IS Management Handbook, 8th Edition

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IS Management HANDBOOK 8 TH E D I T I O N

OTHER AUERBACH PUBLICATIONS The ABCs of IP Addressing Gilbert Held ISBN: 0-8493-1144-6 The ABCs of TCP/IP Gilbert Held ISBN: 0-8493-1463-1 Building an Information Security Awareness Program Mark B. Desman ISBN: 0-8493-0116-5 The Complete Book of Middleware Judith Myerson ISBN: 0-8493-1272-8 Computer Telephony Integration, 2nd Edition William A. Yarberry, Jr. ISBN: 0-8493-1438-0 Global Information Warfare: How Businesses, Governments, and Others Achieve Objectives and Attain Competitive Advantages Andy Jones, Gerald L. Kovacich, and Perry G. Luzwick ISBN: 0-8493-1114-4 Information Security Architecture Jan Killmeyer Tudor ISBN: 0-8493-9988-2 Information Security Management Handbook, 4th Edition, Volume 1 Harold F. Tipton and Micki Krause, Editors ISBN: 0-8493-9829-0 Information Security Management Handbook, 4th Edition, Volume 2 Harold F. Tipton and Micki Krause, Editors ISBN: 0-8493-0800-3 Information Security Management Handbook, 4th Edition, Volume 3 Harold F. Tipton and Micki Krause, Editors ISBN: 0-8493-1127-6 Information Security Management Handbook, 4th Edition, Volume 4 Harold F. Tipton and Micki Krause, Editors ISBN: 0-8493-1518-2

Information Security Policies, Procedures, and Standards: Guidelines for Effective Information Security Management Thomas R. Peltier ISBN: 0-8493-1137-3 Information Security Risk Analysis Thomas R. Peltier ISBN: 0-8493-0880-1 A Practical Guide to Security Engineering and Information Assurance Debra Herrmann ISBN: 0-8493-1163-2 The Privacy Papers: Managing Technology and Consumers, Employee, and Legislative Action Rebecca Herold ISBN: 0-8493-1248-5 Securing and Controlling Cisco Routers Peter T. Davis ISBN: 0-8493-1290-6 Securing E-Business Applications and Communications Jonathan S. Held and John R. Bowers ISBN: 0-8493-0963-8 Securing Windows NT/2000: From Policies to Firewalls Michael A. Simonyi ISBN: 0-8493-1261-2 Six Sigma Software Development Christine B. Tayntor ISBN: 0-8493-1193-4 A Technical Guide to IPSec Virtual Private Networks James S. Tiller ISBN: 0-8493-0876-3 Telecommunications Cost Management Brian DiMarsico, Thomas Phelps IV, and William A. Yarberry, Jr. ISBN: 0-8493-1101-2

AUERBACH PUBLICATIONS www.auerbach-publications.com To Order Call: 1-800-272-7737 • Fax: 1-800-374-3401 E-mail: [email protected]

IS Management HANDBOOK 8 TH E D I T I O N Carol V. Brown Heikki Topi EDITORS

AUERBACH PUBLICATIONS A CRC Press Company Boca Raton London New York Washington, D.C.

This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”

Library of Congress Cataloging-in-Publication Data Information systems management handbook / editors, Carol V. Brown, Heikki Topi. — 8th ed. p. cm. ISBN 0-8493-1595-6 1. Information resources management — Handbooks, manuals, etc. I. Brown, Carol V. (Carol Vanderbilt), 1945– II. Topi, Heikki. T58.64.I5338 2003 658.4d038—dc21

2003041798

This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the consequences of their use. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming, and recording, or by any information storage or retrieval system, without prior permission in writing from the publisher. All rights reserved. Authorization to photocopy items for internal or personal use, or the personal or internal use of specific clients, may be granted by CRC Press LLC, provided that $1.50 per page photocopied is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 USA. The fee code for users of the Transactional Reporting Service is ISBN 0-8493-15956/03/$0.00+$1.50. The fee is subject to change without notice. For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged. The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from CRC Press LLC for such copying. Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe.

Visit the CRC Press Web site at www.auerbach-publications.com © 2003 by CRC Press LLC Auerbach is an imprint of CRC Press LLC No claim to original U.S. Government works International Standard Book Number 0-8493-1595-6 Library of Congress Card Number 2003041798

ISBN 0-203-50427-5 Master e-book ISBN

ISBN 0-203-58711-1 (Adobe eReader Format)

Contributors SANDRA D. ALLEN-SENFT, Corporate IS Audit Manager, Farmers Insurance, Alta Loma, California BRIDGET ALLGOOD, Senior Lecturer, Information Systems, University College, North Hampton, England BARTON S. BOLTON, Consultant, Lifetime Learning, Upton, Massachusetts BIJOY BORDOLOI, Professor, School of Business, Southern Illinois University-Edwardsville, Edwardsville, Illinois BRENT J. BOWMAN, Associate Professor, College of Business Administration, University of Nevada-Reno, Reno, Nevada THOMAS J. BRAY, President and Principal Security Consultant, SecureImpact, Atlanta, Georgia CAROL V. BROWN, Associate Professor, Kelley School of Business, Indiana University, Bloomington, Indiana JANET BUTLER, Consultant, Rancho de Taos, New Mexico DONALD R. CHAND, Professor, Bentley College, Waltham, Massachusetts LEI-DA CHEN, Assistant Professor, College of Business Administration, Creighton University, Omaha, Nebraska TIM CLARK, Senior Systems Engineer, Cylink Corporation, Santa Clara, California HAMDAH DAVEY, Finance Manager, Tibbett Britten, United Kingdom NICHOLAS ECONOMIDES, Professor, Stern School of Business, New York University, New York, New York JOHN ERICKSON, Ph.D. Student, College of Business Administration, University of Nebraska-Lincoln, Lincoln, Nebraska MARK N. FROLICK, Associate Professor, Fogelman College of Business, University of Memphis, Memphis, Tennessee FREDERICK GALLEGOS, IS Audit Advisor and Faculty Member, College of Business Administration, California State Polytechnic University, Pomona, California TIMOTHY GARCIA-JAY, Project Director, St. Mary’s Hospital, Reno, Nevada JAMES E. GASKIN, Consultant, Mesquite, Texas HAYWOOD M. GELMAN, Consulting Systems Engineer, Cisco Systems, Lexington, Massachusetts ROBERT L. GLASS, President, Computing Trends, Bloomington, Indiana v

Information Systems Management Handbook FRITZ H. GRUPE, Professor, College of Business Administration, University of Nevada-Reno, Reno, Nevada UMA G. GUPTA, Dean, College of Technology, University of Houston, Houston, Texas GARY HACKBARTH, Assistant Professor, College of Business, Iowa State University, Ames, Iowa LINDA G. HAYES, Chief Executive Officer, WorkSoft, Inc., Dallas, Texas ROBERT L. HECKMAN, Assistant Professor, School of Information Studies, Syracuse University, Syracuse, New York LUKE HOHMANN, Consultant, Luke Hohmann Consulting, Sunnyvale, California RAY HOVING, Consultant, Ray Hoving and Associates, New Tripoli, Pennsylvania ZHENYU HUANG, Ph.D. Student, Fogelman College of Business, University of Memphis, Memphis, Tennessee CARL B. JACKSON, Vice President, Business Continuity Planning, QinetiQ Trusted Information Management Corporation, Worcester, Massachusetts RON JEFFRIES, Consultant, Xprogramming.com DIANA JOVIN, Market Development Manager, NetDynamics, Inc., Menlo Park, California RICHARD M. KESNER, Director of Enterprise Operations, Northeastern University, Boston, Massachusetts WILLIAM J. KETTINGER, Director, Center for Information Management and Technology Research, The Darla Moore School of Business, University of South Carolina, Columbia WILLIAM R. KING, Professor, Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, Pennsylvania CHRISTOPHER KLAUS, Founder and Chief Technology Officer, Internet Security Systems, Atlanta, Georgia RAVINDRA KROVI, Associate Professor, College of Business Administration, University of Akron, Akron, Ohio WILLIAM KUECHLER, Assistant Professor, College of Business Administration, University of Nevada-Reno, Reno, Nevada MIKE KWIATKOWSKI, Consultant, Dallas, Texas RICHARD B. LANZA, Manager of Process, Business and Technology Integration Team, American Institute of Certified Public Accountants, Falls Church, Virginia JOO-ENG LEE-PARTRIDGE, Associate Professor, National University of Singapore, Singapore LISA M. LINDGREN, Consultant, Gilford, New Hampshire LOWELL LINDSTROM, Vice President, Business Coach, Object Mentor, Vernon Hills, Illinois ALDORA LOUW, Senior Associate, Global Risk Management Solutions Group, PricewaterhouseCoopers, Houston, Texas JERRY LUFTMAN, Professor, Howe School of Technology Management, Stevens Institute of Technology, Hoboken, New Jersey vi

Contributors ANNE P. MASSEY, Professor, Kelley School of Business, Indiana University, Bloomington, Indiana PETER MELL, Computer Security Division, National Institute of Standards and Technology, Gaithersburg, Maryland N. DEAN MEYER, President, N. Dean Meyer Associates, Ridgefield, Connecticut JOHN P. MURRAY, Consultant, Madison, Wisconsin STEFAN M. NEIKES, Data Analyst, Tandy Corporation, Watuga, Texas FRED NIEDERMAN, Associate Professor, School of Business and Administration, Saint Louis University, St. Louis, Missouri STEVE NORMAN, Manager, Oracle Corporation; and Honorarium Instructor, University of Colorado at Colorado Springs, Colorado Springs, Colorado POLLY PERRYMAN KUVER, Consultant, Boston, Massachusetts MAHESH RAISINGHANI, Director of Research, Center for Applied Technology and Faculty Member, E-Commerce and Information Systems Department, Graduate School of Management, University of Dallas, Dallas, Texas T.M. RAJKUMAR, Associate Professor, School of Business Administration, Miami University, Oxford, Ohio V. RAMESH, Associate Professor, Kelley School of Business, Indiana University, Bloomington, Indiana C. RANGANATHAN, Assistant Professor, College of Business Administration, University of Illinois-Chicago, Chicago, Illinois VASANT RAVAL, Professor, College of Business Administration, Creighton University, Omaha, Nebraska DREW ROBB, Freelance Writer and Consultant, Los Angeles, California STUART ROBBINS, Founder and CEO, KMERA Corporation; and Executive Director, The CIO Collective, California JOHN F. ROCKART, Senior Lecturer Emeritus, Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts JEANNE W. ROSS, Principal Research Scientist, Center for Information Systems Research, Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts HUGH W. RYAN, Partner, Accenture, Chicago, Illinois SEAN SCANLON, E-Architect, FCG Doghouse, Huntington Beach, California WILLIAM T. SCHIANO, Professor, Bentley College, Waltham, Massachusetts S. YVONNE SCOTT, Assistant Director, Corporate Information Systems, GATX Corporation, Chicago, Illinois ARIJIT SENGUPTA, Assistant Professor, Kelley School of Business, Indiana University, Bloomington, Indiana NANCY SETTLE-MURPHY, President, Chrysalis International Inc., Boxborough, Massachusetts NANCY C. SHAW, Assistant Professor, School of Management, George Mason University, Fairfax, Virginia JAMES E. SHOWALTER, Consultant, Enterprise Computing, Automotive Industry Business Development, Sun Microsystems, Greenwood, Indiana vii

Information Systems Management Handbook KENG SIAU, Associate Professor, College of Business Administration, University of Nebraska-Lincoln, Lincoln, Nebraska JANICE C. SIPIOR, Associate Professor, College of Commerce and Finance, Villanova University, Villanova, Pennsylvania SUMIT SIRCAR, Professor, Farmer School of Business Administration, Miami University, Miami, Ohio SCOTT SWEENEY, Associate, CB Richard Ellis, Reno, Nevada PETER TARASEWICH, Assistant Professor, Northeastern University, Boston, Massachusetts HEIKKI TOPI, Associate Professor, Bentley College, Waltham, Massachusetts JOHN VAN DEN HOVEN, Senior Technology Advisor, Noranda, Inc., Toronto, Ontario, Canada ROBERT VANTOL, Senior E-Commerce Consultant, Web Front Communications, Toronto, Ontario, Canada ROBERTO VINAJA, Assistant Professor, College of Business Administration, University of Texas Pan American, Edinburg, Texas LES WAGUESPACK, Professor, Bentley College, Waltham, Massachusetts BURKE T. WARD, Professor, College of Commerce and Finance, Villanova University, Villanova, Pennsylvania MERRILL WARKENTIN, Associate Professor, College of Business and Industry, Mississippi State University, Mississippi State, Mississippi JASON WEIR, Senior Researcher, HR.com, Aurora, Ontario, Canada STEVEN M. WILLIFORD, President, Franklin Services Group, Inc., Pataskala, Ohio SUSAN E. YAGER, Assistant Professor, Southern Illinois University-Edwardsville, Edwardsville, Illinois WILLIAM A. YARBERRY, JR., Consultant and Technical Writer, Houston, Texas ROBERT A. ZAWACKI, Professor Emeritus, University of Colorado and President, Zawacki and Associates, Boulder, Colorado MICHAEL ZIMMER, Senior Coordinator, Ministry of Health Services and Ministry of Health Planning, Government of British Columbia, Victoria, British Columbia, Canada

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Contents SECTION 1 ACHIEVING STRATEGIC IT ALIGNMENT

.............. 1

STRATEGIC IT CAPABILITIES 1 Assessing IT–Business Alignment. . . . . . . . . . . . . . . . . . . . . . 7 Jerry Luftman 2 IT Capabilities, Business Processes, and Impact on the Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 William R. King 3 Facilitating Transformations in IT: Lessons Learned along the Journey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Steve Norman and Robert A. Zawacki 4 Strategic Information Technology Planning and the Line Manager’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Robert L. Heckman 5 Running Information Services as a Business. . . . . . . . . . . . 47 Richard M. Kesner 6 Managing the IT Procurement Process . . . . . . . . . . . . . . . . 73 Robert L. Heckman 7 Performance Metrics for IT Human Resource Alignment . . . 89 Carol V. Brown 8 Is It Time for an IT Ethics Program? . . . . . . . . . . . . . . . . . . 101 Fritz H. Grupe, Timothy Garcia-Jay, and William Kuechler IT LEADERSHIP ROLES 9 The CIO Role in the Era of Dislocation . . . . . . . . . . . . . . . . 111 James E. Showalter 10 Leadership Development: The Role of the CIO . . . . . . . . . 119 Barton S. Bolton 11 Designing a Process-Based IT Organization . . . . . . . . . . . 125 Carol V. Brown and Jeanne W. Ross ix

