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.
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
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.
spreadsheet and word-processing applications--that streamline individual tasks.
capabilities like e-mail, instant messaging, and blogs and helps people communicate with one another.
customer resource management and supply chain management
re-create interactions between groups of workers or with business partners.
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.
How much should we spend on IT?
Which business processes should receive our IT dollars?
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
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
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)