Paradigm Shift I. Computing Paradigm Shift II. Business Paradigm Shift Dr. Chen, The Challenge of the Information Systems Technology TM -1

I. Computing paradigm Users Networks ComputersNetworks Users Computers

II. Business Paradigm Shift l l Open Systems l l Proprietary Systems l l Mainframes New Enterprise, Expert Systems BPR, Paperless Office Automated Enterprise, Back Office Automation On-Line Transaction Processing Legacy Enterprise, Manual Back Office Manual Front Office l l Client/Server, Multimedia l l Distributed Computing l l Object-Orientation 1970s 1960s 1980s 1990s and Beyond

Chapter 2 Manageable Trends Strategic Impact of IT Integrating Changing Technology Platforms Assimilating Emerging Technologies Sourcing Policies for the IT Value Chain Applications Development Process Partnership of Three Constituencies Dr. Chen, The Trends of the Information Systems Technology TM -4 N

Theme 1: Strategic Impact Operational/manufacturing impacts –cost –coping with complexity –coordination –integration of technology into product Marketing impacts –choice of product –service (e.g., order confirmation, tracking) –value-added information –product customization Dr. Chen, The Trends of the Information Systems Technology TM -5

Defense Consulting Banks Airlines Retail Paper High fashion High Low High Low Figure 2-1 IT Impact: Position of Industry Leaders Information technology impact on marketing (customer focus, reaction to change, provision of differentiation. Etc.) Information technology impact on operations (cost/complexity management, coordination, integration, etc.) Dr. Chen, The Trends of the Information Systems Technology TM -6

CI SW CHEM AA UA Citi High Low High Low Figure 2-2 IT Impact: Position of Key Players in Airlines and Banks Information technology impact on marketing (customer focus.) Information technology impact on operations Key: AA - American Airlines UA - United Airlines Citi - First National Citibank CHEM - Chemical Bank of NY CI - Continental Illinois SW - Southwest Airlines Dr. Chen, The Trends of the Information Systems Technology TM -7

HighLow Marketing gap vs. industry leader Operations gap vs. industry leader Figure 2-3 Targeting IT- Based Investment (as Compared with Industry Leaders Increase integrative capacity Catch up Maintain advantage Increase flexibility, responsiveness/ Differentiate products and services A Contingency Approach to IT Use What four competitive investment strategies used when organizations are comparing their positions with industry leaders? High Dr. Chen, The Trends of the Information Systems Technology TM -8

What four IT environments are created by variation in strategic impact of existing systems and strategic impact of the applications development portfolio? A Contingency Approach to IT Management Dr. Chen, The Trends of the Information Systems Technology TM -9

POLICIES INFORMATION TECHNOLOGY STRATEGIES Theme 2: Integrating Changing Technology Platforms How to Capitalize on the real Business Opportunities? Integrating... ORGANIZATION Dr. Chen, The Trends of the Information Systems Technology TM -10

Who should be Involved in the Project Development? TM -11 Consists of... PROJECT MEMBERS TECHNICAL PROFESSIONALS USERS MANAGEMENT Dr. Chen, The Trends of the Information Systems Technology

Theme 2: Integrating Changing Technology Platforms Advances in –Processing power –Data storage –Communications Integration of –Computing –Telecommunications –Office support –Broadcasting Reasons –Physical interconnections –Development involves multiple technologies –Opportunities for integration Dr. Chen, The Trends of the Information Systems Technology TM -12

Theme 3: Assimilating Emerging Technologies Phase 1: Technology Identification and Investment –Identify technology of interest –Pilot project (usually in IT) to test Phase 2: Technological Learning and Adaptation –Users test technology in pilot projects –Will the technology make us more effective? Phase 3: Rationalization / Management Control –Develop support systems and controls for efficient use of technology Phase 4: Maturity / Widespread Technology Transfer –Spread technology throughout the organization 1. Innovation (Technical-oriented) 2. Learning (User-oriented) 3. Rationalization 4. Maturity Dr. Chen, The Trends of the Information Systems Technology TM -13 N

Theme 4: Sourcing Policies for the IT Value Chain What is outsourcing? Dr. Chen, The Trends of the Information Systems Technology TM -14 The phenomenon that appeared in the information systems field in the late 1980s was outsourcing, which means turning over a firm's computer operations, network operations, or perhaps other information systems functions to a vendor for a specified time - generally, at least for three years.

OUTSOURCING CONTRACTING: COMPUTER CENTER OPERATIONS TELECOMMUNICATIONS NETWORKS APPLICATION DEVELOPMENT TO EXTERNAL VENDORS * Dr. Chen, The Trends of the Information Systems Technology TM -15

Why Outsoucing? Outsourcing has become an option that most CIOs need to consider to satisfy their management that their operation is being run efficiently, effectively, and economically Dr. Chen, The Trends of the Information Systems Technology TM -16

The Driving Forces Behind Outsourcing Two drivers – focus 3on core business – value 3shareholder Dr. Chen, The Trends of the Information Systems Technology TM -17

Outsourcing As an Economic Strategy Core competencies Which sources are less expensive How much control is needed Dr. Chen, The Trends of the Information Systems Technology TM -18