Information Systems Management Handbook SOURCING ALTERNATIVES 12 Preparing for the Outsourcing Challenge. . . . . . . . . . . . . . 135 N. Dean Meyer 13 Managing Information Systems Outsourcing. . . . . . . . . . . 145 S. Yvonne Scott 14 Offshore Development: Building Relationships across International Boundaries . . . . . . . . . . . . . . . . . . . . . 153 Hamdah Davey and Bridget Allgood 15 Application Service Providers . . . . . . . . . . . . . . . . . . . . . . . 159 Mahesh Raisinghani and Mike Kwiatkowski SECTION 2 DESIGNING AND OPERATING AN ENTERPRISE INFRASTRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 MANAGING A DISTRIBUTED COMPUTING ENVIRONMENT 16 The New Enabling Role of the IT Infrastructure . . . . . . . . 175 Jeanne W. Ross and John F. Rockart 17 U.S. Telecommunications Today . . . . . . . . . . . . . . . . . . . . . 191 Nicholas Economides 18 Information Everywhere. . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Peter Tarasewich and Merrill Warkentin DEVELOPING AND MAINTAINING THE NETWORKING INFRASTRUCTURE 19 Designing and Provisioning an Enterprise Network . . . . . 223 Haywood M. Gelman 20 The Promise of Mobile Internet: Personalized Services . . . 241 Heikki Topi 21 Virtual Private Networks with Quality of Service . . . . . . . 257 Tim Clark 22 Storage Area Networks Meet Enterprise Data Networks . . 269 Lisa M. Lindgren DATA WAREHOUSING 23 Data Warehousing Concepts and Strategies . . . . . . . . . . . 279 Bijoy Bordoloi, Stefan M. Neikes, Sumit Sircar, and Susan E. Yager 24 Data Marts: Plan Big, Build Small . . . . . . . . . . . . . . . . . . . . 301 John van den Hoven 25 Data Mining: Exploring the Corporate Asset . . . . . . . . . . . 307 Jason Weir

x

Contents 26 Data Conversion Fundamentals . . . . . . . . . . . . . . . . . . . . . 315 Michael Zimmer QUALITY ASSURANCE AND CONTROL 27 Service Level Management Links IT to the Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 Janet Butler 28 Information Systems Audits: What’s in It for Executives? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 Vasant Raval and Uma G. Gupta SECURITY AND RISK MANAGEMENT 29 Cost-Effective IS Security via Dynamic Prevention and Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Christopher Klaus 30 Reengineering the Business Continuity Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 Carl B. Jackson 31 Wireless Security: Here We Go Again . . . . . . . . . . . . . . . . . 379 Aldora Louw and William A. Yarberry, Jr. 32 Understanding Intrusion Detection Systems. . . . . . . . . . . 389 Peter Mell SECTION 3 PROVIDING APPLICATION SOLUTIONS

. . . . . . . . . . . . 399

NEW TOOLS AND APPLICATIONS 33 Web Services: Extending Your Web . . . . . . . . . . . . . . . . . . 405 Robert VanTol 34 J2EE versus .NET: An Application Development Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 V. Ramesh and Arijit Sengupta 35 XML: Information Interchange. . . . . . . . . . . . . . . . . . . . . . . 425 John van den Hoven 36 Software Agent Orientation: A New Paradigm. . . . . . . . . . 435 Roberto Vinaja and Sumit Sircar SYSTEMS DEVELOPMENT APPROACHES 37 The Methodology Evolution: From None, to One-Size-Fits-All, to Eclectic . . . . . . . . . . . . . . . . . . . . . . . . 457 Robert L. Glass 38 Usability: Happier Users Mean Greater Profits . . . . . . . . . 465 Luke Hohmann xi

Information Systems Management Handbook 39 UML: The Good, the Bad, and the Ugly . . . . . . . . . . . . . . . 483 John Erickson and Keng Siau 40 Use Case Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Donald R. Chand 41 Extreme Programming and Agile Software Development Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Lowell Lindstrom and Ron Jeffries 42 Component-Based IS Architecture . . . . . . . . . . . . . . . . . . . 531 Les Waguespack and William T. Schiano PROJECT MANAGEMENT 43 Does Your Project Risk Management System Do the Job? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 Richard B. Lanza 44 Managing Development in the Era of Complex Systems. . . .555 Hugh W. Ryan 45 Reducing IT Project Complexity . . . . . . . . . . . . . . . . . . . . . 561 John P. Murray SOFTWARE QUALITY ASSURANCE 46 Software Quality Assurance Activities . . . . . . . . . . . . . . . . 573 Polly Perryman Kuver 47 Six Myths about Managing Software Development . . . . . 581 Linda G. Hayes 48 Ethical Responsibility for Software Development. . . . . . . 589 Janice C. Sipior and Burke T. Ward SECTION 4 LEVERAGING E-BUSINESS OPPORTUNITIES

. . . . . . . . . 599

E-BUSINESS STRATEGY AND APPLICATIONS 49 Building an E-Business Strategy . . . . . . . . . . . . . . . . . . . . . 603 Gary Hackbarth and William J. Kettinger 50 Surveying the E-Landscape: New Rules of Survival . . . . . 625 Ravindra Krovi 51 E-Procurement: Business and Technical Issues . . . . . . . . 637 T.M. Rajkumar 52 Evaluating the Options for Business-to-Business E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 C. Ranganathan

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Contents 53 The Role of Corporate Intranets . . . . . . . . . . . . . . . . . . . . . 663 Diana Jovin 54 Integrating Web-Based Data into a Data Warehouse . . . . 671 Zhenyu Huang, Lei-da Chen, and Mark N. Frolick 55 At Your Service: .NET Redefines the Way Systems Interact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 Drew Robb SECURITY AND PRIVACY ISSUES 56 Dealing with Data Privacy Protection: An Issue for the 21st Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 Fritz H. Grupe, William Kuechler, and Scott Sweeney 57 A Strategic Response to the Broad Spectrum of Internet Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 Janice C. Sipior and Burke T. Ward 58 World Wide Web Application Security . . . . . . . . . . . . . . . . 729 Sean Scanlon SECTION 5 FACILITATING KNOWLEDGE WORK

. . . . . . . . . . . . . . . 749

PROVIDING SUPPORT AND CONTROLS 59 Improving Satisfaction with End-User Support . . . . . . . . . 753 Nancy C. Shaw, Fred Niederman, and Joo-Eng Lee-Partridge 60 Internet Acceptable Usage Policies . . . . . . . . . . . . . . . . . . 761 James E. Gaskin 61 Managing Risks in User Computing . . . . . . . . . . . . . . . . . . 771 Sandra D. Allen-Senft and Frederick Gallegos 62 Reviewing User-Developed Applications . . . . . . . . . . . . . . 781 Steven M. Williford 63 Security Actions during Reduction in Workforce Efforts: What to Do When Downsizing . . . . . . . . . . . . . . . . . . . . . . . 799 Thomas J. Bray SUPPORTING REMOTE WORKERS 64 Supporting Telework: Obstacles and Solutions . . . . . . . . 807 Heikki Topi 65 Virtual Teams: The Cross-Cultural Dimension . . . . . . . . . 819 Anne P. Massey and V. Ramesh 66 When Meeting Face-to-Face Is Not the Best Option . . . . . 827 Nancy Settle-Murphy

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Information Systems Management Handbook KNOWLEDGE MANAGEMENT 67 Sustainable Knowledge: Success in an Information Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835 Stuart Robbins 68 Knowledge Management: Coming up the Learning Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 Ray Hoving 69 Building Knowledge Management Systems . . . . . . . . . . . . 857 Brent J. Bowman 70 Preparing for Knowledge Management: Process Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 873 Richard M. Kesner INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891

xiv

Introduction The first few years of the new millennium have been a challenging time for the information technology (IT) manager. The initial economic euphoria that greeted the successful completion of Y2K projects worldwide was quickly followed by a dramatic shakedown within U.S.-based industries most closely related to the growth of the Internet. Today, organizations are striving to find innovative ways to leverage in-place IT solutions to improve efficiency and effectiveness under a harsher economic climate. At the same time, technologies that hold the promise of globally ubiquitous access to distributed applications continue to be strong drivers of new business solutions and organizational change. In this competitive environment, it is increasingly important for IT managers to be able to closely align IT investments with the organization’s strategic goals. Both a high-quality IT infrastructure and high-quality IT services are critical for any modern organization to compete. Yet it is also essential for IT leaders to continue to assess new technologies and understand the fundamental issues of how best to integrate modern information technologies — including packaged enterprise systems, Web services, wireless access technologies, peer-to-peer computing, and voice, video, and data communication technologies — to transform the ways that organizations compete and individuals work across geographically dispersed locations. The 70 chapters in this 8th edition of the IS Management Handbook have been selected with the objective of helping our target audience, the practicing IT manager, successfully navigate today’s challenging environment. Guidelines, frameworks, checklists, and other tools are provided for a range of critical IT management topics. In addition to providing readings for our target audience of senior IT leaders, other members of the IT management team, and those consulting on IT management issues, we encourage potential adopters of this Handbook to use it as a resource for IT professional development forums and more traditional academic curricula. The five section themes we have selected for this Handbook are briefly introduced below. xv

Information Systems Management Handbook Section 1: Achieving Strategic IT Alignment Achieving strategic alignment between the IT organization and the business has been a top IT management issue for more than a decade. Achieving alignment should be viewed as a goal to continually aspire to, rather than an end state. Today, the IT investments to be aligned include not only systems investments, but also investments in IT people and IT processes. The three major topics selected for this section are strategic IT capabilities, IT leadership roles, and sourcing alternatives. Section 2: Designing and Operating an Enterprise Infrastructure A reliable and robust IT infrastructure is a critical asset for virtually all organizations. Decisions as to the design, implementation, and ongoing management of the IT infrastructure directly affect the success and viability of modern organizations. Yet, IT infrastructure issues have also become more complex: distributed technologies in general, and the Internet in particular, have blurred the boundaries between organizational systems and the systems of business partners. The five topics covered in this section include managing a distributed computing environment, developing and maintaining the networking infrastructure, data warehousing, quality assurance and control, and security and risk management. Section 3: Providing Application Solutions The development of Web-based, globally distributed application solutions requires skills and methods that are significantly different from those that were required of IT professionals in earlier eras. As client environments have become very diverse and users have come to expect ubiquitous and uninterrupted application availability, the integration between various systems components has become increasingly important. At the same time, security requirements have become increasingly stringent. The four topics covered in this section are new tools and applications, systems development approaches, project management, and software quality assurance. Section 4: Leveraging E-Business Opportunities The dramatic shakedown after the E-commerce boom of the late 1990s has not reduced the importance of the Internet, but may have reduced its speed of growth. For established traditional businesses, supporting E-business has become a vitally important new responsibility as organizations have pursued initiatives that include a mixture of online and offline xvi

Introduction approaches. E-business technologies have become an integral part of most organizations’ development portfolios and operational environments. The two topics covered in this section are E-business strategy and applications, and security and privacy issues. Section 5: Facilitating Knowledge Work Facilitating knowledge work continues to be a critical IS management role. Today’s typical knowledge worker is a computer-savvy user who has little tolerance for downtime and is an increasingly demanding Web user. Today’s technologies also enable working remotely — as a telecommuter or a member of a virtual team. Work teams are also beginning to demand new technologies to support communications and collaboration across geographical boundaries. The three topics covered in this section are providing support and controls, supporting remote workers, and knowledge management. How to Use This Handbook The objective of this handbook is to be a resource for practicing IT managers responsible for managing and guiding the planning and use of information technology within organizations. The chapters provide practical management tools and “food-for-thought” based on the management insights of more than 85 authors who include former CIOs at Fortune 500 companies now in consulting, other practicing IT managers, consultants, and academics who focus on practice-oriented research and best practices. To help our readers find the sections and information nuggets most useful to them, the chapters in this Handbook have been organized under 17 topics that fit into the five section themes introduced above. For those of you interested in browsing readings in a specific IT management area, we suggest becoming familiar with our table of contents first and then beginning your readings with the relevant section introduction at the beginning of each new section. For those interested in gleaning knowledge about a narrower topical area, we recommend a perusal of our alphabetical index at the end of the Handbook.

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Acknowledgments It has been a privilege for us to work together again as editors of the IS Management Handbook. We believe that our prior experiences working in the IT field, as educators seeking to respond to the curriculum needs of IT leaders, and as researchers tracking industry trends and best practices, position us well for this editorial challenge. We want to extend our sincere thanks to the authors who promptly responded to our requests for new material and worked together with us to develop new intellectual content that is relevant and timely. Each chapter has been reviewed multiple times in pursuit of currency, accuracy, consistency, and presentation clarity. We hope that all the authors are pleased with the final versions of their contributions to this Handbook. We also wish to offer special thanks to our publisher, Richard O’Hanley, for his insightful direction and to our production manager at CRC Press, Claire Miller, for her friendly communications and expertise. We also are grateful to our own institutions for recognizing the importance of faculty endeavors that bridge the academic and practitioner communities: Indiana University and Bentley College. Finally, we appreciate the continued support of our family members, without whose understanding this project could not have come to fruition. As we complete our editorial work for this Handbook, we can only marvel at the speed with which economic, technological, and professional fortunes have risen, and sometimes fallen, within the past decade. We encourage our readers to continue to invest in the professional development of their staffs and themselves, especially during the down cycles, in order to be even better positioned for a future in which IT innovation will continue to be an enabler, and catalyst, for business growth and change. CAROL V. BROWN Indiana University [email protected] HEIKKI TOPI Bentley College [email protected] xix


Section 1

Achieving Strategic IT Alignment

ACHIEVING STRATEGIC IT ALIGNMENT Achieving strategic alignment between the IS organization and the business has been a top IS management issue for more than a decade. In the past, achieving strategic IT alignment was expected to result primarily from a periodic IT planning process. Today, however, the emphasis is on a continuous assessment of the alignment of IT investments in not only systems, but also IT people and IT processes. Given the high rate of change in today’s hyper-competitive environments, achieving strategic IT alignment needs to also be viewed as a goal to continually aspire to, not necessarily an end state. The 15 chapters in this first section of the Handbook address a large set of IT–business alignment issues, which are organized under three highlevel topics: • Strategic IT capabilities • IT leadership roles • Sourcing alternatives STRATEGIC IT CAPABILITIES Chapter 1, “Assessing IT–Business Alignment,” presents a tool for teams of business and IT managers to reach agreement on their organization’s current state of alignment and to provide a roadmap for improvement. Thirtyeight practices are categorized into six IT–business alignment criteria: communications, competency/value measurement, governance, partnership, technology scope, and skills. According to the author, most executives today rate their organizations between levels 2 and 3 on a five-level maturity curve. Chapters 2 and 3 provide some high-level guidelines for achieving IT–business alignment via strategic IT capabilities. Chapter 2, “IT Capabilities, Business Processes, and Impact on the Bottom Line,” emphasizes the need to focus on IT investments that will result in “bundles” of internally consistent elements that fulfill a business or IT objective. A leading academician, the author argues that IT capabilities primarily impact a company’s bottom line through redesigned business processes. Chapter 3, “Facilitating Transformations in IT: Lessons Learned along the Journey,” focuses on how an IT organization can successfully transform itself into a more flexible consultative model. Based on a previously published model, the authors describe each component of their change model for an IT management context. The chapter concludes with lessons learned based on the authors’ extensive field experiences. The next four chapters are all concerned with developing specific IT capabilities by improving IT processes and metrics. Chapter 4, “Strategic Information Technology Planning and the Line Manager’s Role,” presents 2

