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  • IT Doesn't Matter Publication Date: May 1, 2003 Availability: In Stock Author(s):  Nicholas G. Carr    Type: Harvard Business Review Article Product Number: R0305B Language: English Length: 32p This widely debated article now includes 14 Letters to the Editor. As information technology has grown in power and ubiquity, companies have come to view it as evermore critical to their success; their heavy spending on hardware and software clearly reflects that assumption. Chief executives routinely talk about information technology's strategic value, about how they can use IT to gain a competitive edge. But scarcity, not ubiquity, makes a business resource truly strategic--and allows companies to use it for a sustained competitive advantage. You gain an edge over rivals only by doing something that they can't. IT is the latest in a series of broadly adopted technologies--think of the railroad or the electric generator--that have reshaped industry over the past two centuries. For a brief time, these technologies created powerful opportunities for forward-looking companies. But as their availability increased and their costs decreased, they became commodity inputs. From a strategic standpoint, they no longer mattered. That's exactly what's happening to IT, and the implications are profound. In this article, HBR's Editor-at-Large Nicholas Carr suggests that IT management should, frankly, become boring. It should focus on reducing risks, not increasing opportunities. For example, companies need to pay more attention to ensuring network and data security. Even more important, they need to manage IT costs more aggressively. IT may not help you gain a strategic advantage, but it could easily put you at a cost disadvantage.
  • The information age has brought with it a host of new technologies--and an overabundance of choices. Managers are hard-pressed to figure out what all those innovations do, let alone which ones to adopt and how to implement them. Furthermore, many so-called advancements haven't lived up to expectations: Frustration, delays, and even outright failures tempt many executives to avoid dealing with IT altogether. But those who turn away are selling their companies short. Executives have three critical responsibilities when it comes to IT: They must help choose technologies, using an inside-out approach that keeps the true needs of the business in mind; smooth the adoption of those technologies, taking into account that they may encounter strong resistance; and encourage their exploitation by leveraging already standardized data and work flows. What's most important, though, is that they look beyond the individual IT projects they select to the broader picture of how IT is likely to affect the organization. Information technology can be classified into three types, each of which provides companies with a particular level of change. Function IT encompasses technologies--such as spreadsheet and word-processing applications--that streamline individual tasks. Network IT includes capabilities like e-mail, instant messaging, and blogs and helps people communicate with one another. Enterprise IT brings with it approaches such as customer resource management and supply chain management and lets companies re-create interactions between groups of workers or with business partners. Different types of technology bring about different types of organizational change, and managers should tailor their own roles accordingly. Categorizing IT in this manner can help leaders determine which technologies to invest in and how they can assist organizations in making the most of them. Mastering the Three Worlds of Information Technology Publication Date: Nov 1, 2006 Availability: In Stock Author(s):  Andrew McAfee    Type: Harvard Business Review Article Product Number: R0611J Language: English Length: 11p
  • This article includes a one-page preview that quickly summarizes the key ideas and provides an overview of how the concepts work in practice along with suggestions for further reading. Senior managers often feel frustration--even exasperation--toward information technology and their IT departments. The managers complain that they don't see much business value from the high-priced systems they install, but they don't understand the technology well enough to manage it in detail. So they often leave IT people to make, by default, choices that affect the company's business strategy. The frequent result? Too many projects, a demoralized IT unit, and disappointing returns on IT investments. What distinguishes companies that generate substantial value from their IT investments from those that don't? The leadership of senior managers in making six key IT decisions. The first three relate to strategy: How much should we spend on IT? Which business processes should receive our IT dollars? Which IT capabilities need to be companywide? The second three relate to execution: How good do our IT services really need to be? Which security and privacy risks will we accept? Whom do we blame if an IT initiative fails? Learning Objective: To identify the decisions that non-IT executives must control in order to ensure that IT choices support high-level company strategy. Six IT Decisions Your IT People Shouldn't Make Publication Date: Nov 1, 2002 Availability: In Stock Author(s):  Jeanne W. Ross, Peter Weill    Type: Harvard Business Review Article Product Number: R0211F Language: English Length: 11p
