Discussion 8/11
After completing the reading this week, we reflect on a few key concepts this week:
Discuss what performance management is and how it influences effective teams.
Review table 11.1, define leadership behaviors (in your own words) and note which behaviors are beneficial at specific organizational activities (example: project planning, leading coworkers, etc). Please note at least five organizational activities and be specific when responding.
Note at least two organizational capabilities and compare and contrast each.
Please be sure to answer all the questions above in the initial post.
Please ensure the initial post and two response posts are substantive. Substantive posts will do at least TWO of the following:
Ask an interesting, thoughtful question pertaining to the topic
Expand on the topic, by adding additional thoughtful information
Answer a question posted by another student in detail
Share an applicable personal experience
Provide an outside source
Make an argument
At least one scholarly (peer-reviewed) resource should be used in the initial discussion thread. Please ensure to use information from your readings and other sources from the UC Library. Use APA references and in-text citations.
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Strategy:
Issues and Practices
M
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een
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it Strategy
Issues and Practices
tHiRd edition
James D. McKeen Heather A. Smith
t
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McKeen_1292080264_mech.indd 1 28/11/14 12:56 PM
IT STraTegy:
ISSueS and PracTIceS
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A01_MCKE0260_03_GE_FM.indd 2 26/11/14 9:32 PM
IT STraTegy:
ISSueS and PracTIceS
T h i r d E d i t i o n
G l o b a l E d i t i o n
James D. McKeen
Queens University
Heather A. Smith
Queens University
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ISBN 10: 1-292-08026-4
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A01_MCKE0260_03_GE_FM.indd 4 26/11/14 9:32 PM
ConTEnTS
Preface 13
About the Authors 21
Acknowledgments 22
Section I Delivering Value with IT 23
Chapter 1 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 1. Have a Clearly Defined Portfolio Value Management
Process 33
Principle 2. Aim for Chunks of Value 33
Principle 3. Adopt a Holistic Orientation to Technology Value 33
Principle 4. Aim for Joint Ownership of Technology Initiatives 34
Principle 5. Experiment More Often 34
Conclusion 34 References 35
Chapter 2 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 3 MakIng IT CounT 49
Business Measurement: An Overview 50
Key Business Metrics for IT 52
5
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6 Contents
Designing Business Metrics for IT 53
Advice to Managers 57
Conclusion 58 References 58
Chapter 4 effeCTIVe BuSIneSSIT relaTIonShIPS 60
The Nature of the BusinessIT Relationship 61
The Foundation of a Strong BusinessIT
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 BusinessIT
Relationship 73
Chapter 5 BuSIneSSIT CoMMunICaTIon 74
Communication in the BusinessIT Relationship 75
What Is Good Communication? 76
Obstacles to Effective Communication 78
T-Level Communication Skills for IT Staff 80
Improving BusinessIT Communication 82
Conclusion 83 References 83
Appendix A IT Communication Competencies 85
Chapter 6 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 6 26/11/14 9:32 PM
Contents 7
Section II IT governance 109
Chapter 7 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 8 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 9 BuDgeTIng: PlannIngS eVIl TwIn 140
Key Concepts in IT Budgeting 141
The Importance of Budgets 143
The IT Planning and Budget Process 145
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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 KnowingDoing 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
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Contents 9
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
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10 Contents
Chapter 16 TeChnology-enaBleD CollaBoraTIon 240
Why Collaborate? 241
Characteristics of Collaboration 244
Components of Successful Collaboration 247
The Role of IT in Collaboration 249
First Steps for Facilitating Effective Collaboration 251
Conclusion 253 References 254
MInI CaSeS
Innovation at International Foods 256
Consumerization of Technology at IFG 261
CRM at Minitrex 265
Customer Service at Datatronics 268
Section IV IT Portfolio Development and Management 273
Chapter 17 ManagIng The aPPlICaTIon PorTfolIo 274
The Applications Quagmire 275
The Benefits of a Portfolio Perspective 276