ACHIEVING STRATEGIC IT ALIGNMENT an IT planning approach that takes into account two potentially conflicting needs: centralized IT coordination and entrepreneurial IT applications for business units. The author views the roles played by line managers in the IT planning process as critical to achieving IT–business alignment. Chapter 5, “Running Information Services as a Business,” presents a framework and a set of tools for managing the IS department’s service commitments to the organization. For example, the authors provide a comprehensive mapping of all IS services to discrete stakeholder constituencies, as well as templates for capturing business value, project roles, and risks. Chapter 6 presents a process model for IT procurement that has been developed by a Society for Information Management (SIM) working group. The objective of the working group was to impose discipline on a cross-functional process, based on the experiences of a dozen senior IT executives from large North American companies. The model details sub-processes and key issues for three Deployment processes (requirements determination, acquisition, contract fulfillment) and three Management processes (supplier management, asset management, quality management). Chapter 7, “Performance Metrics for IT Human Resource Alignment,” focuses on designing metrics to motivate and reward IT managers and their personnel for the development of a strategic human resource capability within the IT organization. After presenting guidelines for both what to measure and how to measure, a case example is used to demonstrate some best practices in people-related metrics in an organizational context that values IT–business goal alignment. The final chapter under this topic, “Is It Time for an IT Ethics Program?,” provides specific guidelines for developing an ethics program to help IT employees make better decisions. Given the recent publicity on corporate scandals due to unethical behavior within U.S. organizations, the chapter’s title deserves a resounding “Yes” response: an IT ethics program appears to be a relatively inexpensive and totally justifiable investment. IT LEADERSHIP ROLES The three chapters on IT leadership topics share ideas based on many years of personal experience by IT leaders. Chapter 9, “The CIO in the Era of Dislocation,” is based on the author’s insights as a former CIO and now a consultant with regular access to thought leaders in the field. Specifically, the author argues that entrepreneurial leadership is required in today’s networked world. The new era of pervasive computing and dislocating technologies and its meaning for the CIO role are described. As a former IT manager and a facilitator of leadership development programs, the author 3

ACHIEVING STRATEGIC IT ALIGNMENT of Chapter 10, “Leadership Development: The Role of the CIO,” argues that the departing CIO’s legacy is not the IT infrastructure left behind, but rather the IT leadership capability left behind. This chapter was crafted with the objective of helping IS leaders understand their own leadership styles, which is the first step toward helping develop other leaders. Chapter 11, “Designing a Process-Based IT Organization,” summarizes the organization design innovations of a dozen highly regarded IT leaders striving to develop more process-based IT organization. The authors synthesize these research findings into four IT processes and six IT disciplines that characterize the early 21st-century process-based IT organization. Common challenges faced by the IT leaders who were interviewed are also described, along with some of their initial solutions to address them. SOURCING ALTERNATIVES Since the landmark Kodak outsourcing contract, the trade-offs between internal and external sourcing for core and non-core IT functions have been widely studied. Chapter 12, “Preparing for the Outsourcing Challenge,” provides useful guidelines for preventing a bad outsourcing decision. Detailed methods to facilitate fair service and cost comparisons between internal staff and outsourcing vendors are provided. Chapter 13, “Managing Information Systems Outsourcing,” discusses the key components of outsourcing agreements from a client perspective. As the author points out, good contractual agreements are the first step toward effective management and control of IS/IT outsourcing arrangements. The final two chapters on the alternative sourcing topic discuss IT management issues associated with two new outsourcing options: (1) “offshore” outsourcing (IT work managed by organizations in other countries) and (2) application service providers (ASPs). Chapter 14, “Offshore Development: Building Relationships across International Boundaries,” provides useful “food-for-thought” about how to build effective relationships with IT workers managed by an outsourcing firm located in a country that is different from the client’s firm. Using a case example of a client firm based in the United Kingdom and an outsourcer in India, the authors describe some of the challenges encountered due to lack of knowledge about the client firm’s business context and socio-cultural differences, as well as some suggestions for how they can be successfully addressed. ASPs provide Internet-based hosting of packaged or vendor-customized applications. Particularly if the ASP is a third-party provider, their valueadded services may include software integration as well as hosting services. A composite of content from two related articles published by the same authors, Chapter 15, “Application Service Providers,” presents the 4

ACHIEVING STRATEGIC IT ALIGNMENT potential benefits of ASP arrangements (including the support of virtual organizations) and some of the infrastructure challenges. The discussion of service level agreements emphasizes the key differences between SLAs with an external ASP versus SLAs with an internal IT organization.

5


Chapter 1

Assessing IT–Business Alignment Jerry Luftman

Alignment is the perennial business chart-topper on top-ten lists of IT issues. Educating line management on technology’s possibilities and limitations is difficult; so is setting IT priorities for projects, developing resources and skills, and integrating systems with corporate strategy. It is even tougher to keep business and IT aligned as business strategies and technology evolve. There is no silver-bullet solution, but achieving alignment is possible. A decade of research has found that the key is building the right relationships and processes, and providing the necessary training. What follows is a methodology developed by the author for assessing a company’s alignment. Modeled after the Capability Maturity Model® developed by Carnegie Mellon’s Software Engineering Institute, but focused on a more strategic set of business practices, this tool has been successfully tested at more than 50 Global 2000 companies and is currently the subject of a benchmarking study sponsored by the Society for Information Management and The Conference Board.1 The primary objective of the assessment is to identify specific recommendations for improving the alignment of IT and the business. ALIGNMENT CATEGORIES The tool has six IT–business alignment criteria, or maturity categories, that are included in each assessment: 1. 2. 3. 4. 5. 6.

Communications Maturity Competency/Value Measurements Maturity Governance Maturity Partnership Maturity Technology Scope Maturity Skills Maturity

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ACHIEVING STRATEGIC IT ALIGNMENT Each maturity category is discussed below. A list of specific practices for each of the six alignment criteria can be found in Exhibit 1. Communications Maturity Effective exchange of ideas and a clear understanding of what it takes to ensure successful strategies are high on the list of enablers and inhibitors to alignment. Too often there is little business awareness on the part of IT or little IT appreciation on the part of the business. Given the dynamic environment in which most organizations find themselves, ensuring ongoing knowledge sharing across organizations is paramount. Many firms choose to draw on liaisons to facilitate this knowledge sharing. The keyword here is “facilitate.” This author has often seen facilitators whose role becomes serving as the sole conduit for interaction among the different organizations. This approach tends to stifle, rather than foster, effective communications. Rigid protocols that impede discussions and the sharing of ideas should be avoided. Competency/Value Measurements Maturity Too many IT organizations cannot demonstrate their value to the business in terms that the business understands. Frequently, business and IT metrics of value differ. A balanced “dashboard” that demonstrates the value of IT in terms of contribution to the business is needed. Service levels that assess IT’s commitments to the business often help. However, the service levels must be expressed in terms that the business understands and accepts. The service levels should be tied to criteria that clearly define the rewards and penalties for surpassing, or missing, the objectives. Frequently, organizations devote significant resources to measuring performance factors. However, they spend much less of their resources on taking action based on these measurements. For example, requiring a return on investment (ROI) before a project begins, but not reviewing how well objectives were met after the project was deployed, provides little value to the organization. It is important to continuously assess the performance metrics criteria to understand (1) the factors that lead to missing the criteria and (2) what can be learned to improve the environment. Governance Maturity The considerations for IT governance include how the authority for resources, risk, conflict resolution, and responsibility for IT is shared among business partners, IT management, and service providers. Project selection and prioritization issues are included here. Ensuring that the appropriate business and IT participants formally discuss and review the 8

Exhibit 1.

Alignment Criteria Level 5: Optimal Process (Complete Alignment)

Alignment Criterion: Communications Maturity

Level 1: With Process (No Alignment)

Understanding of Business by IT Understanding of IT by Business

IT management lacks Limited Good understanding understanding understanding by IT by IT management management Managers lack Limited understanding Good understanding understanding by managers by managers

Organizational Learning

Casual conversation and meetings

Newsletters, reports, group e-mail

Style and Ease of Access

Business to IT only; formal

One-way, somewhat informal

Leveraging Intellectual Assets

Ad hoc

Some structured sharing emerging

Structured around key processes

Formal sharing at all levels

Formal sharing with partners

IT–Business Liaison Staff

None or use only as needed

Primary IT–Business link

Facilitate knowledge transfer

Facilitate relationship building

Building relationship with partners

Level 2: Beginning Process

Level 3: Establishing Process

Understanding encouraged among IT staff Understanding encouraged among staff Formal methods sponsored by senior management Two-way, somewhat informal

Understanding required of all IT staff Understanding required of staff Learning monitored for effectiveness Two-way, informal and flexible

9

Assessing IT–Business Alignment

Training, departmental meetings Two-way, formal

Level 4: Improved Process

Alignment Critera (continued)

Alignment Criterion: Competency/Value Measurements Maturity



IT Metrics

Technical only

Business Metrics

IT investments measured rarely, if ever Value of IT investments rarely measured Use sporadically

Technical cost; metrics Review, act on rarely reviewed technical, ROI metrics Cost/unit; rarely Review, act on ROI, reviewed cost

Link between IT and Business Metrics Service Level Agreements Benchmarking

Seldom or never

Formally Assess IT Investments

Do not assess

Continuous Improvement Practices

None

Business, IT metrics not linked With units for technology performance Sometimes benchmark informally Only when there is a problem Few; effectiveness not measured


Business, IT metrics becoming linked

Level 4: Improved Process Also measure effectiveness Also measure customer value

Formally linked; reviewed and acted upon With units; becoming Enterprisewide enterprisewide May benchmark formally, seldom act Becoming a routine occurrence Few; starting to measure effectiveness

Level 5: Optimal Process (Complete Alignment) Also measure business ops, HR, partners Balanced scorecard, includes partners Balanced scorecard, includes partners Includes partners

Routinely benchmark, Routinely benchusually act mark, act on, and measure results Routinely assess and Routinely assess, act on findings act on, and measure results Many; frequently Practices and meameasure sures well-estabeffectiveness lished

ACHIEVING STRATEGIC IT ALIGNMENT

10 Exhibit 1.

Exhibit 1.

Alignment Critera (continued)

Alignment Criterion: Governance Maturity


Formal Business Strategy Planning

Not done, or done as At unit functional level, Some IT input and needed slight IT input cross-functional planning Not done, or done as At unit functional level, Some business input needed light business input and cross-functional planning Centralized or Central/decentral; Central/decentral decentralized or Federal some collocation

Formal IT Strategy Planning Organizational Structure

CIO reports to CFO

How IT is Budgeted


CIO reports to COO


Level 5: Optimal Process (Complete Alignment)

At unit and enterprise, with IT

With IT and partners

At unit and enterprise, with business Federal

With partners

Federal

11

CIO reports to COO or CEO

CIO reports to CEO

Cost center, spending Cost center by unit is unpredictable

IT treated as investment

Profit center

Rationale for IT Spending

Reduce costs

Process driver, strategy enabler

Competitive advantage, profit

Senior-Level IT Steering Committee

Do not have

Meet informally as needed

Formal committees meet regularly

Proven to be effective

Also includes external partners

How Projects Are Prioritized

React to business or IT need

Determined by IT function

Determined by business function

Mutually determined

Partners’ priorities are considered

CIO reports to CFO

Some projects treated as investments Productivity, efficiency Also a process enabler


Reporting Relationships


Alignment Criterion: Partnership Maturity





Business Perception of IT

Cost of doing business

Becoming an asset

Enables future business activity

Drives future business activity

IT’s Role in Strategic Business Planning Shared Risks and Rewards

Not involved

Enables business processes IT takes all the risks, IT takes most risks receives no rewards with little reward

Managing the IT–Business Relationship Relationship/Trust Style

IT–business Managed on an ad relationship is not hoc basis managed Conflict and mistrust Transactional relationship

Business Usually none Sponsors/Champions

Often have a senior IT sponsor or champion

Partner with business in creating value Enables or drives IT, business adapt business strategy quickly to change Risks, rewards always Managers incented shared to take risks

Drives business processes IT, business start sharing risks, rewards Processes exist but Processes exist and not always complied with followed IT becoming a valued Long-term service provider partnership IT and business sponsor or champion at unit level


Business sponsor or champion at corporate level

Processes are continuously improved Partner, trusted vendor or IT services CEO is the business sponsor or champion

ACHIEVING STRATIEGIC IT ALIGNMENT

12 Exhibit 1. Alignment Critera (continued)

Exhibit 1. Alignment Critera (continued) Level 1: With Process (No Alignment)




Primary Systems

Cost of doing business

Becoming an asset

Enables future business activity

Drives future business activity

Standards

Not involved

Architectural Integration

IT takes all the risks, receives no rewards IT–business relationship is not managed

Enables business processes IT takes most risks with little reward

Drives business processes IT, business start sharing risks, rewards Processes exist but Processes exist and not always followed are complied with

How IT Infrastructure is Perceived

Managed on an ad hoc basis


Partner with business in creating value Enables or drives IT, business adapt business strategy quickly to change Risks, rewards always Managers incented shared to take risks Processes are continuously improved

13


Alignment Criterion: Technology Scope Maturity

Alignment Critera (continued) Level 5: Optimal Process (Complete Alignment)

Alignment Criterion: Skills Maturity



Innovative, Entrepreneurial Environment

Discouraged

Somewhat encouraged Strongly encouraged at unit level at unit level

Also at corporate level

Key IT HR Decisions Made by:

Top business and IT management at corporate Tend to resist change Job transfers rarely occur

Same, with emerging functional influence Change readiness programs emerging Occasionally occur within unit

Top business and IT Top management management across across firm and firm partners Programs in place at Also proactive and corporate level anticipate change Regularly occur at all Also at corporate level unit levels

Cross-Functional Training and Job Rotation

No opportunities

Decided by units

Social Interaction

Minimal IT–business interaction

Strictly a business-only Trust and confidence Trust and confidence relationship is starting achieved

Attract and Retain Top Talent

No retention program; poor recruiting

IT hiring focused on technical skills

Change Readiness Career Crossover Opportunities


Top business and unit management; IT advises Programs in place at functional level Regularly occur for unit management


Formal programs run Also across enterby all units prise

Technology and business focus; retention program

Also with partners

Also with partners

Attained with customers and partners Formal program for Effective program hiring and retaining for hiring and retaining


14 Exhibit 1.

Assessing IT–Business Alignment priorities and allocation of IT resources is among the most important enablers (or inhibitors) of alignment. This decision-making authority needs to be clearly defined. Partnership Maturity The relationship that exists among the business and IT organizations is another criterion that ranks high among the enablers and inhibitors of alignment. Giving the IT function the opportunity to have an equal role in defining business strategies is obviously important. However, how each organization perceives the contribution of the other, the trust that develops among the participants, ensuring appropriate business sponsors and champions of IT endeavors, and the sharing of risks and rewards are all major contributors to mature alignment. This partnership should evolve to a point where IT both enables and drives changes to both business processes and business strategies. Naturally, this demands having a clearly defined vision shared by the CIO and CEO. Technology Scope Maturity This set of criteria assesses the extent to which IT is able to: • Go beyond the back office and the front office of the organization • Assume a role supporting a flexible infrastructure that is transparent to all business partners and customers • Evaluate and apply emerging technologies effectively • Enable or drive business processes and strategies as a true standard • Provide solutions customizable to customer needs Skills Maturity This category encompasses all IT human resource considerations, such as how to hire and fire, motivate, train and educate, and culture. Going beyond the traditional considerations such as training, salary, performance feedback, and career opportunities, there are factors that include the organization’s cultural and social environment. For example, is the organization ready for change in this dynamic environment? Do individuals feel personally responsible for business innovation? Can individuals and organizations learn quickly from their experience? Does the organization leverage innovative ideas and the spirit of entrepreneurship? These are some of the important conditions of mature organizations. LEVELS OF ALIGNMENT MATURITY Each of the six criteria described above has a set of attributes that allow particular dimensions (or practices) to be assessed using a rating scheme 15

ACHIEVING STRATEGIC IT ALIGNMENT of five levels. For example, for the practice “Understanding of business by IT” under the Communications Maturity criterion, the five levels are: Level 1: IT management lacks understanding Level 2: Limited understanding by IT management Level 3: Good understanding by IT management Level 4: Understanding encouraged among IT staff Level 5: Understanding required of all IT staff It is important to have both business and IT executives evaluate each of the practices for the six maturity criteria. Typically, the initial review will produce divergent results, and this outcome is indicative of the organization’s alignment problems and opportunities being addressed. The objective is for the team of IT and business executives to converge on a maturity level. Further, the relative importance of each of the attributes for each maturity criterion may differ among organizations. For example, in some organizations, the use of SLAs (service level agreements), which is a practice under the Competency/Value Measurements Maturity criterion, may not be considered as important to alignment as the effectiveness of IT–business liaisons, which is a practice under the Communications Maturity criterion. Assigning the SLA practice a low maturity assessment should not significantly impact the overall rating. However, it is still valuable for the assessment team to discuss why a particular attribute (in this example, SLAs) is less significant than another attribute (liaisons). After each practice is assessed, an average score for the evaluation team is calculated for each practice, and then an average category score is determined for each of the six criteria (see Exhibit 2). The evaluation team then uses these scores for each criterion to converge on an overall assessment of the IT alignment maturity level for the firm (see below). The next higher level of maturity is then used as a roadmap to identify what the firm should do next. A trained facilitator is typically needed for these sessions. ASSESSING YOUR ORGANIZATION This rating system will help you assess your company’s level of alignment. You will ultimately decide which of the following definitions best describes your business practices. Each description corresponds to a level of alignment, of which there are five:

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Level 1: Without Process (no alignment) Level 2: Beginning Process Level 3: Establishing Process Level 4: Improved Process Level 5: Optimal Process (complete alignment)

Assessing IT–Business Alignment Exhibit 2.

