IT Strategy:  Issues and Practices For these Global Editions, the editorial team at Pearson has collaborated with educators across the world to address a wide range of subjects and requirements, equipping students with the best possible learning tools This Global Edition preserves the cutting-edge approach and pedagogy of the original, but also features alterations, customization, and adaptation from the North American version Global edition Global edition Global edition IT Strategy Issues and Practices THIRD edition James D McKeen • Heather A Smith THIRD edition McKeen Smith This is a special edition of an established title widely used by colleges and universities throughout the world Pearson published this exclusive edition for the benefit of students outside the United States and Canada If you purchased this book within the United States or Canada you should be aware that it has been imported without the approval of the Publisher or Author Pearson Global Edition McKeen_1292080264_mech.indd 28/11/14 12:56 PM IT Strategy: Issues and Practices A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Third Edition Global Edition IT Strategy: Issues and Practices James D McKeen Queen’s University Heather A Smith Queen’s University Boston Columbus Indianapolis New York San Francisco Hoboken Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto  Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Editor in Chief: Stephanie Wall Head of Learning Asset Acquisition, Global Edition: Laura Dent Acquisitions Editor: Nicole Sam Program Manager Team Lead: Ashley Santora Program Manager: Denise Vaughn Editorial Assistant: Kaylee Rotella Assistant Acquisitions Editor, Global Edition: Debapriya Mukherjee Associate Project Editor, Global Edition: Binita Roy Executive Marketing Manager: Anne K Fahlgren Project Manager Team Lead: Judy Leale Project Manager: Thomas Benfatti Procurement Specialist: Diane Peirano Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber Cover Image: © Toria/Shutterstock Cover Designer: Lumina Datamantics Full Service Project Management: Abinaya Rajendran at Integra Software Services, Pvt Ltd Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this ­textbook appear on appropriate page within text Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited 2015 The rights of James D McKeen and Heather A Smith to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988 Authorized adaptation from the United States edition, entitled IT Strategy: Issues and Practices, 3rd edition, ISBN 978-0-13-354424-4, by James D McKeen and Heather A Smith, published by Pearson Education © 2015 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners ISBN 10:     1-292-08026-4 ISBN 13: 978-1-292-08026-0 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 Typeset in 10/12 Palatino LT Std by Integra Software Services, Pvt Ltd Printed and bound in Great Britain by Clays Ltd, Bungay, Suffolk A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Contents Preface  13 About the Authors  21 Acknowledgments  22 Section I Delivering Value with IT 23 Chapter the IT Value Proposition  24 Peeling the Onion: Understanding IT Value  25 What Is IT Value?  25 Where Is IT Value?  26 Who Delivers IT Value?  27 When Is IT Value Realized?  27 The Three Components of the IT Value Proposition  28 Identification of Potential Value  29 Effective Conversion  30 Realizing Value  31 Five Principles for Delivering Value  32 Principle Have a Clearly Defined Portfolio Value Management Process  33 Principle Aim for Chunks of Value  33 Principle Adopt a Holistic Orientation to Technology Value  33 Principle Aim for Joint Ownership of Technology Initiatives  34 Principle Experiment More Often  34 Conclusion  34  •  References  35 Chapter Delivering Business Value through IT Strategy  37 Business and IT Strategies: Past, Present, and Future  38 Four Critical Success Factors  40 The Many Dimensions of IT Strategy  42 Toward an IT Strategy-Development Process  44 Challenges for CIOs  45 Conclusion  47  •  References  47 Chapter Making IT Count  49 Business Measurement: An Overview  50 Key Business Metrics for IT  52 A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM 6 Contents Designing Business Metrics for IT  53 Advice to Managers  57 Conclusion  58  •  References  58 Chapter Effective Business–IT Relationships  60 The Nature of the Business–IT Relationship  61 The Foundation of a Strong Business–IT Relationship  63 Building Block #1: Competence  64 Building Block #2: Credibility  65 Building Block #3: Interpersonal Interaction  66 Building Block #4: Trust  68 Conclusion  70  •  References  70 Appendix A  The Five IT Value Profiles  72 Appendix B  Guidelines for Building a Strong Business–IT Relationship 73 Chapter Business–IT Communication  74 Communication in the Business–IT Relationship  75 What Is “Good” Communication?  76 Obstacles to Effective Communication  78 “T-Level” Communication Skills for IT Staff  80 Improving Business–IT Communication  82 Conclusion  83  •  References  83 Appendix A  IT Communication Competencies  85 Chapter Effective IT Leadership  86 The Changing Role of the IT Leader  87 What Makes a Good IT Leader?  