IT Decision Making and the Business Manager Edward G

1-03-30 IT Decision Making and the Business Manager Edward G. Cale, Jr. Jerry Kanter Paul J. Saia, Jr. Payoff Making effective decisions regarding information technology and its deployment during times of technical and organizational discontinuity is a challenge. This article describes how IS and business management are coping with IT decision making today. The article reveals the hybrid organizational styles some companies employ and the processes, participants, and relationships that produce IT decisions. Introduction There has been a wide range of studies on decision-making responsibilities for IT over the years. A report entitled “Whose Responsibility Is IT Management?” distinguishes between the IT technical architecture and the IT management architecture. 4 The IT technical architecture refers to the hardware, software, and data base, as well as the people who develop and operate computer equipment and the computer network. The IT management architecture is more encompassing and is defined as “the location, distribution, and pattern of managerial responsibilities and control that ultimately affect how IT resources are applied and then implemented.” Most studies have focused on the evolution of the IT function from its role as an extension of the financial organization with limited impact on operating management to its more significant role in today's organization, in which the head of the IT function often reports directly to the CEO. Among the organizations in this study, some of the power and authority that were built into the IT function are now decentralized and are becoming the province of line and staff management. Today's IT organizations are hybrid organizations, choosing to centralize some functions while decentralizing others. This study of end-user business managers was performed to determine the role that IT plays within their operations and the expanding role they play in the management of IT. Relationship Between IT Management and the User Community From the IT executive's point of view, users have become more knowledgeable about IT and are playing an important role in IT decision making. Most IT executives interviewed in an earlier study argued for a sharing of responsibilities, with the IT specialist playing the dominant role in the management of technology(i.e., architecture, standards, and operations) and the user playing a dominant role in use of technology (i.e., application development and use).5 To gain an even more accurate picture of IT management approaches in the hybrid organization, input from the user community was sought. This study was directed to the 4 A. Boynton, G. Jacobs, R. Zmud, “Whose Responsibility Is IT Management?” Sloan Management Review (Summer 1992). 5 E. Cale, J. Kanter, and P. Saia, “The Changing Locus of IT Decision Making,” Center for Information Management Studies Working Paper 93-04,Babson Park MA: Babson College, 1991. same Fortune 1000 organizations involved in the study of IT executives. In all, 30 end-user managers were interviewed. They worked in medium-sized to large companies that covered a range of industries, including insurance, manufacturing, consumer products, pharmaceuticals, chemicals, and energy production and distribution. The interviews took place at the company site and lasted approximately an hour. Two interviewers were present at all but a few interviews. The titles of the interviewees ranged from controller to sales and marketing manager, manufacturing manager, human resources manager, and director of operations. Research Objectives The study had the following objectives: · To determine the relationship between IT management and line management of a sampling of organizations. · To focus on the role of business managers in making decisions regarding the use of IT resources. · To ascertain the characteristics of those IT/business relationships that appear to work best. · To understand the forces driving change in the management of IT today. Company Culture and Management Style One of the most radical changes in management style occurred in a large, high- technology defense company, in which reduced revenues brought about a major reorganization. Moving from a traditional functional organization, the company adopted a strategy of ad hoc project groups, in which personnel are assigned to a group according to their skills and the current needs of the projects. When the project is finished or an individual's skills are no longer needed by the group, the members are reassigned to another group. Thus, should a particular group need IT skills, someone with those skills would become a member of the group and that person's allegiance would be to the group, not to the IT department. With the exception of basic business functions such as payroll, accounts payable, and accounts receivable, little remained of a formal IT organization. The transformation of the company has caused the IT resources to be totally distributed to the process teams. Much of the hierarchy of the company has been shattered because essential members of teams are viewed as peers. Exhibit 1 summarizes the changes, especially downsizing and client/server architecture, that are compressing business and IT management—they are becoming one and the same. This trend is not universal, but it was present in the majority of organizations in this study. Forces of Change Improving Relationships Almost every user expressed dissatisfaction with the past “glass house” environment in which IT functioned. Users believed that systems were weak in service and support. Users were skeptical of their value because the systems had been built by IT with little (if any) user involvement. Although users were not universally satisfied with their current relationships with the IT department, most of those interviewed said that the relationship had improved substantially in the recent past. One of the key contributors to this improvement appeared to be a major increase in communication between the IT function and the user departments. This increase in communication appeared to help both parties: IT departments were becoming more responsive to user needs, and the users were becoming more conscious of the necessary compromises that they needed to make. Impact of Downsizing. Users attributed the improved communication to two factors. First, downsizing and reorganizations have forced the survivors to focus on business needs and their department's role in meeting those needs. Thus, in recent years, there has been a common ground on which IT and functional managers could meet. Assignment of IT Workers to Business Units. A second significant factor contributing to improved communication has been the frequent assignment of IT personnel to the business function. In some organizations, this assignment was permanent, reflected in a solid-line reporting responsibility between the IT personnel and the user department management. In other organizations, the reporting relationship remained within the IT department, with only a temporary or dotted-line reporting relationship to the user department. Whatever the relationship, this method seemed to improve relations greatly. According to one manager, although IS people do not know the business function, they play an invaluable role in implementing the system because they know the IT function. In some cases, the assignment of IT personnel to user departments was extreme, with the users gaining direct control over parts of the IT function, such as relevant applications development, maintenance, and use. In all cases, a sense of user ownership (whether actual or implied) contributed to increased satisfaction when the acquisition of funds, the allocation of resources, and the priority of work was concerned. Sample Scenarios. In the human resources (HR) department of one of the interviewed companies, the HR manager had an IT background as well as experience in the human resources function. By mutual agreement with the CIO, the HR manager had built a powerful suite of applications that was responsive to the department's needs and priorities—as they should be, because HR established the priorities. The downside is that HR used software that runs uniquely on the departmental hardware platform. It is not the standard for the organization, and the CIO is aware of it. The HR manager would just as well turn the operation of the applications back to the CIO in order to concentrate on the functional aspects of the HR job, which is managing personnel, not IT applications. On the technical side, several managers said they wanted to see the adoption of the open systems concept. Open systems were considered important because they would allow users to either develop or purchase applications that could be easily integrated into other applications. From the perspective of user managers, most of the new work would be developed on PC platforms or in a client/server environment. Most new systems would be based on shrink-wrapped software packages. In this environment, users said the IT department's role should be one of consultation and advice, along with operating and maintaining the backbone network. In a few cases, the users' approval of the IT function had actually improved following a centralization effort. In these cases, economies of scale and technology had allowed the centralized IT function to replace and improve on a hodgepodge of ineffective and incompatible homegrown systems. However, the instances of centralization or recentralization ran counter to most observed trends. Although most of the people

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