Tally Sheet Averaged Scores

Practice Categories

Practices

Communications 1 2 3 4 5 6 Competency/ 7 Value 8 Measurements 9 10 11 12 13 Governance

14 15 16 17 18 19 20 21

Partnership

22 23 24 25 26 27

Technology Scope

28 29 30 31

1 1.5 2 2.5 3 3.5 4 4.5 5

Average Category Score

Understanding of business by IT Understanding of IT by business Organizational learning Style and ease of access Leveraging intellectual assets IT–business liaison staff IT metrics Business metrics Link between IT and business metrics Service level agreements Benchmarking Formally assess IT investments Continuous improvement practices Formal business strategy planning Formal IT strategy planning Organizational structure Reporting relationships How IT is budgeted Rationale for IT spending Senior-level IT steering committee How projects are prioritized Business perception of IT IT’s role in strategic business planning Shared risks and rewards Managing the IT–business relationship Relationship/trust style Business sponsors/ champions Primary systems Standards Architectural integration How IT infrastructure is perceived

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ACHIEVING STRATEGIC IT ALIGNMENT Exhibit 2. Tally Sheet (continued) Averaged Scores Practice Categories Skills

Practices 32 33 34 35 36 37 38

1 1.5 2 2.5 3 3.5 4 4.5 5

Average Category Score

Innovative, entrepreneurial environment Key IT HR decisions made by: Change readiness Career crossover opportunities Cross-functional training and job rotation Social interaction Attract and retain top talent

Your Alignment Score:

Level 1 companies lack the processes and communication needed to attain alignment. In Level 5 companies, IT and other business functions (marketing, finance, R&D, etc.) adapt their strategies together, using fully developed processes that include external partners and customers. Organizations should seek to attain, and sustain, the fifth and highest level of alignment. Conducting an assessment has the following four steps: 1. Form the assessment team. Create a team of IT and business executives to perform the assessment. Ten to thirty executives typically participate, depending on whether a single business unit or the entire enterprise is being assessed. 2. Gather information. Team members should assess each of the 38 alignment practices and determine which level, from 1 to 5, best matches their organization (see Exhibit 1). This can be done in three ways: (1) in a facilitated group setting, (2) by having each member complete a survey and then meeting to discuss the results, or (3) by combining the two approaches (e.g., in situations where it is not possible for all group members to meet). 3. Decide on individual scores. The team agrees on a score for each practice. The most valuable part of the assessment is not the score, but understanding its implications for the entire company and what needs to be done to improve it. An average of the practice scores is used to determine a category score for each of the six criteria (see Exhibit 2). 4. Decide on an overall alignment score. The team reaches consensus on what overall level to assign the organization. Averaging the cate18

Assessing IT–Business Alignment gory scores accomplishes this, but having dialogue among the participants is extremely valuable. For example, some companies adjust the alignment score because they give more weight to particular practices. The overall alignment score can be used as a benchmarking aid to compare with other organizations. Global 1000 executives who have used this tool for the first time have rated their organizations, on average, at Level 2 (Beginning Process), although they typically score at Level 3 for a few alignment practices. CONCLUSION Achieving and sustaining IT–business alignment continues to be a major issue. Experience shows that no single activity will enable a firm to attain and sustain alignment. There are too many variables. The technology and business environments are too dynamic. The strategic alignment maturity assessment tool provides a vehicle to evaluate where an organization is, and where it needs to go, to attain and sustain business–IT alignment. The careful assessment of a firm’s IT–business alignment maturity is an important step in identifying the specific actions necessary to ensure that IT is being used to appropriately enable or drive the business strategy. Note 1. See also Jerry Luftman, editor, Competing in the Information Age: Align in the Sand, Oxford University Press, 2003; and Jerry Luftman, Managing the IT Resource, Prentice Hall, 2003.

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Chapter 2

IT Capabilities, Business Processes, and Impact on the Bottom Line William R. King

During the 1990s, a great deal of attention was paid to the “productivity paradox” — the phenomenon that, for the U.S. economy, while huge business investments were being made in IT, no corresponding improvements in productivity were detectable. Since the early 1990s, the paradox has been debunked on technical grounds involving such things as its reliance on government-provided productivity data, its failure to consider increased consumer benefits from IT, etc. Attempts to trace IT investments to their impact on the bottom line have also generally not proved to be fruitful, presumably because so many factors affect overall profitability that it is impractical to isolate the effect of one of them — IT. However little empirical evidence has existed for the impact of IT, U.S. firms have continued to invest heavily in IT. Now, more than 50 percent of the total annual capital investment of U.S. firms is in IT, and IT “success stories” continue to proliferate. However, while business managers have obviously not been deterred by practitioners of the dismal science, they have received little guidance as well. Now, some research results are beginning to appear that have the prospect of providing such guidance. IT INVESTMENT VERSUS IT CAPABILITIES One of the explanations for the productivity paradox’s apparent failure is that IT investments have often been used as a surrogate measure for IT 0-8493-1595-6/03/$0.00+$1.50 © 2003 by CRC Press LLC

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ACHIEVING STRATEGIC IT ALIGNMENT capabilities. Clearly, a firm does not enhance the effectiveness of its IT merely by throwing money at IT. Rather, the possibility that IT will enhance business performance is through the development of efficacious IT capabilities, which include the hardware and software, the shared services that are provided by the IT function, and the IT management and organizational capacities — such as IT planning, software development skills, etc. — that bind the hardware and software to the services. IT capabilities are bundles of internally consistent elements that are focused toward the fulfillment of an IT or business objective. Without such focus on a capability, the organization may make IT expenditures in a fragmented manner. For example, until quite recently, many rather sophisticated commercial banks had computerized checking account systems, loan systems, and credit card systems that were not integrated to focus on fulfilling a variety of customer needs. These disparate systems were operationally effective, but their contribution to the bottom line was limited because they could not be used to fullest advantage to identify potential customers and to enable the development of closer relationships with customers. If a firm just invests in IT rather than in IT capabilities, it is likely to merely be acquiring IT components — primarily hardware, software, and vendor-provided services — that it may not really understand and may not be capable of fully utilizing to achieve business goals. If, on the other hand, it develops IT capabilities — sophisticated packages of hardware, software, shared services, human skills, and organizational processes — that are focused toward specific business goals, it is far more likely to be able to effectively employ the resources to impact profitability. For example, an investment in IT planning may enable better decisions to be made concerning hardware and software and how they may be best used to fulfill organizational needs. The overall package of hardware, software, planning capacity, and services that can result may rather directly impact the bottom line, whereas expenditures for new software or services may not do so because of the organization’s lack of an overall framework for deciding what is needed, what priorities are associated with each “need,” and when the organization may be ready to effectively utilize these expenditures. Part of the explanation for the failure of the productivity paradox has to do with the wide variability in the abilities of business to create IT capabilities rather than to merely spend money on IT. Some firms have created such capabilities and have therefore made wise IT expenditures. Others have continued the early-computer-era practice of buying the latest tech22

IT Capabilities, Business Processes, and Impact on the Bottom Line nology without a comprehensive plan as to how that technology might be most effectively employed in achieving business goals, and as a result they have been less successful. IT AND BUSINESS PROCESSES Research results, including a study that I conducted with Dr. Weidong Xia of the University of Minnesota, have begun to emerge that demonstrate that the primary mechanisms through which IT capabilities impact overall business performance are through the business processes. This result is consistent with the emphasis given in the past decade to the “balanced scorecard” as a measurement tool for assessing performance. The balanced scorecard deemphasizes overall financial measures and provides indices of progress toward the achievement of business process goals such as improved quality, increased customer satisfaction, and reduced cycle time. Now, these results in IT research demonstrate that it is in the improvements that can be made in such measures of business process performance through IT that the business impact of IT can be most directly felt. This is a basic premise of business process reengineering (BPR), which is intuitively appealing and widely applied (even if the BPR terminology is now somewhat dated) but which is not broadly studied and verified. In effect, proponents of BPR have argued that redesigned business processes are needed so that the inertia of the old way of doing things can be wrung out of the processes. These results from IT research can be interpreted to say that the old technologies may be similarly “wrung out” of existing old processes, not merely by replacing old technologies with new ones, but by doing zerobased process redesign on the basis of a new look at process goals and alternative ways of performing the process as well as alternative new technologies and alternative organizational forms (such as strategic alliances and outsourcing). Companies that have successfully developed IT capabilities are, ironically, in the best position to use non-IT solutions, such as alliances, in business process improvements because they are able to recognize the limits of new technologies and to focus on the best way of achieving the business goals of the business processes. The emphasis on business processes as targets for IT investments should incorporate the notion of “real options” — that is, the idea that in making an IT investment, one is not only purchasing the immediate benefit, but is either acquiring or foreclosing future options. This idea is crucial to 23

ACHIEVING STRATEGIC IT ALIGNMENT that of IT capabilities as well as in the determination of the business process benefits that may be derived from an IT investment. The simplest illustration of real options is in terms of the scalability of IT resources. If resources are scalable, some future options are preserved; if not, they may be foreclosed. Guidance to Practitioners The focus on IT capabilities and the influence that they exert through business processes leads to a number of guidelines for managers: • IT should avoid the image and reality of always recommending “throwing money” at the latest technologies. • Rather, the focus of IT investments should be on developing explicit IT capabilities that are “bundles” of hardware, software, shared services, management practices, technical and managerial skills, etc. • The soft side of IT capabilities is as important as the hard side, so that management should consider investments in IT planning and in development methodologies as carefully as they consider new hardware and software investments. • The real option value of IT investments — for example, the future options that are either made possible or foreclosed — need to be considered in developing an IT capability and in redesigning E-business processes. • IT should focus on impacting the business through impacting key business processes because, if the emphasis is on balanced scorecard measures, eventually these impacts will flow to the bottom line. • Correspondingly, while an emphasis on IT impacting profitability can lead to IT never really being held accountable, the focus on business process measures is more readily assessed and more easily attributable to the success or failure of IT. • In considering the redesign of business processes, IT should give attention to new organizational arrangements, such as alliances and outsourcing, rather than concentrating solely on IT solutions.

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Chapter 3

Facilitating Transformations in IT: Lessons Learned along the Journey Steve Norman Robert A. Zawacki

The rate of change today is higher than it ever has been in the past. There is now more pressure on information technology (IT) professionals than ever before. IT firms or departments must do more with less, and must do so quicker than ever before given today’s competitive environments. Given these factors, it is even more critical today that IT companies employ successful change strategies and processes. If a company cannot quickly and successfully adapt to change, it is destined to fail. The purpose in writing this chapter is to propose a model that will allow for successful change in IT firms. This model is reinforced by more than 30 years of research and personal experiences, and has proven successful in many of today’s top IT firms. CONTINUING TURBULENCE The turbulence in which companies operate today has reached peak levels. Since 1995, mergers and acquisitions have increased in absolute numbers and size. Those mergers permit economies of scale, which translates to more and larger workforce reductions (the projections were that the numbers for 2001 would be the highest ever). Further, organizations are

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ACHIEVING STRATEGIC IT ALIGNMENT locked in a global struggle over time-based competition, cost-effectiveness, even better customer service, and the need to be innovative while being flexible. As a consequence, the trust between management and individual contributors is at an all-time low.2 The outcome of this perceived random change is a high need by IT leaders to transform their organizations from the old bureaucratic control model to a more flexible consultative model. In the authors’ opinion, which has been proven correct by many companies, the organizational model that permits people to best respond to the above drivers of change is the “learning organization.” Not only is this model flexible, it is also scalable, enabling it to be implemented in many different organizations, regardless of size. This model is also called the STAR organization.3 It has many synonyms, such as the high velocity environment, the ad hoc organization, the shamrock organization, and even the expression “violent implementation,” to describe a development department’s strategy in response to timebased competition. Regardless of what it is called, an outcome of this continuous/discontinuous change is an expressed need by IT leaders4 for strategic alignment with the business, and with a renewed focus on strategy and tactics. Because of time-based competition and cost-effectiveness, IT leaders must do more with less and even quicker than before. CREATING THE BURNING PLATFORM “The need for a transformation stems from environmental turbulence that can render current organizational practices valueless. To respond, leaders must transform their organizations.”5 The transformation to the learning (STAR) organization is a new paradigm resulting in a new synergy that assists people in responding more quickly to the drivers of change than their competitors. The four main drivers of change are:6 1. Even better customer service: both internal and external. 2. Cost-effectiveness: a firm cannot, in the long run, cut costs and have sustained customer service and growth (we went through a period of cost reduction and confirmed this!). 3. Time-based competition: the firm that gets to the market first with a new product/service has a temporary monopoly, which is rewarded by the marketplace and by the stock market. 4. Innovation and flexibility: the organization of the future simply must learn faster and adapt faster than its competitors. 26

Facilitating Transformations in IT: Lessons Learned along the Journey THE MODEL FOR ALIGNMENT AND FOCUS Through coaching various IT leaders through their transformations toward learning organizations, and through personal observation, it was realized that there was a need to have a process that helped an organization’s people understand why they had to launch the transformation. A further need was to understand how to implement the transformation. This circular process is the key to rebuilding trust. When people feel trusted and valued, they add value to the customer and to the bottom line of the income statement. The search for a model to help understand this dual model of why and how led us to an article by Nutt and Backoff of Ohio State University, which Zawacki included in his Organizational Development book (5th edition, see Note 2). We then modified their model to make it a better fit with our research and the IT environment. Several clients have said that the model helped them understand their turbulent environment and also gave them a roadmap through the transformation. The modified model appears in Exhibit 1. Moving up the ladder in the model from the bottom addresses the why questions for the various levels in an organization. For example, for programmers or software engineers, the organizational transformation should reduce their job stress, improve their quality of work life, and give them empowerment (autonomy) with better processes and a clearer vision. Conversely, to implement this transformation (how), the IT leadership team must begin with a clear vision and values, and then must examine all of its processes, people empowerment, etc. VISION, VALUES, STRATEGIC OBJECTIVES, AND NEW BEHAVIORS Establishing the organizational vision, values, strategic objectives, and behaviors should be a collaborative process that increases the opportunity for organizational success.7 By making this process a collaborative one, you increase buy-in and, thus, ownership in the resulting vision, values, strategic objectives, and behaviors. When there is true organizational ownership in these, there is more commitment to the success of the organization. This resulting commitment greatly enhances the organization’s chances for success. Unfortunately, it is our experience that many IT executives have a desire to skip this step because of its “fuzzy” nature and because of the high degree of difficulty in defining the future. After going through this process, we had one very effective executive vice-president say, “If I hear that vision word again, you are out of here!” As stated, this new paradigm must begin with a clear vision, which must align with the company’s strategic objectives, and which then must result in new values and behaviors. The importance of a clear vision and corre27


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Exhibit 1.