89 How to Build Better IT Leaders  92 Investing in Leadership Development: Articulating the Value Proposition  95 Conclusion  96  •  References  97 Mini Cases Delivering Business Value with IT at Hefty Hardware  98 Investing in TUFS  102 IT Planning at ModMeters  104 A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Contents Section II   IT Governance   109 Chapter Effective IT Shared Services  110 IT Shared Services: An Overview  111 IT Shared Services: Pros and Cons  114 IT Shared Services: Key Organizational Success Factors  115 Identifying Candidate Services  116 An Integrated Model of IT Shared Services  117 Recommmendations for Creating Effective IT Shared Services  118 Conclusion  121  •  References  121 Chapter Successful IT Sourcing: Maturity Model, Sourcing Options, and Decision Criteria  122 A Maturity Model for IT Functions  123 IT Sourcing Options: Theory Versus Practice  127 The “Real” Decision Criteria  131 Decision Criterion #1: Flexibility  131 Decision Criterion #2: Control  131 Decision Criterion #3: Knowledge Enhancement  132 Decision Criterion #4: Business Exigency  132 A Decision Framework for Sourcing IT Functions  133 Identify Your Core IT Functions  133 Create a “Function Sourcing” Profile  133 Evolve Full-Time IT Personnel  135 Encourage Exploration of the Whole Range of Sourcing Options  136 Combine Sourcing Options Strategically  136 A Management Framework for Successful Sourcing  137 Develop a Sourcing Strategy  137 Develop a Risk Mitigation Strategy  137 Develop a Governance Strategy  138 Understand the Cost Structures  138 Conclusion  139  •  References  139 Chapter Budgeting: Planning’s Evil Twin  140 Key Concepts in IT Budgeting  141 The Importance of Budgets  143 The IT Planning and Budget Process  145 A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM 8 Contents Corporate Processes  145 IT Processes  147 Assess Actual IT Spending  148 IT Budgeting Practices That Deliver Value  149 Conclusion  150  •  References  151 Chapter 10 Risk Management in IT  152 A Holistic View of IT-Based Risk  153 Holistic Risk Management: A Portrait  156 Developing a Risk Management Framework  157 Improving Risk Management Capabilities  160 Conclusion  161  •  References  162 Appendix A  A Selection of Risk Classification Schemes 163 Chapter 11 Information Management: Stages and Issues  164 Information Management: How Does It Fit?  165 A Framework For IM  167 Stage One: Develop an IM Policy  167 Stage Two: Articulate the Operational Components  167 Stage Three: Establish Information Stewardship  168 Stage Four: Build Information Standards  169 Issues In IM  170 Culture and Behavior  170 Information Risk Management  171 Information Value  172 Privacy  172 Knowledge Management  173 The Knowing–Doing Gap  173 Getting Started in IM  173 Conclusion  175  •  References  176 Appendix A  Elements of IM Operations  177 Mini Cases Building Shared Services at RR Communications  178 Enterprise Architecture at Nationstate Insurance  182 IT Investment at North American Financial  187 A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Contents Section III   IT-Enabled Innovation 191 Chapter 12 Technology-Driven Innovation  192 The Need for Innovation: An Historical Perspective  193 The Need for Innovation Now  193 Understanding Innovation  194 The Value of Innovation  196 Innovation Essentials: Motivation, Support, and Direction  197 Challenges for IT leaders  199 Facilitating Innovation  201 Conclusion  202  •  References  203 Chapter 13 When Big Data and Social Computing Meet  204 The Social Media/Big Data Opportunity  205 Delivering Business Value with Big Data  207 Innovating with Big Data  211 Pulling in Two Different Directions: The Challenge for IT Managers  212 First Steps for IT Leaders  214 Conclusion  215  •  References  216 Chapter 14 Effective Customer Experience  217 Customer Experience and Business value  218 Many Dimensions of Customer Experience  219 The Role of Technology in Customer Experience  221 Customer Experience Essentials for IT  222 First Steps to Improving Customer Experience  225 Conclusion  226  •  References  226 Chapter 15 Business Intelligence: An Overview  228 Understanding Business Intelligence  229 The Need for Business Intelligence  230 The Challenge of Business Intelligence  231 The Role of IT in Business Intelligence  233 Improving Business Intelligence  235 Conclusion  238  •  References  238 A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM www.downloadslide.net 354 Section IV  •  IT Portfolio Development and Management Omaha are threatening to strike,” he said as Joel took his seat “They think you’re going to use your system to monitor their behavior What’s going on?” “I have no idea sir,” Joel stammered “We’ve just done a technical pilot.” “Well, I’ve told them out there that the pilot has been suspended indefinitely,” Alan said “Clearly, you haven’t been careful about the impressions you’re giving so you’d better go back to the drawing board.” Back in the team room, Joel called an urgent meeting to explain the situation “We’ve done a lot of work to collect this data and it could have a huge impact on our costs, energy efficiency and safety record,” he noted “But we will not get a chance to prove this if we don’t figure out how to get the drivers onside We didn’t need to ‘sell’ the Great Green project, but this hostile reaction suggests that we may have some selling to with other parts of the organization as well as our truck drivers Anybody got any other ideas about what could go wrong?” “Well, our front-line operations managers are super busy,” said Menakshi “We’d better be careful how we