CISB444 - Strategic Information Systems Planning Chapter 7 - Strategic Management of IS/IT : Organising and Resourcing

Course Overview Chapter 7 considers a wide range of aspects related to structuring and organising IS resources and the governance of IS/IT activities CISB414 - Strategic Information Systems Planning 2

Main Topics Organising strategies for IS/IT management Framework guiding action Provisioning of IS/IT resources Bridging the gap: Improving the contribution of the IS function CISB414 - Strategic Information Systems Planning 3

Introduction Earl (1996) notes that it is the ‘organisational issues in the strategic management of IT that matter most’. Many research highlights that what distinguishes organisations that are successful with IT is not technical sophistication, but how they manage IS/IT strategy. In order for organization to exploit IS/IT effectively over an extended period, IS/IT require sound and consistent strategic management. CISB414 - Strategic Information Systems Planning 4

The Purpose For managing investments in IS/IT, to deliver the maximum value in terms of benefits to the business; For managing the data, information and knowledge of the organisation to ensure that its business value is fully exploited and protected For managing the acquisition, deployment and utilisation of IT, to the benefits of the organisation and relationships with technology and service suppliers For organisational management of IS/IT related resources, the activities they perform and the governance and administration of IS/IT CISB414 - Strategic Information Systems Planning 5

The Strategic Management Requirement Strategic management is a combination of formal planning, creativity, innovation, informal thinking, and opportunism, all must be exploited and integrated. This set of activities also requires some feedback or control mechanism. Sometimes, the strategy has to be revisited to accommodate for internal/external influences CISB414 - Strategic Information Systems Planning 6

Avoiding the Disintegration of the Applications Portfolio Many organisations have suffered from the lack of coordination in IS/IT management, which can cause disintegration of applications portfolio. In the longer term, this failure can have 3 major effects: – The systems that are developed and implemented do not meet overall business needs; – Resources are misused – Strategy formulation is essentially a retrofitting process, producing enormous rework CISB414 - Strategic Information Systems Planning 7

Avoiding the Disintegration of the Applications Portfolio The cause can usually be attributed to 3 main reasons: – Lack of alignment between the business and IS strategies – Uncoordinated management of IS demand and IT supply – Over-centralisation or decentralisation of responsibility regarding IS/IT investments with lack of mechanisms to ensure coherence across centralised and devolved IS/IT decisions and activities CISB414 - Strategic Information Systems Planning 8

Organising Strategies for IS/IT Management Factors to consider (based on the approaches adopted for information, application, and technology management): – Overall organisational alternatives and the position of IS functions in the organisation – Organising options (structure and resource configuration) – Allocation of decision rights (centralisation versus devolution) – Resourcing strategies (both insourcing and outsourcing) It is most critical that the IS function is organised to satisfy its customers (internal and external) requirements as well as to manage itself effectively. CISB414 - Strategic Information Systems Planning 9

Centralisation versus Decentralisation Centralisation or decentralisation: getting it wrong can be very costly, but how can an organisation know when it is right? Many examples shows that swings between extreme centralisation and decentralisation proves unsuccessful because some things are best centralised and others devolved in the units. CISB414 - Strategic Information Systems Planning 10

Centralisation versus Decentralisation Example: in a decentralised engineering group, a very centralised IS function was failing to provide a satisfactory service. The management rapidly devolve IS/IT resources to the business units – Systems development virtually ceased and support for existing systems was adversely affected. – Many of the best people left and at no site was there sufficient resource to achieve major developments, while local management had no experience of running and IS group – Gradually it was realised that some aspects of IS/IT should be recentralised to avoid duplicated expertise, avail of synergies, etc. and some aspects, reinforced by user resource investments should remain in the units. CISB414 - Strategic Information Systems Planning 11

Centralisation versus Decentralisation: Ideal Organisational Arrangement for IS/IT Resources A number of factors to consider: – The organisation’s dependence on IT – Its stage of maturity in terms of its application portfolio – The geography of the enterprise, especially for organisations with a global presence – Its business diversity and rate of change of the types of business and competitive pressures in each business – The economics of resourcing, obtaining and deploying skills CISB414 - Strategic Information Systems Planning 12

Centralisation versus Decentralisation Study by La Belle and Nyce (1987) concluded: Business units should be responsible for applications (decentralised) : – Architecture – Development – Operation Certain areas should be centralised: – Telecommunications – Hardware and software architecture – Information architecture – Risk management and security – Shared services and utilities – Human resources CISB414 - Strategic Information Systems Planning 13

Centralisation versus Decentralisation Other factors to consider: – Geographically dispersion level of the organisation – The degree to which information is a shared business resource – How closely technologies need to be coordinated In addition, where there are potential benefits to the organisation as a whole that are greater than the sum of the parts (of the business units), then some planning and coordination at the centre can add value to ensure that these additional benefits are achieved. CISB414 - Strategic Information Systems Planning 14

Imperatives for the Management of IS/IT CISB414 - Strategic Information Systems Planning 15

Imperatives for the Management of IS/IT CISB414 - Strategic Information Systems Planning 16

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Classifying Sourcing Options Transaction Style : Refers to one-time or short-term contracts Relationship Style Refers to less detailed, often incentive based contracts, expected that customer and vendor will do a long term business CISB414 - Strategic Information Systems Planning 24

Classifying Sourcing Options Resource: Organization buy vendor resources, but manage the use of the resources in-house Result Style Vendor manage the delivery of the IT activity, using whatever resources necessary to provide customer with the specified results CISB414 - Strategic Information Systems Planning 25

Classifying Sourcing Options This analysis leads to 4 distinct contract types or sourcing strategy. Only 2 of them are strictly outsourcing contracts – contract out and preferred contractor) CISB414 - Strategic Information Systems Planning 26

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Scenario BlackGold Holdings, a national oil and gas company is looking into improving its IT service to the whole company nationwide. In order to do so, it has been identified that a new Intranet system consisting of a number of applications is needed to support the day to day internal business process for its users ranging from different operating units such as Exploration and Production, Sales and Marketing, Research and Development, Finance, HR etc. To optimize the performance of the new Intranet, a revamp on the company’s clients system (desktop/notebooks used by all employees) is required. Currently the users’ machines run on MS XP and the company is looking into upgrading the operating system to ensure smooth running of the new Intranet system. Investments are needed not only for the development of a new applications portfolio, but also for a revamp on the hardware system. CISB414 - Strategic Information Systems Planning 31

Question The management agrees that outsourcing the services will be a good idea. Discuss with your team the following questions: 1.Why would the management think that outsourcing will be a good approach in handling the above project? (p.g 22) 2.There are different strategies in outsourcing. What are they? Discuss which strategy/strategies is/are suitable for the above project. (p.g ) 3.What are the possible challenges faced in outsourcing IT/IS (p.g. 23) CISB414 - Strategic Information Systems Planning 32