© , David Gadish, Ph.D.1 IS/IT Policy and Strategy CIS 590 Spring 2005 Week 7 Lecture Dr. David Gadish

© , David Gadish, Ph.D.2 Week 5 Review  Organizing IT (Ch-8)  Human Resource Considerations (Ch-9)

© , David Gadish, Ph.D.3 Week 6 Review  Discuss Projects  Discuss Student Presentations  Midterm

© , David Gadish, Ph.D.4 Week 7 Agenda  Management of Change (Ch-10)  IT Governance (Ch-11)  Questions

5 Chapter 10 Management of Change Managing the Information Technology Resource

© , David Gadish, Ph.D.6 Chapter Outline  Change is complex organization concept  Why people resist change  How IT is player in change management  Successful planning of change  Global factors in change management

© , David Gadish, Ph.D.7 Using Lewin-Schein for Managing Change Through IT Source: Adapted from Lewin and Schein, CHristin Bullen.

© , David Gadish, Ph.D.8 Pain As a Motivator  Possible Sources: –Inability to see critical information about business trends, competition, customers –Discovery that competition has information technology that provides data being sought –Directly from customer(s) –Need to integrate disparate systems resulting from acquisition –Individuals’ inability to perform their work due to IT constraints

© , David Gadish, Ph.D.9 Unfreezing  Planning a Change to Address the Issues  Pain As a Motivator –Becomes clear organization is failing –Missing potentially advantageous opportunities  Real Job Benefits as Motivator –Improves way individual carries out job  Charismatic Leader as Motivator –If champion of change is respected, others will follow  IT As Changer and Changee

© , David Gadish, Ph.D.10 IT As Changer  Targets –Hardware –Systems Software –Applications Software –Connected Information/NWs –Personnel –Processes

© , David Gadish, Ph.D.11 IT As Changee  Anticipate or react to opportunities or problems: –Change in objectives, processes, regulation, economy, “innocent” bystander –Scarcity of labor, raw materials, etc. –Mergers and acquisitions –Customer demands –Actions of competitors

© , David Gadish, Ph.D.12 Five Phases of Positive Cycles  Uninformed Optimism –At beginning of change effort –Believe everything will go as planned  Informed Pessimism –Begin to learn difficulties, doubt and concern  Hopeful Realism –Visible progress and support is received  Informed Optimism –Confidence is built as completion nears  Completion –Satisfaction of succeeding and reaching objective

© , David Gadish, Ph.D.13 Conner’s Stages of Positive Change Source: Conner, Daryl, Managing at the Speed of Change, Random House (1992).

© , David Gadish, Ph.D.14 Conner’s Negative Response to Change  Immobilization –Information shocks the system  Denial –Assume position will fade away  Anger –Feeling of helplessness  Bargaining –People voice concerns and become involved  Depression –Feel helpless to change destiny  Testing –Confidence is built and can adjust  Acceptance –Embrace and work to support change

© , David Gadish, Ph.D.15 Conner’s Stages of Negative Responses Source: Conner, Daryl, Managing at the Speed of Change, Random House (1992).

© , David Gadish, Ph.D.16 Organization Change Process Build Sense of Urgency Create a Clear Tomorrow Develop a Migration Plan Reinforce the New Behavior Source: Belasco, James, Teaching the Elephant to Dance,

© , David Gadish, Ph.D.17 Implementing Change  Leadership Plus Facilitation  Get Right People Involved  Team Building  Secure Resources

© , David Gadish, Ph.D.18 Leadership Plus Facilitation  All levels participate to create value  Get other’s creativity, cooperation, support  Front line employees are closest to the work –Listen to their ideas –Consider alternatives –Envision how technology can enable solutions

© , David Gadish, Ph.D.19 Benefits of Getting Right People Involved  Benefits from creativity and innovation  Best people provide role models for others  Gains respect by virtue of talent involved  More likely to remain on budget and on time  Successful process become model for others  Achieved goal is respected

