It used to be that managers could delegate IT decisions to the organization’s resident computer experts and they would simply go away and decide how to design and build a solution. But now, the decisions being made can affect the whole business in terms of service and product possibilities, smooth running of day-to-day operations and opportunities for sharing information. Is it
But there is a problem with senior management getting closer to the IT decision-making process. Davenport (1994) says, ‘General managers … usually don’t know much about computers. They may like the idea of using information technology strategically. … But they seldom know how to translate their wishes into specific IT investments.’ How can this situation be managed?
First, it is important to decide what sort of contribution IT makes to the organization’s strategy. This enables the senior management team to gauge how much and what sort of attention the development and running of IT systems should be given by
To make this decision it is necessary to look at two factors: strategic impact of application development and strategic impact of existing systems. For some organizations, the development of new innovative IT systems has a significant strategic impact; for others, they are more focused on installing off the shelf packages to enhance some aspect of internal performance. Similarly, some organizations are 100 per cent dependent on IT to maintain operational performance, such as manufacturing organizations. For others, it might take quite a period of time before a disruption in IT services would create a significant performance dip.
The grid in Figure 8.1 is useful for assessing the organization’s current IT strategic position and thus deciding how much senior management attention needs to be spent on IT issues, and how IT should be managed. It is worth noting that the organization may change its position on the grid over a number of years.
Figure 8.1: IT strategic grid
‘Support’ organizations may
‘Factory’ organizations are completely dependent on the smooth running of their IT systems. For instance, a manufacturing unit might grind to a halt if the IT systems were to fail. However, with this type of organization, innovative applications developments, although important, are not crucial to the organization’s ability to be competitive, except when its performance starts to lag behind
‘Turnaround’ organizations are those in which innovative applications developments are crucial to the firm’s strategic success, but the day-to-day running of IT systems is not so critical. This might for example be an organization developing e-learning packages. The other classic examples are DHL, UPS and Fedex, who all
‘Strategic’ organizations such as banks and insurance companies are those in which innovative applications development
How do senior managers ensure that IT investment decisions are in line with the organization’s long-term strategy? The answer may be to develop a set of guiding principles which
The ‘principles’ approach to IT is advocated by Davenport. He recommends that a task force is set up comprising from 5 to 10 senior managers, including a senior information systems person, together with a small group of IS managers. This
The IS managers create the initial set of principles which
On infrastructure: We are committed to a single vendor environment.
On applications: IS will provide applications that support cross-functional integration of business processes.
On data: Data created or obtained within the company belongs to the corporation – not to any particular function, unit, or individual. It is available to any
userin the company who can demonstratea need for it.
On organization: The user-sponsor of a systems project will be responsible for the business success of the system.
Once this amount of time and effort is spent aligning the thinking between senior business managers and IT managers, the strategic course for IT progress is set, and decision making becomes much easier.