  • The Val IT framework is an IT governance framework that helps board and executive management ensure that IT investments, services and assets are managed throughout their full economic life cycle—and that they continue to deliver optimal benefits, at an affordable cost, with acceptable levels of risk. Val IT consists of a set of guiding principles and a number of processes conforming to those principles that are further defined as a set of key management practices. The framework addresses outcomes, assumptions, costs, and risks related to a balanced portfolio of IT-enabled business investments. It also provides benchmarking capability and allows enterprises to exchange experiences on best practices for value management. Used with considerable success by leading organisations for many years, the proven value management processes and practices within Val IT are presented—for the first time ever -- as one single integrated framework that provides business and IT decision makers with a comprehensive, consistent, and coherent approach to creating concrete and measurable business value. Val IT helps executives: Increase the probability of picking winners Increase the likelihood of project success Reduce surprises from IT cost and delivery date overruns Reduce costs due to inefficient investments
  • The single most effective means of continually ensuring that IT contributes measurable value to the organisation’s objectives is a strategic, leadership-sponsored commitment to establishing a comprehensive IT governance capability . All organisations practice some form of IT governance, but what you are doing today may not be enough. If you look over this list and feel like your organisation would benefit from doing one or more of these better, you would benefit from taking a more formalised and enterprise-wide approach to your IT governance.
  • Val IT helps executives focus on two of four fundamental IT governance-related questions: ‘Are we doing the right things?’ (the strategic question) and ‘Are we getting the benefits?’ (the value question). COBIT, on the other hand, takes the IT view, helping executives focus on answering the questions ‘Are we doing them the right way?’ (the architecture question) and ‘Are we getting them done well?’ (the delivery question). The strategic question. Is the investment: • In line with our vision • Consistent with our business principles • Contributing to our strategic objectives • Providing optimal value, at affordable cost, at an acceptable level of risk The value question. Is the investment: • A clear and shared understanding of the expected benefits • Clear accountability for realising the benefits • Relevant metrics • An effective benefits realisation process over the full economic life cycle of the investment The delivery question. Do we have: • Effective and disciplined management, delivery and change management processes • Competent and available technical and business resources to deliver: – The required capabilities – The organisational changes required to leverage the capabilities The architecture question. Is the investment: • In line with our architecture • Consistent with our architectural principles • Contributing to the population of our architecture • In line with other initiatives
  • Val IT consists of a set of guiding principles and a number of processes conforming to those principles, which are further defined as a suite of key management practices. • IT-enabled investments will be managed as a portfolio of investments. Optimising investments requires the ability to evaluate and compare investments, objectively select those with the highest potential to create value, and manage all the investments in order to maximise value. • IT-enabled investments will include the full scope of activities required to achieve business value. Realising value from IT-enabled investments requires more than delivering IT solutions and services—it also requires changes to some or all of the following: the nature of the business itself; business processes, skills and competencies; and organisation; all of which must be included in the business case for the investment. • IT-enabled investments will be managed through their full economic life cycle. Business cases must be kept up-to-date from the initiation of an investment until any resulting service is retired. • Value delivery practices will recognise there are different categories of investments that will be evaluated and managed differently. Such categories might be based on management discretion, magnitude of costs, types of risks, importance of benefits (e.g., achievement of regulatory compliance), types and extent of business change. • Value delivery practices will define and monitor key metrics and respond quickly to any changes or deviations. Metrics must be established and regularly monitored to ensure value is created and continues to be created throughout the investment life cycle. • Value delivery practices will engage all stakeholders and assign appropriate accountability for the delivery of capabilities and the realisation of business benefits. Both the IT function and the other parts of the business must be engaged and accountable—the IT function for IT capabilities, and the business for the business capabilities required to realise value. • Value delivery practices will be continually monitored, evaluated and improved. As enterprises gain experience with Val IT practices, learnings can be applied so that the selection of investments and the management of them improve each year.
