1. Building IT Leadership: Revisiting Key Issues Presenter: Leslie Willcocks Professor of Technology Work And Globalization London School of Economics and Political Science email: l.p.willcocks@lse.ac.uk BCS London May 17th 2007

2. (C) Leslie Willcocks, 2007 Does IT Matter? Carr, N., "IT Doesn't Matter," Harvard Business Review, Vol. 81, 5, May 2003, pp. 41-49. Friedman, Thomas, The World is Flat, Farrar, Strauss, and Giroux, New York, 2005, pages 3 to 172

3. (C) Leslie Willcocks, 2007 Nicholas Carr: Does IT Matter? Harvard Bus. School Press, 2004 IT is just a commodity: “IT is an infrastructure technology like the steam engine, railroad, telegraph, telephone ” IT is no longer a source of competitive advantage: “The core functions of IT—data storage, data processing, and data transport—have become available and affordable to all.”

4. (C) Leslie Willcocks, 2007 Nicholas Carr: Does IT Matter? Harvard Bus. School Press, 2004 Spend less. Studies show that the companies with the biggest IT investments rarely post the best financial results. Follow, don't lead. Moore's Law guarantees that the longer you wait to make an IT purchase, the more you'll get for your money. Focus on vulnerabilities, not opportunities. Even a brief disruption in the availability of the technology can be devastating.

5. (C) Leslie Willcocks, 2007 Friedman: The Ten Flatteners Platform Building 11/9/89 (PC revolution: Windows) 8/9/95 (Internet Revolution: Netscape goes public) Work Flow Software (application protocols let computers talk to computers) Open-sourcing (Best software is available to everyone) Platform Use Outsourcing (global sourcing of knowledge work) Offshoring (moving facilities to cheapest location lowers prices, stimulates the economy) 7.Supply-Chaining (eating sushi in Arkansas) 8.Insourcing (allows small firms to act big) 9.In-forming (Google, Yahoo, MSN) Platform Enhancement 10. The Steroids

6. (C) Leslie Willcocks, 2007 Key Issues For IT Executives - 2006-7 Top Ten Management Concerns: 1. IT and Business Alignment 2. Attracting, Developing and Retaining IT Professionals 3. Security and Privacy 4. IT Strategic Planning 5. Project management capability 6. Introducing Rapid Business Solutions 7. Speed and Agility (new to top ten) 8. True Return on Individual IT Investments 9. Measuring The Value of IT Investments 10. IT Governance Note: - 70% organisations are Maturity 2/3 on alignment (out of 5) See Luftman et al. (2006) MISQE Key Issues for IT Executives for earlier surveys

7. (C) Leslie Willcocks, 2007 2006 2005 2004 Delivering projects that enable business growth 1 118 Linking business and IT strategies and plans 2 2 4 Building business skills in the IS organization 3 9 1 Demonstrating the business value of IT 4 3 2 Attracting, developing, and retaining IS personnel 5 * * Applying metrics to the IS organization and IT services 6 414 Improving the quality of IS service delivery 7 7 3 Flexible technology infrastructure 8 * * Improving IT governance 91011 Consolidating the IS organization and operations10 8** 2006 CIO Strategic Management Priorities * New question for 2006 ** New question for 2005 To what extent will each of the following CIO actions be a priority for you in 2006? Ranking Source: 2006 Gartner EXP CIO Survey 4 3 6 1 5 8 2 11 9 10 7 -Reducing IS complexity x = Retail (58 CIOs) 6 x = Telco (29 CIOs) Improving Business Continuity Planning. - 15 2 12 1 9 8 3 7 5 4 Moving to a service- based org. - 10

8. (C) Leslie Willcocks, 2007 Key Issues: Some Food For Thought... 1.Technology 2.Strategy 3.People 4.Structure 5.Governance 6.Eight IT Differentiators

9. (C) Leslie Willcocks, 2007 Top Six Application and Technology Developments : 1. Web services (new to top 6) 2. Business Intelligence 3. Security Technologies 4. Business Process Management (new to top six) 5. Customer Portals (new to top 6) 6. Systems Integration Key Issues For IT Executives 2006-7 Other: SOA XML EAI/M Corporate performance mmt. CRM

10. (C) Leslie Willcocks, 2007 IT Hype IT Capability 'Useful' IT 'Strategic' IT Willcocks, Feeny, et al 1997 Four Domains of IT

11. (C) Leslie Willcocks, 2007 Key Issues: Some Food For Thought... 1.Technology 2.Strategy 3.People 4.Structure 5.Governance 6.Eight IT Differentiators

12. (C) Leslie Willcocks, 2007 IT/IS Strategy Formulation: A Multiple Methodology Business plans and Goals Current SystemIT Opportunities Mandatory Strategic Development Infrastructure Renewal Maintenance R&D Strategic Application Plan Analytical Methodology Opportunities, Threats ‘Listen to the Technology’ Teamwork Evaluative Surveys & Audits Strengths Weaknesses Users & Specialists Creative Techniques, Processes & Environment Examples Scenarios Bright Sparks & Product Champions ‘Top Down’ ‘Bottom Up’‘Outside-In’ Source: Earl, 1996

13. (C) Leslie Willcocks, 2007 Strategic IT Sourcing (Willcocks et al, 2002) Contribution to Business Operations Contribution to Competitive Positioning/Core Competence Critical Useful Commodity Differentiator ‘Qualifiers’ ‘Necessary Evils’ ‘Order Winners’ ‘Distractions’ (Best-source: In-House/Partner) (In-House/Buy-In) (Outsource)(Migrate or Eliminate)

