Remaining Schedule

Remaining Schedule Mar. 1 – Chapter 17 and course summary. Mar. 3 – Student ATP presentations. Mar. 8 -- Final ATP Due Date (not Mar. 3) I will do a final exam clinic on that day. Come prepared to ask questions. Mar. 10 -- No class scheduled. Final Exam – March 18 at 8 to 11 AM. Will return papers on the day of the final exam.

ATP Presentations on March 3 Apple – Chris Johnson Cisco – Rashi Sinha Dell – Cyrus Semnani IBM Global Services– William Pease Intel – Max Gutman Knight-Ridder – Rebecca Sherrill Oracle – Jonathan Gregorio Plantronics – Tan Nguyen

Historical Perspective Two technologies are changing the world: • Information Technology • Transportation Technology The greatest event in transportation in the US occurred at Promontory, Utah on May 10, 1869. Union Pacific railroad tracks joined Central Pacific to complete the transcontinental railroad connection.

Travel Comparison During the California Gold Rush: • Overland from Missouri to California took four to six months. • Taking a ship to Panama and then going over land and catching a ship to San Francisco took three month. • Going around Cape Horn or through the Strait of Magellan of South America took a year. • The new railroad took six days.

Chapter 17 Final Considerations

I regard information technology as a precocious teenager: full of energy, irreverent, unpredictable, a source of both joy and heartache--and frequently in need of close supervision. Kent "Oz" Nelson Chairman and CEO United Parcel Service

Three Definite Conclusions 1. The way to gain acceptance of information systems by senior management is to focus on using it to gain a competitive advantage. 2. The way to capitalize on this opportunity is thorough a marketing approach. 3. The way to sell anything over time is by emphasizing value.

There Has Never Been a Better Time 1. For candor relative to key business and IT issues. 2. For real world success stories versus theory. 3. For business and IS leadership versus techniques and methodologies.

Company Mentality Most people buy the premise that managing information and information systems is a key, fundamental aspect of running the business. An issue can be selling the best specific approach.

The Sell Cycle • Identify Prospects • Gain Interest • Develop Need • Quantify the Need • Build the Sale • Market the Solution • Gain Commitment

Marketing/Sales Process Research / Planning / Enabling Campaigns Program Programs Programs Targeted Opportunities Create/ Capture Demand Define/ Agree on Solution Maintain Customer Gain Commitment Implement Customer Satisfaction and Revenue Delivery Vehicles Products and Services

An IS Marketing Therefore List Do an analysis of the major focus and priorities of the CEO. Determine the 3 - 5 things that your customers spend 75% of their time doing. Read the annual report and look for the presence or absence of information systems endorsements. Take a hard look at the marketing job being done by the IS organization. Build a personal network for competitive information sources.

IS Competitive Marketing Ten Commandments 1. Solving customer problems has always been a logical and successful marketing strategy. 2. During adverse times, your customers really need you. 3. Eighty percent of winning is showing up! 4. Go to your customers with questions, not answers.

5. Remember that quality products and services are the foundation of competitive success that also includes leadership of skilled employees using advanced methods. 6. A winning approach should provide long term advantages, include benefits for the organization as a whole and not distort the logical balance among major business functions. 7. Successful systems are built on harmony in the work place, discipline in the work place and automation that is consistent with the first two factors. 8. Redefine your business, products or services and business processes based on how this redefines value to customer.

9. The company reward system should endorse and reinforce the major factors cited above. 10. Watch the arrogance and stay current.

Organizational Response to Business Drivers IS Significance High Medium Low • New Markets, Opportunities and Competitors • Time, Flexibility and Responsiveness as • Competitive Factors • Product Customization • Process Reengineering, Redefining and TQM • Employee Empowerment and • Cross-functional Teams • Organization Downsizing, Outsourcing • Business Partnering and Alliances Figure 17-1

Business Success Factors I/S Role Important Necessary Marginal • Business Leadership • Fitting Pieces into the Big Picture • Organizational Responsiveness and • Resilience • Realizing that Solving Customer • Problems Requires a Team Approach • A Strong Company Culture • Ability and Willingness to Innovate, • Change and Take Risks • Accomplishing All of These Factors • While Maintaining Necessary Balance • Good Communication Throughout the • the Entire Organization Figure 17-2

Why Aren’t All Companies Successful in Using IS to Compete? 1. Business Reasons 2. Information Technology Reasons

Business Reasons • A lack of senior management sponsorship. • Poor employee acceptance or use. • General resistance to change within the organization. • Poor alignment of Information Systems with business strategies.

