ICT in Business ICT Strategy Part 3b: Organizational issues Bas Kruiswijk Leiden University, April 2010

© Twynstra 2 Strategic sourcing of ICT ICT processes, tasks and infrastructure: outsource or embed in the business?

© Twynstra 3 ICT Organisation Business Strategy ICT Strategy Organizational Infrastructure ICT Infrastructure BusinessICT External internal Demand Supply Architectures ProcessesSkills

© Twynstra 4 The classical ICT Organisation Strategic Tactical Operational Setting strategy Strategic planning Architecture design / technical planning Delivering applications Business requirements definition Application development Support of end-user decisions Supporting infrastructure Data center operations Network operations Desktop support Applications maintenance Source: Gartner Group, Charles Chang

© Twynstra 5 The classical ICT Organisation Role of the ICT organisation based on –Environmental changes took place slowly and incrementally –Long-term business strategies –Stable end-user requirements that lasted for years –Technology changes took place over years But what is needed today? –Continuous and radical change needs managing –New products demand IT-based innovation –Virtual organizations require entrepreneurship and end-to- end supply chains And... –Can you do it all by yourself? Source: Gartner Group, Charles Chang

© Twynstra 6 What tasks belong in the ICT organisation? Strategic Operational Tactical Embed in the business Delegate to a third party

© Twynstra 7 Core-tasks of an ICT Organisation Some tasks can be embedded in the business Some tasks can be outsourced to a third party But the core tasks of an ICT organisation are –Stimulate innovation –Manage the consistency in ICT solutions and applications –Manage ICT implementations (Change Management) –Manage outsourced services

© Twynstra 8 Example roles within an ICT organisation Strategic Technisch beheerder hardware & netwerken Service- medewerker Systeem eigenaar Informatie- architect Functioneel beheer Technisch beheerder software Coördina- tor ICT Project- leider Operational Programmeur Technisch specialist Systeem analist Contract- manager Tactical Inkoper Web- master Directie Technical manager hardware & network Service- support Information - architect Technical manager software - Programmer Technical specialist System analist Contract- manager Purchaser Information manager System owner Functional manager Project manager Web- master

© Twynstra 9 Roles embedded in the business or outsourced Strategic Technisch beheerder hardware & netwerken Service- medewerker Systeem eigenaar Informatie- architect Functioneel beheer Technisch beheerder software Coördina- tor ICT Project- leider Operational Programmeur Technisch specialist Systeem analist Contract- manager Tactical Inkoper Web- master Directie Technical manager hardware & network Service- support Information - architect Technical manager software - Contract- manager Purchaser Information manager System owner Functional manager Project manager Web- master Programmer Technical specialist System analist Embed in the business Delegate to a third party

© Twynstra 10 And the core tasks... Technisch beheerder hardware & netwerken Service- medewerker Systeem eigenaar Informatie- architect Functioneel beheer Technisch beheerder software Coördina- tor ICT Project- leider Programmeur Technisch specialist Systeem analist Contract- manager Inkoper Web- master Directie Technical manager hardware & network Service- support Information - architect Technical manager software - Contract- manager Purchaser Information manager System owner Functional manager Project manager Web- master Programmer Technical specialist System analist Embed in the business Delegate to a third party Stimulate innovation Manage consistency Manage changes Manage outsourced services

© Twynstra 11 What is sourcing? Dynamically planning and organizing ICT capacity (people, technology and processes), needed to meet the goals of the business Central issues of strategic sourcing 1.What is the sourcing problem, related to the business (business goals, business model)? 2.Which part of the ICT services (or ICT processes) are subject to outsourcing? 3.Analyse the ICT services to decide exactly what will/can be outsourced Technology (ICT infrastructure) Processes People

© Twynstra 12 1: Business model and its sourcing problem Problems of an ICT organisation –Manage and reduce ICT costs –Align ICT investments with business goals –Build a stable ICT service portfolio –Selectively outsource ICT tasks and manage the hiring of external ICT expertise –Manage internal and external staff –Security, architecture, integration... Choices to be made –How does an organisation create value for its customers? –What resources are needed, and how to organise these resources to create added value? Different business models ask for a different approach to strategic sourcing

© Twynstra 13 Business models Digital Abundance Physically Scarce Resources Adding value Customer focused Customized services KPN Shell Akzo Lucent TNT UPS Daf Nike Smart Bol.com Docdata Philips Amazon.com BuyITdirect.com Organisation with BU / SU focus Organisation focused on core- competences Supply-chain organisation Network- organisation Traditional organisation Virtual organisation Supplier focused Mass production

© Twynstra 14 Sourcing issues related to the business model TraditionalFocusedCore competence s Supply chainNetworkVirtual All in one Hierachy Service and business units Outsourcing to suppliers PartnershipsPartnerships with shared goals Event driven, incidental relationships based on added value How to obtain qualified ICT capacity? How to optimize the ICT competence? Which ICT supplier and how to handle unneeded resources? How to optimize the revenue of the partnership? How to share responsibili- ties and how to smart- source? Who are my partners, and how to organise co- operation?