present this program to them or it could be seen as a lot of extra work.” “Our mechanics should be involved as well,” said Ted “They seemed quite interested in the information we could pull off the trucks They could be quite helpful if we get them involved.” “We’ve got all this great data,” said Sue, “but how are we going to get the drivers to act on it? Just collecting this information isn’t enough.” “We’ve also got to consider how to roll this project out across the company,” said Mario “If the drivers can get this upset about a simple technical pilot, what are they going to when they see the information we’re planning to collect!” The team fell silent and Joel turned all these thoughts over in his mind He knew his future at CFI depended on what they did next They’d barely started this project and it was already in trouble “Okay,” he said “We’ve hit a snag so now we’ve got to find a way to get Energy Telematics back on track I told Alan we’d work up a plan and, if he likes it, he’ll unsuspend the project Who’s got some ideas?” Discussion Questions Why was Joel’s team caught off guard by the hostile reaction of the truck drivers to “technical” pilot of the Energy Telematics project at the Omaha depot? Why did the “Great Green Challenge” succeed while the Energy Telematics p ­ roject hit road bumps right out of the gate? What are the lessons learned for Joel and his team? Develop a plan for Joel and his team to get the Energy Telematics project unsuspended The plan will need details of who, what, when, where and why M21_MCKE0260_03_GE_C21.indd 354 12/3/14 8:56 PM www.downloadslide.net Mini Case Managing Technology at Genex Fuels4 “You have got yourselves into a terrible predicament,” said V R “Sandy” Sandhuramen, his soft Indian accent belying the gravity of his words “You are incredibly lucky you have managed to business as well as you have, but this situation cannot be allowed to carry on.” Sandy, a high-priced technology consultant, had been hired by Genex Fuel’s new CIO, Nick Devlin, to review the company’s technology portfolio and help him and his newly appointed IT architect, Chuck Yee, get a handle on the firm’s technology needs Genex, a major producer of crude oil and natural gas, is the largest marketer of petroleum and petroleum products in the region It is structured into three distinct business divisions, each comprising a number of functional segments Until recently, IT had been decentralized into the three divisions, each with its own director of IT who reported to the divisional executive vice presidents (EVPs) Devlin, formerly the director of the corporate division, had been appointed CIO and given the specific mandate to bring in SAP as the primary technology platform for all the divisions “We have to start behaving like we’re one business,” said the CEO when he appointed Devlin “I want a much more agile and responsive IT organization than we’ve had in the past It seems to me that every time I ask IT to look into something I’ve heard or read about, they always come up with a thousand and one reasons why it won’t work We need to be able to use technology competitively, and that won’t happen unless you can get ahead of the curve.” Devlin’s excitement about his new mandate had lasted just about a week, until the true scope of the challenge became clear He had asked each divisional IT director for an inventory of hardware and software currently in place and to briefly outline the work that was in their plans for the coming year “We must have one of every piece of hardware and software ever produced,” Devlin marveled as he scanned their reports On the one hand, there was a new customer management system called COMC, which had been implemented to improve real-time information exchange between the company’s 135 bulk fuel sites and Genex headquarters On the other hand, IT was still running an archaic DOS-based marketing system called MAAS to provide customer service and reports “And they want to bring in SAP!” he groaned “We need a plan, and we need it soon.” That was when Devlin had engaged Sandy to work with Yee “First, I want a ­no-holds-barred assessment of our current situation,” he had said, and now they were in his office, outlining the “terrible predicament.” Smith, H A., and J D McKeen “Managing Technology at Genex Fuels.” #9-L05-1-004, Queen’s School of Business, February 2005 Reproduced by permission of Queen’s University, School of Business, Kingston, Ontario 355 M21_MCKE0260_03_GE_C21.indd 355 12/3/14 8:56 PM www.downloadslide.net 356 Section IV  •  IT Portfolio Development and Management “The biggest problem you face at present,” said Sandy, “is the fact that you have absolutely no standards and no integration, as you discovered for yourself, Nick.” There was a lot of technology out there—both old and new—and it was a political hot potato Almost every system had its group of advocates, some very senior in the company All the EVPs had invested their individual technology budgets in the hardware and software that they felt could best support their work The problem was that maintaining this mishmash was now costing an arm and a leg And it was highly doubtful that the company was getting true value for its technology investment “We should be able to leverage our existing investments so we can invest in new technology,” said Yee “Instead, almost all our budget is taken up with holding these systems together