UVA Center for the Management of Information Technology March 6, 2009 Strategy Execution and the Role of the CIO/IT Jeanne W. Ross Director & Principal Research Scientist Center for Information Systems Research (CISR) MIT Sloan School of Management Phone: (617) 253-2348, Fax: (617) 253-4424 [email protected]; http://mitsloan.mit.edu/cisr/ This research was made possible by the support of CISR sponsors and patrons. Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross MIT CISR gratefully acknowledges the support & contributions of its Research Patrons and Sponsors. CISR’s Mission Research Patrons • Founded in 1974; CISR has a strong track record of practice-based research on how firms – Boston Consulting Group – Gartner manage & generate business value from IT – BT Group – IBM Corporation – Diamond Management & – Microsoft Corporation • Research is disseminated via electronic Technology Consultants – Tata Consultancy Services research briefings, working papers, research workshops & exec. ed. programs including Research Sponsors http://mitsloan.mit.edu/cisr/education.php – Aetna Inc. – Det Norske Veritas – Mohegan Sun – Allstate Insurance Co. (Norway) – NASA 2009 CISR Research Projects – ANZ Banking Group – DHL Global Management – Nissan North America (Australia) GmbH (Germany) – Nomura Research The View from the Top: IT and Business Value – AstraZeneca – Direct Energy Institute, Ltd. (Japan) Pharmaceuticals, LP – Embraer – Empresa – Parsons Brinckerhoff • Achieving Superior Business Value from IT – Banco Bradesco S.A. Brasileira de Aeronautica – PepsiAmericas, Inc. —A Single Framework of What Matters (Brazil) S.A. (Brazil) – PepsiCo International • Communicating Effectively about IT Value – Banco Itaú S.A. (Brazil) – EMC Corp. – Pfizer Inc. • Maturing and Globalizing IT Governance – Bank of America – ExxonMobil Global – PNC Global Investment – BP Services Co. Servicing Building and Leveraging IT’s Assets – Campbell Soup Co. – Fidelity Investments – Procter & Gamble Co. • Managing Business Experiments: Web-based – Canadian Imperial Bank – Grupo Santander Brasil – Quest Diagnostics Innovations in Collaboration of Commerce – Guardian Life Insurance – Raytheon Company – CareFirst BlueCross Co. of America – Renault (France) • Learning from IT Projects: Effective BlueShield – Johnson & Johnson – Standard & Poor’s Post-Implementation Reviews – Caterpillar, Inc. – Hartford Life, Inc. – State Street Corp. • Benchmarks for IT Decision Making – Celanese – HBOS Australia – Sunoco, Inc. – Chevron Corp. – ING Groep N.V – TD Bank Managing Digitized Organizations – CHRISTUS Health (Netherlands) – Time Warner Cable • Leading the Transition to the Digitized Platform – Chubb & Son – Intel Corporation – Trinity Health • Designing and Managing Shared Services – Commonwealth Bank – Int’l Finance Corp. – TRW Automotive, Inc. • Managing the Information Explosion of Australia – Liberty Mutual Group – Unibanco S.A. (Brazil) – Credit Suisse – Marathon Oil Corp. – VF Corporation • Making Sense of “the Cloud” (Switzerland) – Mars, Incorporated – Wal-Mart, Inc. – MetLife – World Bank Contact Information: 5 Cambridge Center, NE25-778 Cambridge, MA 02142 CenterCenter for for Information Information Systems Systems Research Research (CISR) (CISR) Ph. 617-253-2348; Fax 617-253-4424 © 2009 MIT Sloan ©CISR 2009 , 20-Feb-09 MIT Sloan CISR - Ross E-mail [email protected]; http://mitsloan.mit.edu/cisr/ 1 Agenda Why Firms Need a Digitized Platform Who Will Own the Platform? The SEO – Three key SEO responsibilities – Two Models of CIOs as SEOs – The non-IT SEO How the SEO Evolves The Future of the CIO Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross 2 The IT landscape at most firms Corporate Data Data Applications Technology Platforms Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross 3 The vision for the future systems landscape Data Warehouse Middleware Data Applications Technology Platforms Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross 4 Companies build their platforms in stages. Business Standardized Optimized Business Silos Technology Core Modularity Business Agility Standard Interfaces and Business Componentization Enterprise-Wide Technology Standardized Standards Enterprise Processes/Data Locally Optimal Business Solutions 25% 46% 27% 2% % of Firms Source: Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, J. Ross, Center for Information Systems Research (CISR) P. Weill, D. Robertson, HBS Press, 2006. © 2009 MIT Sloan CISR - Ross Percentage of firms in each stage is updated based on a 2007 survey of 1508 IT executives. 