1. 1 Chapter 12 IT Business Communications Managing the Information Technology Resource

2. © 2004-05, David Gadish, Ph.D.2 Chapter Outline  Importance of communication in achieving alignment  Importance of understanding of business by IT  Why it is necessary for business partners to understand IT  Importance of communication in developing partnership  Methods used to improve communication

3. © 2004-05, David Gadish, Ph.D.3 Importance of Communication “Effective communications is the central lifeline of any organization. It is the vehicle for driving change, shaping expectations, and rallying workers around core purposes.” -Charlene Marmer Solomon

4. © 2004-05, David Gadish, Ph.D.4 Kotter’s Key Elements for Communicating  Simplicity  Metaphor, Analogy, and Example  Multiple Forums  Repetition  Leadership by Example  Explanation of Inconsistencies  Give and Take

5. © 2004-05, David Gadish, Ph.D.5 Financial Terms for IT Team  Bearer Bonds –Bond owners clip out coupon and present to bond issuer  Bond –Bond matures and issuer redeems face amount  Treasuries –U.S. Treasury borrows money in form of bills, notes, bonds  U.S. Savings Bonds –Non-negotiable and purchases are limited  Zero Coupon Bond –No coupons and no interest paid

6. © 2004-05, David Gadish, Ph.D.6 Web Services Terms for Business  SOAP –Provides way for applications to communicate with each other  UDDI –Web-based distributed directory that enables businesses to list themselves on Internet  Web Services –Standardized way of integrating Web-based applications  Web Services Description Language –XML-formatted language that describes Web services capabilities  XML –Specification developed by World Wide Web Consortium to tag data

7. © 2004-05, David Gadish, Ph.D.7 Henderson’s Two Styles of Relationships  Transactional Style –Defined by rules, policies, and procedures  Partnership Style –Implies risk sharing, longer time frame for exchanges, and need to establish range of mechanisms

8. © 2004-05, David Gadish, Ph.D.8 Six Determinants of Partnership

9. © 2004-05, David Gadish, Ph.D.9 The Road to Partnership  Education  Joint Planning  Measurement and Control  Effective Use of Teams  Multilevel Human Resource Strategy  Technology

10. © 2004-05, David Gadish, Ph.D.10 Global Culture  Hidden messages in communication  Written communication may be viewed positively or negatively  Written communication maintains supporting role  Written communication –Addresses ambiguity –Prevents misunderstandings –Identifies ownership and accountability

11. © 2004-05, David Gadish, Ph.D.11 Addressing Communication Effectiveness  Direct Communication  Liaison Roles  Temporary Task Forces  Permanent Teams/Committees  Integrating Roles  Managerial Linking Roles

12. © 2004-05, David Gadish, Ph.D.12 Sample Approaches  Direct Communications –Reflect differences in complexity, requirements, and importance –Determine best vehicle and audience –Consider how to provide right level of interaction

13. © 2004-05, David Gadish, Ph.D.13 Sample Approaches  Liaison Roles –Surrogate facilitator in assisting business and IT to join and work together –Get IT and business stakeholders together –Ensure each group participates for successful development and deployment of business systems

14. © 2004-05, David Gadish, Ph.D.14 Sample Approaches  Temporary Task Forces –Creates central focus for each participant –Helps to avoid daily distractions –Improves communication among task members –Share common goals and objectives

15. © 2004-05, David Gadish, Ph.D.15 Sample Approaches  Permanent Teams or Committees –Effective means of providing stability –Steering committees provide mechanism for making improved long-term decisions –Legitimate formal process exists –Decisions likely made in best interests of firm –Communication improved

16. © 2004-05, David Gadish, Ph.D.16 Sample Approaches  Integrating Roles –Similar to providing cross-training to IT and business personnel –Experience to know what other person needs to do –Rotate IT and business people between two areas to broaden perspective

17. © 2004-05, David Gadish, Ph.D.17 Sample Approaches  Managerial Linking Roles –Used to facilitate multiple/difference priorities and agendas –Use a matrix structure –Guidance provided by multiple supervisors –Means of communication improved –Used where IT and business are comfortable with each other on partnership level

18. © 2004-05, David Gadish, Ph.D.18 Tips and Techniques  Communication is important  Learn from others’ trials and tribulations  Shared domain knowledge is critical  Training of administration managers in IT and their inclusion in IT projects  Things do go wrong and need to get back on track  Implement formal communication programs may be necessary

