Chapter 11 Information Systems Management Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

“… You’ve Got a Fox in Charge of a Hen House.” IS management is a mess. New maintenance supervisor oversees IS, but has no IS background IS manager has a conflict of interest Inherited some contractor developed applications. Access to servers is wide open Fox Lake’s general manager needs to get actively involved in IS management

Chapter Preview Information systems are critical to organizational success, and like all critical assets, need to be responsibly managed, in organizations both large and small. In this chapter, we will survey the management of IS and IT resources. We begin by discussing the major functions and the organization of the IS department. Then we will consider each of the major functions in greater detail: planning the use of IT/IS, creating and managing the computing infrastructure, creating and managing enterprise IS, and protecting organizational information assets.

Chapter Preview (cont.) The pros and cons of outsourcing and describing some of its risks are presented. Finally, the chapter concludes with a discussion of the relationship of users to the IS department. In this last section, you will learn both your own and the IS department’s rights and responsibilities. The goal of the chapter is to give you an appreciation for the scale and complexity of the IS management task and to help you become an effective consumer of IS services.

Study Questions Q1 What are the functions and organization of the IS department? Q2: How do organizations plan the use of IS? Q3: What are the advantages and disadvantages of outsourcing? Q4: What are your user rights and responsibilities? Q5: 2022?

Types of Sourcing Sourcing Offshoring In _______ Out _______ Crowd ___________

Q1: What are the Functions and Organization of the IS Department? Major functions of information systems department Plan how to use IS to accomplish organizational goals and strategy Manage outsourcing relationships Protect information assets Develop, operate, and maintain organization’s computing infrastructure Develop, operate, and maintain enterprise applications

Functions and Organization of the IS Department Each organization’s IS structure varies depending on these factors: ______ _______ __________ __________ ________ Other factors Size Culture Competitive environment Industry

How is the IS Department Organized? This organizational structure chart shows the typical top-level reporting relationships. Depending on the organization, the Chief Information Officer (CIO) may report to the Chief Executive Officer (CEO), the Chief Operating Officer (COO), or the Chief Financial Officer (CFO). Fig 11-1 Typical Senior-level Reporting Relationships

How Is the IT Department Organized? Chief Information Officer (CIO) Principal manager Reports to CEO, COO, or CFO Technology office Head: Chief Technology Officer (CTO) Investigates new information systems technologies for possible application at organization Operations Manages computing infrastructure

How Is the IT Department Organized? Development Manages process of creating new information systems Maintains existing system Outsourcing relations Handles affairs with outsourced systems Data administration staff functions Establishes data standards and data management practices and policies

INFORMATION SYSTEMS (MIS/IS) Each project team should include the following three types of people: 1) top/middle management 2) technical professional (e.g., MIS, accounting) 3) USERS ORGANIZATIONS INFORMATION SYSTEMS TECHNOLOGY MANAGEMENT Dr. Chen, The Challenge of the Information Systems Technology TM -12

Q/A T/F If an organization does not develop programs in-house, then the development group of the IS department will include programmers, test engineers, and technical writers. Answer: ________ FALSE

What IS-Related Job Positions Exist? Fig 11-2 Job Positions in the Information Systems Industry

What IS-Related Job Positions Exist? (cont’d)

What IS-Related Job Positions Exist? (cont’d)

IT Position Requirements (Very Important to Your Future Career!) p.390 Most positions require business knowledge plus technical knowledge Many require university degrees Most require good verbal and writing skills Think dual majors with MIS/CIS to enhance your marketability (competitive advantage) Accounting and information systems Marketing and information systems Management and information systems Operations and information systems HRM and information systems

Q2. How Do Organizations Plan the Use of IS Q2 How Do Organizations Plan the Use of IS? Major IS Planning Functions The figure below shows the necessary steps an organization must take to plan how it will use IS and IT and to make sure both of them support the organization’s strategy. The CIO is responsible for most of these items. It’s a never-ending process as organizations change, grow, or merge with other companies. The steering committee, a group of senior managers from major business functions, works with the CIO to set IS priorities, make decisions about major IS projects, and serve as a communication channel between users and the IS function. Fig 11-3 Planning the Use of IS/IT

Explain How You Would Respond to Each Situation. Playing computer games during work hours Playing computer games before and after work hours Responding to emails from an ill parent Watching DVDs during lunch and breaks Sending emails to plan a party that mostly involves people from work Sending emails to plan a party that mostly involves no one from work Updating your Facebook page Reading news on CNN.com Checking stock market over Internet Tweeting friends on your computer about your softball win last night. Selling personal items on eBay Paying personal bills online Paying personal bills online when traveling on company business Buying an airplane ticket for an ill parent over the Internet Changing content of a personal Web site Changing content of a personal business Web site Buying an airplane ticket for a personal vacation over Internet

Align Information Systems with Organizational Strategy As strategies change, as the organization merges with other organizations, as divisions are sold, IS must evolve along with the organization. Changing a network requires time and resources. Integrating disparate information systems applications is even slower and more expensive. Without a persuasive CIO, IS can be perceived as a drag on the organization’s opportunities.