© Twynstra 15 2: Which ICT processes are subject to outsourcing? What are the ICT processes –The complete value chain from strategy to operational implementation of ICT services Which processes are subject to outsourcing?

© Twynstra 16 Environment Organisation Products & services Management processes raw material data, etc. Primary business processes Innovation, R&D & knowledge management Business support processes ICT processes ICT processes in context = Information flows Supplier Customer

© Twynstra 17 ICT Processes ICT Suppliers ICT end users Manage functional requirements Planning of ICT capacity and service levels Production, delivery and support Contractmanagement services and products ICT Strategy Architecture and Alignment Primary processes Business support processes Innovation, R&D and knowledge management Customers in the business Management processes Insource or outsource

© Twynstra 18 3: Analyze what to outsource The ICT infrastructure The ICT processes, necessary to supply the servics The people and the organisation, necessary to supply the services ICT Infrastructure (technology) ICT processes ICT organisation and staff

© Twynstra 19 ICT Infrastructure Office Information systems Business information systems Technical Information systems Functional Specific Generic Physical ICT infrastructure components User Support and Application Management System Management ICT infrastructure layers functionality Network Management ICT Function/processes = central

© Twynstra 20 ICT Infrastructure Infrastructure layers (based on the OSI-model) –Physical: hardware, cables, power supply –Generic: routers, name servers, network –Specific: operating system, application servers –Functional: application, content, business rules Functional areas –Office: office, , internet –Business: finance, HRM, production planning, business planning –Technical: CAD, production process support, scientific applications

© Twynstra 21 ICT Processes Strategic processes –ICT Strategy, alignment and architecture Tactical processes –Planning of services and capacity –Service management with suppliers and customers –Contract management Operational processes –Incident control –Change, problem, configuration management –System, technical and functional management Operational processes are most likely to be outsourced ITIL is a best-practice model to organise these processes

© Twynstra 22 People and organisation Strategic Technisch beheerder hardware & netwerken Service- medewerker Systeem eigenaar Informatie- architect Functioneel beheer Technisch beheerder software Coördina- tor ICT Project- leider Operational Programmeur Technisch specialist Systeem analist Contract- manager Tactical Inkoper Web- master Directie Technical manager hardware & network Service- support Information - architect Technical manager software - Contract- manager Purchaser Information manager System owner Functional manager Project manager Web- master Programmer Technical specialist System analist Embed in the business Delegate to a third party

© Twynstra 23 Sourcing: the big picture Organisation Products & services Raw material, data etc. Environment ICT-management Supplier Customer

© Twynstra 24 Why strategic sourcing? Most Important Business Motives in Sourcing Strategy Source: Computer Sciences Corporation 14 th Annual Survey of IS Management Issues

© Twynstra 25 What activities are currently outsourced? Source: Computer Sciences Corporation 14 th Annual Survey of IS Management Issues

© Twynstra 26 Information management and the CIO Roles and tasks of the information manager or his boss: the CIO

© Twynstra 27 Information management Demand and supply Business Strategy ICT Strategy Organizational Infrastructure ICT Infrastructure BusinessICT External internal Demand Supply

© Twynstra 28 The map for information management (Amsterdam Information Model) Source: prof. dr. ir. R. Maes Universiteit van Amsterdam

© Twynstra 29 Information management the business and information dimension

© Twynstra 30 The CIO Chief Information Officer In the top of an organization Responsible for demand and supply Accent on different roles –ICT partner in strategy –Information policy maker –ICT Trendwatcher –ICT Facilities manager –Application manager –User support –Business partner –Alignment manager

© Twynstra 31 The roles of the Information manager / CIO ICT Partner in strategy Discover strategic ICT opportinities for the business Information policy maker Outline and implement policy regarding information provision ICT Trendwatcher Keeps up to date with ICT developments and trends ICT Facilities manager Ensure that the technical facilities form a reliable whole Application manager Responsible for the daily operation of all ICT resources User supportResponsible for the actual use of ICT facilities Business partnerParticipant in business process design in relationship with ICT Alignment manager Aligning business and information facilities Source: ‘Who is managing the information?” Primavera working paper, Universiteit van Amsterdam