Making APM Happen 278
Capability 1: Strategy and Governance 280
Capability 2: Inventory Management 284
Capability 3: Reporting and Rationalization 285
Key Lessons Learned 286
Conclusion 287 References 287
Appendix A Application Information 288
Chapter 18 IT DeManD ManageMenT: SuPPly ManageMenT
IS noT enough 292
Understanding IT Demand 293
The Economics of Demand Management 295
Three Tools for Demand management 295
Key Organizational Enablers for Effective Demand
Management 296
Strategic Initiative Management 297
Application Portfolio Management 298
Enterprise Architecture 298
BusinessIT Partnership 299
Governance and Transparency 301
Conclusion 303 References 303
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Contents 11
Chapter 19 TeChnology roaDMaP: BenefITS, eleMenTS, anD
PraCTICal STePS 305
What is a Technology Roadmap? 306
The Benefits of a Technology Roadmap 307
External Benefits (Effectiveness) 307
Internal Benefits (Efficiency) 308
Elements of the Technology Roadmap 308
Activity #1: Guiding Principles 309
Activity #2: Assess Current Technology 310
Activity #3: Analyze Gaps 311
Activity #4: Evaluate Technology
Landscape 312
Activity #5: Describe Future Technology 313
Activity #6: Outline Migration Strategy 314
Activity #7: Establish Governance 314
Practical Steps for Developing a Technology
Roadmap 316
Conclusion 317 References 317
Appendix A Principles to Guide a Migration
Strategy 318
Chapter 20 eMergIng DeVeloPMenT PraCTICeS 319
The Problem with System Development 320
Trends in System Development 321
Obstacles to Improving System Development
Productivity 324
Improving System Development Productivity: What we
know that Works 326
Next Steps to Improving System Development
Productivity 328
Conclusion 330 References 330
Chapter 21 InforMaTIon DelIVery: PaST, PreSenT, anD
fuTure 332
Information and IT: Why Now? 333
Delivering Value Through Information 334
Effective Information Delivery 338
New Information Skills 338
New Information Roles 339
New Information Practices 339
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12 Contents
New Information Strategies 340
The Future of Information Delivery 341
Conclusion 343 References 344
MInI CaSeS
Project Management at MM 346
Working Smarter at Continental Furniture International 350
Managing Technology at Genex Fuels 355
Index 358
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PrEFACE
Today, with information technology (IT) driving constant business transformation,
overwhelming organizations with information, enabling 24/7 global operations, and
undermining traditional business models, the challenge for business leaders is not
simply to manage IT, it is to use IT to deliver business value. Whereas until fairly recently,
decisions about IT could be safely delegated to technology specialists after a business
strategy had been developed, IT is now so closely integrated with business that, as one
CIO explained to us, We can no longer deliver business solutions in our company
without using technology so IT and business strategy must constantly interact with
each other.
Whats New in This Third Edition?
Six new chapters focusing on current critical issues in IT management, including
IT shared services; big data and social computing; business intelligence; manag-
ing IT demand; improving the customer experience; and enhancing development
productivity.
Two significantly revised chapters: on delivering IT functions through different
resourcing options; and innovating with IT.
Two new mini cases based on real companies and real IT management situations:
Working Smarter at Continental Furniture and Enterprise Architecture at Nationstate
Insurance.
A revised structure based on reader feedback with six chapters and two mini cases
from the second edition being moved to the Web site.
All too often, in our efforts to prepare future executives to deal effectively with
the issues of IT strategy and management, we lead them into a foreign country where
theyencounter a different language, different culture, and different customs. Acronyms
(e.g., SOA, FTP/IP, SDLC, ITIL, ERP), buzzwords (e.g., asymmetric encryption, proxy
servers, agile, enterprise service bus), and the widely adopted practice of abstraction
(e.g., Is a software monitor a person, place, or thing?) present formidable barriers to
entry to the technologically uninitiated, but more important, they obscure the impor-
tance of teaching students how to make business decisions about a key organizational
resource. By taking a critical issues perspective, IT Strategy: Issues and Practices treats IT
as a tool to be leveraged to save and/or make money or transform an organizationnot
as a study by itself.