Q/A Which of the following is a function of the steering committee for an IS department? A) writing program code B) imparting training C) adapting software D) setting IS priorities Answer: ______ D

Information System Strategy Triangle Business (Firm) Strategy Where is the business going and why? Direction for business Needs and priorities IT impact and potential Infrastructure and services Supports business Organizational Strategy IS/IT Strategy Fail to balance these three strategies IS fail to support business goals IS fail to support organizational system Misalignment between business & org. strategies A business strategy is a well-articulated vision of where the business seeks to go and how it expects to get there; An organizational strategy is the organization’s design, as well as the choices it makes to define, set up, coordinate, and control its work processes; IS strategy is the plan the organization uses in providing information systems and services. IS strategy can itself affect and is affected by changes in a firm’s business and organizational strategies. Moreover, IS strategy always has consequences – intended or not – on business and organizational strategies. Business strategy business decisions; -- Objective and direction; -- Change; Organizational strategy -- A plan that answers the question: How will the company organize in order to achieve its goals and implement its business strategy? Thus, it is a plan for organizational design, and choices the firm makes that define, set up, coordinate, and control its work processes. business based; - Demand oriented; - Application focused IS/IT strategy activity based; -Supply oriented; -Technology focused Gain strategic advantage by using IT … It consists of four major elements: 1) Architecture/Infrastructure, 2) MIS Organization, 3) Funding and 4) Project Management What is required? How it can be delivered? 1. Architecture/Infrastructure 2. MIS organization 3. Funding 4. Project Management N

Information System Strategy Triangle A business strategy is a well-articulated vision of where the business seeks to go and how it expects to get there. An organizational strategy is the organization’s design, as well as the choices it makes to define, set up, coordinate, and control its work processes. IS/IT strategy is the plan the organization uses in providing information systems and services.

Communicate Issues to the Executive Group CIO provides the IS perspective during discussions of problem solutions, proposals, and new initiatives. For example, when considering a merger, it is important that a company consider integration of information systems in the merged entities. This consideration needs to be addressed during evaluation of merger opportunity.

Develop Priorities and Enforce Them Within the IS Department CIO must ensure that priorities consistent with overall organizational strategy are developed and communicated to IS department. Must also ensure that IS department evaluates proposals and projects for using new technology in light of those communicated priorities.

Sponsor the Steering Committee Steering committee is a group of senior managers from major business functions that works with the CIO to set IS priorities and decide among major IS projects and alternatives. Provides a forum where information systems personnel can discuss potential IS initiatives and directions with the user community Provides a forum where users may express their needs, frustrations, and other issues they have with the IS department

Q3. Outsourcing: What and Why? Outsourcing is the process of hiring another organization to perform a service. Outsourcing is done to save costs, to gain expertise, and to free up management time. Any value chain business activity can be outsourced “Your back room is someone else’s front room.” (Peter Drucker) Drivers (at least four advantages) include: Reducing ________ Transition to new _____________ Focus on _______ business strategies; Provide better management and focus of IT personnel. Disadvantages are present in outsourcing and include: Losing ________ _________ to undue decisions, etc. costs; technologies; Drivers: 1. Cost-effective access to … 2. Avoidance of …, primarily an issue for SMALL and very low-technology organization 3. Outsourcing during this period was important, but, in retrospect, largely peripheral to the main IT activities that took place in midsized and LARGE organization. Example: 1) Kodak’s decision in 1990 to oursource its IT was the first real WAKE-UP call. 2) Midsized and large organization: apply outsourcing Small and medium-sized: ONLY with problematic, grossly mismanaged IS departments. Large Outsourcers: EDS, CSC (Computer Science Corp.), IBM (Global Services), Andersen-Consulting (Accenture), etc. Backsourcing is when a company brings back previously outsourced IS functions. core control, Expensive

Sourcing Decision Cycle Framework Sourcing involves many decisions (Figure 11 Extra-1). The first step is the make or buy decision. If buy is selected then the company must decide where. If the company decides to go offshore it must decide if the offshore company is near or far. Periodic evaluation must take place. Continual evaluation is needed to determine if the arrangement is satisfactory or not (either for outsourcing or insourcing). 28