14. (C) Leslie Willcocks, 2007 The Role of Organisational Architecture Organizational Architect - creates options (scenarios) - converts set of options into organizational requirements - assesses level of change required - helps refine vision - identifies organization design for vision - helps refine technology architecture Board/ CEO/ Inner Circle IT Architects Visions refined through informed dialogue IT architecture refined through informed dialogue Actionable vision - organization design - technology platform Source: Sauer and Willcocks 2002

15. (C) Leslie Willcocks, 2007 Key Issues: Some Food For Thought... 1.Technology 2.Strategy 3.People 4.Structure 5.Governance 6.Eight IT Differentiators

16. (C) Leslie Willcocks, 2007 CEO’s Attitude to IT CEO’s Attitude to IT IT Vision to Transform Top Management Team Process Team Process Personal/Informal Culture ‘Away Day’ Workshops CIO’s Personal Profile IT Knowledge/Experience Business Loyalty/Focus Goal Seeking BUT ALSO Consultative Leadership Ideas Oriented CIO’s Position in Organisation Member of Top Management Team ExcellentRelationships Source: Earl and Feeny, 2000

17. (C) Leslie Willcocks, 2007 Business and Function Vision Delivery of Service Architecture Planning and Design Business Systems Thinking Contract Facilitation Technical Architecture Contract Monitoring Vendor Development Making Process- IT work Relationship Builder IS Leadership; Informed Buying Nine Core Back-office Capabilities Retained Core IT Capabilities

18. (C) Leslie Willcocks, 2007 Key Issues: Some Food For Thought... 1.Technology 2.Strategy 3.People 4.Structure and Governance 5.Eight IT Differentiators

19. (C) Leslie Willcocks, 2007 The IT Function: Enormous Pressure to Change Value for Money Quality, Service Time Compliance Social and Green Resps. More knowledgeable AND demanding users User Pressures ? IT Technology Challenges Business and external Pressures Diversity Distribution, Integration Packages Emerging technologies Etc. IT Service Suppliers Existing Systems

20. (C) Leslie Willcocks, 2007 Six Models of IT Organisation 1 Corporate Service 2 Decentralised 3 Internal Bureau and 4 Business Venture 5 Federal

21. (C) Leslie Willcocks, 2007 Six Models of IT Organisation 6a Outsourced: Corporate Service 6b Outsourced: Federal supplier

22. (C) Leslie Willcocks, 2007 Governance Defined “IT governance—specifying the framework for decision rights and accountabilities to encourage desirable behaviour in the use of IT.” – Weill, MISQE, 2004 Decision rights and inputs Desirable behaviour e.g sharing, reuse, cost savings, innovation, growth Mechanisms – IT council, architecture office, SLAS… Business value – responsibilities, accountabilities, metrics…

23. (C) Leslie Willcocks, 2007 Stronger IT Governance Is Needed: IT has become more important, but less under ‘control’ of the IT function Firms face major new opportunities and risks as IT migrates outside the IT department Complexity and ‘rogue’ behaviour need to be managed Links to, and learning from, corporate governance Top IT performers govern IT differently depending on objectives – asset usage, revenue growth, flexibility, ROA/profits The business must help by: –Understanding what is possible, and not possible, in IT –Providing more explicit direction on the business approach and priorities –Disciplining its own behaviour, cooperating more –Addressing complexity head on –Being engaged in its IT governance and management responsibilities –Making some uncomfortable choices e.g on shared services/applications…..

24. (C) Leslie Willcocks, 2007 Important IT Governance Concepts IT Principles – Clarifying the business role of IT IT Architecture – Defining integration and standardisation requirements IT Infrastructure – Determining shared and enabling services Business Application Needs – Specifying the business need for purchased or internally developed IT applications IT Investment and Prioritization – Choosing which initiatives to fund and how much to spend Weill and Ross, 2004

25. (C) Leslie Willcocks, 2007 Summary: Eight I.T. Differentiators Listen to the technology; be informed by globalization dynamics (Friedman, 2005: Moscella, 1997, 2004) IT governed as a strategic portfolio by relevant stakeholders (Willcocks et al. 2003: Weill and Ross, 2005) IT led by a credible CIO, influential amongst senior business execs. including CEO (Feeny and Ross, 2000) Disciplined mixed sourcing strategy, management, and delivery regime (Cullen and Willcocks, 2004: Willcocks and Lacity, 2006 Business maturity to manage IT as a strategic resource (Willcocks et al. 1997; Broadbent et al. 2005) Retain specific key IT capabilities (Willcocks and Lacity 2006) Ensure key supplier capabilities (Feeny et al., 2005) Core organizational project management capability (Willcocks et al., 2003 ) Ensure Value for IT Spend to

26. (C) Leslie Willcocks, 2007 USEFUL REFERENCES 1. Willcocks, L. et al. (2003) Making IT Count: Strategy, Delivery and Infrastructure. Butterworth-Heinemann 2. Willcocks, L. and Lacity, M. (2007) Global Sourcing of Business and IT Services. Palgrave, London 3. Sauer, C. and Willcocks, L. (2002) Evolution of the Organizational Architect. Sloan Management Review, April. 4. Weill, P. and Ross, J. (2004) IT Governance. Harvard Business Press, Boston 5. Willcocks, L. et al. (1997) Managing IT As A Strategic Resource. McGraw Hill, Maidenhead 6. Earl and Feeny (2000) How to be a CEO in an Information Age,. Sloan Management Review, Winter