© , David Gadish, Ph.D.20 Characteristics of High Performing Teams  Clear Elevating Goal  Results-Driven Structure  Competent Team Members  Unified Commitment  Collaborative Climate  Standards of Excellence  External Support and Recognition  Principled Leadership

© , David Gadish, Ph.D.21 Secure Resources  Focus resources on accomplishing strategy –Time –People –Money  Careful study of required resources  Ensure allocation of resources

© , David Gadish, Ph.D.22 Stakeholder Roles in Change  Change sponsor –Top management initiating program of change  Change agent or champion –Responsible for implementing change in middle- or lower-level management  Change target –Individuals or groups directly affected by change  Influence –Help target through process of change

© , David Gadish, Ph.D.23 Reasons People Resist Change  Loss of Face  Loss of Control  Excess Uncertainty  Surprise  “Difference” Effect  “Can I Do it?”  Ripple Effect  More Work  Past Resentments  Real Threats  Competing Commitments

© , David Gadish, Ph.D.24 Refreezing  Institutionalize processes and systems to become organizational norm  Information system needs to be adequate  Managers may need to change old habits  May threaten individual’s power, status, income

© , David Gadish, Ph.D.25 Understanding Resistance to Change  Listening to what people are and are not saying  Communicate so people feel knowledgeable and involved  Address concerns so real issues of resistance are surfaced and managed  Apply 80/20 rule putting effort into preparing for the change

© , David Gadish, Ph.D.26 80/20 Rule  Determine people in target population who are in top 20 percent of business producers  Spend 80 percent of time for people issues with top 20 percent  Spend 80 percent of personnel development budget on top 20 percent  Study work and determine what 20 percent of job results in 80 percent of returns  Train assistant to do remaining 80 percent  Enlist top 20 percent to do on-the-job training for next 20 percent

© , David Gadish, Ph.D.27 Overcoming Resistance to Change  Expect resistance  Find the resistance  Understand the motivations of resistance  Use reward system/incentives  Build in benefits to the users  Knowledge  Intervention techniques  Indoctrination and coercion

© , David Gadish, Ph.D.28 Why Improvement Efforts Fail Source: Brynjolfsson, Erik,

© , David Gadish, Ph.D.29 Elements of Planning Change  Guidance, Structure, and Process  Shared Vision  Backers and Supporters  Symbols, Signals, and Rewards  Standards, Measures, and Feedback  Local Participation and Innovations  Policy and Systems Review  Communication, Education, and Training

© , David Gadish, Ph.D.30 Elements of Planning Change

© , David Gadish, Ph.D.31 Mistakes in Managing Change  Management assumes employees know how to behave as company wants  Do not allow for change to take time and persistence  Trapped in thinking if focused, cooperation of target population is ensured  Do not plan adequate time for managerial tasks  Resort to coercive management techniques  Believe change will increase shareholder value

© , David Gadish, Ph.D.32 Localization Barriers  Languages  Cultures, values  Business practices  Taste  Competitors  Proximity to local customer  Risk  Cost  Pace  Food  Authority  National and regional protectionism  Laws, regulations, tariffs  Communications weakness  Labor unions  Transportation  Quality of labor  New technology  Organization

© , David Gadish, Ph.D.33 Tasks for Focus Outside Country  Research on stakeholder’s city and country  Learn pronunciation of names  Research political, economic, religious, social, intellectual, and artistic contexts  Learn customs and taboos  Seek advice from others who have interacted from same location  Find out about individuals  Assess own prejudices about people/location

© , David Gadish, Ph.D.34 Cross-Cultural Stereotypes

© , David Gadish, Ph.D.35 “Who Moved My Cheese?” Lessons  Change happens  Anticipate change  Monitor change  Adapt to change quickly  Change  Enjoy change  Be ready to change quickly and enjoy it again

36 Chapter 11 IT Governance Managing the Information Technology Resource

© , David Gadish, Ph.D.37 Chapter Outline  Definition of IT governance  IT governance as issue for organizations  Need for formal IT governance mechanisms  IT governance alternatives  Forms of governance and leadership roles in cross-functional initiatives  Steering committees  Prioritizing projects and assessing risks  Global considerations