Where & how the sourcing should be delivered? (overseas subsidiary) Where & how the sourcing should be delivered? (distant land) (proximate) BUY MAKE Nearsourcing is -- “sourcing service work to a foreign, lower-wage country that is relatively close in distance or time zone or both” -- Distance and language (and/or culture) matter. Captive center: -- An overseas subsidiary that is set up to serve the parent company. -- Alternative to offshoring or nearshoring. Backsourcing is when a company brings back previously outsourced IS functions. Backsourcing FIGURE 11 Extra 1 SOURCING DECISION CYCLE FRAMEWORK 29

Outsourcing Information Systems Outsourcing, the process of hiring another organization to perform a service, can provide advantages like the ones shown in this figure. India is the most popular foreign outsourcer because of its large, well-educated, English-speaking population who earn 20 to 30 percent less in labor costs than their U.S. counterparts. International outsourcing is well-suited to 24/7 operations like customer support. Some say outsourcing is a threat to U.S. technology leadership. Fig 11-4 Popular Reasons for Outsourcing IS Services

Risk Reduction Caps financial risk Ensures certain level of quality, or avoids having substandard quality Vendor assumes responsibility for hardware, software, network protocol selection, and knowing applicable tax laws Easier to hire another vendor than to fire and rehire internal staff.

International Outsourcing India Large, well-educated, English-speaking, labor cost 70-80% less than in US. China and other countries. Modern telephone technology and Internet-enabled service databases Customer support and other functions operational 24/7.

What Are the Outsourcing Alternatives? This figure shows alternatives businesses have for outsourcing some or all of their information system components. Major categories of alternatives by information systems components Oracle, EDS Amazon Salesforce.com Oracle/PeopleSoft Web storefront Oracle IaaS Cloud Employee Travel IaaS: Infrastructure-as-a-Service SaaS: Software-as-a-Service Fig 11-5 IS/IT Outsourcing Alternatives

There are a lot of risks to outsourcing information systems as this figure describes. Fig 11-6 Outsourcing Risks

Q/A When a company outsources a system, it no longer has control over prioritizing fixes for software failures and problems. Answer: _______ TRUE

Write shorter contracts - less than ___ years 5 When to Outsourcing? Which IS activities are strategic to our company's business? Will outsourcing save us at least ____ percent? Does our firm have access to the needed technology and expertise? If not, outsourcing may be the answer to acquiring these resources. Does outsourcing increase our firm's flexibility? 15 Does outsourcing increase our firm's flexibility? Outsourcing shifts capital budgets to operating expenses, which can give a firm more financial flexibility. Furthermore, outsourcing may free up personnel to work on new systems, while the outsourcer maintains the existing ones. Also, it can increase the firm's flexibility for acquiring new technologies sooner. Outsourcing is an important question facing today's IS executives. There are four activities that management should not outsource: strategy, the architecture of the system, the decisions about when to introduce IS into the organization, and management of the vendor. Write shorter contracts - less than ___ years 5

INSOURCING What is the example(s) mentioned in the Friedman’s Video (The World is Flat)? 37

Crowdsourcing Definition: Taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people, in the form of an open call. Used by companies to increase productivity, lower production costs, and fill skill gaps. Can be used for a variety of tasks. Companies do not have control over the people doing the work. Has cost more than traditional methods. 38

Q4: What Are Your IS Rights and Responsibilities? Fig 11-15 User Information Systems Rights and Responsibilities

Q4: What Are Your IS Rights and Responsibilities? (cont’d) Fig 11-15 User Information Systems Rights and Responsibilities

Q/A Which of the following is true about the changes and developments foreseen for 2022? A) Licensed, off-the-shelf software will become less configurable, less adaptable, and less flexible. B) Fewer applications will be developed in-house and software customization will become easier. C) Better-skilled employees will be needed to adapt software to increasingly unique organizational needs. D) Small computing devices will become more expensive and lose their popularity. Answer: ______ B

Q5: 2022? Hardware infrastructure will migrate to cloud Licensed, off-the-shelf software more configurable, adaptable and flexible. iOS devices and other, small computing devices will become cheaper and more popular. Fewer and less-skilled employees needed Loss of control of employees’ use of IT

You have certain rights and responsibilities with regard to the IS department that supports you in your job. Here is a list of them. Fig 11-7 User Information Systems Rights and Responsibilities

End of chapter 11