IT STRATEGY: ISSUES and PRACTICES This Page Intentionally Left Blank Third Edition
Total Page：16
File Type：pdf, Size：1020Kb
IT STRATEGY: ISSUES AND PRACTICES This page intentionally left blank Third 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 Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editor in Chief: Stephanie Wall Acquisitions Editor: Nicole Sam Program Manager Team Lead: Ashley Santora Program Manager: Denise Vaughn Editorial Assistant: Kaylee Rotella Executive Marketing Manager: Anne K. Fahlgren Project Manager Team Lead: Judy Leale Project Manager: Thomas Benfatti Procurement Specialist: Diane Peirano Cover Designer: Lumina Datamantics Full Service Project Management: Abinaya Rajendran at Integra Software Services, Pvt. Ltd. Cover Printer: Courier/Westford Composition: Integra Software Services, Pvt. Ltd. Printer/Binder: Courier/Westford Text Font: 10/12 Palatino LT Std Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text. Copyright © 2015, 2012 and 2009 by Pearson Education, Inc., Upper Saddle River, New Jersey, 07458. Pearson Prentice Hall. All rights reserved. Printed in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permission(s), write to: Rights and Permissions Department. Library of Congress Cataloging-in-Publication Data McKeen, James D. IT strategy: issues and practices/James D. McKeen, Queen’s University, Heather A. Smith, Queen’s University.—Third edition. pages cm ISBN 978-0-13-354424-4 (alk. paper) ISBN 0-13-354424-9 (alk. paper) 1. Information technology—Management. I. Smith, Heather A. II. Title. HD30.2.M3987 2015 004.068—dc23 2014017950 10 9 8 7 6 5 4 3 2 1 ISBN–10: 0-13-354424-9 ISBN–13: 978-0-13-354424-4 CONTENTS Preface xiii About the Authors xxi Acknowledgments xxii Section I Delivering Value with IT 1 Chapter 1 DEVELOPING AND DELIVERING ON THE IT VALUE PROPOSITION 2 Peeling the Onion: Understanding IT Value 3 What Is IT Value? 3 Where Is IT Value? 4 Who Delivers IT Value? 5 When Is IT Value Realized? 5 The Three Components of the IT Value Proposition 6 Identification of Potential Value 7 Effective Conversion 8 Realizing Value 9 Five Principles for Delivering Value 10 Principle 1. Have a Clearly Defined Portfolio Value Management Process 11 Principle 2. Aim for Chunks of Value 11 Principle 3. Adopt a Holistic Orientation to Technology Value 11 Principle 4. Aim for Joint Ownership of Technology Initiatives 12 Principle 5. Experiment More Often 12 Conclusion 12 References 13 Chapter 2 DEVELOPING IT STRATEGY FOR BUSINESS VALUE 15 Business and IT Strategies: Past, Present, and Future 16 Four Critical Success Factors 18 The Many Dimensions of IT Strategy 20 Toward an IT Strategy-Development Process 22 Challenges for CIOs 23 Conclusion 25 25 Chapter 3 LINKING IT TO BUSINESS METRICS 27 Business Measurement: An Overview 28 Key Business Metrics for IT 30 v vi Contents Designing Business Metrics for IT 31 Advice to Managers 35 Conclusion 36 36 Chapter 4 BUILDING A STRONG RELATIONSHIP WITH THE BUSINESS 38 The Nature of the Business–IT Relationship 39 The Foundation of a Strong Business–IT Relationship 41 Building Block #1: Competence 42 Building Block #2: Credibility 43 Building Block #3: Interpersonal Interaction 44 Building Block #4: Trust 46 Conclusion 48 48 Appendix A The Five IT Value Profiles 50 Appendix B Guidelines for Building a Strong Business–IT Relationship 51 Chapter 5 COMMUNICATING WITH BUSINESS MANAGERS 52 Communication in the Business–IT Relationship 53 What Is “Good” Communication? 54 Obstacles to Effective Communication 56 “T-Level” Communication Skills for IT Staff 58 Improving Business–IT Communication 60 Conclusion 61 61 Appendix A IT Communication Competencies 63 Chapter 6 BUILDING BETTER IT LEADERS FROM THE BOTTOM UP 64 The Changing Role of the IT Leader 65 What Makes a Good IT Leader? 67 How to Build Better IT Leaders 70 Investing in Leadership Development: Articulating the Value Proposition 73 Conclusion 74 75 MINI CASES Delivering Business Value with IT at Hefty Hardware 76 Investing in TUFS 80 IT Planning at ModMeters 82 Contents vii Section II IT Governance 87 Chapter 7 CREATING IT SHARED SERVICES 88 IT Shared Services: An Overview 89 IT Shared Services: Pros and Cons 92 IT Shared Services: Key Organizational Success Factors 93 Identifying Candidate Services 94 An Integrated Model of IT Shared Services 95 Recommmendations for Creating Effective IT Shared Services 96 Conclusion 99 99 Chapter 8 A MANAGEMENT FRAMEWORK FOR IT SOURCING 100 A Maturity Model for IT Functions 101 IT Sourcing Options: Theory