Functional Specification Analysis Precursors

sponding values cannot be overstated. A clear vision and values are the stakes in the ground that associates hang onto, and that also pulls them toward the future when “turf” conflicts begin to surface during a planned transformation. This vision must also be exciting, engaging, and inspiring. It must have all of these qualities to truly get the energy of the organization around it. If it fails to exhibit these qualities, the organization simply will not have the sustained effort required to succeed. After establishing such a vision, the IT leadership team must then clearly articulate the new supporting values and behaviors of the STAR organization to all levels of the organization. The entire organization must clearly understand what the new vision, values, and behaviors are so that everyone knows what is expected of them. In addition, the leadership team 28

Facilitating Transformations in IT: Lessons Learned along the Journey must be sure to keep communicating the vision, values, and behaviors to reinforce the message. It is also critical that the leadership team look for early opportunities to positively reinforce the desired behaviors when exhibited. In addition, incentive and reward programs that support the new vision, values, and behaviors must quickly be put in place to capitalize on early victories and to capture and gain momentum. Of course, new values must be differentiated from old (mature) values and the focus must be on the new values. Some examples of mature and new values and the consequences (outcomes) of each are described in Exhibit 2. REVIEW PROCESSES After establishing the vision, values, and behaviors, the IT leadership team must review all processes to be sure that they support and enhance the learning organization. Every process must map directly back into the vision, values, and behaviors that were established. Otherwise, the process is merely overhead and should be reexamined (and possibly eliminated). For example, does the joining-up process include the interview, offer, in-processing, sponsorship, coaching, training, and the tactical goals and resources to do the job in the new organization? If so, great! If not, this should be immediately reexamined and revamped. Another key success factor is the priority-setting process for projects. It is our experience that if the prioritization process does not involve the business partners to the degree necessary, the CIO is set up for failure. Usually, the business partners negotiate their projects with the CIO and then the CIO is put in a position of setting priorities between the various business units. Unless the business partners (as a team) set the priorities for the entire organization, the CIO is doomed to fail, given limited resources and reduced cycle time of projects, because of the time-based competition in the market. Finally, metrics must be a key part of the process examination. Of course, the metrics used must be valid and must measure what they are supposed to measure. The metrics used must also be carefully examined to be sure they parallel the organizational direction. We use a metrics package titled “360 Degree Benchmarking” that includes measures for five critical areas: human resources/culture, software development, network platform services, data centers, and enterprise IT investments.8 Unfortunately, it has been our experience that many IT leaders resist metrics for fear of the unknown (or for fear of being held accountable to them!). However, metrics and baseline measures are critical because they permit the leadership team to demonstrate the value of the transformation process to the CEO. 29

ACHIEVING STRATEGIC IT ALIGNMENT Exhibit 2.

Consequences of Mature and New Values

Mature Values

Manifestations or Outcomes

Little personal investment in IT vision, values, and objectives People need a leader to direct them Keep the boss happy

They are the leader’s values, not mine

If something goes wrong, blame someone else Do not make waves Tomorrow will be just like today

People do not like change/they like security New Values Vision, values, and objectives are shared and owned by all IT individual contributors and business units People are capable of managing themselves within the vision, values, and objectives Keep the customer happy The buck stops here Make waves Nobody knows what tomorrow will bring Although random change upsets our behavior patterns, we learn and adjust

Hierarchy of authority and control Real issues do not surface at meetings Appeal procedures become over-formalized Innovation is not widespread but in the hands of a few technologists People swallow their frustrations: “I can’t do anything — it’s leadership’s responsibility to save the ship.” Job descriptions, division of labor, and little empires Manifestations or Outcomes These are my values

Hierarchy is replaced with selfdirected teams Customer-driven performance People address real problems and find synergistic solutions Waves result in innovation Constant learning to prepare for the unknown future Change is an opportunity to grow

Note: For a more detailed discussion of the change paradigm, see Steven W. Lyle and Robert A. Zawacki, “Centers of Excellence: Empowering People to Manage Change,” Information Systems Management, Winter 1997, pp. 26–29.

EMPOWERMENT OF PEOPLE Empowerment was a new “buzzword” of the 1990s. However, trying to define empowerment is similar to the difficulty of defining pornography. This dilemma was best summed up by former Justice Potter Stewart’s now-famous statement: “I shall not today attempt to define [obscenity]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it.”

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Facilitating Transformations in IT: Lessons Learned along the Journey The American Heritage Dictionary defines empower as “to enable or permit.” This is also referred to in the business world as autonomy. One can say that empowerment is basically how much autonomy the employee has in accomplishing organizational goals. So, what does this mean? We can perhaps better define or measure empowerment by observing leadership behavior in IT organizations, and then going back to the values and behaviors in Exhibit 2 to determine how closely they match. Does the organization truly empower its people? Do its actions support the vision, and does the organization then enable its people to get to the vision in their own way? After 30 years of consulting with IT organizations, we do know that individual contributors want to be treated as adults and want to control their own destiny. This does not mean that they desire laissez-faire management. Rather, people want goals and deadlines, and, given that they have the needed ability, training, and resources, they want the autonomy to accomplish those goals. However, they do expect strong feedback on goal accomplishment. Another aspect of empowering people is bureaucracy-bashing. The basic objective of bureaucracy-bashing is to remove low-value work and create “headroom” for overstressed people while building trust. This process of reverse-engineering is similar to GE’s workout sessions or Ford/Jaguar’s egg groups. Many of our STAR organizations also use quick hits and early wins as tactical moves to deliver quickly and reinforce the benefits of organizational transformations.9 WORK CLIMATE AND CULTURE To improve the quality of work life, do not re-invent the wheel. Benchmark against the best and leverage what has already been done. There are many good processes/systems already designed and implemented. For example, a networking group client recently decided that a strong technical career track was one of the keys to the future as organizations delayered. When they called, we referred them to another client that had an excellent technical career track. A team of development people visited the organization, liked what they saw, borrowed the hosting IT organization’s procedure, and implemented the process when they were “back at the ranch.” Very little cost and no consultants. The STAR organization is very flat, with few layers of management. Additionally, it is based on strong project management, and led by people who have a passion for the end product. After 30 years of interventions in IT organizations, however, we find very few organizations with strong project management — and this is an alarming trend. Most companies talk a good game; however, when you look more closely, strong project management is not there. We believe very strongly that this is a key competency of the 31

ACHIEVING STRATEGIC IT ALIGNMENT future in IT. Therefore, it must be examined and reexamined constantly and consistently. MEANINGFUL WORK Strong project managers motivate their IT people through meaningful work. Once the salary and benefits are competitive, our research indicates that IT people want meaningful work, which consists of using a variety of their skills, identifying with the larger goals of the organization, having highly visible work, having autonomy, and receiving good feedback. A related metric that we use is the Job Diagnostic Survey — Information Technology,10 which measures the meaningfulness of work, compares the richness of the jobs to global norms, and also measures the match-up of the person and the job. Meaningful work, equitable pay, and benefits explain more of the productivity of an IT department than any other variables. INCREASED COMMITMENT AND PRODUCTIVITY When organizations look closely at the meaningfulness of the work itself, and then match that with the needs of the person doing the work, they greatly enhance their chances for success. Individuals with a high growth need strength (GNS) should be “matched” in jobs that offer high motivating potential scores (MPS). That is, people with a high need for growth should be put in jobs that offer the growth they need. Conversely, if individuals have a low GNS, they can be placed in the jobs that have lower MPS. If this match is not looked at closely, the people on either end of the scale will quickly become dissatisfied, and their commitment and productivity will then decrease significantly. Our research indicates that 50 to 60 percent of an IT professional’s productivity stems from the match between the person and the job (GNS and MPS). Obviously, organizations want people who are committed and productive in order to increase their overall chances for value added to the bottom line. TRUSTWORTHINESS Organizations also want people who are trustworthy. People with high integrity are more apt to work smarter to make the organization successful. People who are not trustworthy are in a position to cause a great deal of damage to an organization, thus limiting the organization’s chances for success. Many individual contributors want to be trusted (empowered); however, they must also realize that they must be trustworthy. An individual’s trustworthiness is the sum total of his or her behavior, commitment, motivation, and follow-through. Although this variable is more difficult to measure than the others, it is also a key factor in an organization’s success and must be understood and examined. 32

Facilitating Transformations in IT: Lessons Learned along the Journey SUMMARY More than 70 percent of U.S. families now have two or more wage earners. As IT organizations merge, are bought out, or eventually downsize, the remaining people must still do all of the work of the people who left the organization. Not only that, but they must now do the same amount of work in less time. In many IT organizations, leadership’s response to the drivers of change is to have people work longer and harder. People can do this in the short run; however, in many IT organizations, the short run has become the long run. This is a trend that must be altered quickly or there will be severe negative consequences to the company’s success. With a labor market that is becoming increasingly tight for IT workers, and with ever-increasing job stress, the key to a sustained competitive advantage through people is the learning organization. This transformation to the learning organization must begin with the “whys” and “hows.” The key for IT leadership is to tell and show people that there is light at the end of the tunnel. Thus, the transformation journey begins with a vision and ends with reduced job stress. LESSONS LEARNED ALONG THE WAY After 30 years of research, teaching, consulting, and coaching IT organizations through change and transformations, we submit the following lessons learned. While not all IT organizations exhibit all of these characteristics, the trend is so strong and clear that we feel compelled to make these statements. Some may shock the reader. 1. IT cultures eat change for lunch. 2. Empowerment of IT associates is a myth. 3. Mergers and turnover in IT leadership are killing many good change programs. New leaders have a need for their own program or fad of the month. 4. Associates are hearing two conflicting messages: get the product out the door and innovate. Of the two, getting product out the door wins every time. 5. IT leaders talk a good game on measurement but, in reality, many do not want to be measured. 6. Where IT is implementing effective change, there is always a good change champion at the executive level. 7. During the 1990s, the market for IT people shifted from a buyer’s market to a seller’s market (due to hot skills, the year 2000, the Internet, and a drop-off in college majors). Now, there is a shift back to a buyer’s market because of the huge failure of dot.coms and the general downturn in the U.S. economy. However, be alert for the economy to return to its previous high levels of gross domestic 33

ACHIEVING STRATEGIC IT ALIGNMENT product (GDP) and, hence, for the market to again become a seller’s market. 8. IT leaders should concentrate on three main competencies to be successful in a period of random change: passion for the customer, passion for the product, and passion for the people. 9. Many IT change efforts are failing because they are trying to put programs in place in bureaucratic organizations designed for the 1960s, that were really designed for the STAR organization. 10. Turnover at the CIO level and outsourcing will continue in the short term because the business units do not perceive that IT adds timely and cost-effective value to the bottom line. CRITICAL SUCCESS FACTORS FOR WORKFORCE TRANSFORMATION If only a portion of the above statements is true, what can IT leaders do to load their change programs for success? Our conclusions are as follows. 1. Create a vision of the new organization with clearly stated core values and behaviors. 2. Help associates understand the benefits of change (the “whys” and “hows”), because if we do not change, we are all dead. 3. Demonstrate radical change and stay the course. 4. Involve as many associates as possible and listen to them. 5. Realize that repetition never spoils the prayer! Communicate, communicate, and communicate some more. 6. Benchmark with the best. 7. Utilize IT leaders who demonstrate the new values and behaviors. 8. Commit resources to support the change program, in the realization that change is not free! 9. Select future leaders based on the new values and competencies (like paneling, for example, which is a process that uses a committee to evaluate people for future assignments). 10. Monitor progress. Use full-spectrum performance measures before, during, and after the change program. 11. Use multiple interventions and levers. Build on opportunities. 12. Change the performance appraisal and reward system. 13. Put a culture in place that thrives on change. Capitalize on chaos. Notes 1. The Wall Street Journal, “Terror’s Toll on the Economy,” October 9, 2001. 2. Robert A. Zawacki, Carol A. Norman, Paul A. Zawacki, and Paul D. Applegate, Transforming the Mature IT Organization: Reenergizing and Motivating People, EagleStar Publishing, 1995. Also see Wendell L. French, Cecil H. Bell, Jr., and Robert A. Zawacki, Organization Development and Transformation: Managing Effective Change (5th ed.), McGraw-Hill Publishing, 1999. 3. Ibid. pp. 49–50.

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Facilitating Transformations in IT: Lessons Learned along the Journey 4. The term “IT leaders” is an all-inclusive term that includes people such as CIOs, vice presidents of systems development, directors of networks and operations, and presidents and vice presidents of software organizations. 5. Paul C. Nutt and Robert W. Backoff, “Facilitating Transformational Change,” Journal of Applied Behavioral Science, 33(4), 491, December 1997. 6. For an example of this process see Robert A. Zawacki and Howard Lackow, “Team Building as a Strategy for Time-Based Competition,” Information Systems Management, Summer 1998, pp. 36–39. 7. Zawacki, et al., pp. 26–27. 8. 360 Degree Benchmarking is a trademark of Technology & Business Integrators (TBI) of Woodcliff Lake, New Jersey. 9. For complete guidelines to bureaucracy-bashing, see Figure 2-2 in Zawacki et al., p. 48. 10. The Job Diagnostic Survey — Information Technology and global database is a copyrighted methodology of Zawacki and Associates of Colorado Springs.