As in the first two editions of this book, this third edition combines the experi-
ences and insights of many senior IT managers from leading-edge organizations with
thorough academic research to bring important issues in IT management to life and
demonstrate how IT strategy is put into action in contemporary businesses. This new
edition has been designed around an enhanced set of critical real-world issues in IT
management today, such as innovating with IT, working with big data and social media,
13
A01_MCKE0260_03_GE_FM.indd 13 26/11/14 9:32 PM
14 Preface
enhancing customer experience, and designing for business intelligence and introduces
students to the challenges of making IT decisions that will have significant impacts on
how businesses function and deliver value to stakeholders.
IT Strategy: Issues and Practices focuses on how IT is changing and will continue to
change organizations as we now know them. However, rather than learning concepts
free of context, students are introduced to the complex decisions facing real organi-
zations by means of a number of mini cases. These provide an opportunity to apply
the models/theories/frameworks presented and help students integrate and assimilate
this material. By the end of the book, students will have the confidence and ability to
tackle the tough issues regarding IT management and strategy and a clear understand-
ing of their importance in delivering business value.
Key Features of This Book
A focus on IT management issues as opposed to technology issues
Critical IT issues explored within their organizational contexts
Readily applicable models and frameworks for implementing IT strategies
Mini cases to animate issues and focus classroom discussions on real-world deci-
sions, enabling problem-based learning
Proven strategies and best practices from leading-edge organizations
Useful and practical advice and guidelines for delivering value with IT
Extensive teaching notes for all mini cases
A Different ApproAch to teAching it StrAtegy
The real world of IT is one of issuescritical issuessuch as the following:
How do we know if we are getting value from our IT investment?
How can we innovate with IT?
What specific IT functions should we seek from external providers?
How do we build an IT leadership team that is a trusted partner with the business?
How do we enhance IT capabilities?
What is ITs role in creating an intelligent business?
How can we best take advantage of new technologies, such as big data and social
media, in our business?
How can we manage IT risk?
However, the majority of management information systems (MIS) textbooks are orga-
nized by system category (e.g., supply chain, customer relationship management, enterprise
resource planning), by system component (e.g., hardware, software, networks), by system
function (e.g., marketing, financial, human resources), by system type (e.g., transactional,
decisional, strategic), or by a combination of these. Unfortunately, such an organization
does not promote an understanding of IT management in practice.
IT Strategy: Issues and Practices tackles the real-world challenges of IT manage-
ment. First, it explores a set of the most important issues facing IT managers today, and
second, it provides a series of mini cases that present these critical IT issues within the
context of real organizations. By focusing the text as well as the mini cases on todays
critical issues, the book naturally reinforces problem-based learning.
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Preface 15
IT Strategy: Issues and Practices includes thirteen mini caseseach based on a real
company presented anonymously.1 Mini cases are not simply abbreviated versions of
standard, full-length business cases. They differ in two significant ways:
1. A horizontal perspective. Unlike standard cases that develop a single issue within
an organizational setting (i.e., a vertical slice of organizational life), mini cases
take a horizontal slice through a number of coexistent issues. Rather than looking
for a solution to a specific problem, as in a standard case, students analyzing a mini
case must first identify and prioritize the issues embedded within the case. This mim-
ics real life in organizations where the challenge lies in knowing where to start as
opposed to solving a predefined problem.
2. Highly relevant information. Mini cases are densely written. Unlike standard
cases, which intermix irrelevant information, in a mini case, each sentence exists for
a reason and reflects relevant information. As a result, students must analyze each
case very carefully so as not to miss critical aspects of the situation.
Teaching with mini cases is, thus, very different than teaching with standard cases.
