McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-1 BUSINESS DRIVEN TECHNOLOGY Chapter Five: Organizational Structures that Support Strategic Initiatives

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-2 LEARNING OUTCOMES 5.1 Compare the responsibilities of a chief information officer (CIO), chief technology officer (CTO), chief privacy officer (CPO), and chief security officer (CSO) 5.2 Explain the gap between IT people and business people and the primary reason this gap exists 5.3 Define the relationship between information security and ethics

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-3 CHAPTER FIVE OVERVIEW Organizational employees must work closely together to develop strategic initiatives that create competitive advantages Ethics and security are two fundamental building blocks that organizations must base their businesses upon

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-4 IT ROLES AND RESPONSIBILITIES Information technology is a relatively new functional area, having only been around formally for around 40 years Recent IT-related strategic positions: – Chief Information Officer (CIO) – Chief Technology Officer (CTO) – Chief Security Officer (CSO) – Chief Privacy Officer (CPO)

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-5 IT ROLES AND RESPONSIBILITIES Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives Broad CIO functions include: – Manager – ensuring the delivery of all IT projects, on time and within budget – Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization – Communicator – building and maintaining strong executive relationships

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-6 IT ROLES AND RESPONSIBILITIES What concerns CIOs the most

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-7 IT ROLES AND RESPONSIBILITIES Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT Chief Security Officer (CSO) – responsible for ensuring the security of IT systems Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-8 THE GAP BETWEEN BUSINESS PERSONNEL AND IT PERSONNEL Business personnel possess expertise in functional areas such as marketing, accounting, and sales. IT personnel have the technological expertise. This typically causes a communications gap between the business personnel and IT personnel

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5-9 FUNDAMENTAL SUPPORT STRUCTURES – ETHICS AND SECURITY Ethics and security are two fundamental building blocks that organizations must base their businesses on to be successful In recent years, such events as the Enron and Martha Stewart fiascos along with 9/11 have shed new light on the meaning of ethics and security

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Ethics Ethics – the principles and standards that guide our behavior toward other people Privacy is a major ethical issue – Privacy – the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Ethics Ethical issues stemming from Technology Advances

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Ethics One of the main ingredients in trust is privacy For e-business to work, companies, customers, partners, and suppliers must trust each other

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Security Organizational information is intellectual capital - it must be protected Information security – is the protection of information from accidental or intentional misuse by persons inside or outside an organization E-business automatically creates tremendous information security risks for organizations

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Security Organizational spending on information security

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Security Computer Security Expenditures/Investment

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved OPENING CASE STUDY QUESTIONS How Levi’s Got Its Jeans into Wal-Mart 1.Predict what might have happened to Levi’s if its top executives had not supported investments in IT 2.David Bergen compiled a cross-functional team of key managers. Analyze the relationships between Levi’s three business areas and determine why Bergen chose them to be a part of his cross- functional team 3.Explain why it would be unethical for Wal-Mart to sell Levi’s jeans sales information to another jeans manufacturer 4.Evaluate the ramifications for Wal-Mart’s business if it failed to secure its partner’s information and all sales information for all products were accidentally posted to an anonymous Web site.

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER FIVE CASE Customer's Customer Relationship Management Organizations should implement effective solutions for not only their own organizations but also their customers’ organizations Ticketmaster wants to sell to its customer’s customer Ticketmaster wants to sell the tickets to a Knicks game at Madison Square Garden and book dinner at a restaurant near the Garden This could take revenue away from Madison Square Garden’s lucrative concession sales

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER FIVE CASE QUESTIONS 1.Describe the dilemma an organization faces when attempting to access its customer’s customers 2.Compare customer relationship management and customer’s customer relationship management 3.Explain why directly accessing a customer’s customer is considered unethical 4.Assess the adverse impact to Ticketmaster if it failed to ensure the security of its customer information such as credit card numbers

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved BUSINESS DRIVEN TECHNOLOGY UNIT ONE CLOSING

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Unit Closing Case One Motivating and Rewarding Employees 1.Using Porter’s Five Forces determine if you would enter the EIM market. Provide support for your answer 2.Explain why you think the EIM market is expected to grow so significantly over the next few years 3.Describe how managers can change an organization’s efficiency and effectiveness by being able to view incentive plans online 4.Explain why EIM software can have a direct impact on an organization's bottom line

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Unit Closing Case One Motivating and Rewarding Employees 5.Summarize how an EIM can impact a company’s value chain 6.Define ethics and explain why it is unethical for people to fail to report when they are overpaid for their sales efforts 7.Explain why an organization would want to ensure that its incentive program information is highly secure

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Unit Closing Case Two Delta Airlines Plays Catch-Up 1.What business risks would Delta be taking if it decided not to catch up with industry leaders in using IT to gain a competitive advantage? 2.What competitive advantages can a company reap it if is the first- mover in introducing an innovative IT system? What are the pros and cons of being a fast follower? 3.What other industries could potentially benefit from the use of yield management systems? 4.Explain how American and United used customer information to gain a competitive advantage and how the competitive advantage affected their value chains

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved Unit Closing Case Two Delta Airlines Plays Catch-Up 5.Select two efficiency and effectiveness metrics that Delta can implement to measure the success of its gate and boarding application 6.Delta’s board of directors questioned the need to spend additional funds on IT when the airline was under great pressure to reduce its costs. Determine a strategy for how the CEO, CIO, CTO, and CPO can work together to ensure IT projects are supported by both the business and IT departments 7.Explain how an airline can use information technology to ensure the security of its airplanes