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Chapter 4

Strategic Information Technology Planning and the Line Manager’s Role Robert Heckman

How can a company gain the benefits of entrepreneurial IT decision making by line managers without permitting the IT environment to become a highcost, low-performance, disconnected collection of independent systems? This chapter proposes an approach to IT planning that includes a formal role and responsibility for line managers. When combined with centralized IT architecture planning, this planning technique creates an approach to information management that is simultaneously top-down and bottom-up. The pendulum is swinging back. For more than a decade the responsibility for managing and deploying information resources has ebbed away from the centralized information management (IM) department and into line departments. The end-user computing revolution of the 1980s was followed by the client/server revolution of the 1990s. In both cases the hopedfor outcome was the location of information resources closer to the customer and closer to marketplace decisions, which in turn would lead to better customer service, reduced cycle time, and greater empowerment of users. The reality, however, was often quite different. Costs for information technology spiraled out of control, as up to half the money a company spent on information technology was hidden in line managers’ budgets. In addition to higher costs, distributed architectures often resulted in information systems with poor performance and low reliability. Because the disciplines that had been developed for centralized mainframe systems were lacking, experienced technologists were not surprised when client/server 0-8493-1595-6/03/$0.00+$1.50 © 2003 by CRC Press LLC

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ACHIEVING STRATEGIC IT ALIGNMENT systems performed poorly. Many client/server systems lacked (and still lack) effective backup and recovery procedures, capacity planning procedures, or performance analysis metrics. With costs up and performance down, CEOs are once again calling for greater centralized control over information resources. The growing movement toward enterprise resource planning (ERP) systems such as those offered by SAP, PeopleSoft, and Baan has also increased awareness of the need for careful management of the IT infrastructure. The architectures of the client/server versions of these systems paradoxically create a need for stronger centralized control of the IT infrastructure. Large companies such as Kodak (SAP) and Corning (PeopleSoft) have created single infrastructure development teams with integrated responsibilities for technical architecture, database administration, site assessment, and planning. Finally, the diffusion of Internet and intranet resources has suggested to many that a more centralized approach to control of network resources is also desirable — in fact, even necessary. Recent discussions about the network computer, one that obtains virtually all application and data resources from a central node, have reminded more than one observer of the IBM 3270 “dumb terminal” era. THE IT MANAGEMENT CHALLENGE Despite these drivers toward re-centralization, the forces that originally led to diffusion of IT management responsibility still exist. Certainly, the impact of information technology continues to grow and at the same time becomes more widely diffused throughout organizations. Likewise, the need to respond quickly to competitive thrusts continues to increase the value of independent IT decision making by line managers. As technologies become more user-friendly and the workforce becomes more IT literate, it is inevitable that line managers will face more and more technology-related decisions. The challenge, then, is how to gain the benefits of entrepreneurial IT decision making by line managers without permitting the IT environment to become a high-cost, low-performance, fragmented, and disconnected collection of independent systems. One solution to the IT management challenge is better IT planning. Information systems planning is an idea that has been with us for some time, and numerous systems planning methodologies have been developed and published. However, most IT planning methodologies are based on a topdown, centralized approach and are motivated more by technology issues than by business issues. They tend to be driven or facilitated by technologists within the centralized IM organization, or by outside consultants 38

Strategic Information Technology Planning and the Line Manager’s Role engaged by IM. Ownership of the process and the responsibility for its success are vested in the IM analyst’s role. Top-down, centralized planning conducted by the IM department has an important, even critical role, especially in large organizations. The construction of a single, standardized IT architecture and infrastructure is a crucial step for the successful integration of systems throughout the organization. It provides the foundation upon which aligned business and technology strategies can be built. The development and management of the infrastructure is clearly a centralized IM responsibility. However, it only solves half of the IT management and planning problem. Top-down, centralized IT planning is unlikely to result in a portfolio of IT investments that effectively uses the infrastructure to achieve business objectives. A DIALECTICAL APPROACH A more comprehensive view of IT planning is needed to address the simultaneous needs for centralized coordination and diffused decision making. The first step is to recognize that such planning will necessarily be dialectical — that is, it will involve conflict. To say that a process is dialectical implies tension or opposition between two interacting forces. A dialectical planning process systematically juxtaposes contradictory ideas and seeks to resolve the conflict between them. This expanded view of planning is based on the idea that effective planning can be neither exclusively top-down nor exclusively bottom-up. It must be both. The key to success using this planning philosophy is the creation of a formal role for line managers in the IT planning process. The topdown/bottom-up IT planning approach shown in Exhibit 1 is built on three fundamental principles: 1. Push responsibility for IT planning down and out into the organization. The ability to manage and plan for information resources must be a normal and expected skill for every line manager, equal in importance to the management of human and financial resources. 2. Integrate the IT planning activities of line managers through the role of a chief information officer (CIO). By emphasizing the benefits of entrepreneurial IT decision making by the line manager responsible for business strategy, organizations run the risk of the IT environment becoming fragmented and unresponsive. The CIO, as leader of the information management department, must be responsible for integration and control of IM throughout the organization. 3. View the IT environment as an information market economy. Line managers are free to acquire resources from the information market as they choose. However, just as the federal government regulates activities in the national economy through guidelines, policies, and 39


Exhibit 1.

Responsibilities in a Dialectical Planning Process

standards, the CIO establishes the information infrastructure within which line managers make information market decisions.1 This emphasis on departmental strategy as opposed to corporate strategy is intentional. It does not deny the critical importance of unified corporate-level business and IT strategies. Rather, it acknowledges that there are often departmental strategies that are not identified in corporate strategy or that may, to some degree, conflict with corporate strategy. A topdown/bottom-up planning process recognizes the possibility that corporate-level business and IT strategies may be influenced over time by the strategic choices made in the sub-units. THE LINE MANAGER’S ROLE Since much attention both in literature and in practice has been given to the top-down component of IT planning, procedures for this kind of work are widely understood in the community of technologists. IT planning, however, is likely to be an unfamiliar job for many line managers. The following simplified planning process (shown in Exhibit 2) may provide a useful framework for line managers to follow when beginning departmental IT planning. Unlike many detailed processes which are more suitable for projectlevel planning, this streamlined approach is valuable because it ensures that line managers focus their attention at the strategic and tactical levels 40

Strategic Information Technology Planning and the Line Manager’s Role

Exhibit 2.

An IT Planning Process for Line Management

rather than at the detailed project level. The process is also highly flexible and adaptable. Within each of the three stages any number of techniques may be adopted and combined to create a customized process that is comfortable for each organizational culture. Stage 1: Strategic Alignment The overall objective of Stage 1 is to ensure alignment between business and technology strategies. It contains two basic tasks: developing an understanding of the current technology situation and creating a motivating vision statement describing a desired future state. In addition to understanding and documenting the current business and technology contexts, this stage has the goal of generating enthusiasm and support from senior management and generating commitment, buy-in, and appropriate expectation levels in all stakeholders. One technique for creating a rich description of the current business and technology situation is the BASEline analysis. The four steps in the BASEline analysis procedure are shown in Exhibit 3. Additional techniques which can be used in Stage 1 are scenario creation, stakeholder interviews, brainstorming, and nominal group techniques. 41


BASEline Analysis

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Stage 2: Create an IT Investment Portfolio In this stage the objective is to identify a rich set of options for future information technology investments. In addition to generating potential investment options, in this stage it is also important to understand which options will have the greatest impact on the business, to assess the risk associated with each option, and to estimate the resources required to implement the impact options. Techniques that may be used in this stage are the strategic option generator,2 value chain analysis,3 critical success factor analysis,4 brainstorming, and nominal group techniques. It may also be useful in this stage to systematize the evaluation process through the use of some form of scoring model. A scoring model enables the planning team to integrate considerations such as financial benefit, strategic impact, and risk. Stage 3: Tactical Bridge In this stage the line manager takes the crucial actions necessary to ensure that the strategic IT investment portfolio is actually implemented. To overcome the greatest single threat to strategic technology planning — a plan 42

Strategic Information Technology Planning and the Line Manager’s Role that is put on the shelf and never looked at again — it is important to ensure that resources are made available to implement the projects that comprise the investment portfolio. To do this, it is necessary to integrate the work accomplished in strategic planning with the ongoing, periodic tactical planning that occurs in most organizations. The most important tactical planning activities are often financial. It is imperative that money be allocated in the annual budgeting cycle to execute the strategic projects identified in the IT investment portfolio. While this may seem obvious, companies often fail to make this link. It is assumed that the operating budget will automatically take into account the strategic work done six months earlier, but in the political process of budget allocation, the ideas in the strategic plan can easily be forgotten. Human resources are also often taken for granted. However, careful tactical planning is usually necessary to ensure that the right blend of skills will be available to implement the projects called for in the strategic plan. Once appropriate resources (time, money, people) have been allocated, then intermediate milestones and criteria for evaluation should be developed. Finally, effective communication of the strategic and tactical work that has been done is a crucial step. Dissemination of the planning work through management and staff presentations and publications will ensure that organizational learning occurs. Thus, attention should be devoted in Stage 3 not only to ensure that strategic plans are implementable, but that they continue to affect the organization’s strategic thinking in the future. PLANNING PROCEDURES When beginning the process of IT planning for the first time, a number of basic procedural issues will have to be addressed and resolved. Who is the line manager responsible for developing an IT plan? Who should be involved in the IT planning process? How formal should the process be? What deliverables should be produced? What is an appropriate planning horizon? What is the right planning cycle? There is no one right answer to these questions. The culture and the leadership style of the company and the department will to a great degree influence how planning processes are executed. There are, however, several procedural guidelines that may be useful for line managers who are undertaking the task of IT planning: Who Is the Line Manager? The key role in this process is played by the department or business unit manager. In smaller companies, no more than two or three senior executives may play the line manager role as described here. Larger corporations may have as many as 20 or 30 business units with a scope that war43

ACHIEVING STRATEGIC IT ALIGNMENT rants independent IT planning. Regardless of who occupies the role of line manager, it is absolutely critical that this individual take an active interest in IT planning and be personally involved in the process. He or she is the only one who can ensure that directly reporting managers view planning for information resources as an integral part of their job accountability. Who Should Be Involved? Composition of a planning team is a delicate art. We may think of representation on the planning team both horizontally and vertically. Attention to horizontal representation ensures that all sub-units are represented in the planning process. Attention to vertical representation ensures that employees at all levels of the organization have the opportunity to provide input to the planning process. It is also critical that departmental IT planning has a link to corporate IT planning. Thus it is usually beneficial to include a member of the central IM staff on the departmental planning team. Other outside members may also be appropriate, especially those who can provide needed technical expertise in areas such as emerging technologies where the line management team may not have the necessary technical expertise. Process and Deliverables As the business environment becomes more dynamic and volatile, the technology planning process must be more flexible and responsive. Thus the planning process should not be too rigid or too formal. It should provide the opportunity for numerous face-to-face encounters between the important participants. Structure for the process should provide welldefined forums for interaction rather than a rigidly specified set of planning documents. Perhaps a more effective mechanism for delivering the work of planning teams is for the line manager to periodically present the departmental IT plan to other senior managers, the CIO, and to members of his own staff. Planning Horizon The planning horizon must also be determined with the dynamic nature of the information technology environment in mind. Although there are exceptions, it is usually unrealistic for a department manager to plan with any precision beyond two years. Corporate IT planning, on the other hand, must look further when considering the corporate system’s infrastructure and policies. This long-term IT direction must be well understood by departmental managers, for it is critical to line planning activities.

44

Strategic Information Technology Planning and the Line Manager’s Role Planning Cycle: A Continuous Process Plans must be monitored and updated frequently. It may be sufficient to go through a formal planning exercise annually, including all three steps mentioned earlier. Checkpoint sessions, however, may occur at various intervals throughout the year. Major evaluations — such as the purchase of a large software package or the choice of a service provider — are likely to occur at any time in the cycle and should be carefully integrated with planning assumptions. It is absolutely critical that the strategic IT plan be integrated into other strategic and tactical planning processes, such as strategic business planning and annual budgeting for the department. Unless this linkage is formally established, it is very unlikely that strategic IT planning will have much influence on subsequent activities. CONCLUSION Regardless of the procedures chosen, the goal is for all members of the organization to understand that strategic IT planning is a critical component of business success. Everyone should be aware of the decisions reached and the linkage between business strategy and technology strategy. In the future, when all members of line management recognize that strategic technology planning is an essential component of strategic business planning, then an emphasis on strategic IT planning as a stand-alone activity may not be necessary. For now, however, as the pendulum swings back from decentralized to centralized control of information resources, there is a risk that line managers may not recognize the need for strategic IT planning. As we better understand the importance of centralized control of the IT infrastructure, we must not forget that the integration of IT into business strategy remains the province of every line manager who runs a business unit. Notes 1. Boynton, A.C. and Zmud, R., “Information Technology Planning in the 1990s: Directions for Practice and Research,” MIS Quarterly, 11(1), 1987, 59–71. 2. Wiseman, C. 1988. Strategic Information Systems, Irwin Publishing, Toronto, Ontario, Canada. 3. Porter, M. and Millar, V., “How Information Gives You Competitive Advantage,” Harvard Business Review, July 1985. 4. Shank, E. M., Boynton, A. C, and Zmud, R., “Critical Success Factors as a Methodology for MIS Planning,” MIS Quarterly, June 1985, pp. 121–129.

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Chapter 5

Running Information Services as a Business Richard M. Kesner

Most enterprises lack a comprehensive process that ensures the synchronization of IT project and service investments with overall business planning and delivery. Indeed, many enterprises fail to clarify and prioritize IT investments based upon a hierarchy of business needs and values. Some enterprises do not insist that their IT projects have a line-of-business sponsor who takes responsibility for the project’s outcomes and who ensures sufficient line-of-business involvement in project delivery. To address these shortcomings, each and every enterprise should embrace a process where the business side of the house drives IT investment, where both business and IT management holistically view and oversee IT project deliverables and service delivery standards, and where ownership and responsibility for said IT projects and services are jointly shared by the business and the IT leadership. The objective of this chapter is to present a framework and set of tools for viewing, communicating, managing, and reporting on the commitments of the IS organization to the greater enterprise.1 Throughout, the uncompromising focus is on the customer and hence on the enterprise’s investment in information technology from the standpoint of customer value. A starting point in this discussion is a simple model of the “internal economy” for information services that in turn drives IS’ allocation of resources between service delivery and project work. This model serves as the foundation for a more detailed consideration of two complementary IS business processes: service delivery management and project commitment management. The chapter then discusses a process for the more effective synchronization, communication, and oversight of IS service and project commitments, including the use of measurement and report tools. Finally, the 0-8493-1595-6/03/$0.00+$1.50 © 2003 by CRC Press LLC

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ACHIEVING STRATEGIC IT ALIGNMENT discussion will turn to the benefits of establishing an enterprisewide IS project office to support IS delivery and to better monitor and leverage the value of the enterprise’s IT investment portfolio. THE “INTERNAL ECONOMY” FOR INVESTING IN IT SERVICES AND PROJECTS All organizations are resource constrained. Their leaders must choose where best to invest these limited resources. Although the IS share of the pie has been increasing with the growing use of IT across the enterprise, it too has its limits, requiring planning and prioritization in line with the needs of the greater enterprise. Effectively and efficiently managing IS resources requires understanding of the full scope of the demands driving the prioritization of these IT investments. At the most fundamental level, organizations invest in technology in compliance with mandated legal and accounting requirements, such as those set forth by federal and state taxation authorities, government legislation, regulatory statutes, and the like. At the next level, an enterprise expends resources to maintain its existing base of information technology assets, including hardware and software maintenance; system licenses and upgrades; security services; and desktop, storage, and printer expansions and replacements. These investments are meant to “keep the lights on” and, therefore, are not discretionary; nor are these costs stagnant. They go up with inflation and as new workers are added or as the network and related IT infrastructures grow. Furthermore, as new IT services are introduced to the environment, they become, over time, part of the enterprise’s embedded base of IT, expanding its nondiscretionary IT spending. Because none of these IT products and services run on their own or function flawlessly, IS must also provide significant and cost-effective enduser operations, and production support and troubleshooting. Later, because neither the requirements of IS customers nor the evolution of information technology itself are static, there is a constant need to enhance existing IT products and services and to invest strategically in new IT capabilities. Thus, the day-to-day delivery of an information services organization must balance ongoing services — typically running 24 hours a day/seven days a week (a.k.a. 24/7) — with a wide range of service and system enhancements and new project work. Many times, IS project-delivery resources overlap with those focused on service delivery for the simple reason that the development team must understand the current state of the enterprise’s business requirements and IT capabilities if they are to deliver requested improvements. Furthermore, those maintaining an IT service should have a hand in its creation or, at the very least, thoroughly understand its IT underpinnings. Thus, a balanced IS organization requires a workforce dedicated to 24/7 service delivery overlapping a 48

Running Information Services as a Business Total Cost of IT Ownership: New Projects Discretionary (Governed by Project Plans)

Enhancements IT Investment Reserve

Nondiscretionary (Governed by SLAs)

System Maintenance Infrastructure Maintenance Required by External Agencies

Exhibit 1.

