CISB444 - Strategic Information Systems Planning Chapter 7 - Strategic Management of IS/IT : Organising and Resourcing

CISB444 - Strategic Information CISB444 - Strategic Information Systems PlanningSystems Planning

Chapter 7 - Chapter 7 - Strategic Management of Strategic Management of IS/IT : Organising and ResourcingIS/IT : Organising and Resourcing

Course OverviewCourse Overview

Chapter 7 considers a wide range of aspects related to structuring and organising IS resources and the governance of IS/IT activities

CISB414 - Strategic Information Systems PlanningCISB414 - Strategic Information Systems Planning 22

Main TopicsMain Topics

• Organising strategies for IS/IT management• Framework guiding action• Provisioning of IS/IT resources• Bridging the gap: Improving the contribution of the IS function


IntroductionIntroduction

• Earl (1996) notes that it is the ‘organisational issues in the strategic management of IT that matter most’.

• Many research highlights that what distinguishes organisations that are successful with IT is not technical sophistication, but how they manage IS/IT strategy.

• In order for organization to exploit IS/IT effectively over an extended period, IS/IT require sound and consistent strategic management.


The Purpose The Purpose

• For managing investments in IS/IT, to deliver the maximum value in terms of benefits to the business;

• For managing the data, information and knowledge of the organisation to ensure that its business value is fully exploited and protected

• For managing the acquisition, deployment and utilisation of IT, to the benefits of the organisation and relationships with technology and service suppliers

• For organisational management of IS/IT related resources, the activities they perform and the governance and administration of IS/IT


The Strategic Management RequirementThe Strategic Management Requirement

• Strategic management is a combination of formal planning, creativity, innovation, informal thinking, and opportunism, all must be exploited and integrated.

• This set of activities also requires some feedback or control mechanism.

• Sometimes, the strategy has to be revisited to accommodate for internal/external influences


Avoiding the DisintegrationAvoiding the Disintegrationof the Applications Portfolioof the Applications Portfolio

• Many organisations have suffered from the lack of coordination in IS/IT management, which can cause disintegration of applications portfolio.

• In the longer term, this failure can have 3 major effects:– The systems that are developed and implemented do not

meet overall business needs;– Resources are misused– Strategy formulation is essentially a retrofitting process,

producing enormous rework


Avoiding the DisintegrationAvoiding the Disintegrationof the Applications Portfolioof the Applications Portfolio

• The cause can usually be attributed to 3 main reasons:– Lack of alignment between the business and IS strategies– Uncoordinated management of IS demand and IT supply– Over-centralisation or decentralisation of responsibility

regarding IS/IT investments with lack of mechanisms to ensure coherence across centralised and devolved IS/IT decisions and activities


Organising Strategies for IS/IT ManagementOrganising Strategies for IS/IT Management

• Factors to consider (based on the approaches adopted for information, application, and technology management):– Overall organisational alternatives and the position of IS

functions in the organisation– Organising options (structure and resource configuration)– Allocation of decision rights (centralisation versus

devolution)– Resourcing strategies (both insourcing and outsourcing)

• It is most critical that the IS function is organised to satisfy its customers (internal and external) requirements as well as to manage itself effectively.


Centralisation versus DecentralisationCentralisation versus Decentralisation

• Centralisation or decentralisation: getting it wrong can be very costly, but how can an organisation know when it is right?

• Many examples shows that swings between extreme centralisation and decentralisation proves unsuccessful because some things are best centralised and others devolved in the units.


Centralisation versus DecentralisationCentralisation versus Decentralisation• Example: in a decentralised engineering group, a very centralised IS

function was failing to provide a satisfactory service.• The management rapidly devolve IS/IT resources to the business units– Systems development virtually ceased and support for existing

systems was adversely affected.– Many of the best people left and at no site was there sufficient

resource to achieve major developments, while local management had no experience of running and IS group

– Gradually it was realised that some aspects of IS/IT should be recentralised to avoid duplicated expertise, avail of synergies, etc. and some aspects, reinforced by user resource investments should remain in the units.


Centralisation versus Decentralisation:Centralisation versus Decentralisation:Ideal Organisational Arrangement for IS/IT ResourcesIdeal Organisational Arrangement for IS/IT Resources

A number of factors to consider:– The organisation’s dependence on IT– Its stage of maturity in terms of its application portfolio– The geography of the enterprise, especially for

organisations with a global presence– Its business diversity and rate of change of the types of

business and competitive pressures in each business– The economics of resourcing, obtaining and deploying

skills



Study by La Belle and Nyce (1987) concluded:• Business units should be responsible for applications (decentralised) :– Architecture– Development– Operation

• Certain areas should be centralised:– Telecommunications– Hardware and software architecture– Information architecture– Risk management and security– Shared services and utilities– Human resources



• Other factors to consider:– Geographically dispersion level of the organisation– The degree to which information is a shared business

resource– How closely technologies need to be coordinated

• In addition, where there are potential benefits to the organisation as a whole that are greater than the sum of the parts (of the business units), then some planning and coordination at the centre can add value to ensure that these additional benefits are achieved.


Imperatives for the Management of IS/ITImperatives for the Management of IS/IT


Imperatives for the Management of IS/ITImperatives for the Management of IS/IT









Classifying Sourcing OptionsClassifying Sourcing Options

Transaction Style :• Refers to one-time or

short-term contractsRelationship Style• Refers to less detailed,

often incentive based contracts , expected that customer and vendor will do a long term business



Resource:• Organization buy vendor

resources, but manage the use of the resources in-house

Result Style• Vendor manage the

delivery of the IT activity, using whatever resources necessary to provide customer with the specified results



• This analysis leads to 4 distinct contract types or sourcing strategy.

• Only 2 of them are strictly outsourcing contracts – contract out and preferred contractor)






ScenarioScenarioBlackGold Holdings, a national oil and gas company is looking into improving its IT service to the whole company nationwide. In order to do so, it has been identified that a new Intranet system consisting of a number of applications is needed to support the day to day internal business process for its 15000 users ranging from different operating units such as Exploration and Production, Sales and Marketing, Research and Development, Finance, HR etc. To optimize the performance of the new Intranet, a revamp on the company’s clients system (desktop/notebooks used by all employees) is required. Currently the users’ machines run on MS XP and the company is looking into upgrading the operating system to ensure smooth running of the new Intranet system. Investments are needed not only for the development of a new applications portfolio, but also for a revamp on the hardware system.


QuestionQuestion

The management agrees that outsourcing the services will be a good idea. Discuss with your team the following questions:

1.Why would the management think that outsourcing will be a good approach in handling the above project? (p.g 22)2.There are different strategies in outsourcing. What are they? Discuss which strategy/strategies is/are suitable for the above project. (p.g. 24-28)3.What are the possible challenges faced in outsourcing IT/IS (p.g. 23)


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CISB444 - Strategic Information Systems Planning Chapter 7 - Strategic Management of IS/IT : Organising and Resourcing