with toothpicks and tape.” “One of the most challenging situations,” Sandy went on, “is Price One.” Obsolete but absolutely essential, Price One is the fuel-pricing system that stores the pricing algorithms for all fuels marketing functions, including aviation, marine, retail, branded associates, and industrial and wholesale Although pricing is an ­integral part of marketing, Price One cannot communicate with COMC and is not easily adaptable to changes in the business environment Price One perfectly reflected the business and technology that existed ten years ago, but this has now become a real drawback To get around these limitations while continuing to use Price One, staff manually feed information from pricing requests in COMC to Price One to get approval because both systems use different terminology in coding products for different pricing methods Price One also lacks the ability to link information from different systems to ensure data integrity As a result, Price One has accumulated some irrelevant data groups under pricing for products, and such corrupted data can be detected only by an experienced individual who has been dealing with that product group for decades and who would know at a glance the validity of the data One of Price One’s critical flaws is its inability to link with other systems, such as COMC, and to pick up competitive market information in order to approve price Previous plans to rewrite this system have been resisted strenuously by management because of the expense Now the system is on its last legs “And like most oil and gas companies,” Sandy observed, “you have automated very few of your information assets as other types of organizations have done.” Typically for the industry, Genex had grown by acquiring other, smaller firms and had inherited an enormous amount of physical data It now has more than two million items of paper and microfilm It has one hundred twenty thousand tapes of data Some items date back to the 1940s and came from numerous sources The company’s seismic assets, on which it bases many of its decisions and which has a replacement cost estimated at more than two billion dollars, are stored on a wide variety of media from analog tapes, magnetic reels, and cartridges to optical discs to paper, film, and microfilm They are spread out across five conventional physical warehouses This system of data management is problematic for two main reasons First, with land sales occurring every two weeks, it is extremely difficult to make timely decisions based on all known information about a property Clearly, the more seismic information a company can bring to bear on its decisions, the better it can decide where it wants to further work Second, the company’s data assets, on which its future depends, are extremely vulnerable There is no backup When needed, the only copy of the M21_MCKE0260_03_GE_C21.indd 356 12/3/14 8:56 PM www.downloadslide.net Managing Technology at Genex Fuels 357 information requested is physically transported to Genex’s offices The tapes on which the data reside deteriorate further with each reading Furthermore, much information resides on obsolete forms of media and is getting increasingly difficult to access “Finally, IT is getting a lot of pressure from the executive office,” reported Sandy “These guys have seen what’s going on in other companies, and they want to see Genex move into the twenty-first century Staff at Genex cover vast territory and must work from home, from local facilities, or on the road Not only does Genex need to provide a virtual working environment for these workers, but it also needs to consider how they can work together as a team without having physical colocation for communication.” “Well, I guess we have it all,” said Devlin “Integration problems, outdated hardware and software, inconsistent data, expensive workarounds, pressure to modernize, and substantial budget limitations.” Turning to Yee and Sandy, he smiled “Now what are we going to about it? Where we start?” Discussion Questions What evidence is the CEO using to suggest that Genex is not using technology competitively? Did Devlin need to hire Sandy, a “high-priced technology consultant,” to tell him that technology at Genex was a mess? Devise a strategy to successfully implement enterprisewide systems (such as SAP) at Genex M21_MCKE0260_03_GE_C21.indd 357 12/3/14 8:56 PM www.downloadslide.net Index A Access in IM, 171 of information, 244, 249 of people, 243 Account manager position, 41 Accountability by IT leadership, 93 for stewardship of information, 168–169 Accuracy discouraged by budget process, 149 as part of IM, 170 Alignment of strategies between IT and business, 37–38, 39–40, 45–47 budget, traditional practices, and, 46 by incentive systems, 55 poor alignment, reasons for, 51–52 Allocation of funds See Budget, IT APM capabilities challenges experienced, 283 governance, 281–284 inventory management, 284–285 rationalization, 285–286 reporting, 285–286 strategy, 281–284 Application portfolio management (APM), 274–287, 298 benefits, 276–278 effective, 302 focus, 278 interrelated capabilities, 278–286 key leasons, 286–287 quagmire, 275–276 Application service providers (ASPs), 125 Application System Asset Management (ASAM) Decision Chart, 311 Architecture business, 44–45 governance, 314–316 Archiving, 336 ASAM See Application System Asset Management ASP See Application service