19. © 2004-05, David Gadish, Ph.D.19 2 Types of Communication  Push communication –Occurs when information is disseminated to the organization without being requested by receivers of information  Pull communication –Occurs when information is requested and implies immediate availability of information

20. © 2004-05, David Gadish, Ph.D.20 Personal Factors  Maintain clear and honest communication  Trust  Reputation  Integrity

21. © 2004-05, David Gadish, Ph.D.21 Best Methods to Improve Communications  Knowledge sharing  Introduce classes for IT and business staff to attend jointly  Group Decision Support System  Jointly manage communication between business and IT  Use of liaison agents, task forces, cross-functional project teams and direct communication  Measurement and control

22. © 2004-05, David Gadish, Ph.D.22

23. © 2004-05, David Gadish, Ph.D.23 Priority in Improving IT Communication  Focus on where improvements can be made  Strategic Alignment Maturity Assessment Model  Training  Continually scan new technologies and products  Build partnerships through mutual understanding

24. 24 Chapter 13 Measuring, Reporting, and Controlling Managing the Information Technology Resource

25. © 2004-05, David Gadish, Ph.D.25 Chapter Outline  Importance of measurement  What and how to measure  Quality and efficacy of measures  Reporting to different audiences  Controlling IT through effective SLAs  Negotiating a service level agreement  Making SLAs work – metrics  Introducing internal SLA to firm  SLA myths  Who owns measurements and what/when to do them  Can enterprise succeed with or without measurements?

26. © 2004-05, David Gadish, Ph.D.26 Why Is There IT?

27. © 2004-05, David Gadish, Ph.D.27 Productivity Study of IT and Business Executives Source: InformationWeek research productivity study of 300 IT and business executives

28. © 2004-05, David Gadish, Ph.D.28 Measuring IT  IT expenditure as percent of revenue  IT expenditure per employee  Revenue per IT dollar  Total IT expense budget vs. actual  Total IT capital budget vs. actual  Employees supported per IT employee

29. © 2004-05, David Gadish, Ph.D.29 Importance of Measurement  Business wants to know if IT is being run efficiently and effectively  Identify opportunities for improving effectiveness and efficiency  Effectiveness –Doing things right  Efficiency –Doing things the right way

30. © 2004-05, David Gadish, Ph.D.30 Measuring IT – Samples  Overall – qualitative measures  Overall – quantitative measures  Network  Data center

31. © 2004-05, David Gadish, Ph.D.31 What and How to Measure  Need to measure –Business impact –Customer relationships –Internal organization impact –Investment impact –Value chain impact  Know how processes are changing between any measurements, and explain any changes in results  No ideal set of metrics

32. © 2004-05, David Gadish, Ph.D.32 10-Step Approach to Developing Measurements 1. Commitment of resources, time, and cooperation from senior business and IT management 2. Have and review formal strategic plan, mission statements, and goals 3. Committees need to be established for each of 38 IT processes 4. Each committee meets and defines goals of each IT process as first objective 5. Identify critical success factors

33. © 2004-05, David Gadish, Ph.D.33 10-Step Approach to Developing Measurements 6. Establish guidelines to measure if, and to what degree, critical success factors have been met 7. Complete pilot should be done and members jointly participate in the pilot 8. Recommendation to install these measurements should be raised to senior management for endorsement 9. Distribution and implementation of new measures 10. Analyze results and review with all partners

34. © 2004-05, David Gadish, Ph.D.34 5 Stages of Benchmarking  Planning  Analysis  Integration  Action  Maturity Source: Robert C. Camp and http://www.apqc.orghttp://www.apqc.org

35. © 2004-05, David Gadish, Ph.D.35 Benchmarks  Planning –Identify what is to be benchmarked –Identify comparative companies –Determine data collection method and collect data  Analysis –Determine current performance “gap” –Project future performance levels

36. © 2004-05, David Gadish, Ph.D.36 Benchmarks  Integration –Communicate benchmark findings and gain acceptance –Establish functional goals  Action –Develop action plans –Implement specific actions and monitor progress –Recalibrate benchmarks  Maturity –Leadership position attained and practices fully integrated into process

37. © 2004-05, David Gadish, Ph.D.37 Iterative Process for Benchmarking Source: Dataquest, Gartner Group.