Versus Practice 105 The “Real” Decision Criteria 109 Decision Criterion #1: Flexibility 109 Decision Criterion #2: Control 109 Decision Criterion #3: Knowledge Enhancement 110 Decision Criterion #4: Business Exigency 110 A Decision Framework for Sourcing IT Functions 111 Identify Your Core IT Functions 111 Create a “Function Sourcing” Profile 111 Evolve Full-Time IT Personnel 113 Encourage Exploration of the Whole Range of Sourcing Options 114 Combine Sourcing Options Strategically 114 A Management Framework for Successful Sourcing 115 Develop a Sourcing Strategy 115 Develop a Risk Mitigation Strategy 115 Develop a Governance Strategy 116 Understand the Cost Structures 116 Conclusion 117 117 Chapter 9 THE IT BUDGETING PROCESS 118 Key Concepts in IT Budgeting 119 The Importance of Budgets 121 The IT Planning and Budget Process 123 viii Contents Corporate Processes 123 IT Processes 125 Assess Actual IT Spending 126 IT Budgeting Practices That Deliver Value 127 Conclusion 128 129 Chapter 10 MANAGING IT- BASED RISK 130 A Holistic View of IT-Based Risk 131 Holistic Risk Management: A Portrait 134 Developing a Risk Management Framework 135 Improving Risk Management Capabilities 138 Conclusion 139 140 Appendix A A Selection of Risk Classification Schemes 141 Chapter 11 INFORMATION MANAGEMENT: THE NEXUS OF BUSINESS AND IT 142 Information Management: How Does IT Fit? 143 A Framework For IM 145 Stage One: Develop an IM Policy 145 Stage Two: Articulate the Operational Components 145 Stage Three: Establish Information Stewardship 146 Stage Four: Build Information Standards 147 Issues In IM 148 Culture and Behavior 148 Information Risk Management 149 Information Value 150 Privacy 150 Knowledge Management 151 The Knowing–Doing Gap 151 Getting Started in IM 151 Conclusion 153 154 Appendix A Elements of IM Operations 155 MINI CASES Building Shared Services at RR Communications 156 Enterprise Architecture at Nationstate Insurance 160 IT Investment at North American Financial 165 Contents ix Section III IT-Enabled Innovation 169 Chapter 12 INNOVATION WITH IT 170 The Need for Innovation: An Historical Perspective 171 The Need for Innovation Now 171 Understanding Innovation 172 The Value of Innovation 174 Innovation Essentials: Motivation, Support, and Direction 175 Challenges for IT leaders 177 Facilitating Innovation 179 Conclusion 180 181 Chapter 13 BIG DATA AND SOCIAL COMPUTING 182 The Social Media/Big Data Opportunity 183 Delivering Business Value with Big Data 185 Innovating with Big Data 189 Pulling in Two Different Directions: The Challenge for IT Managers 190 First Steps for IT Leaders 192 Conclusion 193 194 Chapter 14 IMPROVING THE CUSTOMER EXPERIENCE: AN IT PERSPECTIVE 195 Customer Experience and Business value 196 Many Dimensions of Customer Experience 197 The Role of Technology in Customer Experience 199 Customer Experience Essentials for IT 200 First Steps to Improving Customer Experience 203 Conclusion 204 204 Chapter 15 BUILDING BUSINESS INTELLIGENCE 206 Understanding Business Intelligence 207 The Need for Business Intelligence 208 The Challenge of Business Intelligence 209 The Role of IT in Business Intelligence 211 Improving Business Intelligence 213 Conclusion 216 216 x Contents Chapter 16 ENABLING COLLABORATION WITH IT 218 Why Collaborate? 219 Characteristics of Collaboration 222 Components of Successful Collaboration 225 The Role of IT in Collaboration 227 First Steps for Facilitating Effective Collaboration 229 Conclusion 231 232 MINI CASES Innovation at International Foods 234 Consumerization of Technology at IFG 239 CRM at Minitrex 243 Customer Service at Datatronics 246 Section IV IT Portfolio Development and Management 251 Chapter 17 APPLICATION PORTFOLIO MANAGEMENT 252 The Applications Quagmire 253 The Benefits of a Portfolio Perspective 254 Making APM Happen 256 Capability 1: Strategy and Governance 258 Capability 2: Inventory Management 262 Capability 3: Reporting and Rationalization 263 Key Lessons Learned 264 Conclusion 265 265 Appendix A Application Information 266 Chapter 18 MANAGING IT DEMAND 270 Understanding IT Demand 271 The Economics of Demand Management 273 Three Tools for Demand management 273 Key Organizational Enablers for Effective Demand Management 274 Strategic Initiative Management 275 Application Portfolio Management 276 Enterprise Architecture 276 Business–IT Partnership 277 Governance and Transparency 279 Conclusion 281 281 Contents xi Chapter 19 CREATING AND EVOLVING A TECHNOLOGY ROADMAP 283 What is a Technology Roadmap? 284 The Benefits