Beyond Chief Information Officer to Network Manager
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Beyond Chief Information Officer to Network Manager John J. Donovan Harvard Business Review No. 88504 SEPTEMBER±OCTOBERHBR 1988 Beyond Chief Information Officer to Network Manager John J. Donovan Decentralized computing is sweeping business voring decentralization. Employees want to operate like a wave rolling onto a beach. Its advance is un- their own systems, in their own way, and when it's stoppableÐand for some powerful reasons. Eco- most convenient for them. nomics is one important factor. On a mainframe The migration of computing power from corporate computer, the average cost per mip (millions of headquarters to divisions, plants, and desktops prom- instructions per second), a benchmark of hardware ises to reduce costs, enhance competitiveness, and performance, approaches $200,000. On a personal renew organizational creativity. But it also poses pro- computer the cost is only about $4,000. A similar found technological and political dilemmas for se- cost comparison applies to software. Individuals and nior executives responsible for computer operations. small groups can develop computer applications If they try to exploit the favorable economics of PCs faster and less expensively than large teams can. To and locally developed software, they may wind up avoid diseconomies of scale in programming, compa- with hundreds of isolated applicationsÐwhat I call nies disperse the software development process. information islandsÐunable to share data. If senior Strategic and organizational factors are also driving executives focus on avoiding these information is- the decentralization of computing power. By defini- lands by resisting decentralization, they may not tion, information systems that link companies with only forfeit attractive business opportunities but also distant customers or suppliersÐthe much-heralded invite mutiny among users wanting to develop sys- use of information technology as a competitive tems of their own. weaponÐcannot be restricted to a headquarters com- There is no shortage of cautionary tales about the puter facility under tight central control. Within perils for managers of decentralized computing. For companies, the emergence of confident and capable example, the senior executive in charge of computer computer users creates a powerful constituency fa- systems at a lawn-equipment company allowed its two major factories to develop their own information John J. Donovan is Chairman and Chief Executive Officer of The systems for tracking work orders and inventory. Both Cambridge Technology Group in Cambridge, Mass., an organiza- used stand-alone IBM System/36 minicomputers, tion that builds major strategic applications for a variety of orga- nizations in the public and private sectors. Professor Donovan is but their application teams wrote incompatible pro- also a tenured faculty member at MIT's Sloan School of grams customized to their factories' operations. This Management. created problems when the CEO asked for regular Copyright q 1988 by the President and Fellows of Harvard College. All rights reserved. consolidated reports on shipments and inventory. In practice, network management means evaluat- The chief information officer's staff had to collect ing hardware technologies with as much emphasis data from each factory separately and combine the on telecommunications capabilities as on sheer information by hand. Responsiveness to the individ- processing performance. It means developing sys- ual needs of each factory interfered with corporate- tems-level software tools that guarantee network se- level data collection and analysis. curity and create consistent, easy-to-use interfaces These problems are not confined to the private between workstations of different power built sector. One state government's information center around different architectures. It means implement- allowed individual agencies like public welfare and ing connectivity standards throughout the organiza- finance to purchase their own computer hardware tion so that users are free to revise their applications and specify the most urgently needed applications. without jeopardizing the company's entire network. To avoid connectivity problems, software engineers In short, it means setting technological and organiza- in the information center wrote the programs and tional ground rules to guide self-directed computer made sure they conformed to standards. But long users. backlogs developed, and frustrated users began Up to now, CIOs have governed computer use in squeezing free applications from their hardware ven- decentralized environments using several distinct dors or burying the acquisition of unauthorized soft- policies. (See the illustration, ``The Four Stages of ware in equipment purchase orders. Ultimately, the Decentralized Computing.'') The logic of this frame- government wound up with dozens of data bases work is quite simple. CIOs make centralization/de- and spreadsheets that could not feed into its central centralization choices on three levels. The three computer. It still has not unraveled the mess. dimensions of the framework correspond to these In the world of business computing, the 1980s has choices. The x-axis traces the degree to which compa- been the decade of the chief information officer. nies distribute hardware to factories and offices. The Company after company has named a senior exe- y-axis reflects the decentralization of development cutive, reporting to the CEO, to preside over its functions like writing new applications and updating strategic information agenda and data-processing op- software. The z-axis tracks the location of decision- erations. CIOs and their staffs have been busy manag- making authority over information systemsÐfor ex- ing enormous hardware and software budgets, ample, who approves hardware purchases, or who de- designing strategic applications, training new users, termines what applications to develop. and building and running vast computer systems. The point on the framework where the three axes I believe the 1990s will witness the emergence of meet represents the set of centralized policies with a new breed of senior information executiveÐthe which virtually every company entered the com- network managerÐwhose priorities and challenges puter age three decades ago. Here, the corporate will differ in many important respects from the information staff wields absolute control: large CIO's. Unless CIOs successfully transform them- mainframes available only to data-processing profes- selves into network managers, they will be ill- sionals run programs designed and written by cen- equipped to confront the user dissatisfaction, organi- tralized software teams. Today this set of policies is zational squabbles, and technological roadblocks in- an organizational and technological dinosaur. To be variably triggered by the advance of decentralized sure, some companies still maintain administrative computing. systems, like payroll and accounts payable, under What's the difference between a CIO and a network rigid central controls. But the proliferation of mini- manager? Network managers understand that in a computers, technical workstations, and PCs has ren- world of accelerating decentralization, the most ef- dered extinct policies based on highly centralized fective way to oversee a company's computer re- hardware. sources is to relinquish control of them and instead Point B, on the other hand, represents the ``helping focus on the networks that connect them. Network hand'' method of managing computers in the current managers won't merely accept the inevitability of era of distributed hardware. Mainframes, minicom- decentralized computing. They will encourage it by puters, and PCs are located in and are operated surrendering authority over hardware purchases and by the factories or branch offices that use them. But software development while seizing control of com- these departments do not write, update, or service munications systems and policies. These areas will the application software that powers their equip- grow increasingly complex as hardware and software ment. A central technical staff performs all develop- migrate down the organization, and the business re- ment work in response to priorities set by the users. lies more heavily on electronic links with customers The state government information center described and suppliers. earlier operated under such policies. HARVARD BUSINESS REVIEW September±October 1988 135 None of these points represents a natural home in 187 tax offices throughout the state. To facilitate base for an organization. The competitive demands data feedback from these offices to a powerful Am- of the industry, the organizational structure of the dahl computer in the state capital, the IS department company, and the technological competence of the insisted on absolute control over the details of every work force all influence the pace and method of de- application. centralization. But virtually every company is mov- But its 12 programmers couldn't make even minor ing (although at different rates) toward Point D, the changes fast enough to satisfy users. Some local of- ``network'' model. Let's look at each of these policies fices wanted to enter names in an order different in turn. from standard. Others wanted touch screens to speed data retrieval. Still others wanted more efficient search routines for updating vehicle information on existing files. These disenchanted users began tin- Big Brothers and Powerless Users kering with the programs and acquiring unau-