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Chapter 9 The Roles, Roles and Relationships Concept
Chapter 9 1. Roles, Relationship Concept and Examples. 2. Triggers of Action. 3. Technology Transfer Through Organizational Learning. 4. IS Organization as a Business within a Business. 5. Outsourcing the management of IS.
IS as a Competitive Resource? • Business competitiveness is a top priority. • What about Information Systems?
Success Can Be Elusive! Why are some companies successful while others are frustrated with a lack of results and benefits from the use of information systems?
Roles, Roles and Relationships 1. What organizational leadership is necessary to gain a competitive advantage through the use of information systems? 2. How does an organization determine the appropriate use of information systems to gain a competitive advantage on an on-going basis? 3. Does a specific event, activity or person tend to trigger the start of a program that emphasizes the competitive use of information systems?
Roles, Roles and Relationships 4. Can an organization sustain a competitive advantage that is built on an information system? 5. Is this a broad based approach or is the successful use of competitive information tied to a small number of people playing key roles? 6. Does outsourcing the management of information systems impact its possible use as a competitive resource?
How Much is Based On: 1. Business Leadership? 2. Information Systems Leadership? 3. A Proven Information Systems Track Record? 4. Business Stability? 5. Information Content of the Business? 6. IS Cost and/or Risk?
Roles of Information Systems 1. Business Process Partner. 2. Provide Access to Information. 3. Enhance Communications. 4. Provide Decision Assist.
Information systems are strategic weapons, not cost centers. Robert F. Mc. Dermott Former USAA CEO
Roles, Roles and Relationship Concept ****** 1. The role of information systems is focused on competitive priorities. 2. Senior management plays a major role in positioning and prioritizing the competitive role of information systems. 3. There is an on-going working relationship between senior management and the information systems organization to sustain the successful use of information systems to compete.
Two Important Questions 1. Who Makes Competitive Strategy Decisions? 2. Who Makes Competitive Strategy Decisions When the Process is Built on a Computer Base?
Top Executive Job Description The primary role of the top executive is to assure the long term viability of the business.
The Role of the Senior Executive The Person that Runs the Business on a Day-To-Day Basis • Provide a long term vision for the future of the business. • Recognize the value of information to the organization. • Sponsor and participate in determining the role of information systems.
• Communicate the importance of the information systems role. • Provide funding, including R&D, to address the major requirements. • Focus on results and benefits. • Motivate to make things happen!
Role of Other Senior Management n Understand the role of information systems within the organization. n Identify and specify requirement for new information systems. n Justify and fund existing and new systems. n Sponsor their information systems on an on-going basis.
Role of IS Executive n Function as a member of the senior management team. n Provide an understanding of the realm of the possible, feasible, affordable and achievable with information systems. n Posture information systems as a service and support organization in both fact and perception.
Using IS to Compete Senior Management Users Functional Management Information Systems Organization Figure 9 -1
Roles, Roles and Relationships Leadership in two forms: - Business Leadership - IT Leadership
Information Systems Organization Mission Statement To assure that the corporation's present as well as future demands for information, information processes, information systems and computer-based technologies are provided in such a manner that the daily conduct of the business will not be impacted and that the future business opportunities can be capitalized on and managed by the corporation.
The Reeducation of UPS Kent “Oz” Nelson , CEO • For decades UPS focused on managing physical distribution. • Today, new IT and relaxed regulations have made logistics management the imperative. • Information about a package is often as important as the package itself. • In one decade IT has gone from a limited factor to a critical enabling resource.
Using Information Systems to Gain a Competitive Advantage An Essential Partnership
Using Information Systems to Compete Senior Management IT Leadership Business Leadership Information Systems Organization Figure 9 -2
Relationships 1. A formal structure within the organization. 2. Integral to the way that the business is run.
Who Should Be the Primary Initiator of Using Information Systems to Compete? • Senior Management? • Functional Management? • Information Systems Management?
Using IS to Compete Primary Responsibilities Direction Conceptual Approach Specific Approach Senior Management 7 2 1 Functional Management 2 5 4 I/S Management 1 3 5 10 10 10 Figure 9 -4
Technology Transfer Through Organizational Learning There is a direct correlation between the successful introduction of a new information system within an organization and the learning curve of the primary users.
Learning Curves Information Technology Computer-based Applications Organization
Making It Happen! hip p s der rshi Lea ade ess y Le sin og Bu tics nol Tac ech T n y sio i teg V a Str Action Initiators Competitive Advantage Crisis Management Process Improvement Executive Power Figure 9 -5
You manage things, but you lead people. Grace Hopper Admiral U. S. Navy
More on Leadership 1. Entrepreneur Founder 2. Corporate Managers 3. Corporate Caretakers Bob Townsend Up the Organization
A Business Products/Services Users Suppliers Board of Directors Competitors Figure 9 -6
Information Systems Business Customers Suppliers Steering Committee Competitors Figure 9 -7
Steering Committee I/T Needs Real $s Products People Direction Information Systems Organization Competitors Wants & Needs Justification Real $s? Products & Services Constraints Costs al Re Users Suppliers Opportunities Nee d Prio s and ritie s s llar Do Figure 9 -8
Outsourcing Hiring someone whose expertise can perform a business function or activity better, more cost effectively and/or in a more timely manner than can be achieved in-house. Also enables the company to focus on its core competencies and those factors that mean the difference between success and failure.
Outsourcing is a current, major focus of many business enterprises. It continues to be a very hot topic.
Outsourcing Logical? Necessary? Appropriate? Cost-effective? What? With Whom? Where? How Long? Risk?