Group IS Expenditures

core group focused on technological innovation, development, and systems integration. Taken together, these various layers of IT investment establish the boundaries of the IS organization’s internal economy. As modeled in Exhibit 1, one can group IS expenditures into two large buckets: nondiscretionary costs that support existing IT investments and discretionary costs that fund new initiatives, including major system enhancements and new IT projects.2 Note that our model comprehends all of the enterprise’s IT expenditures, including internal (IS staff) labor and external vendor, consulting, and contractor costs. The “IT investment reserve” represents an amount set aside each year as a contingency for both discretionary and nondiscretionary cost overruns. Driven by the number of users and the extent of services, nondiscretionary costs will typically consume at least 50 percent of the annual IT budget and, if not carefully managed, may preclude the opportunity for more strategic IT (project-based) investments. Put another way, the total sum devoted to IT expenditure by the enterprise is rarely elastic. If nondiscretionary costs run out of control, there will be little left for project work. If the business’ leadership envisions major new IT investments, these may only come at the expense (if possible!!!) of existing IT services or through enlarging the overall IS allocation.3 Not surprisingly, the enterprise’s leaders usually want it both ways; namely, they expect the IS organization to keep the total cost of IT down while taking on new initiatives. For this reason, it is incumbent upon the IS 49

ACHIEVING STRATEGIC IT ALIGNMENT leadership to manage their commitments with great care through a rigorous process of project prioritization, customer expectation management, and resource alignment. To succeed in this endeavor, IS must keep it simple and keep it collaborative. More specifically, they should employ an investment-funding model along the lines mentioned above. They should separate out and manage recurring (nondiscretionary) activity through service level agreements (SLAs).4 Similarly, they should manage projects through a separate but connected commitment synchronization process.5 Throughout these labors, IS management should employ metrics that measure value to the business and not merely the activity of IS personnel. Last but not least, while IS management should take ownership of the actual technology solutions, they must also ensure that the proper business sponsors, typically line-of-business executive management, take ownership of and responsibility for project delivery and its associated business process changes in partnership with their IS counterparts. The next two sections of this chapter will, in turn, consider in greater detail best practices in the areas of service and project delivery management. MANAGING SERVICE DELIVERY6 The services delivered by IS to its customers across the enterprise have evolved over time and are in a constant state of flux as both the business needs of the organization and its underlying enabling technologies evolve. Given this ever-changing environment and given the general inadequacies of the typical lines of communication between IS teams and their customers, much of what is expected from IS is left unsaid and assumed. This is a dangerous place to be, inevitably leading to misunderstandings and strained relations all around. The whole point of service level management is for IS to clearly and proactively identify customer requirements, define IS services in light of those requirements, and articulate performance metrics (a.k.a. service levels) governing service delivery. Then, IS should regularly measure and report on IS performance, hence reinforcing the value proposition of IS to its customers. In taking these steps, IS management will provide its customers with a comprehensive understanding of the ongoing services delivered to them by the IS organization. Furthermore, service level management establishes a routine for the capture of new service requirements, for the measurement and assessment of current service delivery, and for alerting the customer to emerging IT-enabled business opportunities. In so doing, IS service delivery management will ensure both that IS resources are focused on delivering the highest value to the customer and that the customer 50

Running Information Services as a Business appreciates the benefits of the products and services so delivered. The guiding principles behind such a process may be summarized as follows: • Comprehensive. The process must encompass all business relationships, and products and services delivery by IS on behalf of its customers. • Rational. The process should follow widely accepted standards of business and professional best practice, including standard system development life-cycle methodologies. • Easily understood. The process needs to be streamlined, uncomplicated, and simple, hence easily accessible to nontechnical participants in the process. • Fair. Through this process the customers will understand that they pay for the actual product or service as delivered; cost and service level standards should be benchmarked and then measured against other best-in-class providers. • Easily maintained. The process should be rationalized and largely paperless, modeled each year on prior year actuals and subsequently adjusted to reflect changes in the business environment. • Auditable. To win overall customer acceptance of the process, key measures must be in place and routinely employed to assess the quality of IS products, services, and processes. The components of the IS service delivery management process include the comprehensive mapping of all IS services against the enterprise communities that consume those services. It also includes service standards and performance metrics (including an explicit process for problem resolution), the establishment and assignment of IS customer relationship executives (CREs) to manage individual customer group relations, a formal service level agreement for each constituency, and a process for measuring and reporting on service delivery. Let us consider each of these in turn. As a first step in engineering an IS service-level management process, IS management must segment its customer base and conceptually align IS services by customer. If the IS organization already works in a business environment where its services are billed out to recover costs, this task can be easily accomplished. Indeed, in all likelihood, such an organization already has SLAs in place for each of its customer constituencies. But for most enterprises, the IS organization has grown up along with the rest of the business and without any formal contractual structure between those providing services and those being served.7 To begin, employ your enterprise’s organization chart and map IS delivery against that structure. As you do so, ask yourselves the following questions: 51

ACHIEVING STRATEGIC IT ALIGNMENT • What IS services apply to the entire enterprise and who sponsors (i.e., pays for or owns the outcome of) these services? • What IS services apply only to particular business units or departments and who sponsors (i.e., pays for or owns the outcome of) these services? • Who are the business unit liaisons with IS concerning these services and who are their IS counterparts? • How does the business unit or IS measure successful delivery of the services in question? How is customer satisfaction measured? • How does IS report on its results to its customers? • What IS services does IS itself sponsor on its own initiative without any ownership by the business side of the house? Obviously, the responses to these questions will vary greatly from one organization to another and may in fact vary within an organization, depending upon the nature and history of working relationships between IS and the constituencies it serves. Nevertheless, it should be possible to assign every service IS performs to a particular customer group or groups, even if that “group” is the enterprise as a whole. Identifying an appropriate sponsor may be more difficult, but in general, the most senior executive who funds the service or who is held accountable for the underlying business enabled by that service is its sponsor. If too many services are “owned” by your own senior IS executive rather than a business leader, IS may have a more fundamental alignment problem. Think broadly when making your categorizations. If a service has value to the customer, some customers must own it. Service Level Agreements In concluding this piece of analysis, the IS team will have identified and assigned all of its services (nondiscretionary work) to discrete stakeholder constituencies. This body of information may now serve as the basis for creating so-called service level agreements (SLAs) for each customer group. The purpose of the SLA is to identify, in terms that the customer will appreciate, the value that IS brings to that group. However, the purpose of the SLA goes well beyond a listing of services. First and foremost, it is a tool for communicating vital information to key constituents on how they can most effectively interact with the IS organization. Typically, the document includes contact names, phone numbers, and e-mail addresses. SLAs also help shape customer expectations in two different but important ways. On the one hand, they identify customer responsibilities in dealing with IS. For example, they may spell out the right way to call in a problem ticket or a request for a system enhancement. On the other hand, they define IS performance metrics for the resolution of problems and for responding to customer inquiries. Last but not least, a standard SLA com52

Running Information Services as a Business piles all the services and service levels that IS has committed to deliver to that particular customer. Service level agreements can take on any number of forms.8 Whatever form you choose, ensure that it is as simple and brief a document as possible. Avoid technical jargon and legalese language, and be sensitive to the standard business practices of the greater enterprise within which your IS organization operates.9 Most of all, write your SLAs from your customers’ perspective, focusing on what is important to them. Tell them in plain English what services they receive from you, the performance metrics for which IS is accountable, and what to do when things break down or go wrong. Within these more general guidelines, IS SLAs should include the following elements: • A simple definition of the document’s purpose, function and scope • The name(s) and contact information of those parties within IS who are responsible for this particular document and the associated business relationship (typically the assigned IS customer relationship executive and one or more IS business officers) • A brief set of statements identifying the various units within IS, their roles and responsibilities, and how best to contact them for additional information, support, and problem resolution10 • A table listing the particular information technology assets and IS services addressed in the SLA, including hours of operation and support for listed systems and services • Any exclusion statements, such as “significant system enhancements of over $10,000 in value and larger IS projects will be covered through separate agreements between the XYZ Department and Information Services” • If appropriate, a breakdown of service costs and their formulas, if these costs are variable, as well as the projected total cost of the services delivered for the fiscal year of the SLA • Business unit responsibilities11 • Service level response standards when problems arise (see Exhibit 2 for an example) • Escalation procedures for the handoff of problems as need be (see Exhibit 3 for an example • A glossary of key terms, especially defining system maintenance and enhancement activities and the roles and responsibilities of service delivery process participants • Service metrics12 and reporting standards • A sign-off page for the executive sponsor13 and the working clients who are in receipt of the SLA prepared by IS Your next step is to assign a customer relationship executive (CRE) to each SLA “account.” The role of the CRE is to serve as a primary point of 53


Service Level Response Standards

Severity

Description

Response Time

Critical

Application does not function for multiple customers Application function does not work for single customer Application questions

1 business day

High

Low

2 business days

3 business days

contact between customer executive management and the IS organization. In this role, the CRE will meet with his/her executive sponsor and working clients to initially review that business unit’s SLA and thereafter on a regular basis to return to that group to assess IS performance against the metrics identified in the SLA. Where IS delivers a body of services that apply across the enterprise, you might consider creating a single “community” SLA that applies to all and then brief addenda that list the unique systems and services that pertain to particular customer groups. Whatever the formal structure of these documents, the real benefit of the process comes from the meetings where the CRE will have an opportunity to reinforce the value of IS to the customer, listen to and help address IS delivery and performance problems, learn of emerging customer requirements, and share ideas concerning opportunities for further customer/IS collaboration. CREs will act within IS as the advocates and liaisons for, and as the accountable executive partners to, their assigned business units in strategic matters. Needless to say, CREs must be chosen with care. They must be good listeners and communicators. They must have a comprehensive understanding of what IS currently delivers and what information technology may afford the customer in question. While they need not be experts in the aspect of the business conducted by the customer, they must at the very least have a working knowledge of that business, its nomenclature(s), and the roles and responsibilities of those working in that operating unit. Among the many skills that a good CRE must possess is the ability to translate business problems into technical requirements and technical solutions into easily understood narratives that the customer can appreciate. The CRE also needs to be a negotiator, helping the customers manage their portfolios of IS services and projects within the available pool of resources, choose among options, and at times defer work to a better time. The greatest value of the CRE is to act as a human link to a key customer constituency, managing their expectations while keeping IS focused on the 54

Running Information Services as a Business Exhibit 3.

Escalation Procedures for the Handoff of Problems

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3ULRULW\ Definition $SSOLFDWLRQ LV QRW DYDLODEOH IRU LQGLYLGXDO XVHUV ZLWKLQ D VLWH Response time $ UHVSRQVH ZLOO EH SURYLGHG ZLWKLQ RQH EXVLQHVV GD\ $ UHFRP PHQGHG VROXWLRQ ZLOO EH SURYLGHG ZLWKLQ WKUHH EXVLQHVV GD\V LI WKHUH DUH no RXW VWDQGLQJ SULRULW\ V )LQGLQJ D VROXWLRQ WR D SULRULW\ SUREOHP ZLOO QRW EHJLQ XQWLO DOO SULRULW\ SUREOHPV WKDW LPSDFW WKH SULRULW\ LVVXH·V UHVROXWLRQ KDYH EHHQ UHVROYHG 5HVSRQVLELOLWLHV IS service provider — VHQGV DFNQRZOHGJPHQW RI SUREOHP UHVROYHV SUREOHP DQG FRPPXQLFDWH VWDWXV WR DOO ZKR DUH DIIHFWHG Working client — ZRUNV DORQJVLGH &5( XQWLO WKH PDWWHU LV UHVROYHG Partner-providers — HPSOR\HG DV QHHG EH 3ULRULW\ Definition $SSOLFDWLRQ JHQHUDWHV DSSURSULDWH UHVXOWV EXW GRHV QRW RSHUDWH RSWLPDOO\ Response time ,PSURYHPHQWV ZLOO EH DGGUHVVHG DV SDUW RI WKH QH[W VFKHGXOHG UHOHDVH RI V\VWHP 5HVSRQVLELOLWLHV IS service provider — FRPPXQLFDWHV QHHGHG FKDQJHV Other process participants — DV SDUW RI WKH UHJXODU V\VWHP XSJUDGH F\FOH a

The executive sponsor rarely gets involved in the day-to-day collaboration with IS. The working clients are those representatives of the business unit served who work with IS on a regular basis and who have the authority to speak for the business unit in terms of identify service requirements or in changing project priorities. b While the party directly responsible for a service (e.g., e-mail, help desk) should deal directly with the customer concerning problem resolution, most customer services entail a value chain of technology services. The IS owners of the latter services are partnerproviders to the former (e.g., network and server services are partner-providers to a Web application owner).

quality delivery of its commitments to that group. This effort is iterative (see Exhibit 4): collecting and processing data, meeting with customers and IS service providers, listening, communicating, and educating. In total, the service level management process will ensure the proper alignment between customer needs and expectations on the one hand, and IS resources on the other. The process clearly defines roles and responsibilities, leaves little unsaid, and keeps the doors of communication and understanding open on both sides of IS service delivery. From the standpoint of the IS leadership, the SLA process offers the added benefit of maintaining a current listing of IS service commitments, thus filling in the non55


1. Define the SLA

6. Refine the SLA

2. Assign the SLA Owner

5. Improve the Service Provided

3. Monitor SLA Compliance

4. Collect and Analyze Data

Exhibit 4. SLA Management Process

discretionary layers of IS’ internal economy model. Whatever resources remain can be devoted to project work and applied research into new ITenabled business opportunities. Bear in mind that this is a dynamic model. As the base of embedded IT services grows, a greater portion of IS resources will fall within the sphere of nondiscretionary activity, limiting project work. The only way to break free from this set of circumstances is to either curtail existing services or broaden the overall base of IS resources. In any event, the service-level management process will provide most of the information that business and IS leaders need to make informed decisions. With the service side of the house clarified, IS leaders can turn their attention to the discretionary side of delivery. Project work calls for a complementary commitment management process of its own. MANAGING PROJECT COMMITMENTS To put it simply, any IS activity that is not covered through a service level agreement is by definition a project that must be assigned IS discretionary resources. Enterprises employ a planning process of some type whereby IT projects are identified and prioritized. IS is then asked to proceed with this list in line with available resources. Unfortunately, IS organizations find it much easier to manage and deliver routine, ongoing (SLA) services than to execute projects. The underlying reasons for this state of affairs may not be obvious, but they are easily sum56