38. © 2004-05, David Gadish, Ph.D.38 Quality of Measures  Often best when forecasting trends  Can lead to misleading results  Gain correct insight as to what measurement indicates  Good quality may be significant indicator of good performance

39. © 2004-05, David Gadish, Ph.D.39 Dimensions of Service Quality  Reliability –Consistency of performance and dependability  Responsiveness –Willingness/readiness of employees to provide service in timely manner  Competence –Possession of required skills to perform service  Access –Approachability and ease of contact  Courtesy –Politeness, respect, consideration, friendliness

40. © 2004-05, David Gadish, Ph.D.40 Dimensions of Service Quality  Communications –Keeping customers informed in language they understand  Credibility –Trustworthiness, believability, honesty  Security –Freedom from danger, risk, doubt  Understanding/Knowing the Customer –Making effort to understand customer’s needs  Tangibles –Physical evidence of service

41. © 2004-05, David Gadish, Ph.D.41 Dimensions of Successful IT Functions  Service quality  System quality  Information quality  Use  User satisfaction  Individual impact  Work group impact  Organizational impact

42. © 2004-05, David Gadish, Ph.D.42 Source: Anthony, R.N. Planning and Control Systems: A Framework for Analysis, Cambridge, MA: Harvard University Press (1965).

43. © 2004-05, David Gadish, Ph.D.43 Variety in Reporting  Historical Data  Statistical Data  Assist managers in determining repairs  Each has different characteristics

44. © 2004-05, David Gadish, Ph.D.44 Characteristics of Effective SLAs  Based on current “user” expectation  Defined by location, function, and service type  Uses benchmarks and baselines for measuring performance  Specifies minimums, penalties, and incentives  Specifies reports and tracking tools to be monitored  Agreement not too few, not too many  Gets adjusted periodically to reflect changes

45. © 2004-05, David Gadish, Ph.D.45 Negotiating a SLA  Get a Baseline  Define Responsibility  Allow for Modifications  Ensure Reports Are in Terms Anyone Can Understand  Don’t Forget the End-User Experience

46. © 2004-05, David Gadish, Ph.D.46 Examples of Service Level Metrics  Application availability  Average application response time  Number of application crashes per unit of time  Average throughout  Network availability and bandwidth  Server availability

47. © 2004-05, David Gadish, Ph.D.47 Examples of Service Level Metrics  Elapse time to repair hardware failure  Mean time between server failure  Number of operating system failure per unit of time  Number of middleware failure per unit of time  Number of production jobs not completed during batch night shift

48. © 2004-05, David Gadish, Ph.D.48 Questions Concerning Who Owns Measurement  Who should own measurement?  Is measure a process that should be owned by the people doing the measurement?  Is it a corporate asset or cost?  Is this question similar to who should own payroll?  Should the owners of internal processes that are being measured simply own it?  Does it make a difference?

49. © 2004-05, David Gadish, Ph.D.49 What to do with Measurements  Establish report card for performance  Create effective and understandable benchmarks  Senior management needs to know current status and effectiveness of IT

50. © 2004-05, David Gadish, Ph.D.50 Performance Measures for Efficient Order Management  Short order lead times  In-stock availability  Order accuracy  Access to order status information  Response time to customer inquiries

51. © 2004-05, David Gadish, Ph.D.51 Performance Measures for Efficient Customer Management  Lower inventory carrying cost  Reduced human intervention  Greater order accuracy  Improved production planning/forecasting  Lower order administration  Lower number of complaints  Improved customer decision making based on preferences  Increase number of automatic restocking customers  Lower stock-out occurrences

52. © 2004-05, David Gadish, Ph.D.52 When Measurements Should be Done  Continuously  Daily  Weekly  Monthly  Semiannually  Annually

53. © 2004-05, David Gadish, Ph.D.53 Can Enterprise Succeed Without Measurement?  Only 42% of companies prepare business case for CRM project  Only 45% have centralized CRM responsibility  57% can’t justify investments because they don’t know how to measure customer profitability  Only 10% measure ROI

54. © 2004-05, David Gadish, Ph.D.54 How Does Enterprise Benefit from Measurement?  Performance is related to effectiveness, efficiency, and quality  To understand process it must be measured and compared  Part of monitoring project performance  Determine if vendors are performing to service level agreements

55. © 2004-05, David Gadish, Ph.D.55 Next Week’s Agenda  IT Strategy (Ch-14)  Student Presentations