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The Expanding Scope of Vendor Options ÊTo buy professional services ËTo buy a product ÌTo buy a transaction ÍTo use a systems integrator - project based ÎOutsourcing - time based QualityProducts/ServicesSpeedCost Dr. Chen, The Trends of the Information Systems Technology TM -20

The Expanding Scope of Vendor Options ÊTo buy professional services ËTo buy a product ÌTo buy a transaction ÍTo use a systems integrator - project based ÎOutsourcing - time based QualityProducts/ServicesSpeedCost Dr. Chen, The Trends of the Information Systems Technology TM -21

When to Outsourcing? Which IS activities are strategic to our company's business? Will outsourcing save us at least 15 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? Dr. Chen, The Trends of the Information Systems Technology TM -22

What Activities that Management should not Outsource? strategy policy role the decisions about when to introduce information systems into the organization the management of the vendor when the system (IS) department is well managed, and where IT is a core competency Dr. Chen, The Trends of the Information Systems Technology TM -23

OUTSOURCING BENEFITS Economy Service quality Predictability Flexibility Making fixed cost variable Freeing up human resources for other projects Freeing up financial capital Dr. Chen, The Trends of the Information Systems Technology TM -24

CONS OF OUTSOURCING Loss of control Vulnerability of strategic information Dependency Dr. Chen, The Trends of the Information Systems Technology TM -25

Outsourcing Recommendations Write shorter contracts - less than 5 years Subcontract control Selective outsourcing Dr. Chen, The Trends of the Information Systems Technology TM -26

Desirable Outcomes and Implementation Issues On-time On-budget Full functionality user acceptance Favorable cost-to-benefits ratio Low maintenance Scalability Integration with other systems Reusability Dr. Chen, The Trends of the Information Systems Technology TM -27

Theme 4: Sourcing Policies for the IT Value Chain Why Make? –Custom to needs –Confidentiality –Insulate from external vulnerability –Easy to adapt –Leading-edge competence Why Buy? –Access to specialized skills –Cost –Staff utilized for most important products –Personnel costs –“Professional” management of service organization –Proliferation of services available Dr. Chen, The Trends of the Information Systems Technology TM -28

Theme 5: Applications Development Process SYSTEM DEVELOPMENT PROCESS LIFE CYCLE ()SYSTEM DEVELOPMENT PROCESS LIFE CYCLE (SDLC) Dr. Chen, The Trends of the Information Systems Technology TM -29

SYSTEMS ANALYSIS SYSTEM DESIGN PROGRAMMING TESTING CONVERSION PRODUCTION & MAINTENANCE * SYSTEM DEVELOPMENT (Life Cycle) PROCESS Dr. Chen, The Challenge of the Information Systems Technology TM -30

SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION SYSTEMS ANALYSIS IDENTIFY PROBLEM(S) SPECIFY SOLUTIONS ESTABLISH INFORMATION REQUIREMENTS SYSTEMS DESIGN CREATE LOGICAL DESIGN SPECS CREATE PHYSICAL DESIGN SPECS MANAGE TECHNICAL REALIZATION OF SYSTEM PROGRAMMINGTRANSLATE DESIGN SPECS INTO PROGRAM CODE Dr. Chen, The Challenge of the Information Systems Technology TM -31

SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION TESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST CONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF PRODUCTION & OPERATE SYSTEM MAINTENANCE EVALUATE SYSTEM MODIFY SYSTEM Dr. Chen, The Challenge of the Information Systems Technology TM -32

Theme 5: Applications Development Process Design –User request or IT/user proposal –Analysis –(Logical) Design Construct –Detailed design –Coding –Documentation –Testing –Acquisition Dr. Chen, The Trends of the Information Systems Technology TM -33

Theme 5: Applications Development Process (Cont.) Implement –Redesign –Install –Train –Systems test Operate –Acceptance test –Retrain Maintain –“Modernization” –Continuous improvement Dr. Chen, The Trends of the Information Systems Technology TM -34

Dr. Chen, The Challenge of the Information Systems Technology TM -35 Consists of... Management IT Management USERS Management GENERAL Management Theme 6: Partnership of Three Constituencies

IT Management –Pool of technical skills –Technology scan –“Professional” development –Process reengineering User Management –Movement of operational responsibilities to IT –Availability of outside services –User IT sophistication and experience General Management –Must balance IT / User issues –Executives balance IT/strategies Dr. Chen, The Trends of the Information Systems Technology TM -36

SPECTRUM OF ORGANIZATIONAL CHANGE AUTOMATION RATIONALIZATION REENGINEERINGPARADIGM SHIFT ORGANIZATIONAL CHANGE Dr. Chen, The Trends of the Information Systems Technology TM -37

SPECTRUM OF ORGANIZATIONAL CHANGE AUTOMATION: Using technology to perform tasks efficiently / effectively RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks BUSINESS PROCESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology PARADIGM SHIFT Dr. Chen, The Trends of the Information Systems Technology TM -38

What is Business Process and Business Reengineering? Business process: A set of logically related tasks performed to achieved a defined business outcome Business reengineering means radically changing how people work - changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs. Dr. Chen, The Trends of the Information Systems Technology TM -39

1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process BUSINESS REENGINEERING STEPS: Dr. Chen, The Trends of the Information Systems Technology TM -40

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