providers Assessment of actual IT spending, 148–149 of IT value, 29–30, 31–32 B Balance among initiatives, 42–44 Balanced scorecard measurement system, 51, 53, 96 Barriers to conversion, 31 Behavior change and feedback loops, 342 and information delivery, 337 by leaders, 89, 95 “Best” practices See Regulatory legislation Big bang migration strategy, 314 Big data business value better capabilities, 209–210 business strategy, 208–209 challenges, 213 delivering, 207–211 governance, 207–208 innovating with, 211–212 new skills and tools, 210–211 opportunity, 205–207 Big data opportunity, 205–207 “Bottom up” approach to IT investment, 51 Budget, IT cycles and “rolling planning,” 44 determining cost-effectiveness of IT, 42 effective practices, 149–150 fiscal, 141–142, 148 fiscal policy, corporate, 145 functional, defined, 142 IM, assessing value of, 172 impact of, on business, 49–50 importance of, 143–145 IT spending, assessing actual, 148 key concepts, 141–143 planning and budget process, 145–148 predetermined percentage method, 44 problems with process, 140–141 research and development (R & D) in, 312–313 “rolling” planning and budget cycles, 44, 46, 150 technology roadmap, using, to lower costs, 308 traditional practices, challenge of, 46 Bureaucratic IT processes, 200 Business challenges collaboration, 246 lack of BI skills, 232–233 lack of knowledge, 232 358 Z01_MCKE0260_03_GE_INDX.indd 358 12/3/14 8:57 PM www.downloadslide.net Index 359 lack of sponsorship, 232 perspective, 232 silo thinking, 232 Business communication, improving develop new skills, 82 effective communication visible, 82 formally and informally, 82 increase frequency of, 82–83 interpersonal interaction, 60 IT relationship, 75–76 sharing knowledge, 77 spend more time, 83 strong relationship, 90 Business enabling by IT, 42 Business exigency, in delivery of IT functions, 132 Business foundation business expectation, 70 competence, 64–65 credibility, 65–66 ensure effective execution, 65 interpersonal interaction, 66–68 professionalism, 66 trust, 68–70 Business intelligence, building, 336–337 acquire new IT, 236–237 articulate value, 237 challenges, 231–233 continuous improvement, 235–236 cross-functional governance, 236 data acquisition, 234 ecosystem, 229–230 explosion of data, 231 focus, 236 improving, 235–237 information management, 234 intelligence delivery, 234–235 learn from past, 235 need for, 230–231 role of, 233–235 strategy and planning, 234 understanding, 229–230 watch out implementation, 237 Business metrics acting on results, 58 designing a program for IT, 53–57 key, for IT, 52–53 levels of measurement, 53 measurement systems, 50–51 overview, 50–52 principles of a good program, 56 selecting which to measure, 57 Z01_MCKE0260_03_GE_INDX.indd 359 Business model, revisiting, to develop strategies, 40–42 Business performance correlation between IT and, 49–50 problems in measuring, 50 Business relationship, building characteristic of, 62 foundation of strong, 63–70 guidelines, 73 IT relationship, 61 mandate the relationship, 70 nature of, 61–62 C Capability Maturity Model Integration, 322 Capital expenditures, defined, 141–142 Change See Experimentation; Innovation Chief privacy officer position, 172 CIO budget process, role in, 144–145 challenges for, 45–46 role in gap analysis, 311 Classifying technologies, 311 CMMI See Capability Maturity Model Integration “Coffee cans” in budgets, 148 Collaboration with IT characteristics, 244–246 components of successful, 247–248 description, 245 first step for facilitating effective, 251–253 improve communication skills, 75 information access and management, 249–250 knowledge sharing, 95 mass, 257 motivate, 175 need for, 241–244 potential business value, 242 relationship management, 300 risk, 250 role, 249–251 security, 250 smarter development environment, 328 technology, 246 Committee of Sponsoring Organizations of the Treadway Commission, 158 Communication business-IT relationship, 75–76 as element of leadership, 93 empowering, 87 external electronic, 152 12/3/14 8:57 PM www.downloadslide.net 360 Index Communication (continued) frequent, 93 good, 76–78 improving, 82–83 IT competencies, 85 knowledge sharing, 77 mature organizations, 77–78 nontechnical, 66–67 obstacles to effective, 78–80 outcome measure, 76 plug-and-play, 248 relationship management, 300 social behavior, 76–77 “T-level”, skills for IT staff, 80–82 value of, 196 Competition comparison shopping and e-business, 335 effect of, on IT budget, 146 external business intelligence gathering, 337 Compliance with regulations See Regulatory legislation Continuous change, defined, 193 Control as decision criterion for delivery of IT functions, 131 by leaders, 88 Control standards See Standards Conversion of projects from idea to reality, 30–31 Core business processes and link to experimentation, 199 Correlation between IT and business performance See Business performance COSO See Committee of Sponsoring Organizations of the Treadway Commission Cost allocation, 142–143 Cost effectiveness, determining, 42 Costs See Budget, IT CPP See Customer experience/service Credibility of IT, 88 CRM See Customer relationship management Culture and behavior See also Behavior change in IM, 170–171, 174 Customer experience/service customer focus, 223 customer pain point (CPP), 199 customer satisfaction, importance of, 52–53 data management, 224 Z01_MCKE0260_03_GE_INDX.indd 360 