© , David Gadish, Ph.D.38 IT Governance  Power –Who makes these decisions  Alignment –Why they make these decisions  Decision Process –How they make these decisions

© , David Gadish, Ph.D.39 Symptoms of Misalignment  Poor business understanding and rapport  Competitive decline  Frequently fired IT managers  High turnover of IT professionals  Inappropriate resources  Frequent IT reorganizations  Lack of executive interest  Lack of vision/strategy  No communication between IT and users

© , David Gadish, Ph.D.40 Symptoms of Misalignment  Ongoing conflicts between business and IT  Unselective outsourcing of IT function  Productivity decrease  Projects not used, canceled, late  Redundancies in systems development  Absent systematic competencies  Systems integration difficult  Unhappy users/complaints

© , David Gadish, Ph.D.41 Definitions of IT Governance  Operating model for how organization will make decisions about use of IT  Involves external relationships for obtaining IT relationships  Involves authority, control, accountability, roles, and responsibilities  Involves processes and methods for making decisions  Involves judgments about how well use of IT enables strategic direction

© , David Gadish, Ph.D.42 Business Case Issues  Balance all measurements  Balance impact on –Customers/clients –Processes –People –Finance

© , David Gadish, Ph.D.43 Organizations Just Do It  Maintenance –Fixing application problems  Government legislation requirements to ensure compliance  CEO or senior executive idea receives top priority  Competitor’s innovative application of IT

© , David Gadish, Ph.D.44 Enablers to Alignment  Senior executive support for IT  IT involved in strategy development  IT understands the business  Business-IT partnership  Well-prioritized IT projects  IT demonstrates leadership

© , David Gadish, Ph.D.45 Inhibitors to Alignment  IT/business lack close relationships  IT does not prioritize well  IT fails to meet commitments  IT does not understand business  Senior executives do not support IT  IT management lacks leadership

© , David Gadish, Ph.D.46 Why Have Governance  Insufficient resources to meet commitments  Unreliable delivery schedules  Lack of focus on daily operations  Reduced quality of delivered projects  Potential for working on wrong things  Business functions move in own IT direction to satisfy own requirements  Chaotic/nonstandard infrastructure  Poor communications and relationships with IT/Business

© , David Gadish, Ph.D.47 Fulfilling IT Promise to Business  Decisions about IT use made jointly  Develop mutual and agreed-upon expectations  Help senior business management understand costs and risks  Provide IT capabilities required to implement decisions  Monitor and measure value of IT investments  Help senior business management understand it is ongoing process

© , David Gadish, Ph.D.48 Governance Alternatives  Budget  Career crossover  CIO-CEO  Communicate/market/negotiate  Competitive enabler/driver  Education/cross-training  Liaison  Location

© , David Gadish, Ph.D.49 Governance Alternatives  Organization –Centralized, Decentralized, Hybrid  Partnership/Alliance management  Process  Shared risks, responsibilities, reward/penalties  Steering committees  Value Measurement

© , David Gadish, Ph.D.50 Steering Committees  Strategic  Tactical  Operational  Clearly state business role of IT  Identify alignment between organization vision and IT vision  Establish principles for investing in IT  Establish ethical guidelines and policies  Establish architectural principles and standards  Establish goals and measurements for assessment

© , David Gadish, Ph.D.51 Categories of Governance Alternatives  Governance based on organization structure  Governance based on processes  Governance based on human relationships

© , David Gadish, Ph.D.52 Forms of Governance  Govern cross-functional initiatives by: –Assembling matrixed project team –Guidance and assistance provided by corporate IT management –Recognizing human resources and intellectual capital are geographically dispersed,

© , David Gadish, Ph.D.53 Forms of Governance and Leadership Roles

© , David Gadish, Ph.D.54 Effective IT Steering Committee  Business Executive Committee  CIO  Chief Technology Officer  Divisional Business Heads  Head of Information Systems/Networking