The Evolution of Outsourcing The concept of outsourcing is not new. For decades, companies have outsourced a number of functions such as cafeteria service, janitorial service, security guards, payroll, clerical support, manufacturing and distribution. Outsourcing, by the old definition, was very specific, targeted, and often project based. The company might design a product, then outsource the manufacture of various components, subassemblies, even the finished product. Things have evolved to where anything that is not a core business process is a candidate to outsource.
Outsourcing IS Management • A Way to Save Money on a Short Term Basis? • A Way to Avoid the Need to Manage Technical People in an Environment that Keeps Changing? • Strategically Significant? UB example
Outsourcing Information Systems Management Is the outsourcing of the management of information systems a contradiction of its possible strategic significance?
Information System Goals To help achieve organizational objectives by: 1. Supporting the decision making process. 2. Providing necessary information. 3. Providing a communications network. 4. Accommodating change within the organization. 5. Approaching this with a general manager’s perspective.
IS Organization Business 1. Designing Information Systems 2. Building Information Systems 3. Running Information Systems
IT Outsourcing Options • Software Development and/or Maintenance • Application Service Provider • Global Network Provider • Network Management • Management of Entire IS Function • IT Training • Consulting and Reengineering
India’s IT Outsourcing Industry GOOD STUFF, CHEAP That's the reputation of India's IT outsourcing industry, and it's both a blessing and a curse. The blessing is that India has finally been able to move onto the global stage by harnessing its greatest natural resource—people —and focusing on filling the world's need for IT skills and services. India has grown its IT exports in less than a decade from $150 million to more than $4 billion— 10. 5% of India's total overseas sales. Its success is built on a solid record for developing IT talent as well as delivering top-notch legacy system maintenance and software applications.
India’s IT Outsourcing Industry The curse is that, despite what IT outsourcing has meant for India's economy, the country's top IT vendors have been typecast and they all hear the approaching footsteps of Ireland, China and the Philippines as up-and-coming IT service centers. “Getting work is not difficult; getting the right kind of work is difficult. We have to convince customers that they can outsource high-value work to India. "
India’s IT Outsourcing Industry Nobody can beat their price! Software programming in India costs roughly $35 per hour, as opposed to $200 in the United States—and their quality is world-class. Of the 23 companies worldwide that have been awarded the US Software Engineering Institute's Capability Maturity Model Level 5 rating for fault-free software engineering processes (the equivalent of a perfect 10 in Olympic competition), 15 of those elite companies are Indian, among them Infosys, NIIT and Wipro.
China Versus India for Outsourcing India’s global advantage in IT rests on a tripartite foundation: 1) Good IT education, 2) Competitive wages, and 3) English language competency. On the first two, China already competes. That leaves English. Five years ago, very few young Chinese professionals spoke English.
US Corporations n Most managers are used to managing internal resources and staff directly, and having total control over the decision-making process in their area. n There are some fundamental differences in managing an outsourced function.
The Corporation Today A company must ensure that internal resources are dedicated to core competencies and that the right outside relationships are established, maintained, and nurtured.
Chief Resource Officer (CRO) n n New Organizational Model is Creating a New Management Role. Outsourcing has rapidly changed and evolved -- from vertical to virtual, tactical to strategic, cost-cutting to cutting-edge. 1998 was a banner year for outsourcing. Some of the largest deals, as well as the most strategic were made. The stakes have increased, the risks and the rewards have soared, yet the manner in which outsourcing engagements are conducted and supervised has remained the same.
Chief Resource Officer The CRO is a strategic position, charged not with managing corporate resources (time, money, and personnel), but with managing the complex series of relationships the modern corporation must have with its outside resources. The CRO evaluates the need for resources in each function, finds the resources required outside the company, and implements and nurtures the relationship to the company's best advantage.
Chief Resource Manager Outsourcing deals fall apart because there was no one in a Chief Resource Manager position to manage and follow-up on objectives and contractual agreements. n A CRO-type position means taking a global, visionary, forward-thinking role in how to use resources and make them effective and efficient for an organization. n There is a definite need to manage change during the life of an outsourcing contract. n
CRO Skill Profile 1. Experience managing different businesses 2. Experience managing costs 3. Project management 4. Contract negotiations 5. Political and cultural consciousness 6. Ability to think out of the box 7. Comfortable with change
Evaluation Criteria It is important in considering offshore outsourcing to address the following with a potential vendor: a) Do they have offices in US and in proximity to them. Developing long term products require lot of interaction with the vendor locally. b) Get resumes of IT professionals who will work on your project in India and/or the US. If an offshore vendor has experienced IT professionals working for them for a good length of time, they have good retaining and employee policies.
Evaluation Criteria c) Understand the vendor process to develop and deliver the project on a timely basis. d) Get references on where they have successfully completed similar projects. e) Clearly understand the financial and property rights of such a relationship. f) Make sure that you have a way out if things do not go well or according to schedule.
A Well-Structured Alliance • Strategic Synergy. The two (or more) organizations together can achieve a high level of benefits. • Clarity of purpose. The goals and benefits are explicit and clear. • Growth opportunity. The relationship--and its benefits-can be expanded. • Less risk. The relationship reduces the level of risk. • Excellent chemistry. There a good "fit" between the two or more organizations. • Win-Win Proposition. Each party can benefit fairly from the relationship.
Outsourcing Resources n The Outsourcing Institute http: //www. outsourcing. com n ASP Outsourcing Center http: //www. asp-outsourcing-center. com
Some Basic Conclusions 1. There are common factors among companies that have gained a competitive advantage through the use of information systems. 2. The difference between the good examples and the less successful ones is getting bigger.