Essay Instructions: The key to this assignment is to show how these concepts apply in the real world. Please organize the paper around these six questions.
?Questions from senior management
In viewing the health of an organizations? IT activity, our research has indicated that senior managers often ask questions in six critical areas. Four of these areas are essentially diagnostic in nature, whereas the remaining two are clearly action oriented.
1. Is the firm being affected competitively either by failing to implement required IT applications or by faulty implementation of strategic applications? Is the firm missing opportunities that, if properly executed would give it a competitive edge or, more pessimistically, enable it to survive? How important is It to success in the industry? Failure to do well in a competitively important area is a significant problem; failure to perform well in a nonstrategic area is often less critical to the overall health of the firm.
2. Is the firm targeting its IT application development efforts effectively? Is it spending the right amount of money, and is it focusing on the appropriate applications? At times, management asks this question for the wrong reasons. We are sure that many are familiar with the following scenario. An industry survey that compares IT expenditures for a firms leading competitors is circulated among the senior management team. Immediately, attention is focused on those dimensions in which the firm is distinctly different from its competitors-most often attention is focused on those areas where the firm is spending a significant amount more than the competitors. This causes great excitement. After much investigation, it is often discovered that either the company uses a different accounting system for IT than its competitors and therefore the numbers are not directly comparable (e.g., they have excluded telecommunications expenses from their figures while the firm has included them), or the company has a different strategy, geographical location, and/or mix of management strengths and weaknesses than its competitors, and, therefore, what competitors are or are not doing with IT is not directly comparable. Raising the question of effectiveness is appropriate, but attempting to answer it solely with industry surveys of competitors; expenditures is not. The IT management challenge is much too complex. Similarly, the rules of thumb on expenditure levels have become much less useful as the range of technologies and opportunities has increased. For example a major catalog company that worked tirelessly to translate its catalog onto CD?ROM less than three years ago now has the catalog fully available electronically via the Internet and believes that within the decade up to a third of its products will be sold that way.
3. Is the IT asset of a firm being managed efficiently? Sometimes a firm is spending appropriately, but is not getting the appropriate productivity out of its hardware and staff resources. This is a particularly relevant issue in the late 1990s, given the extreme shortages in qualified IT professionals and intensified international competition. On the one hand, the global telecommunications highway allows the firm to access competent development staff around the world (for example, in India and the Philippines) at a fraction of European and U.S. cost. On the other hand, unless standards are rigorously enforced, the new distributed IT architectures can lead to an explosion of support costs.
4. Is the firm?s IT activity sufficiently insulated against the risks of a major operational disaster? The appropriate level of protection varies by organization, relative to the level of strategic and operational dependence on IT. In most instances, business managers underestimate the degree to which their firms are dependent on IT. Even small interruptions in service can cause massive customer defections or significant-and costly-operational disruption. For example a 2-minute interruption of the air traffic control system over La Guardia airport resulted in a 40-minute delay to landing aircraft. An 8-hour downtime for Amazon/com caused such problems that its stock price dropped.
5. Are IT and business leaders capable of dealing with the IT-related management challenges? Historically, senior business leaders have been quick to replace the IT senior management team for performance problems. While often the quickest and most apparent solution to the problem, the high turnover can exacerbate the underlying cause of the problems. Failure to identify and address the underlying problems can spell disaster for the new team that is brought in to ?clean up the mess?, the effort ultimately fails, with the cycle of poor performance continuing. This same cycle of failure can also be seen in outsourcing arrangements; business management often erroneously believes that it can solve IT performance problems by ?throwing the problem over the wall? To be fixed by an IT vendor. Without commitment to actively participate in problem definition and solution, the outsourcing relationship may also be doomed to failure. Clearly, the skills and expertise required to manage the information resources of a firm have sharply changed over time with the evolution of the technology and its potential uses within the firm, the leadership skills and perspectives appropriate today may not have worked in the past and may not work in the future. In many situations the problem is also compounded by a lack of suitable explicit performance measurement standards (metrics) and objective data for assessing performance. As will be discussed in subsequent chapters, we believe the development and installation of these metrics are absolutely vital.
6. Are the IT resources appropriately placed in the firm? Organizational issues such as where the IT resource should report, how development and hardware resources should be distributed within the company, what activities, if any, should be outsourced, and the existence and potential role of a an executive steering committee are examples of topics of intense interest to senior management.?