With mini cases, students must determine what is really going on within the organiza-
tion. What first appears as a straightforward technology problem may in fact be a
political problem or one of five other technology problems. Detective work is, there-
fore, required. The problem identification and prioritization skills needed are essential
skills for future managers to learn for the simple reason that it is not possible for organi-
zations to tackle all of their problems concurrently. Mini cases help teach these skills to
students and can balance the problem-solving skills learned in other classes. Best of all,
detective work is fun and promotes lively classroom discussion.
To assist instructors, extensive teaching notes are available for all mini cases. Developed
by the authors and based on tried and true in-class experience, these notes include case
summaries, identify the key issues within each case, present ancillary information about the
company/industry represented in the case, and offer guidelines for organizing the class-
room discussion. Because of the structure of these mini cases and their embedded issues, it
is common for teaching notes to exceed the length of the actual mini case!
This book is most appropriate for MIS courses where the goal is to understand how
IT delivers organizational value. These courses are frequently labeled IT Strategy or
IT Management and are offered within undergraduate as well as MBA programs. For
undergraduate juniors and seniors in business and commerce programs, this is usually
the capstone MIS course. For MBA students, this course may be the compulsory core
course in MIS, or it may be an elective course.
Each chapter and mini case in this book has been thoroughly tested in a variety
of undergraduate, graduate, and executive programs at Queens School of Business.2
1 We are unable to identify these leading-edge companies by agreements established as part of our overall
research program (described later).
2 Queens School of Business is one of the worlds premier business schools, with a faculty team renowned
for its business experience and academic credentials. The School has earned international recognition for
its innovative approaches to team-based and experiential learning. In addition to its highly acclaimed MBA
programs, Queens School of Business is also home to Canadas most prestigious undergraduate business
program and several outstanding graduate programs. As well, the School is one of the worlds largest and
most respected providers of executive education.
A01_MCKE0260_03_GE_FM.indd 15 26/11/14 9:32 PM
16 Preface
These materials have proven highly successful within all programs because we adapt
how the material is presented according to the level of the students. Whereas under-
graduate students learn about critical business issues from the book and mini cases
for the first time, graduate students are able to relate to these same critical issues
based on their previous business experience. As a result, graduate students are able to
introduce personal experiences into the discussion of these critical IT issues.
orgAnizAtion of thiS Book
One of the advantages of an issues-focused structure is that chapters can be approached
in any order because they do not build on one another. Chapter order is immaterial; that
is, one does not need to read the first three chapters to understand the fourth. This pro-
vides an instructor with maximum flexibility to organize a course as he or she sees fit.
Thus, within different courses/programs, the order of topics can be changed to focus on
different IT concepts.
Furthermore, because each mini case includes multiple issues, they, too, can be
used to serve different purposes. For example, the mini case Building Shared Services
at RR Communications can be used to focus on issues of governance, organizational
structure, and/or change management just as easily as shared services. The result is a
rich set of instructional materials that lends itself well to a variety of pedagogical appli-
cations, particularly problem-based learning, and that clearly illustrates the reality of IT
strategy in action.
The book is organized into four sections, each emphasizing a key component of
developing and delivering effective IT strategy:
Section I: Delivering Value with IT is designed to examine the complex ways that
IT and business value are related. Over the past twenty years, researchers and prac-
titioners have come to understand that business value can mean many different
things when applied to IT. Chapter 1 (The IT Value Proposition) explores these con-
cepts in depth. Unlike the simplistic value propositions often used when imple-
menting IT in organizations, this chapter presents value as a multilayered busi-
ness construct that must be effectively managed at several levels if technology is
to achieve the benefits expected. Chapter 2 (Delivering Business Value through IT
Strategy) examines the dynamic interrelationship between business and IT strat-
egy and looks at the processes and critical success factors used by organizations to
ensure that both are well aligned. Chapter 3 (Making IT Count) discusses new ways
of measuring ITs effectiveness that promote closer businessIT alignment and help
drive greater business value. Chapter 4 (Effective BusinessIT Relationships) exam-
ines the nature of the businessIT relationship and the characteristics of an effec-
tive relationship that delivers real value to the enterprise. Chapter 5 (BusinessIT
Communication) explores the business and interpersonal competencies that IT staff
will need in order to do their jobs effectively over the next five to seven years and
what companies should be doing to develop them. Finally, Chapter 6 (Effective IT
Leadership) tackles the increasing need for improved leadership skills in all IT staff
and examines the expectations of the business for strategic and innovative guid-
ance from IT.
