Managing IT Capital Investment Pertemuan Matakuliah: A0774/Information Technology Capital Budgeting Tahun: 2009

Manage IT as a Strategic Asset Partnering for Success The Importance of Relationships Investing in Values

Manage IT as a Strategic Asset Partnering for Success –IT needs to be organized to rapidly respond to the needs of individual business groups The Importance of Relationships Investing in Values

Manage IT as a Strategic Asset Partnering for Success The Importance of Relationships –Competence –Mutual respect –Credibility –Business knowledge and perspective –Communication Investing in Values

Manage IT as a Strategic Asset Partnering for Success The Importance of Relationships IT is no longer a cost center and a growing number of highly successful firms are recognizing this. IT is an investment and should be managed as such to increase revenue and profits. However recognizing and managing IT as an investment rather than a cost center is a difficult task and requires a significant cultural shift in most companies Investing in Values

Manage IT as a Strategic Asset Partnering for Success The Importance of Relationships Investing in Values –Consistent –Strategic –Adaptable –Repeatable under dynamically changing circumstances

Manage IT as a Strategic Asset Partnering for Success The Importance of Relationships Investing in Values Values are guiding principles, basic beliefs that are fundamental assumptions on which all subsequent actions are based. Values are the essence of an individual or group and provide guidelines by which to make consistent decisions.

Investing in Actions

Investing in Values

Partnering Business Cases Business Teams Partnering Within IT Operating Principles

Partnering Business Cases Business Teams Partnering Within IT Operating Principles

Business Cases Are the instruments through which project priorities are created and set by a joint business unit/technology teams. Are required to address questions of enterprise business goals and technology goals Process forces individuals and organizational units to engage in a continuing dialogue.

Business Cases Alignment with business objectives is a natural consequence of jointly developed business cases for projects that fall within the business’s strategic plan. Approval of the business case moves the business agenda forward and creates partnership and understanding during the process A not insignificant objectives of this process is the respect of the business for IT’s understanding of the business and its strategic needs.

Business Teams Represent the fundamental relationship for –Identifying –Specifying –Prioritizing –Creating IT value

Business Teams

Partnering Within IT Every member of a department needs to understand and be kept up to date on any information that relates to what they are doing and what their partner are doing. Delegation of authority to the lowest practical level allows new ideas to be tested constantly on the front lines in multiple situations simultaneously. Many opportunities are recognized only at the front lines. This opportunities may be fleeting if not recognized at the source when they occur.

Partnering Within IT The evolution of IT as a business partner

Partnering Within IT Evolution of Alignment Necessary EvilService ProviderBusiness Partner INFORMATION TECHNOLOGY Maintenance Customer service oriented Performance management Metrics Standards Strategic Asset Aligned with the business APPLICATIONS DEVELOPMENT Back office Productivity tools Management information Back office Revenue enabling Product creation Workflow management PERSONAL RPODUCTIVITY SERVICES Nonexistent Workstation Support Training Help Desk Desktop Development Education Integrated support Personal relationship APPLICATION ARCHITECTURE Dedicated by mainframe O/S No application architecture group needed Discipline and consistency of mainframe world is unavailable as an enterprise solution Systems integration shows the need for an application architecture Application architects only available through consulting firms and systems integrators Strategic architecture includes adaptable application architecture Aligned with the business Operating efficiencies Leveragability Speed to market Cost effective Web enabled

Operating Principles Managing IT as a Cost Center vs Managing IT as an Investment Cost Center ManagementManaging IT as an Investment Business throws projects requirements over transom (often as solutions masquerading as requirements) Business teams including IT as a "business" work together to specify requirements Priority set by user intuition Jointly developed business case used to determine priority Acceptations testing done by users when time permitted Acceptance Testing done to exacting standards and scheduled with accountabilities and deliverables Infrastructure as a reactive afterthought Strategic architecture/infrastructure as a competitive advantage Application development as an art Application development as a science (discipline and rigor)

Operating Principles Cost Center ManagementManaging IT as an Investment Infrastructure as overheadIT Infrastructure as an Internal Service Provider Task related communication (isolated)Relationships Accept user requirements verbatim. Even worse, creating user requirements without the user Ask the right questions and jointly specify requirements No iterative requirements documentPrototypes and proof of concepts Projects belong to IT only All projects require business units champions and business project champions Technology for technology's sakeAlignment with business objectives Reactionary/task orientedProactive/relationship-objectives

Operating Principles Cost Center ManagementManaging IT as an Investment Working in silosTeamwork/synergy MistrustCredibility IT for IT's sakeCustomer-centric Lack of metricsPerformance metrics BureaucraticAdaptable Follow ordersCreative-Solutions Authoritarian decision makingDecentralization of decision making Cost containment Build for efficiency and effectiveness, architect for growth and business alignment Venders managed by the usersVendors managed by IT Vendor invoices go to the userVendor invoice go to IT