Introduction

EvolutionsBusiness executives viewed the ICT function as the province of the technocrats primarily interested in new features with little relevance to real-world business problems;Technology executives have often considered business managers to be shortsighted, lacking vision to exploit all that technology has to offer.

Struggle as they attempt to implement increasingly complex systems in the face of rapid change in business and technology

Technology, Business, and Societal Evolution During the 20th century

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 1 Figure 1- 2

1900 1950 2000

AgriculturalEconomy

IndustrialEconomy

InformationEconomy

Typical mathematical formula:D=B 2 -4AC

Equivalent FORTRAN statement:D=B ** 2-4*A*C

Telegraph

Technology Evolution

Social and Business Evolution

Photos reprinted with permission from AT&T and IBM

Evolution of Computing Performance

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan., Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

1

10

100

1,000

10,000

100.000

1,000,000

1980 1990 1996

PCs and workstations

Mainframe

Adapted from: McKenney, J., Waves of Change: Business Evolution through Information Technology , Boston: Harvard Business School Press, 1995.

Price Performance Trends of Mainframes and PCs $/MIPs

*Ratio of MIPs per Dollars (Mainframes:PCs)

8:1*

286:1*

900:1*

Introduction Figure I-1

Examples

American airlines

Baxter

Mrs. Field Coockies

Open Market

FactsBusiness executives have begun to wrest control from IT executives who have failed to step up to the challenge of entering the boardroomWe see IT-enabled “virtual organizations” in which many small independent agents (or firms) band together as nodes on an information network to achieve dramatic increases in scope and scale.Independency of time and physical location.

21st Century insights: Themes

Expanded processing capacity enables convergence of voice, video and data; encourages real-time transactions and interactivity; dramatically increases connectivity and access.

The business models that dominated the industrial economy are evolving to take advantage of of the capabilities of new technologies.

ICT infrastructure becomes more standardized, modular and scalable From cost avoidance to asset-based, strategic approach

Organizations “buy” rather than “make” IT-applications

Cooperation amongst 4 constituencies Business executives, IT-executives, users, technology

providers

Need to ensure high levels of security, privacy, reliability, and availability.

Theme 1:Market structure and industry dynamics

Theme 1:Market structure and industry dynamics

Porters value chain model

Administration and infrastructure

Human resource management

Product/technology/development

Procurement

Support activities

Primary activities

Inbound logistics

Operations Outboundlogistics

Sales andmarketing

Services

Valueadded -cost = MARGIN

Well defined roles, responsibilities and relationships were governed by standardized policies, procedures and agreements

The Value Chain Defines Industry Structure and Relationships

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan.,

Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.Introduction Figure I

-2

Evolution towards virtually integrated industries

Theme 2: Evolving Business Models

What business are you in? What is you business model?Who are our customers? Our suppliers?ASP models

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 2 Figure 2-1

Theme 3:The Impact of IT on Strategy and Operations

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 1 Figure 1-6

Factory Strategic

Support Turnaround

Goal: Improve performance of core processes

Leadership: Business unit executives

Project Management: Process reengineering

Goal: Improve local performance

Leadership: Local level oversight

Project Management

No strategic impact from IT

Goal: Transform organization or industry

Leadership: Senior executives & board

Project Management: Change management

Goal: Identify and launch new ventures

Leadership: Venture incubation unit

Project Management: New venture development

IT Impact on Core Strategy

IT Im

pac

t o

n C

ore

Op

erat

ion

s

Low

High

High

Reliable zero defect operations Steady stream of technological innovations

Theme 4:Prioritizing IT investments

Benefits from investments in Networked IT Infrastructure Functionality and flexibility

Benefits from doing business on a Networked IT Infrastructure Commerce: operating efficiency, process

performance Content/knowledge community

Theme 5:Assimilation and Organizational Learning

Success

Success

Success

stagnationblock A

stagnationblock B

stagnationblock C

narrowlyfocused andnot marketed

too efficiencydominated

Phase 1

Phase 2

Phase 3

Phase 4

Opportunity Identificationand investment

Organizational learningand adaptation

rationalization andContinuous evolution

widespreadtechnology transfer

Lack ofAttentionAndcommitment

Theme 6:Buy versus Make

User friendly personal software packagesCan I outsource data centers, networks, help desks, PC supportAllignment of short term and long term goals and incentivesProvisions for death and divorce