A01_MCKE0260_03_GE_FM.indd 16 26/11/14 9:32 PM
Preface 17
In the mini cases associated with this section, the concepts of delivering
value with IT are explored in a number of different ways. We see business and
IT executives at Hefty Hardware grappling with conflicting priorities and per-
spectives and how best to work together to achieve the companys strategy. In
Investing in TUFS, CIO Martin Drysdale watches as all of the work his ITdepart-
ment has put into a major new system fails to deliver value. And the IT Planning
at ModMeters mini case follows CIO Brian Smiths efforts to create a strategic
IT plan that will align with business strategy, keep IT running, and not increase
ITs budget.
Section II: IT Governance explores key concepts in how the IT organization is
structured and managed to effectively deliver IT products and services to the orga-
nization. Chapter 7 (Effective IT Shared Services) discusses how IT shared services
should be selected, organized, managed, and governed to achieve improved organi-
zational performance. Chapter 8 (Successful IT Sourcing: Maturity Model, Sourcing
Options, and Decision Criteria) examines how organizations are choosing to source
and deliver different types of IT functions and presents a framework to guide sourc-
ing decisions. Chapter 9 (Budgeting: Plannings Evil Twin) describes the evil twin
of IT strategy, discussing how budgeting mechanisms can significantly undermine
effective business strategies and suggesting practices for addressing this problem
while maintaining traditional fiscal accountability. Chapter 10 (Risk Management
in IT) describes how many IT organizations have been given the responsibility of
not only managing risk in their own activities (i.e., project development, operations,
and delivering business strategy) but also of managing IT-based risk in all company
activities (e.g., mobile computing, file sharing, and online access to information and
software) and the need for a holistic framework to understand and deal with risk
effectively. Chapter 11 (Information Management: Stages and Issues) describes how
new organizational needs for more useful and integrated information are driving
the development of business-oriented functions within IT that focus specifically on
information and knowledge, as opposed to applications and data.
The mini cases in this section examine the difficulties of managing com-
plex IT issues when they intersect substantially with important business issues.
In Building Shared Services at RR Communications, we see an IT organiza-
tion in transition from a traditional divisional structure and governance model
to a more centralized enterprise model, and the long-term challenges experi-
enced by CIO Vince Patton in changing both business and IT practices, includ-
ing information management and delivery, to support this new approach. In
Enterprise Architecture at Nationstate Insurance, CIO Jane Denton endeavors
to make IT more flexible and agile, while incorporating new and emerging tech-
nologies into its strategy. In IT Investment at North American Financial, we
show the opportunities and challenges involved in prioritizing and resourcing
enterprisewide IT projects and monitoring that anticipated benefits are being
achieved.
Section III: IT-Enabled Innovation discusses some of the ways technology is
being used to transform organizations. Chapter 12 (Technology-Driven Innovation)
examines the nature and importance of innovation with IT and describes a typi-
cal innovation life cycle. Chapter 13 (When Big Data and Social Computing Meet)
discusses how IT leaders are incorporating big data and social media concepts
A01_MCKE0260_03_GE_FM.indd 17 26/11/14 9:32 PM
18 Preface
and technologies to successfully deliver business value in new ways. Chapter 14
(Effective Customer Experience) explores the IT functions role in creating and
improving an organizations customer experiences and the role of technology in
helping companies to understand and learn from their customers experiences.
Chapter 15 (Business Intelligence: An Overview) looks at the nature of
