1. Six IT Decisions Your IT People Shouldn’t Make Jeanne W
Six IT Decisions Your IT People Shouldn’t Make Jeanne W. Ross and Peter Weill
EnFuego
Kacey Baxter, Ashish Mistry,
Dan Myers-Power and Mark Rose
April 10, 2004

2. Strategy Decisions Define IT’s role in the company
Decide how IT fits the company strategy
Determine the funding needed to achieve objective
How much
should we
spend on IT?
Source: Ross and Weill

3. Strategy Decisions
How much
should we
spend on IT?
Which business
processes
should
receive our IT
dollars?
Make clear decisions about what initiatives receive funds
Prevents overloading the IT department
Source: Ross and Weill

4. Strategy Decisions Determine which functions should be centralized
How much
should we
spend on IT?
Which business
processes
should
receive our IT
dollars?
Which IT
capabilities
need to be
companywide?
Determine which functions should be centralized
Balance centralization and flexibility of business units
Source: Ross and Weill

5. Execution Decisions
Which features are needed based on costs and features
Prioritize service options
How good do
our IT services
really need to
be?
Source: Ross and Weill

6. Execution Decisions
How good do
our IT services
really need to
be?
What security
and privacy
risks will we
accept?
Examine the trade-offs between security/privacy and convenience
Find balance
Source: Ross and Weill

7. Execution Decisions
How good do
our IT services
really need to
be?
What security
and privacy
risks will we
accept?
Assign an executive to be accountable for every IT project
Monitor metrics to realize value of business systems
Whom do we
blame if an IT
initiative fails?
Source: Ross and Weill

8. Bush Boake Allen
Bush Boake Allen’s Project Mercury appears to be a pet project, no initial buy-in from full management team
Strategy is lacking
Want to spend, spend, spend with no clear direction on IT needs
Senior Manager is ignoring his IT responsibility

9. Bush Boake Allen No strategic direction for Project Mercury
How much
should we
spend on IT?
No strategic direction for Project Mercury
No real idea of costs, could be up to $500,000 per site
Which business
processes
should
receive our IT
dollars?
Trying to fund everything due to lack of focus
One technologist assigned—overwhelming initiative
Better spent in R&D?
Project Mercury launched without full team buy-in
Decentralization has been key to company strategy
How will “the Spider” fit into strategy?
Which IT
capabilities
need to be
companywide?
Source: Ross and Weill

10. Alibris -- Strategy There was no budget for IT Spending
If a problem occurred, they threw more money it
How much
should we
spend on IT?
Which business
processes
should
receive our IT
dollars?
Database conversion and eCommerce launch
How could they automate fulfillment?
How do they deal with SKUs?
Consultants were doing lots of customization
What were the future staffing level requirements?
Would there always be a need for consultants?
Which IT
capabilities
need to be
companywide?
Source: Ross and Weill

11. Alibris -- Execution Did they need Oracle? Did they need Thunderstone?
What were the consequences of not launching?
Could they afford to have the system “down?”
How good do
our IT services
really need to
be?
What security
and privacy
risks will we
accept?
Case pre-dates attention on identity theft issue
Do we need to protect the booksellers data?
Who secures the customer data?
Everything was delegated to the consultants
No one internally had ultimate responsibility
Too willing to jump platforms
Whom do we
blame if an IT
initiative fails?
Source: Ross and Weill

12. Oracle at Oregon Steel Mills
Oracle Implementation/Upgrade Goals
Upgrade Portland from 9.4 (Character) version to 10.7 (Windows)
Convert Pueblo from legacy to version 10.7 (Windows) -- Legacy not Y2K Compliant
Standardized General Ledger across all companies (15 in consolidated group)
Reduce support requirements
Faster closes
Interchangeable staff between locations
What happened?
Two database installations: one in Pueblo, one in Portland (KPMG’s Idea)
Two license fees (Oracle didn’t mind)
Standardized General Ledger to start, slowly drifted apart as each location added new accounts and functionality
Manufacturing resisted conversion so only Financials used
Lots of customization = Additional fees when upgrading to 11i
Why did it happen?
Turnover: Controller, Project Manager, Lead Accountant, Business Analysts
CFO clueless about IT and not involved
No one was ultimately held responsible for the project

13. Outsourced IT at SEH-A Goals of Outsourcing IT (aka “Fantasy Land”)
Reduce head count = reduce costs
Better level of support because of better trained staff
Flexibility with staffing levels
Overall lower cost of IT
The Results (aka “Reality”)
No drop in staffing -- same people work there as before
Savings in benefits offset by higher hourly rates
No incentive to upgrade or standardize operating systems (95, 98, 2000, XP)
“Guinea Pigs” for Lotus Notes R5 (very buggy)
Still spending $2M per year on customized programming for manufacturing
They love “closing tickets”
Not very flexible in terms of finding solutions
Current person in charge of IT isn’t even Manager level and reports to Facilities

14. Key’s to IT Success
Senior Managers need to take a key role in IT decisions and be accountable
Delegating responsibility without active involvement is a bad idea
Business process may also change
Training for non-IT executives
Consultants don’t know everything