Theme 7: Partnership among ConstituanciesThree Eras of IT evolution

Administrativeframework

Target forIT use

Justification/Benefits

Era IMainframe

Era II Micro-computer

Era IIIInternetwork

Regulatedmonopoly

Back officeAutomation

OrganizationalProductivity

FreeMarket

IndividualIndividual/Group

Effectiveness

SharedPartnership

Electronic integra- Tion and Learning

BusinessAdvantage

Five Questions to the Managerto be answered every six months or so.

1. Do the perspectives and skills of the IT and general management team fit the firm’s changing applications trust, operations challenges, user environment, and often shift in strategic relevance ?

2. Is the firm organized to identify , evaluate , and assimilate new IT-opportunities? In this fast moving field an internally focused, low-quality staff can generate severe problems. Unprofitable, unwitting obsolescence (from which it is hard to recover) is terribly easy here. There is no need for a firm to adopt leading-edge technology (indeed, many are ill equipped to do so), but it is inexcusable not to be aware of what the possibilities are.

3. Are the three main management systems for integrating the environment to the firm as a whole in place and implemented? These are the strategic planning system, the management control system and the project management system.

4. Are the security , priority setting, manufacturing procedure , and change control systems in the IT operations function appropriate for the role it now plays in the firm?

5. Are organization structures and linking mechanisms in place that will ensure informed senior management on IT-evolutions such that IT is aligned with the needs of the company?

Investing in ICT

If you think

good information systems are expensive,

try without them !

Company

company not the same anymore

information system became strategic

quality requirements finally stated

management at all levels involved

Global knowledge management

IT - departments

Not the same anymore

much larger action radius

role of the central system has changed

hardware within the budget of a department

required knowledge not pure technical anymore

User

Not the same anymore either not doing his first IT-project

got some computer training

has his own preferred packages

wants to build his own little system

doesn’t want to be forced into a system

wants to be involved in the development

Nolan evolution of IT-usage

initiation

contagioncontrol

maturity

Four stages of DP growth:

NOLAN phases

Stage Initiation contagion control maturity

orientation cost reductionnew functionsmoratorium database inquiry

organizationwhere first useddispersed central controlled distributed

manager operationsmanager

middle managermiddle managerdirector

management viewlax selling controlling a resource

applications supporting diversificationdatabases end-user computing

control little very little strong normal

user involvementinterviews ,manuals

PC's project groupstransparent

Success of 21st Century Company

Immediate availability of the right information on the right moment in time Continuous scan of environment

Learning company Knowledge base

Immediate reaction Zero Latency Company

Flexible organizational structure of independent cellsvirtual company

Corporate Information Manager

Depends on:

Goals and Technologies

Goals and Requirements

Information as a resource

Zero Latency

E-commerce

Flexibility

Efficiency

Knowledge Management

Partnerships

Diversity

Added Value

Goals and Requirements

Information as a resource

Zero Latency

E-commerce

Flexibility

Efficiency

Knowledge Management

Partnerships

Diversity

Added Value

Enabling TechnologiesWorkflow Inter(tra)netWEB

Data Mining

Secure Payments

Data Warehousing

Databases, ERP

Telecom, broadband

Development environments

XML

System management

Enabling TechnologiesWorkflow Inter(tra)netWEB

Data Mining

Secure Payments

Data Warehousing

Databases, ERP

Telecom, broadband

Development environments

XML

System management

Citation Citation

There is nothing more difficult to plan ,

more doubtful of success,

nor more dangerous to manage

than the creation of a new system.

For the initiator has the enmity of all who

would profit by the preservation of the old

system and merely lukewarm defenders in

those who would gain by the new one.

Machiavelli, 1513