IS/IT Functional Specialty –Role Structure CapabilitiesRole, Structure, Capabilities

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PURPOSEPURPOSE

To consider the continuingTo consider the continuing change occurring in the role, str ct re and capabilities of thestructure and capabilities of the IS/IT functional specialty in firmsy

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Why IS/IT Structure?Why IS/IT Structure?

> It’s Changeable> IS/IT “Related” Resources Are Large and Growing

• 1-10% of revenue• Majority of capital expenditures

I t t C titi> Importance to Competitiveness• Efficiency (bottom line)• Innovation (top line)• Innovation (top line)• Improved decision making (business

intelligence)

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7 S Factors Affecting Firm Performance

StrategyStructureSystemsStaffingSkillSkillsStyleShared ValuesShared Values

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Functions are a Result of Specialization

Adam Smith – EfficiencyPin factory (20 fold)Process design and resource assignment

Al Sl GM i th 20’ M F O i tiAl Sloan GM in the 20’s –M Form OrganizationSpecialization Creates a Need for Coordination

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Functional Specialties –Value Chain> Primary Activities

> Inbound & outbound logistics> Operations> Marketing & sales

Aft l i> After-sale service> Support Activities

> Human Resources> Human Resources> Technology development> Procurement

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> Procurement> Infrastructure

IS/IT – A “New” SpecialtyIS/IT A New Specialty

> 1950 – 60 Data Processing> 1970 – 80 Add Management Information> 1980 – 90 Add Information Technology> 1990 – 00 Add Enterprise Information

2000 10 Add P Gl b li ti> 2000 – 10 Add Process Globalization> 2010 – 20 ?

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Current Indicators of Change

Travelers Insurance – CIO is also Chief Innovation OfficerC ill T t P j t C t N TCargill – Tartan Project Creates a New TeamGeneral Mills – Standardize DataMedtronic Organize to Emphasize InnovationMedtronic – Organize to Emphasize InnovationUnited Health Group – Two IS/IT Innovation Units Others?Others?

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Empirical Evidence of Change

Adams, Larson and Xia – Centralization of technology and applications

Latest Work with Eric Larson – Centralization, Standardization and Less SpecializationStandardization, and Less Specialization

Luftman Survey – From Federal to Centraly

Gartner - Centralized

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What Relates to Structure ?What Relates to Structure ?

In the 60’s Alfred Chandler (Harvard) observed that strategy and structure go together.

Detour – Consider strategy

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Strategy FieldStrategy Field

Explain why some organizations operating in similar conditionsoperating in similar conditions perform differently

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Decision Focus in StrategyDecision Focus in Strategy

>Scope – Territory of Operations

>Competencies – Basis of C titi Ad tCompetitive Advantage

>Governance – Decision RightsParallels with IS/IT Strategy

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Parallels with IS/IT Strategy

Alternative Views of Strategy> Plan – Step1; if ____ , then Step 2 ; etc.

> Ploy – “fake “ plan

P iti l / biliti t t> Position – role, resources/capabilities, structure

> Perspective comprehensive long term> Perspective – comprehensive, long-term

> Pattern – post hoc observation

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> Pattern post hoc observation

Organization Levels in Strategy

>Corporate – Mix of Business Units>Corporate Mix of Business Units

>Business Unit Basis of>Business Unit – Basis of Advantage in an Industry

> Function – Alignment ( Corporate?

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> Function Alignment ( Corporate? Business Unit?)

AlignmentAlignment

> Function to Business

> Operations (internal) to Strategic (external)

Th Di i S C t i d> Three Dimensions – Scope, Competencies and Governance

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Position (Strategy) of IS/IT Function> Role (Scope)

> Resources /Capabilities (Competencies)

St t (G )> Structure (Governance)

> Choosing a strategy for IS/IT means establishing the> Choosing a strategy for IS/IT means establishing the role, capabilities and structure of the functional group

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Role?Role?

> The expectation of the broader organization regarding the functional specialty.

- Effective, reliable, secure, cheap operations Involvement in process improvement- Involvement in process improvement

- Involvement in product/service innovation- Authority in standardization of technology Of DataAuthority in standardization of technology. Of Data.

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Resources/Capabilities?Resources/Capabilities?

> Adams/Xia – Business W/I a Business

- innovate, operate, market, manage, adapt

W ill & B db t> Weill & Broadbent

communication messaging standardization- communication, messaging, standardization,security, operations, advice & support

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Structure?Structure?

