Chapter 1 Slides

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© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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Chapter 1

Introduction

Managing the Information
Technology Resource

Jerry N. Luftman


© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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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

© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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Primary Purpose


IT is important and necessary for a
successful organization


Successful management of IT is
necessary for competitive advantage


© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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3 Strategies for Competitive
Advantage


Cost leadership


Competing with lower costs


Product differentiation


Competing with value


Product focus


Competing by restricting one’s market



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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

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Additional Skills of IT Managers


Financial


Human Resource


Relationship
Management


Legal


Governance


Marketing


Negotiating


Leadership

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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.”

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3 Primary Computing Eras

1.
Mainframe
Computer Era

2.
PC Computing Era

3.
Pervasive
Computing


© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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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


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Historical View


Cost decreased


Size decreased


Use of personal computers increased


Business staff and IT staff began to
interact


Technology issues increased


Networks, E
-
mail, and Internet became
necessity


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Role of IT


No longer just serves a business


Integral in business strategy


Impacts every area of business


Complexity increases


How does IT function vs. the entire
organization


Responsible for the integration of
information

© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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Role of IT Today

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Enabler of E
-
Business


All aspects of IT are more externally visible


Serve as mediator among various functions


Disintermediation


Reintermediation


Hypermediation


Infomediation



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Disintermediation


Eliminates the middleman


Electronic stock trading


Forces focus on service differentiation


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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

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Hypermediation


Interactions found via Internet transactions


Complete, seamless, invisible supply
chain to customers


Leverages external partners

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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

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Change Agent


Dynamic Stability


IT supports business in dynamic changes with
no change to business processes


Can enable/inhibit incremental and radical
changes


Innovation may depend on IT



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Enabler of Globalization


Expands business
presence beyond
borders


IT maintenance of
Infrastructure and
Technologies


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IT/Business Gap


IT/Business alignment critical


Alignment


Application of IT in an appropriate and timely
manner, in harmony with business goals,
strategies, and needs


Enabler


Inhibitor



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CSC Survey Top Rankings


Information Systems alignment with
Corporate Goals ranked 1
st

or 2
nd

9 of 11
years!


Organizing & utilizing data


Connecting to customers, suppliers,
and/or partners electronically


Optimizing organizational effectiveness

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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



© 2004 Managing the Information Technology Resource, Jerry N. Luftman

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Porter’s Generic Value Chain

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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



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Luftman’s 6 Components


Communications
Maturity


Competency/

Value Measure
-
ment Maturity


Governance
Maturity


Partnership
Maturity


Scope and
Architecture
Maturity


Skills Maturity