Running Information Services as a Business marized. Services are predictable events, which are easily metered and with which IS personnel and their customers have considerable experience and a reasonably firm set of expectations. More often than not, a single IS team oversees day-to-day service delivery (e.g., network operations, Internet services, e-mail services, security administration, and so forth). Projects, on the other hand, typically explore new territory and require an IS team to work on an emerging, dynamic, and not necessarily well-articulated set of customer requirements. Furthermore, most projects are, by definition, cross-functional, calling on expertise from across the IS organization and that of its business unit customers. Where there are many hands involved and where the project definition remains unclear, the risk of error, scrap, and rework is sure to follow. These are the risks that the project commitment management process must mitigate. Note that, like the SLA process, the effort and rigor of managing project commitments will vary from one organization to another and from one project to the next. The pages that follow present a framework for informed decision making by the enterprise’s business and IS leadership as they define, prioritize, shape, and deliver IT projects. Readers must appreciate the need to balance their desire to pursue best practices with the realworld needs of delivery within their own business environment. As a first step, the enterprise’s business leadership will work with IS to identify appropriate project work. Any efforts that appropriately fall under existing SLAs should be addressed through the resources already allocated as part of nondiscretionary IS funding for that work. Next, CREs will work with their executive sponsor(s) to define and shape potential project assignments for the coming year. While the CREs will assist in formulating and prioritizing these project lists, they must make it clear that this datagathering activity in no way commits IS. Instead, the CREs will bring these requests back to IS executive management who will in turn rationalize these requests into an IT project portfolio for the review and approval of the enterprise’s leadership.14 This portfolio presentation should indicate synergies and dependencies between projects, the relative merits/benefits of each proposal, and the approximately level of investment required. With this information in hand and as part of the annual budgeting/planning process, the enterprise’s business and IS leaderships will meet to prioritize the list and to commit, in principle, to those projects that have survived this initial review. Typically, all enterprise-level projects emerging from and funded by this process are, by definition, of the highest priority in terms of delivery and resource allocations. If additional resources are available, business-unit-specific projects may then be considered in terms of their relative value to the enterprise. At least in the for-profit sector, enterprises will define a return-on-investment (ROI) hurdle rate for this part of the process, balancing line-of-busi57

ACHIEVING STRATEGIC IT ALIGNMENT ness IT needs against overall enterprise IT needs. In many instances, the business units may receive approval to proceed with their own IT projects as long as they can fund these projects and as long as IS has the bandwidth to handle the additional work. Invariably, unforeseen circumstances and business opportunities will necessitate revisiting the priority list. Some projects may be deferred and others dropped in favor of more pressing or promising IT investments. Similarly, as the IS team and its business partners work through the development life cycle on particular projects, they will find that their original assumptions are no longer valid, requiring the resizing, rescheduling, redefinition, or elimination of these projects. The key to success here is the employment of an initial, rigorous project-scoping effort coupled with a comprehensive project life-cycle management process that ensures regular decision points early on in the project’s design, development, and implementation phases. Once a project is properly scoped and enters the pipeline, the IS project director,15 working in collaboration with working client(s) and supported by an IS project manager,16 will create a commitment document and a project plan (both are discussed below) reflecting detailed project commitments and resource allocations.17 The IS CRE will then monitor the project team’s overall compliance within the plan, reporting back to the customer on a regular basis. Initial project scoping is key to the subsequent steps in the project management process. Too often, projects are pursued without a clear understanding of the associated risks and resource commitments. Neither the project’s working clients nor its IS participants may understand their respective roles and responsibilities. Operating assumptions are left undocumented and the handoffs and dependencies among players remain unclear. More often than not, IT efforts undertaken without sufficient information along these lines end in severe disappointment. To avoid such unhappy results, IS project teams should embrace a commitment process that ensures a well-informed basis for action. The Commitment Management Process A framework for commitment management follows. Like the other illustrations found in this chapter, this methodology’s application should be balanced against the needs of the occasion. For example, if the project in question covers well-trodden ground, less rigor is required than if the envisioned project blazes hitherto unexplored trails. Here again, the commitment management process itself forces the project team to ask the very questions that will help them to determine the best course of action. From the outset, no project should proceed without an executive (business) sponsor and the assignment of at least one working client. The exec58

Running Information Services as a Business utive sponsor’s role is to ensure the financial and political support to see the project through. The sponsor owns the result and is therefore the project’s most senior advocate. The sponsor’s designated working clients are those folks from the business side of the house who will work hand-inhand with IS to ensure satisfactory delivery of the project. Without this level of commitment on the part of the business, no project should proceed. If the project in question happens to be sponsored by IS itself, then the chief IS executive will serve as sponsor, and the IS manager who will own the system or service once it is in production will serve as the working client. While it is assumed that the project is funded, the commitment document should indicate the project’s recognized priority. For example, is this an enterprise project of the highest priority or a line-of-business project of only middling importance? Finally, the team must ask, at what phase in the scoping of the project are we? Do we know so little about the project at hand that we are only in a speculative phase of commitment at this time, or are we so confident in our understanding of the project’s parameters that we are prepared to make a formal commitment to the customer and proceed?18 As a next step in framing the commitment, the project team should define the business problem or opportunity driving the proposed investment of IS resources. The reader may think this a trivial activity but you would be surprised at how disparate the initial conversation on this subject may become. It is essential that the team start from a common base of understanding concerning the project’s rationale and purpose. To that same end, project teams should be walked through a value template similar to Exhibit 5, so that everyone involved can appreciate the benefits of a positive project outcome. With a common view of the overall project vision and value in place, the time has come to detail project deliverables, including those that are essential for customer acceptance, those that are highly desirable if time and resources allow, those that are optional (where the project may be acceptably delivered without these components), and those elements that are excluded from the scope of this project (but that may appear in future, separately funded phases of the project). Given the project’s now agreedupon deliverables, the team should assign critical success factors for customer satisfaction based on the following vectors of measurement: scope, time, quality, and cost. These metrics must be defined in terms of the particular project. For example, if a project must be completed by a certain date (e.g., to comply with a new regulation), “time” rises to the top of the list, meaning that if time grows short, the enterprise will either adjust scope, sacrifice 59

ACHIEVING STRATEGIC IT ALIGNMENT Exhibit 5. Value Template

Business Improvement

Major

Minor

None

Business Value Statement (in support of the improvement)

1. Increase revenue 2. Decrease cost 3. Avoid cost 4. Increase productivity 5. Improve time-to-market 6. Improve customer service/value 7. Provide competitive advantage 8. Reduce risk 9. Improve quality 10. Other (describe)

quality, or add to cost to meet the desired date. Similarly, if the scope of a project is paramount, perhaps its delivery date will be moved out to allow the team to meet that commitment. As with many other aspects of the commitment process framework, the importance of these elements is to ensure that a thoughtful discussion ensues and that issues are dealt with proactively rather than in a time of crisis. Obviously, the discussion of these critical success factors must take place with the working client(s), creating a golden opportunity to set and manage customer expectations. Because no major change to an IT environment is without implications, the commitment process must identify any major impacts to other systems and IS services that will result from the implementation of the envisioned project solution. For example, if a new application requires network infrastructure or desktop platform upgrades, these must be noted in the commitment document and their implications carried over more tangibly into the project plan. Similarly, if a new information system requires the recoding of older systems or data extracts from enterprise systems of record, these impacts must be documented and factored into the project plan. It is noteworthy to mention that what often gets a project team in trouble is not what is documented but what goes unsaid. For this reason, the 60


Risk Management Matrix

Potential Risk

Description of Risk

Resolution

Technology Financial Security Data integrity Continuity Regulatory Business requirements Operational readiness Other (explain)

commitment process should require the team to explore project assumptions, constraints, and open issues. It falls to the project’s director or manager to draw out from the team and make explicit the inferred operating principles of the project, including the roles and responsibilities of project participants (especially internal and external IT partner providers), how project delivery processes should work, what tools and technologies are to be employed, and how key business and technical decisions governing project outcomes will be made. All projects operate under constraints such as the availability of named technical specialists or the timely arrival of computer hardware and software, which may have a direct impact on outcomes but are out of the team’s direct control. These, too, need to be made explicit so that the customer appreciates the risks to the project associated with these issues. Open issues are different from constraints in that these elements can and will be addressed by the team but the fact that they are “open” may adversely impact delivery. The project team should maintain their list of assumptions, constraints, and open items so as to ensure that none of these diminish project outcomes. At the very least, their status should be shared with the customer on a regular basis as part of expectation setting and subsequent project reporting. The two remaining components of the commitment process are (1) those elements that capture the exposure from project risks and (2) those elements that itemize the project’s specific resource commitments. In terms of the former, it is perhaps useful to begin with an illustrative risk management matrix, as shown in Exhibit 6. 61

ACHIEVING STRATEGIC IT ALIGNMENT In completing a commitment document, the project team should identify the major risks faced in pursuing their assignment. The aforementioned Exhibit 6 identifies risk categories and provides room for a more detailed description of a particular risk and its mitigation. For example, a project technology risk might entail introducing a new or untried technology into the enterprise’s IT environment. A way to mitigate that risk would be to involve the vendor or some other experienced external partner-provider in the initial installation and support of the technology. If the envisioned project solution requires clean data to succeed, the project plan could include a data cleanup process. If business requirements are not documented, phase one of the project could call for business analysis and process engineering work to get at those requirements. The team needs to be honest with itself and its customer in defining project risks and in dealing with them. Keeping risks in the commitment document ensures that they are not forgotten. To conclude the commitment process, the team must define its resource needs in terms of people, time, and funding. From the standpoint of people, the commitment document needs to name names and define roles and responsibilities (including the skills required) explicitly. Exhibit 7 contains an illustrative list of project roles. The project director must ensure that a real person who understands and agrees to the assignment is assigned to each project role. However, these commitments cannot occur without a delineation of the other two resource elements, namely the skills and the time commitment for each internal staff person, and the associated funding for hardware, software, contract labor, consulting, and so forth. These details will come from the project plan that accompanies the commitment document. In the plan, which should adhere to an accepted project life-cycle management methodology, activities are appropriately detailed along with the duration and performer for each task. The plan will tell the partner-providers what is required of their teams. It is the responsibility of these managers to ensure that they do not overcommit their own personnel. If the IS organization operates some sort of resource management database or tracking system, this may be easily accomplished. Otherwise, it rests with the individual manager to keep things straight. Thus, with this information in hand, when the IS partner providers commit to a role and responsibilities within a given project, this commitment is not “in principle” but is based on detailed skill, date, and duration data. When viewed in its entirety, the commitment process leaves nothing to the imagination of the project team and those they serve. The commitment document makes explicit what is to be done, why the project merits resources, who is responsible for what, and what barriers lie in the 62


Project Roles

Role

Name of Associate

Responsibility

The Core Project Team: Executive sponsor Working client(s) Project director Project manager Business analyst Application lead Systems lead Data management lead Infrastructure lead Customer services lead Internal and External Partners: Vendor-based project management support Technical architect(s) Business process architect(s) Creative development/UI Development Training/documentation QA/testing Infrastructure Security Other Partner-Provider(s) (Hardware/Software):

path of success. The project plan details how the team will execute their assignment. Together, these documents form a contract that aligns resources and provides for a common understanding of next steps, roles, and responsibilities. The metrics for successful project delivery are few and simple. Did the project come in on time and within budget? Did it meet customer expectations? To answer these questions, all one needs to do is run actual project results against the project’s commitment document and plan. In addition, the team may employ some post-implementation assessment process or survey tool such as the sample in Exhibit 8. 63

ACHIEVING STRATEGIC IT ALIGNMENT Exhibit 8. Post-Implementation Assessment Process +RZsatisfiedDUH\RXZLWK

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64

Running Information Services as a Business All in all, this framework makes for a good beginning but it does not ensure the success of the project. By being true to the commitment process, many of the problems that might otherwise befall a project will have been addressed proactively. IS METRICS AND REPORTING TOOLS Given all of the work that a typical IS organization is expected to deliver each year, it is easy to see how even major commitments may be overlooked in the furious effort to get things done. To avoid this pitfall, it is incumbent upon IS to clarify its commitments to all concerned. In the prior sections of this chapter, the author has shown how this may be done for both ongoing service and project delivery. Next, IS management must ensure compliance with its commitments once made. Here again, the aforementioned processes keep the team appropriately focused. Service level management requires the integration of performance metrics into each SLA, while the ongoing project-management process forces the team to relate actual accomplishments to plan. During the regular visits of the CREs with their customers, service level and project delivery may be raised with the customers to assess their current satisfaction with IS performance. While each of these activities is important in cementing and maintaining a good working relationship with individual customers, a more comprehensive view is required of how IS services and projects relate to one another. To this end, the author has relied on a single integrated reporting process, called the “Monthly Operations Report,” to capture key IS accomplishments and performance metrics. As its name implies, the Monthly Operations Report is a regularly scheduled activity. The document is entirely customer focused and therefore aligns with both the service level and project commitment management processes. However, it is designed to serve the needs of IS management, keeping customer delivery at the forefront of everyone’s attention and holding IS personnel accountable for their commitments. The report reflects qualitative information from each IS service delivery unit (e.g., help desk, training center, network operations, production services, and so forth) concerning accomplishments of the month. Each accomplishment must be aligned with a customer value (as articulated in SLAs and project commitment documents) if it is to be listed as a deliverable. Next, the report lists quantitative performance data such as system availability, system response time, problem tickets closed, and training classes offered. Note that some of these data points measure activity rather than results and must be balanced with customer satisfaction metrics to be truly meaningful. 65

ACHIEVING STRATEGIC IT ALIGNMENT A system for collecting customer feedback is also needed. This simple surveying process is guided by the following operating principles. First, the process must require no more than two minutes of an individual customer’s time. Second, it must be conducted via the phone or face-to-face, but never via paper forms or e-mail. Third, it must employ measures of customer satisfaction rather than IS activity. Fourth, it must scientifically sample IS’ customer population. And fifth, it must be carried out in a consistent manner on a regular basis. Guided by these principles, the author’s team developed five-question survey tools for each IS service. The team then drew randomly from the help desk customer database where both requests for service and problem tickets are recorded. A single staff member spends the first few days of each month calling customers, employing the appropriate survey scripts. Results are captured in a simple database and then consolidated for the report. These customer satisfaction scores are also tracked longitudinally. All the summary data appears in the monthly operations report. Project delivery is a little more complicated to capture on a monthly basis because projects do not necessarily lend themselves to either quantitative measures or regular customer satisfaction surveying. Nevertheless, the report contains two sets of documents that IS management finds useful. The first is a project master schedule that groups projects by customer portfolio and then by inter-project dependencies. The schedule shows the duration of each project and its status (white for completed, green for on schedule, yellow for in trouble but under control, and red for in trouble). Thus, within a few pages, the IS leadership can see all of the discretionary work that the team has underway at any given time, and what is in trouble, where the bottlenecks are, and who is overcommitted. The presentation is simple and visual. Within the report, each project also has its own scorecard, a single-page representation of that project’s status. Like everything else in the report, the scorecard is also a monthly snapshot that includes a brief description of the project and its value to the customer, a list of customer and project team participants, this month’s accomplishments and issues, a schematic project plan, and a Gantt chart of the current project phase’s activities. Like the master schedule, scorecards are scored white, green, yellow, or red as appropriate. (See Exhibit 9 for a sample scorecard.) In my organization, the monthly operations report is reviewed each month in an open forum by the IS executive team. Other IS personnel are welcome to attend. And within a two- to three-hour block, the entire IS leadership team has a clear picture of the status and health of all existing IS commitments. Follow-up items raised in the review meeting are recorded and appear in the next version of the report. The document itself is distrib66

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Records Management, 8th Edition

Developing Management Skills, 8th Edition

The Speaker's Handbook, 8th Edition

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The Bedford Handbook, 8th Edition

Management and Organisational Behaviour, 8th Edition

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Credit Management Handbook ~ 5th Edition

Energy Management Handbook, 5th Edition

Facilities Management Handbook, Fourth Edition

Energy Management Handbook, 4th edition

Natural Disasters. 8th Edition

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Economics, 8th Edition

Elementary Statistics (8th Edition)

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Frommer's Scotland, 8th Edition

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