> Configuration (relationships/network)> Centralization> Formalization> Standardization

S i li ti> Specialization_ _ _ _ _ _ _ _ _ _

> Flexibility (Adaptability) - Stigler; Quality Literature -(variation) - common cause/ specific cause

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Specific ConfigurationsSpecific Configurations

Agarwal and Sambamurthy – Relationships

> Partner – innovation (IS/IT = B.U.)> Pl tf i f t t (IS/IT t B U )> Platform – infrastructure (IS/IT supports B.U.)> Scalable – flexible (IS/IT supports via vendors)

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Specific ConfigurationsSpecific Configurations

Weill and Ross> Business Monarchy> IT Monarchy> F d l> Feudal> Federal> IT duopoly> IT duopoly> Anarchy

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Specific ConfigurationsSpecific Configurations

Gartner> Heritage (efficient, reliable) > Aligned (supportive)> E d ( il b i l d i )> Engaged (agile, business value driven)> Pervasive (transformational)- - - - - - - - -> Community (business unit owned/cloud)

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Reprise- Why Focus on Structure?> It’s changeable

> It’s changing

Aff t d b th E i t> Affected by the Environment> Demands for integration, innovation, and

intelligenceintelligence> Uncertainty, volatility, pace> Desire to imitate the larger Unit structure

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Major ForcesMajor Forces

> Demand for Integration

> Demand for Innovation

D d f I t lli (A l ti )> Demand for Intelligence (Analytics)

> Desire to Imitate larger unit structure> Desire to Imitate larger unit structure

> Environmental Uncertainty Volatility and Pace

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> Environmental Uncertainty, Volatility, and Pace

Demand for IntegrationDemand for Integration

> Top Line – Customer Relationship

> Bottom Line – Supply Chain

R l ti SOX EPA FDA> Regulation – SOX, EPA, FDA

> Knowledge Management Sharing (Roberto 10/14)> Knowledge Management- Sharing (Roberto 10/14)

> Economies of Scale/Scope ( diversification)

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> Economies of Scale/Scope ( diversification)

Effects on Structure of Demand for Integration> Configuration Change (CIO Rank)> More Centralization> More Standardization> Less Specialization

- - - - - - - - - - - - - - - - -Less (?) Formalization- - - - - - - - - - - - - - - - -

> Centralizing Affect of IS/IT’s Position as a Coordinating Mechanism

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Demand for InnovationDemand for Innovation

> More marketing – access to the user

> More creativity – less directed by the business unit

L t i t d> Less restricted on resource use

> Access to technical specialists via sourcing> Access to technical specialists via sourcing relationships

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Effects on Structure of Demand for Innovation> More Standardization --|

| <---- more communication> More Centralization --|

L F li ti> Less Formalization

> Less Specialization> Less Specialization

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Demand for IntelligenceDemand for Intelligence

> Infrastructure capabilities

> Embedded in processes/systems

E b dd d i d i> Embedded in devices

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Effects of Demand for Intelligence> More centralization

> More formalization

Mi d t d di ti> Mixed standardization

> More specialization> More specialization

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Environmental UncertaintyEnvironmental Uncertainty

> Technical – scale;sourcing

> Economic (cost/price) – globalization;recession

S i l ( ) i l di t ffi> Social (norms) - social media;post office

> Political (regulation) Dodd Frank EPA> Political (regulation) – Dodd-Frank, EPA

> Organizational (imitation) - constraint

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> Organizational (imitation) constraint

Effects on Structure of Technical Uncertainty> Centralization – increasing

> Standardization – increasing

S i li ti ?> Specialization - ?

> Formalization ?> Formalization - ?

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Effects on structure of Economic Uncertainty

> Centralization – increasing

> Standardization – increasing

> Specialization – less

> Formalization - less

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Effects on Structure of Social Uncertainty

> Centralization – increasing

> Standardization - increasing

> Specialization - less

> Formalization - less

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Effects on Structure of Political Uncertainty

> Centralization – increasing

> Standardization – increasing

> Specialization ?

> Formalization - less

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Effects on Structure of Organizational Environment

> Centralization – less

> Standardization – less

> Specialization – increasing

> Formalization - increasing

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Collateral ImpactsCollateral Impacts

> Change – Resistance

> Curriculum – Enterprise System Implementation

> Human Resources – Broad Individuals with Access to specialiststo specialists

> Corporate Strategies – Importance of IS/IT

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ChangeChange

> C group resistance

> Top down or bottom up

C i i ti t titi> Crisis motivator – competition

> Available talent Permanent and transient> Available talent – Permanent and transient

> Training

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> Training

CurriculumCurriculum

> Enterprise System Implementation- degree of standardization (SAP)

> Social Media – Internal (knowledge management)/External (customer relations)management)/External (customer relations)

> Business Analytics – Technical vs. Practicaly

> OJT – University of Chicago

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Human ResourcesHuman Resources

> Breadth vs. Depth Expertise

> Local vs. Global Perspective

I t f U ’ P id ’ T i i> Importance of Users’ vs. Providers’ Training

> Importance of Turnover (+ )> Importance of Turnover (+, -)

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Corporate StrategiesCorporate Strategies

> Corporate – Importance of match in mergers and i iti S i 10/14acquisitions. Seminar 10/14.

> Business Unit Key to Competition (Cost Niche> Business Unit – Key to Competition (Cost, Niche, Differentiation)

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