delivery, 224 dimensions of, 219–221 e-business and information delivery, 335 essential for IT, 222–224 improving, 217–226 information and multimedia, 99 role of technology, 221–222 steps to improve, 225–226 understanding IT value, 25 utilization, 223–224 visioning, 222–223 Customer relationship management (CRM), 221 D Dashboards, digital information delivery through, 335 Data See Information delivery Data generation, 211 Data mining, 336–337 Data processing (DP), 332 Data warehouse, 336–337 Delivery of IT functions See Functions, IT, delivery of Disruptive innovation, defined, 193 Diversity and cultural issues in electronic communication, 215 Domain architects, 309, 312, 315 E EAI See Enterprise application integration e-business information delivery and, 335 Effective demand management, 293, 300 application portfolio, 298 business–IT partnership, 299–300 enterprise architecture, 298–299 governance, 301–302 marketing skills, 300 strategic Initiative, 297 transparency, 301–302 Efficiencies competition on, 39 with technology roadmap, 308 e-mail and information delivery/management, 336 Employees See also Incentive systems access to information via Internet, 335–336 behavior change and information delivery, 337 culture and behavior in IM, 170–171 12/3/14 8:57 PM www.downloadslide.net Index 361 empowerment of, by IT leaders, 93 intangible experience of, 166 leadership training, 89, 92–96 migration strategy for, for future technology demands, 314 satisfaction of, importance of, 52 as staff assigned to project, 31 staffing of IT initiatives, 147 supportive work environment for, 90–91, 96 training, 30–31, 89, 92–96, 141 value of, in IT, 24, 26 Empowerment by IT leaders, 93 Enabling, business, by IT, 42 Enforcement, effective, as part of governance, 315 Enterprise architecture, 44–45 measures, 53 perspective on IM, 167 value, 32 Enterprise application integration (EAI), 275 Enterprise architecture, 298–299 Enterprise risk management, 153 Etiquette, 66, 252 Expenditures See Budget, IT Experimentation core business processes, link to, 199 customer value of, 199 for diminishing risk, 34 as part of innovation, 193 prioritizing, 45 for testing viability of new concepts/ technologies, 43 venture funding for, 199 F Facilitating innovation, 201–202 Feedback loops in information delivery, 342 Finance specialist position, 149 Fiscal IT budget defined, 141–142 establishing of, 148 Fiscal policy, corporate, 145 Flexibility as decision criterion for delivery of IT functions, 131 as leadership skill, 88, 91 of technology, 307 Follow-up to determine value, 32 Framework for information management, 167–170 Z01_MCKE0260_03_GE_INDX.indd 361 “Function delivery” profile, 133–134 Functional IT budget, defined, 142 Functional measures, 53 Functions, IT, delivery of decision criteria for, 131–132 decision framework for, 133–137 maturity model, 123–127 sourcing options, 127–130 G Global business See also Sourcing consolidating, with technology roadmap, 308 networkcentric operations in future, 342 Governance, IT architecture governance, 315 budget contribution to, 143 of funding for experimentation, 199 skills, for IT leaders, 89 Gradual migration strategy, 314 H Hackers, protection against See Security Holistic orientation to IT value, 33 HR management and training leadership training, 89, 92–95 I Identification of potential IT value, 29–30 IM See Information management Impact of IT spending on budget, 49–50 Improving customer experience business value, 218–220 deliver technology, 224 dimensions of, 219–221 essential for IT, 222–224 first step, 225–226 focus on, 223 integrated business, 225 role of technology, 221–222 Incentive systems bonuses, 55 to drive experimentation, 197 and IM, 175 value-based management (VBM), 50–51 value of extending to all IT staff, 57 variable pay program (VPP), 55, 56 Informal information, managing, 343 Information delivery best practices, 341 effective, 338–341 future of, 341–343 12/3/14 8:57 PM www.downloadslide.net 362 Index Information delivery (continued) importance of, today, 333–334 value, delivering, 334–337 Information management (IM) elements of operations, 177 framework for, 167–170 issues in, 170–173 scope of, 165–166 steward position, 168–169 tips for getting started in, 173–175 Infrastructure investments in, 43 priorities, setting, 45 Initiatives, five types of, 42–44 Innovation analytics, 212 big data, 211–212 business strategy, 201 collaborate with vendors, 201–202 "cool" technology, 201 customer value of, 199 data generation, 211 direct, 199 efficiency, 211 essentials, 197–199 facilitating, 201–202 focus on achievable targets, 201 incubate, 201 integrate business, 202 intranet, value of, 198 with IT, 192–202 learn by design, 201 manage process, 202 motivate, 197 need for, 193–194 negative influence, 141 promote learning agility, 202 send clear message, 202 separate operation, 149 service, 211 strategies of, 198 support, 197–198 understanding, 194–196 value of, 196–197 Instant messaging and information delivery/ management, 336 Intangible experience, 166 Integration and interoperability, 307 Integrity in IM, 170 as leadership quality, 89 Z01_MCKE0260_03_GE_INDX.indd 362 Interactive voice recognition, 222, 223, 271 Internal control standards See Standards Internet, 164, 178, 228, 241 Interpersonal interaction management of politics and conflict, 67–68 nontechnical communication, 66–67 professionalism, 66 real business