  • There are 3 overall domains in Val IT: Value Governance, Portfolio Management, and Investment Management. Each domain comprises a number of processes and key management practices. Value Governance (VG) The goal of value governance is to optimise the value of an organisation’s IT-enabled investments Portfolio Management (PM) The goal of portfolio management is to ensure that an organisation’s overall portfolio of IT-enabled investments is aligned with and contributing optimal value to the organisation’s strategic objectives Investment Management (IM) The goal of investment management is to ensure that an organisation’s individual IT-enabled investment programmes deliver optimal value at an affordable cost with a known and acceptable level of risk The guide and examples presented in the Val IT framework are applicable to all enterprises. This guidance, however, is not intended to be prescriptive, and should be tailored to fit the enterprise’s management approach. Small- and medium-sized enterprises can adapt the templates and make them simpler to create and maintain. But in all cases the model adopted should cover business alignment, cost and benefits (financial and non-financial), and risks, since these play a major role in every investment analysis.
  • Transcript

    • 1. Finding IT value – getting it right
    • 2. Sondage
      • Survey
      • How many people have Blackberrys?
      • How many people are pleased with there IT department?
      • How many people feel that they get better service from IT than Finance and HR?
      • IT Jeopardy
      • In 6 months
        • 31,000
        • 2,100
      • 40,000
      • $10 billion ±
      • $3 billion +
    • 3. Topics
      • IT and its weaker sibling IM, are pervasive and ubiquitous.
      • Nor does it (IT) always work.
      • The prospect and promise of Web 2.0, with its progeny - Web 3.0
      • Is IT
        • a sink hole?
        • a tsunami?
        • or simply a rudderless ship?
      • How do we measure the value of such a large and critical part of overall operations and the budget?
    • 4. Agenda
      • Temperature check
        • The sorry state
        • IM is not IT
      • Stratagems
        • Portfolio Management
        • Val IT
        • Voodoo/Holistic accounting
      • Questions and Answers
    • 5. Big Questions
      • What is the value of
      • Class A building
      • Phones
        • 1 telephone
        • 2 telephones
        • 2 m telephones
      • A Blackberry
      • A laptop
      • An RDIMS repository
      • Frameworks
      • Value = Benefits
      • Value = Benefits – Costs
      • CoBIT
        • Is IT doing the right things
        • Is IT doing them right?
        • Is IT doing them well?
        • Are benefits being realised
    • 6. IT Governance Institute
      • “ A 2002 Gartner survey found that 20% of all IT expenditures is wasted
      • A 2004 IBM survey of Fortune 1000 CIOs reported a believe of 40% of IT Spending brought no return
      • A 2006 Standish Group survey found 35% of all IT projects succeeded. (the rest either challenged or failed)
      • Other surveys
      • 20-70% of large scale investments wasted, challenged or fails
      • 8% of IT budget brings value
      • Of 124 financial executives, 80% did not encourage value creation
    • 7. Everyone is doing it (IT)
      • Users
      • Super users (HR, FI)
      • Computer analysts
      • Document managers
      • Record managers
      • Archivists
      • Librarians
      • Web masters
      • Vendors
      • Consultants
      • Contractors
      • Global firms
      • Trickle Down IT
      • Web 2.0
      • convergence
    • 8. Moscella’s Curves 1970 1980 1990 2000 2010 2020 2030 10 100 1,000 3,000 # of Users ‘000,000 Systems Centric PC Centric Network Centric Content Centric Grosch’s Law Moore’s Law Metcalfe’s Law Gilder’s Law
    • 9. IT is never enough
      • IT has been seen as new infrastructure, similar to water, hydro, trail way and telephone systems.
        • The more people make use of, the more benefits (value) people will gain;
        • Similar to other types of infrastructures, it will be absolute necessary and somehow “hidden” from people’s daily life.
        • It’s more widely and deeply involved in people’s life than any other types of infrastructure
        • It’s more complex than other types of infrastructure and therefore harder to operate and eventually cost more.
      • Computing and IT/IM and utilities in human civilization history is still in baby ages.