© , David Gadish, Ph.D.55 Considerations of Steering Committee  Bureaucracy  Career Building  Communication  Complex Decisions  Influence/Empowerment  Low-Hanging Fruit/Quick Hits  Marketing  Objectives/Measurements

© , David Gadish, Ph.D.56 Considerations of Steering Committee  Ownership/Accountability  Priorities  Relationships  Right Participants  Share Risks  Structure, Facilitator

© , David Gadish, Ph.D.57 Group Projects Based On:  Necessity, Opportunity, Desirability  Impact on organization  Likelihood of occurrence  Risk  Resource demands  Anticipated return

© , David Gadish, Ph.D.58 Priorities  Highest impact on firm  Highest likelihood of occurrence  Lowest combined attributes of risk  Least amount of resources demanded  Highest anticipated return

© , David Gadish, Ph.D.59

© , David Gadish, Ph.D.60 Technology Risk Mitigation  Subject matter experts available  Establish emerging technology scanning function  Employ already known technology  Perform pilot projects studies  Attend conferences, read professional journals  Maintain professional memberships  Implement professional certification/study programs  Participate in master’s degree/master’s certification

© , David Gadish, Ph.D.61 Development Risk Mitigation  Modularize projects  Employ project management with prior experience  Establish development life cycle methodology  Reduce scope of projects  Follow “best practices” model for software engineering

© , David Gadish, Ph.D.62 Organizational Risk Mitigation  Secure executive sponsorship  Joint accountability of business/IT management  Early and continuous involvement of stakeholders  Establish formal change management program  Establish formal communication channels  Establish formal and well-understood processes  Establish formal escalation processes

© , David Gadish, Ph.D.63 Market Risk Mitigation  Reduce initial scope of geographic coverage  Employ SME’ and consultants for expert advice  Documentation and formal sign-off on customer requirements  Establish customer “knowledge base”

© , David Gadish, Ph.D.64 Global Considerations  Global Exporter  Multinational  Multilocal  Transnational or Metanational

© , David Gadish, Ph.D.65 Source: Daniels, J. and Caroline, N., in J. Luftman, ed., Competing in the Information Age: Strategic Alignment in Practice.” Oxford University Press (1996).

© , David Gadish, Ph.D.66 Do’s of Vendor Management  Establish vendor management team  Monitor service levels and end-user satisfaction  Track service/product market  Continually renegotiate contract  Keep business units accountable and involved  Think ongoing relationship  Use vendor’s expertise for solutions

© , David Gadish, Ph.D.67 Don’ts of Vendor Management  Try to manage a vendor without adequate expertise available  Ignore need to establish service level agreements  Fail to establish firm accountability  Understaff vendor management function  Rely solely on vendor’s expertise  Forget to keep eye on vendor reputation and profitability

© , David Gadish, Ph.D.68 Contract Renegotiation Processes  Contract expiration  Material breach in contract by vendor  Major change in organization’s management or industry  Significant change in price for same services  New technology

© , David Gadish, Ph.D.69 Outsourcing Considerations  Do: –Ask for and check references –Assess culture of outsourcing partner –Evaluate multiple options –Get it in writing –Metrics matter –Open kimono –Pick outsourcing partner with strong partner network

© , David Gadish, Ph.D.70 Outsourcing Considerations  Don’t: –Buy on price alone –Overlook reference-checking process –Use price contract without consideration of long-term consequences –Forget to provide for contingencies –Communicate via committee –Hand over project management –Rely on marquee references –Single-source –Let head be turned by goodies

© , David Gadish, Ph.D.71 Insource or Outsource?

© , David Gadish, Ph.D.72 Outsourcing RFP  Objectives and Scope  Background  Technology Vision  Services Requested  Transition/Migration Services  Performance Requirements  Resources  Requirements for Vendor Proposal  General Terms and Conditions for Proposal  Proposal Evaluation

© , David Gadish, Ph.D.73

© , David Gadish, Ph.D.74 Next Week’s Agenda  IT Business Communications (Ch-12)  Measuring, Reporting, and Controlling (Ch-13)