value, 63 relationship work in business, 60 significant dimensions of, 66 social skills, 67 soft skills, 68 strengthening, 68 Intranet, value of, in innovation process, 198 Investments in IT “bottom up” approach to, 51 identifying opportunities for, 29–30, 33 infrastructure, 43 IT based risk classification schemes, 163 external, 154 framework for addressing, 157–160 holistic view, 153–155 improving capabilities, 160–161 internal, 154 managing, 152–161 portrait, 156–157 IT competence communication, 85 execution, 64–65 expertise, 64 financial awareness, 64 functional, 77 interpersonal, 74 need skills, 88 strengthening, 65 stress technical, 68 IVR See Interactive voice recognition K Key organizational success factors decision making, 116 key goals, 116 problem solving, 116 KM See Knowledge management Knowing-doing gap, 173 Knowledge enablement/enhancement, in delivery of IT functions, 131–132 Knowledge management (KM) defined, 165–166 need for, 173 12/3/14 8:57 PM www.downloadslide.net Index 363 L Leadership in IT challenges, 199–200 changing role of IT leader, 87–89 changing the culture, 213–214 create sustainable process, 200 development of, 92–95 first steps, 214–215 provide adequate resources, 200 qualities of good leader, 89–90 reassess process and practice, 200 resources, 212–213 short business horizons, 212 strike correct balance, 200 styles of, 91 value proposition for, 95–96 Life cycle stages of technology, 311, 314 Lines of business (LOBs), 198, 307 LOBs See Lines of business M Management advice to, 57–58 in aligning strategies, 41 involvement in decision making, 41 modeling of IM value by, 175 support of IT, 27, 34, 46 Management of portfolio, 33 Managing IT demand economics of, 295 key organizational for effective, 296–302 organizational context, 294 portfolio management, 302 supply management, 293 “technology push” and “business pull”, 300 three tools, 295–296 ultimate goal, 296 understanding, 293–294 Mass collaboration, 245 Maturity model for IT function delivery, 123–127 Measurement See also Business metrics; Dashboards, digital as component of value realization, 31–32 Memoranda of understanding (MOUs), 128 Metrics, business See Business metrics Migration strategies, 314 principles to guide, 318 Misperceptions of IT See Perceptions of IT’s value/effectiveness Motivation See Incentive systems MOUs See Memoranda of understanding Z01_MCKE0260_03_GE_INDX.indd 363 N National Institute of Standards and Technology, 159 Negative perceptions of IT See Perceptions of IT’s value/effectiveness O Object oriented programming, 322 “Observe-orient-decide-act” (OODA) loop, 342 Obstacles to effective communication attitude, 79–80 business organizations structure, 79 changing nature of IT work, 78 frequency, 79 hiring practice, 79 nature of, 79 “Off-profile” (“noncompliant”) technology, 315 OLAP See Online analytical processing Online See Internet Online analytical processing (OLAP), 230 OODA loop See “Observe-orient-decide-act” loop Operations costs defined, 141, 142 separated from innovation costs, 149 Opportunities experimental initiatives, 43 for investments in IT, identifying, 29–30, 33 leveraging others’ ideas, 43 prioritizing, 45 Outsourcing See Sourcing P Partnership between IT and business, 41–42 as sourcing option for IT functions, 127–130 “Peeling the onion,” 25–28, 49 People See Employees Perceptions of IT’s value/effectiveness conflicts in, 26–27 time as factor in, 27 Performance, business See Business performance Pilot studies, value of, in diminishing risk, 34 “Placeholders” in budgets, 148 Planning and budget process, 145–148 Policy for IM, 167 Portfolio value management process, 33 PPM See Project portfolio management 12/3/14 8:57 PM www.downloadslide.net 364 Index Prioritizing projects mechanism for, 29–30 need for, 45 Privacy information delivery and, 334 legislation See Regulatory legislation outsourcing and, 172 policy, 168, 172–173 Product stewards, 315 Projects complementary, 33 conversion of, from idea to reality, 30–31 politicization of, avoiding, 29–30 project measures, 53 value of, assessing, 29–30 Project portfolio, 278 Project portfolio management (PPM), 295 Punctuated equilibrium, 193 Q Quality assurance See Testing R Radio frequency identification technology (RFID), 342 Realizing value, 31–32 Reforms affecting IT See Regulatory legislation; Sarbanes-Oxley Act Regulatory legislation budget, effect on, of, 145 compliance, effective, 168 impact on IT, 87 Relationship management, 300 Research and development (R & D), 312 Responsibility See Accountability Retention of documents as part of IM policy, 168 RFID See Radio frequency identification technology Risk diminishing, 34 Risk management capabilities, 160–161 category, 158 enterprise, 153 expect changes over time, 156 focus what important, 156 good grasp, 156 incorporate, 137 information, 171–172 information security, 154 IT based, 153 Z01_MCKE0260_03_GE_INDX.indd 364 mitigation, 159 monitoring, 159–160 ownership, 159 reporting, 158 technology inventory, 311 type, 158 view from multiple level, 157 Risk management framework, 157 RMF See Risk management framework Roach, Stephen, and impact of IT on services sector, 25 “Rolling” planning and budget cycles, 44, 46, 150 S Sarbanes-Oxley Act (SOX) effect on IT, 87, 173 and information delivery, 334 Scorecard methods balanced, 51, 53, 197 modified, 53–55 Security as decision criterion for delivery of IT