    • 10. GOC IT Spend $2,859.4 $2,885.2 $2,873.2 Total $409.2 $394.5 $401.4 Maintenance $717.7 $538.6 $490.4 Professional Services $562.1 $488.6 $473.0 Communications Services $401.3 $419.7 $381.5 Communications Equipment $26.2 $199.0 $187.1 Computing Services $738.2 $844.8 $939.8 Computing Hardware /Software $ Million $ Million $ Million 2006-2007 2005-2006 2004-2005 Category
    • 11. Gross Calculation
      • 40,000 FTEs
      • 7,000 single shingles
      • ≈ 15%-20% of GoC operating Budget
      $9,355 ∑ $500 Misc $1,000 Accommodation $1,000 Amortisation $1,140 Capital $1,715 O&M $4,000 SWE
    • 12. Sourcing Strategy 4 Different Options….
      • Accountability
      • Visibility
      • Risk
      • Smart Buy
      • Cost certainty
      • Cost visibility
      • Accountability
      • Contractual
      • commitment
      • Results based
      Fixed Cost Variable Cost Build Buy
      • Out Source
      • Systems integration
      • Partner
      • Consulting
      • Contracting
      • Staffing
      • In Source
      • Employees
      • Cheap Buy
      • Best Effort
      • Inputs based
      Option 1 Option 2 Option 3 client shared risk
    • 13. The State of the Union The Good
      • Methodologies
      • CoBIT
      • ITIL
      • RUP
      • CMM
      • PMBoK
      The Bad The Ugly
      • ½ life ≈ 3 years
      • No unified theory
      • # service firms
      • 85% product innovation fails
      • No cost sensitivity
      • No sourcing strategy
      • No metrics
      • Procurement
      • No visibility of it all
      • No benefits harness
    • 14. “IT Doesn’t Matter”
      • IT is done as Nicholas Carr has pointed out in the Harvard Business Review. IT – the raw infrastructure - is no longer a source of competitive advantage and in fact is a commodity.
    • 15. Mastering the Three Worlds of IT
      • 3 critical responsibilities wrt IT
      • choose technologies for the true needs of the business
      • smooth the adoption of those technologies
      • encourage their exploitation by leveraging already standardized data and work flows.
      • Function IT
        • spreadsheet and word-processing applications--that streamline individual tasks.
      • Network IT
        • capabilities like e-mail, instant messaging, and blogs and helps people communicate with one another.
      • Enterprise IT
        • customer resource management and supply chain management
        • re-create interactions between groups of workers or with business partners.
    • 16. Six IT Decisions Your IT People Shouldn't Make
      • Managers complain that they don't see much business value from the high-priced systems they install, but they don't understand the technology well enough to manage it in detail. So they often leave IT people to make, by default, choices that affect the company's business strategy.
      • six key IT decisions.
      • Strategy
        • How much should we spend on IT?
        • Which business processes should receive our IT dollars?
        • Which IT capabilities need to be companywide?
      • Execution
        • How good do our IT services really need to be?
        • Which security and privacy risks will we accept?
        • Whom do we blame if an IT initiative fails?
    • 17. Overall Situation
      • Resources
        • Not enough money
          • New projects
          • Capital
        • Not enough people
      • IT is increasingly complex
      • No difference
        • Discretionary vs. non
        • Stop or go
      • 90-100% of budget for ongoing
      • Can’t develop capacity or capability for new technologies
    • 18. Portfolio Management
      • What are we doing?
      • How much does it all cost?
      • What should we stop? Continue?
      • What is the resource gap - ±?
      • Does the proposed activity make sense?
      • Does the portfolio of activities make sense?
      • Can we be successful?