5 The strategy execution officer (SEO) owns the platform 3 roles of the SEO: Enterprise IT & Ongoing Process Operations/ Governance Continuous Improvement (11) (4) Project Design & Implementation (10) Designs Builds Platform Leverages Platform Components Platform Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Numbers reflect how many of 12 SEOS we studied defined each responsibility. Responsibility 1: IT and Process Governance Ensure clarity among senior executives about platform design. Coordinate demands for enterprise change projects, most of which involve IT implementations. Establish priorities for change projects based on multiple criteria: – Organizational readiness – Contribution to platform – Ability to use platform – Expected benefits Work with senior executive team which either makes investment decisions or approves SEO recommendations. Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Responsibility 2: Project Design/Implementation Ensure disciplined, effective project methodology. Engage all key stakeholders early and often. Provide expertise on process design. Provide oversight and/or support of change management. Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Responsibility 3: Ongoing Operations Provide enterprise services, usually as a shared services organization. Accept accountability for continuous improvement of the platform. Ensure that the enterprise is driving value from the platform. Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Two Models of CIOs in SEO Roles 1. The all-inclusive SEO – Owns all three SEO responsibilities 2. The partnered SEO – Owns first two responsibilities and works closely with a COO or other operational leaders Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Model 1: Dow Chemical’s Inclusive SEO The SEO: Dave Kepler, VP of Shared Services and CIO, Dow Chemical Company. SEO background: Started as CIO; role grew as CEO added responsibilities. Core of the platform is an SAP ERP, implemented in early 1990s. Shared services organization includes IT, six sigma team, customer service, supply chain, and purchasing processes. 6,000–7,000 of company’s 40,000 employees report to SEO. IT operations outsourced to IBM; Accenture is strategic partner for applications development. Growing responsibilities of the SEO facilitate global integration. Source: Dow Chemical Company. Used with permission. See also: Ross and Beath, “The Federated Broker Model at The Dow Center for Information Systems Research (CISR) Chemical Company: Blending World Class Internal and External © 2009 MIT Sloan CISR - Ross Capabilities,” MIT Sloan CISR Working Paper No. 355, July 2005. Dow Chemical Company Shared Services Unit President and COO The Dow Chemical Company Andrew Liveris Corporate Vice President Shared Services Dave Kepler Six Sigma and Information Systems Customer Service Work Process Global Purchasing Global Supply Chain Dave Kepler, CIO Expertise Center Customer Service Six Sigma Expertise Centers Implementation Work Supply Chain Services Chemicals Dow and Accenture Chemicals and E-Business Process & Technology Center and Intermediates* Alliance Plastics* Customer Information Work Process Expertise Group Center Order to Cash Work Application Chemicals and Process Development and Intermediates Dow AgroSciences* Support Hydrocarbons & Energy Performance Chemicals and Thermosets Support Services Enterprise IT Hydrocarbons Plastics Operations and Energy* Finance and Services I.T. Strategy and Architecture for Dow Communications Human Resources All IT Operations and Legal Performance Services Management Chemicals and Thermosets* Facilities Management *Aligned to Business Leaders Source: Dow Chemical Company. Used with permission. See also: Ross and Beath, “The Federated Broker Model at The Dow Plastics* Chemical Company: Blending World Class Internal and External Dow AgroSciences* Capabilities,” MIT Sloan CISR Working Paper No. 355, July 2005. Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross Model 2: Southwest Airlines’ Partnered SEO The SEO: Bob Jordan, EVP of Strategy and Technology, Southwest Airlines. SEO background: Previously head of Technology, Corporate Facilities and Procurement; has an IT background and has gradually assumed more responsibility for IT and change management. Platform development focused on ground and customer operations. Coordinates efforts of seven strategy teams (e.g., best place to work, largest domestic carrier, low-cost carrier, best customer experience). Teams comprised of 30 top executives, each is on more than one team so that they acquire cross-functional view of the firm. Investment decisions made by Executive Planning Committee (top eight executives)