functions, 131 IM policy for, 167, 168, 171–172 Self-service See also Customer experience/ service Self-synchronizing systems, 342–343 Sensor grids in future, 342 Service-level agreements (SLAs), 128 Service levels of IT technology, 310 Service-oriented architecture (SOA), 309, 320, 322 Services sector, impact of IT on, 25 Shared services in IT business oriented, 116 comprehensive investment model, 119 conceptual model, 111 creating, 110–121 customer relationship, 111 definition, 111 effective recommendations, 118–121 goal alignment, 118 identifying candidate, 116–117 integral part of process, people, 120–121 integrated model, 117–118 overview, 111–113 PROS and CONS, 114–115 redraft the relationship, 120 success factors, 115–116 true, 113 12/3/14 8:57 PM www.downloadslide.net Index 365 “Silver bullet thinking,” 25 Simplifying technology environment See Technology roadmap “Skunkworks,” 131, 313 SLAs See Service-level agreements SOA See Service-oriented architecture Social media, 205–207 Sourcing cost structures of, 138 outsourcing and privacy policy compliance, 172 risk management, 137–138 strategy, 315 SOX See Sarbanes-Oxley Act Spending See Budget, IT SPO See Strategic project office Staff See Employees Stakeholders involvement by, in IM, 174–175 Standards budget, effect on IT, 141 information management, 169–170 Stewardship of information, 168–169 Strategic Initiative Management, 297 Strategic project office (SPO), 297 Strategies, IT alignment challenges, 37–38, 39–40, 45–47 budget, effect on, 141 budget as means of implementing, 144–145 decision framework for delivery of IT functions, 133–137 enterprisewide, 150 flexibility, importance of, in, 44–45 four critical success strategies, 40–41 historical context of business and, 38–40 IM components of, 167, 177 imperatives, 55–57 information delivery, 340–341 leadership skills as, 89 partnership between business and IT, 41 problems with developing, 40 strategic investments, defined, 142 structure, importance of, in developing, 45 synchronization of capabilities, 41 themes, 40 Strengthening credibility, 66 Structural capital, IM as, 165 Support of IT by management, 27, 33 Z01_MCKE0260_03_GE_INDX.indd 365 Surrogate measures to demonstrate IT impact, 49 Sustaining innovation, defined, 193 Synchronization of capabilities, 41 System development business involvement, 324 flexible process, 326–327 improved governance, 323 improving, 324–325, 324–328 integration, 322 new approaches, 321 optimize big picture, 326 problem with, 320–321 reduce complexity, 327 smarter development environment, 328 steps to improve, 328–329 testing, 324–325 trends in, 321–323 waterfall method, 322 Systemic approach to IT value, 33 T TCO See Total cost of ownership, 287 "T-level" communication for IT staff listening, 81–82 tailoring, 81 talking, 81 thinking, 81 translation, 80–81 transparency, 81 Team effort related to IT success, 49, 50 “we” mentality, 34 Technology cool, caution with, 201 effect on leadership skills, 89 Technology roadmap benefits of, 307–308 defined, 306 elements of, 308–316 migration strategies, 314, 318 need for, 305–306 Testing viability of new concepts/technologies, 43 Themes, strategic, 40 Three components of IT value proposition, 28–32 Time dimension in implementing business metrics program, 57–58 in realizing IT value, 27–28 12/3/14 8:57 PM www.downloadslide.net 366 Index Total cost of ownership (TCO), 287 Training importance of, 31 leadership, 89–95 Transparency of IM, 171 Trust of leaders, 93 U Understanding, value of, for compliance to regulation, 174 Usage, as contributor to IT value, 31–32 V Validation See Testing Value, delivering through information, 334–337, 339, 341 Value-based management (VBM), 50–51 Value of IM assessing, 172 modeling, by senior management, 175 Value of Innovation, 196–197 Value of IT architecture builder, 72 assessment methodology, 29–30, 174 complementary projects to enhance, 33 defined, 25–26 delivery of, 27 Z01_MCKE0260_03_GE_INDX.indd 366 employees and, 25, 27 five principles for delivering value, 32–34 holistic orientation to, 33 leadership development, 95–96 partner, 72 perception of, 26–27 project coordinator, 72 support of, by management, 27 system provider, 72 technological leader, 73 three components of IT value proposition, 28–32 time dimension in realizing, 27–28 understanding, 23–28 Value system, articulating, by leadership, 93 Variable pay program (VPP), 55, 56 VBM See Incentive systems; Value-based management Viruses, protection against See Security VPP See Variable pay program Vulnerability to cyber attacks See Security W Web See Internet “W” effect, 27–28 “We” mentality, 34 “WISE” chart, 311 12/3/14 8:57 PM www.downloadslide.net Z01_MCKE0260_03_GE_INDX.indd 367 12/3/14 8:57 PM www.downloadslide.net Z01_MCKE0260_03_GE_INDX.indd 368 12/3/14 8:57 PM .. .IT Strategy: Issues and Practices A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM A01_MCKE0260_03_GE_FM.indd 26/11/14 9:32 PM Third Edition Global Edition IT Strategy: Issues and Practices. .. from the United States edition, entitled IT Strategy: Issues and Practices, 3rd edition, ISBN 978-0-13-354424-4, by James D McKeen and Heather A Smith, published by Pearson Education © 2015 All... Delivering Value with IT 23 Chapter the IT Value Proposition  24 Peeling the Onion: Understanding IT Value  25 What Is IT Value?  25 Where Is IT Value?  26 Who Delivers IT Value?  27 When Is IT Value