      • Assign priorities
      • Plan activities
      ± gap Project/Support proposals stop continue Prioritized Recommendations Stage 1 Stage 2 Stage 3
    • 19. Portfolio Management
    • 20. Portfolio Management Run Enhance Transform Nature View Analogy
      • Break & Fix
      • Repairs
      • “ 911” + ”411”
      Operational Fix Old Paradigm Change light bulb
      • Improve current process/ functionality
      • Incremental change in systems
      • Wholesale change
      • Change both Systems & People
      Tactical Strategic New Paradigm Change the lighting system Improve Old Paradigm Change light fixture
      • Non Discretionary
      • Discretionary
      • Discretionary
    • 21. Portfolio Management Timeframe Action Proxy Service
      • Immediate action
      • < 1 month
      • Patch and/or workarounds
      • No new programming
      • No training required
      • Corrective
      • Must fix it, now
      Business Model
      • short run
      • 1- 6 months
      • long run
      • > 6 months
      • Adaptive
      • Should do it, soon
      • Need to evaluate when to make the change
      • Perfective
      • Need to evaluate how to make the change
      • Small process/programming changes
      • Minimal training may be required
      • New design/ technology/ service
      • New infrastructure
      • Training required
      • No Change
      • Some change in business process
      • New Governance/ Organization Model
      Run Enhance Transform
    • 22. Val IT ™
      • Proven practices and techniques for evaluating and managing investment in business change and innovation
      • Val IT helps executives:
        • Increase the probability of picking winners
        • Increase the likelihood of IT investment success
        • Reduce surprises from IT cost and delivery date overruns
        • Reduce costs due to inefficient investments
    • 23. Why Val IT™?
      • An organisation needs stronger governance over IT investments if:
        • IT investments are not supporting the business strategy or providing expected value
        • There are too many projects, resulting in inefficient use of resources
        • Projects often are delayed, run over budget, and/or do not provide the needed benefits
        • There is an inability to cancel projects when necessary
        • It needs to ensure compliance to industry or governmental regulations
    • 24. A Comprehensive Approach
      • Many organisations practice elements of Val IT ™ already
      • Val IT ™ provides a consistent, repeatable and comprehensive approach
      • IT and business become equal shareholders because Val IT ™ helps management to answer these key questions:*
      The strategic question The architecture question The value question The delivery question * Based on the ‘Four Ares” as described by John Thorp in his book The Information Paradox, written jointly with Fujitsu, first published in 1998 and revised in 2003
    • 25. The Seven Principles of Val IT ™
      • IT-enabled investments will:
        • 1. Be managed as a p ortfolio of investments
        • 2. Include the full scope of activities required to achieve business value
        • 3. Be managed through their full economic life cycle
      • Value delivery practices will:
      • Recognise different categories of investments to be evaluated and managed differently
      • Define and monitor key metrics and respond quickly to any changes or deviations
      • Engage all stakeholders and assign appropriate accountability for delivery of capabilities and realisation of business benefits
      • Be continually monitored, evaluated and improved
    • 26. How Val IT ™ Works Establish informed and committed leadership. Align and integrate value management with enterprise financial planning. Define and implement processes. Establish effective governance monitoring. Define portfolio characteristics. Continuously improve value management practices. Establish strategic direction and target investment mix. Evaluate and select programmes to fund. Determine the availability and sources of funds. Monitor and report on investment portfolio performance. Manage the availability of human resources. Optimise investment portfolio performance. Understand the candidate programme and implementation options. Develop the detailed candidate programme business case. Develop the programme plan. Launch and manage the programme. Develop full life cycle costs and benefits. Update operational IT portfolios. Develop and evaluate the initial programme concept business case. Update the business case. Monitor and report on the programme. Retire the programme. Value Governance (VG) Portfolio Management (PM) Investment Management (IM)
    • 27. Voodoo/Holistic Accounting
      • Recognition
      • IT (and IM) enables transformation
        • who pays?
      • Can costs and benefits
        • be measured
        • and realised?
      • Make costs fully visible
        • Portfolio Management
      • Recognise elements
        • R&D
        • IP creation
      • Charge program for new stuff
      • Charge IT infrastructure costs
        • utility
    • 28. Creating IT Value
      • Decrease costs
      • Sourcing strategy
        • Some buy, some build
        • Smart buy vs. cheap buy
      • Fix procurement mess
        • Delays
        • Incumbency
        • Internet dating
        • Etc.
      • Increase benefits
      • Governance
        • CoBIT
        • Val IT
        • Make program accountable
      • More judicious use of IT
      • Centralisation is not the answer
    • 29. Questions ?
      • Alex Beraskow
        • [email_address]
        • 613.234. 8638
      • If everyone is doing, can it be wrong?
      • Beraskow’s Law
        • 1/3 – platform
        • 1/3 – project
        • 1/3 – recurring
        • 1/3 – transformation

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