1. Managing the Information Technology Resource Jerry N. Luftman
Chapter 1 Introduction
Managing the Information Technology Resource
Jerry N. Luftman

2. Chapter Outline Evolution of role of IT
Role of IT management versus other business functions
View of IT by IT executives
How to better manage IT resources
Key issues in the management of IT
Importance of successfully managing IT

3. Importance of IT and the CIO
IT is important and necessary for a successful organization
Successful management of IT is necessary for competitive advantage

4. 3 Strategies for Competitive Advantage
Cost leadership
Competing with lower costs
Product differentiation
Competing with value
Product focus
Competing by restricting one’s market

5. IT Management Categories
Strategic
Pertinent to long-term attainment of goals and business as a whole
Tactical
Needed to achieve strategic plans and goals to produce changes for success
Operational
Process and actions that must be performed on a day-to-day basis to maintain performance level

6. Additional Skills of IT Managers
Financial
Human Resource
Relationship Management
Legal
Governance
Marketing
Negotiating
Leadership

7. Critical Success Factors defined by John Rockart
“The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization’s efforts for the period will be less than desired.”
“Areas of activity that should receive constant and careful attention from management.”

8. Expanding Role of IT 3 Primary Computing Eras
Mainframe Computer Era
PC Computing Era
Pervasive Computing

11. Historical View of IT Initially for government/military use
Businesses used for financial automation
Data Processing was key function
Computers were costly and large in size
Not widely used

12. Historical View Cost decreased Size decreased
Use of personal computers increased
Business staff and IT staff began to interact
Technology issues increased
Networks, , and Internet became necessity

13. Role of IT No longer just serves a business
Integral in business strategy
Impacts every area of business
Complexity increases
Supports relationships among various parts of an organization
Responsible for the integration of information

14. Role of IT Today

15. A. IT as Enabler of E-Business
All aspects of IT are more externally visible
Serve as mediator among various functions
Disintermediation
Reintermediation
Hypermediation
Infomediation

16. Disintermediation Eliminates the middleman
Electronic stock trading (E*trade)
Forces focus on service differentiation
Failures: (Levi Strauss & Co.) (e-toys)

17. Reintermediation
Use of Internet to reassemble buyers and sellers in new ways
Allows negotiation of prices, warranties, quality, shipping
Example includes merging of banking, insurance, and other financial services
Auction sites (eBay: 30M users, $5B, 2001)

18. Hypermediation Interactions found via Internet transactions
Complete, seamless, invisible supply chain to customers
Leverages external partners
Click as transactions
Web portal (Netscape)
Search service (Google, Goto, etc.)
Referral service
Exchange service (credit cards)
Delivery service (UPS, FedEx, USPS)

19. Infomediation
Allows technology users to manage large amounts of information
Search engines and portals provide for narrowing searches
Data mining technology is critical
IT helps business sift through information for insight and clarity

20. B. IT as Change Agent Dynamic Stability (mass customization)
IT supports business in dynamic changes with no change to business processes
Can enable/inhibit incremental and radical changes
Innovation may depend on IT

21. C. IT as Enabler of Globalization
Expands business presence beyond borders
IT Infrastructure and Technologies enable company to manage & control global operations. (DHL)

22. IT/Business Gap IT/Business alignment critical Alignment Enabler
Application of IT in an appropriate and timely manner, in harmony with business goals, strategies, and needs
Enabler
Inhibitor

24. CSC Survey Top Rankings
Information Systems alignment with Corporate Goals ranked 1st or 2nd 9 of 11 years!
Organizing & utilizing data
Connecting to customers, suppliers, and/or partners electronically
Optimizing organizational effectiveness

25. IT vs. Other Functions Encompasses entire enterprise
Affects all business functions
Extends beyond business boundaries
Affects every level of management
Impact affects entire value chain, including suppliers and customers
Creates synergy between departments
Dell Computer Corp., Cisco Systems

26. Porter’s Generic Value Chain

27. Value of IT IT usage has increased three-fold since 1978
Substantial capital expenditures
Cost of doing business
Productivity measurement
Alignment with strategic business goals

28. Luftman’s 6 Components Communications Maturity
Competency/ Value Measurement Maturity
Governance Maturity
Partnership Maturity
Scope and Architecture Maturity
Skills Maturity

29. Discussion Questions
What would you consider some of the key changes in technology over the last 50 years that have had the most impact on organizations?
How are companies organized in terms of the IT function? Who does the CIO report to?
What are some examples of business models that have changed as a result of IT?

30. Discussion Questions
What would you consider the most important factor in improving the ability to play a larger role in an organization?
What are some issues IT faces in the global economy?
In reviewing some of the other concerns within organizations (Fig. 1-3), what role does IT management play? What role does business management play?

31. Discussion Questions
What contributes to the difficulties IT organizations have in demonstrating the value IT brings to the business goals and results? What is the role of the business function in these difficulties?
How will the role of CIO continue to change in the future? What is the role of the CTO relative to the CIO?