Business Reasons • Impatient for results--management and employees. • Vision and direction of the business was not clear. • Poor business strategies. • Good vision, strategy and implementation • but bad timing results in no value to the • customer.

IT Reasons • Inadequate staffing and/or funding. • Project size was extremely large. • Poor project structure. • Organization lacked experience with IT (user and/or IS organization) • Poor systems performance.

Best Practices Study • The effectiveness (quality and value) and efficiency • (cost and productivity) of the information technology • function across five performance dimensions: • Strategic alignment with the business. • Ability to partner with internal and external customers. • Use of technology. • Organization. • Processes.

Study Done By Hackett Benchmarking (www.answerthink.com/hackett) is considered the world's foremost best practices benchmarking firm. With offices in Atlanta, Georgia; Hudson, Ohio; and Frankfurt, Germany, Hackett maintains ongoing benchmark studies in finance, human resources, information technology, procurement, customer contact centers and related areas.

Study Conclusions 1. Given that technology now permeates every aspect of business operations, management of the corporate IT infrastructure has evolved into a CEO-level issue. 2. While it is understandable that in today's economy companies want to cut or at least slow the rise of IT costs, it is alarming that most companies persist in viewing IT as a subsidiary support function, rather than a key competitive lever.

Study Conclusions 3. Principal improvement strategies utilized by the best- managed companies include simplifying and automating processes from end-to-end and leveraging the maximum business value from technology investments and Web infrastructures.

Significant Findings • An 85% increase since 1998 in the number of CIOs who • report directly to the CEO indicates that the linkage between • technology and business is growing tighter. • 2. With a tight link between the overall business strategy and • the company-wide IT strategy, world-class IT organizations • actually spend 17% less per end-user than their average • counterparts ($12,236 versus $10,111) while delivering • projects to business specification 23% more often.

Significant Findings 3. While outsourcing has been embraced by companies as a way to keep IT costs in check, for most it has proved to be a break-even proposition, at best. 4. In highly standardized companies, process costs are virtually the same, regardless of whether functions are largely outsourced or completely in-house. 5. For companies with a very low level of standardization, outsourcing sharply increases process costs. 6. Application development costs at companies with low standardization levels rise by 300% when outsourced.

Significant Findings 7. Outsourcing adds value only when part of an overall IT strategy aimed at leveraging maximum efficiency and effectiveness from people, processes and technology. 8. Greater centralized control of IT operations delivers significant savings in operational support without necessarily sacrificing performance. 9. World-class companies with centralized IT organizations have 24% lower operations costs while enjoying 21% fewer help-desk calls than their decentralized counterparts.

Additional Findings 1. A comparison of staff at average and world-class IT organizations indicates that 163% more professionals and 108% more managers in the latter group have advanced business degrees. 2. Companies are increasingly relying on IT for advice on improving the business with technology, which requires that IT staff add an understanding of business issues to its traditional core competencies.

Additional Findings • The consistent use of IT standards enables top-performing • companies to not only trim IT development costs by 41% • (from $661 to $391 annually per end-user), but also reduces • end-user support and training operations costs by 17% (from • $968 to $801 annually per end-user). • 4. As companies adopt new technologies, integrate • acquisitions and operate in a more real-time global • environment, the case for standardization becomes even • stronger.

Additional Findings 5. While 100% of organizations with world-class IT process performance have disaster-recovery plans in place, only 77% of average companies maintain such a plan, suggesting the presence of a penny-wise, pound-foolish approach to risk management in the latter group.

IT Management When a company is looking to cut costs, they go after areas they don’t understand and many don’t understand information technology. Developing a better understanding of IT—what you have, how it is being used, and what can be standardized, simplified and improved—is critical if business-technology managers are ever to get control of spending for maintenance and operations.

IS Management Another appropriate 80-20 rule An IS organization that spends 80% of its development resource on maintenance and only 20% on new technology or business process enhancements. This makes it hard to argue that IT/IS is adding value to the business and that the IS organization deserves bigger budgets.

