Chapter 1 Introduction

Managing the Information Technology Resource Jerry N. Luftman

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Chapter Outline
Evolution of role of IT Role of IT management versus other business functions View of IT by IT executives How to better manage IT resources Key issues in the management of IT Importance of successfully managing IT

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Primary Purpose
IT is important and necessary for a successful organization Successful management of IT is necessary for competitive advantage

2004 Managing the Information Technology Resource, Jerry N. Luftman

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3 Strategies for Competitive Advantage

Cost leadership
Competing with lower costs

Product differentiation
Competing with value

Product focus
Competing by restricting ones market

2004 Managing the Information Technology Resource, Jerry N. Luftman

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IT Management Categories
Strategic
Pertinent to long-term attainment of goals and business as a whole

Tactical
Needed to achieve strategic plans and goals to produce changes for success

Operational
Process and actions that must be performed on a day-to-day basis to maintain performance level
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Additional Skills of IT Managers

Financial Human Resource Relationship Management Legal Governance Marketing Negotiating Leadership

2004 Managing the Information Technology Resource, Jerry N. Luftman

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John Rockart
The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organizations efforts for the period will be less than desired.

2004 Managing the Information Technology Resource, Jerry N. Luftman

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3 Primary Computing Eras

1. Mainframe Computer Era 2. PC Computing Era 3. Pervasive Computing

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Historical View of IT
Initially for government/military use Businesses used for financial automation Data Processing was key function Computers were costly and large in size Not widely used

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Historical View
Cost decreased Size decreased Use of personal computers increased Business staff and IT staff began to interact Technology issues increased Networks, E-mail, and Internet became necessity
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Role of IT
No longer just serves a business Integral in business strategy Impacts every area of business Complexity increases How does IT function vs. the entire organization Responsible for the integration of information
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Role of IT Today

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Enabler of E-Business
All aspects of IT are more externally visible Serve as mediator among various functions
Disintermediation Reintermediation Hypermediation Infomediation

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Disintermediation
Eliminates the middleman Electronic stock trading Forces focus on service differentiation

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Reintermediation
Use of Internet to reassemble buyers and sellers in new ways Allows negotiation of prices, warranties, quality, shipping Example includes merging of banking, insurance, and other financial services

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Hypermediation
Interactions found via Internet transactions Complete, seamless, invisible supply chain to customers Leverages external partners

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Infomediation
Allows technology users to manage large amounts of information Search engines and portals provide for narrowing searches Data mining technology is critical IT helps business sift through information for insight and clarity

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Change Agent
Dynamic Stability
IT supports business in dynamic changes with no change to business processes

Can enable/inhibit incremental and radical changes Innovation may depend on IT

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Enabler of Globalization
Expands business presence beyond borders IT maintenance of Infrastructure and Technologies

2004 Managing the Information Technology Resource, Jerry N. Luftman

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IT/Business Gap
IT/Business alignment critical Alignment
Application of IT in an appropriate and timely manner, in harmony with business goals, strategies, and needs

Enabler Inhibitor

2004 Managing the Information Technology Resource, Jerry N. Luftman

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CSC Survey Top Rankings

Information Systems alignment with Corporate Goals ranked 1st or 2nd 9 of 11 years! Organizing & utilizing data Connecting to customers, suppliers, and/or partners electronically Optimizing organizational effectiveness

2004 Managing the Information Technology Resource, Jerry N. Luftman

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IT vs. Other Functions

Encompasses entire enterprise Affects all business functions Extends beyond business boundaries Affects every level of management Impact affects entire value chain, including suppliers and customers Creates synergy between departments

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Porters Generic Value Chain

2004 Managing the Information Technology Resource, Jerry N. Luftman

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Value of IT
IT usage has increased three-fold since 1978 Substantial capital expenditures Cost of doing business Productivity measurement Alignment with strategic business goals
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Luftmans 6 Components
Communications Partnership Maturity Maturity Competency/ Scope and Value MeasureArchitecture ment Maturity Maturity Governance Skills Maturity Maturity
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