IS Management • One of the mistakes is just taking what is already being done and automating it. • The biggest opportunity for cost savings is figuring out where to change the business processes. • A lot of companies haven’t done an inventory of their technology assets or assessed the costs of maintaining those assets. • The Hackett Group classifies an IS organization as world class if they rank in the top 25% in efficiency and effectiveness in categories such as infrastructure, planning and strategy, and management and administration of labor and vendors.

World Class IT Standards • Spend 18% less per user. • Operate with 36% fewer people. • Use 29% fewer applications per 1,000 users. • Dedicate 23% more of their budget to overall outsourcing. • Devote 60% more to infrastructure outsourcing. • Commit 34% less to application development and maintenance outsourcing. Source: InformationWeek, Feb. 21, 2005

IS Management • Have standardized and consolidated the IT infrastructure. • Establish a consistent methodology for tracking projects. • Make better use of selective outsourcing and strategic partners to lower labor costs and gain capabilities that they do not want to make an investment. • Make sure that senior management understands the costs and benefits of each major application and service so that they can decide on the level of service and spending that the organization can support.

IT Doesn’t Matter May 2003 Edition of Harvard Business Review By Nicholas G. Carr Editor-at-Large Harvard Business Review

Strategy to Sell Books • IT Doesn’t Matter • Does IT Matter? Information Technology and the Corrosion of Competitive Advantage. (April 2004) • Amazon.com sales rank – 29. • Popular in Japan – 10. • IT Doesn’t Matter—Business Processes Do: A Critical Analysis of Nicholas Carr’s IT Article in the Harvard Business Review by Howard Smith and Peter Figar.

IT Doesn’t Matter What makes a resource truly strategic and gives it the capacity to be the basis for a sustained competitive advantage is not ubiquity but scarcity. You only gain an advantage over a rival by having or doing something that they can’t have or do.

IT Management Rule Recommendations • Spend less. • Follow, don’t lead. • Focus on vulnerabilities, not opportunities.

In Support of the Argument • The emergence of the Personal Computer as the primary computing device. • Continued price/performance of IT. • The availability of the Internet. • The emphasis on integrated application software from vendors versus developing proprietary application software.

IT Risk The operational risks associated with IT are many—technical glitches, obsolescence, service outages, unreliable vendors or partners, security breaches, even terrorism. Few companies have done a thorough job of identifying or tempering vulnerabilities.

Book Conclusions 1. IT management should become boring. 2. The key to success for the vast majority of companies is to no longer seek advantage aggressively but to manage costs and risks meticulously. 3. The challenge will be to maintain discipline when the business cycle strengthens and the hype about IT’s strategic value increases.

Lots of Rebuttals • Despite Carr, global IT spending should increase from $1.9 billion in 2003 to $2.0 billion in 2004. • IDC survey says that non-IT managers spend 20% of their time dealing with IT. • Sixty percent say that the strategic significance of IT is increasing. • Only 2% said it was decreasing. • 55% said that their companies should use IT more aggressively.

Important Business Topics 1. Direct Business Model E-Commerce E-Business 2. Integrated Enterprise Business Processes Enterprise Resource Planning (ERP) Supply Chain Management (SCM) Customer Relationship Management (CRM) 3. Outsourcing 4. Reengineering Core Business Processes 5. Managing Change

Some Appropriate Questions • Do you really believe that information systems can make your organization more competitive? • Is this a technical or an internal marketing challenge? • What is the current credibility of the IS organization? • What are the basic prerequisites for an organization to use IS to compete?

5. How do you align information systems with the goals and objectives of the business? 6. What is the scope of competitively focused systems? 7. How important is determining the value of IS within an organization? 8. What are the organizational and personnel implications of using IS to compete? 9. Does the use of IS to compete ever get easy? More Questions!

Manufacturing System Guidelines 1. Never implement a new system without first simplifying the process. 2. Stay around to help the user articulate your solution to their problem. 3. Automate where appropriate but only if you have senior management commitment. 4. Implement through user ownership of the system.

So where are we? In a period of unprecedented opportunity driven by business and technological change made difficult by: • Competition • Complexity • The Pace of the Change

Getting A Job! Student Services and Job Fairs (Westech) Specific Company Web Pages Job Search Web Pages Personal Networking With People You Know

Remaining Schedule