Chapter 9

The Management
Information Systems
Organization
Introduction
 What are the major MIS positions in an
organizations?
 What is the main role of the CIO?
 What should a manager expect from the MIS
organization?
 What does the MIS organization NOT do?
 How can outsourcing be used to provide
competitive advantage?
 What are some of the disadvantages of
outsourcing?
Real World Examples
 The Southern Company is the dominant utility
company in the southeast.
 Every year since 1948 they have paid a dividend.
 The company has seen a reduction in IT billings
across the company by $54 million while
functions have grown.
 Much of the success can be attributed to its IT
chargeback system.
 This system helps to assure that IT initiatives
align with business goals.
UNDERSTANDING
THE
MIS ORGANIZATION
CIO
 The Chief Information Officer is the head of the IS
organization (reports directly to the CEO)
 CIO’s primary goal is to manage IT resources to
implement enterprise strategy.
 Provide technology vision and leadership for
developing and implementing IT initiatives to help
the enterprise maintain a competitive advantage.
 As the importance of technology has increased so
has the position of the CIO.
Twelve Main Responsibilities
 Responsibilities that define the role of the CIO:
1. Championing the organization
2. Architecture management
3. Business strategy consultant
4. Business technology planning
5. Application development
6. IT infrastructure management
7. Sourcing
8. Partnership developer
9. Technology transfer agent
10. Customer satisfaction management
11. Training
12. Business discontinuity/disaster recovery planning
CTO, CKO, and Others
 The CIO, particularly in larger
organizations, cannot guide the enterprise
toward the future alone.
 Other strategic areas require more focused
guidance.
 New positions created to deal with this
growing need.
 Let’s look at…
 Other IT managers and their responsibilities
 Other IT responsibilities within an organization (such as
DBA, Business Analyst, etc.)
 Reporting relationships between the CIO and other IT
positions
 Figure 9.1 The CIO’s lieutenants
Title
Chief technology officer (CTO)
Chief knowledge officer (CKO)
Chief telecommunications officer
(CTO)
Chief network officer
Chief resource officer
Chief information security officer
Chief privacy officer
Responsibility
Track emerging technologies
Advise on technology adoption
Design and manage IT architecture to insure
consistency and compliance
Create knowledge management infrastructure
Build a knowledge culture
Make corporate knowledge pay off
Manage phones, networks, and other
communications technology across entire
enterprise
Build/maintain internal and external networks
Manage outsourcing relationships
Insures information management practices are
consistent with security requirements
Responsible for processes and practices that
insure privacy concerns of customers,
employees and vendors are met
 Figure 9.2 IS organization roles
Job Title Job Description
IS Manager Implements strategy; leads
systems implementation projects
System Developer Writes new software applications;
Upgrades and maintains existing
systems
Business Analyst Translates business requirements
into implementable IT solutions
Database Implements and maintains the
Administrator software/hardware
Operations Implements/maintains software
Personnel and hardware needed
Support Personnel Run, monitor and maintain the
production applications
Developer Help desk, project management
and desktop services, etc
Webmaster Responsible for all web activities
Web Designer Designs interface for web pages
Job Description
Understands both business and
technology
Programming abilities, cross-
technology knowledge, etc
Understands core business
requirements
Knowledge of database
management systems, etc
Knowledge of database
management systems, etc
Monitor and maintain hardware
and software
Skills vary depending upon role
Knowledge of web trends
Knowledge of interface design
 Figure 9.3 Sample IS organization chart

Chief
Information
Officer

Chief Chief Chief

Knowledge Technology Network
Officer Officer Officer

Name IS Managers
Title

Systems Support
Business Database
Developers/ Personnel/ Other
Analysts Administrators
Developers Operations
INFORMATION SYSTEMS
ORGANIZATION
PROCESSES
Systems Development
 The manager needs to understand the
processes internal to the IS group.
 Systems development is the primary
processes performed.
 Building and developing systems.
 Involves business analysts, programmers,
systems analysts, users, etc. to test and make
sure the system works and meets the business
objectives.
 Includes installation and configuration.
Systems Maintenance
 Includes a number of personnel to keep the
system running and performing.
 Such as DBAs, systems developers, business personnel,
managers, auditors, etc.
 Some of the functions of systems maintenance
include –
 Daily transaction processing.
 Report writing
 Problem reporting and repairing.
 Compliance conforming (Sarbanes-Oxley Act).
Other IS Processes
 Data center operations.
 Core computing systems location.
 Managers have little interaction with.
 Information management and database
administration.
 Activities of collecting and storing the actual data
created, developed, or discovered.
 Internet services.
 Includes intranets, extranets, email, etc.
 Networking services.
 Responsible for designing network architecture.
 General support.
 Help desk.
WHAT A MANAGER CAN
EXPECT FROM THE
IS DEPARTMENT
Eight Core Activities (1/2)
 Anticipating new technologies
 IT must keep an eye on emerging technologies
 Work closely with management to make appropriate
decisions
 Weigh risks and benefits of new technologies
 Strategic direction
 IS can act as consultants to management
 Educate managers about current technologies/trends
 Process innovation
 Review business processes to innovate
 Survey best practices
 Supplier management
 Carefully manage outsourced IT
Eight Core Activities (2/2)
 Architecture and standards
 Be aware of incompatibilities
 Inconsistent data undermines integrity
 Security
 Important to all general managers
 Much more than a technical problem
 Business continuity planning
 Disaster recovery
 “What if” scenarios
 Human resource management
 Hiring, firing, training, outsourcing, etc.
WHAT THE IS ORGANIZATION
DOES NOT DO
What IS Does Not Do
 Does not perform core business functions
such as:
 Selling
 Manufacturing
 Accounting
 Does not set business strategy
 General managers must not delegate critical
technology decisions
Outsourcing

 Subcontracting services from others

 With IT, there is equipment and personnel
involved
 Equipment and facilities are sold to outside vendors
 Personnel might be hired by outside vendors
 Services are hired from the vendors

 Common length of agreement: 10 years

 Backsourcing is when a company brings back

previously outsourced IS functions.
 Figure 9.5 Drivers and disadvantages of outsourcing

Drivers Disadvantages
•Offer cost savings •Abdication of control
•Ease transition to new technologies •High switching costs
•Offer better strategic focus •Lack of technological innovation
•Provide better mgmt of IS staff •Loss of strategic advantage
•Handle peaks •Reliance on outsourcer
•Consolidate data centers •Problems with
•Infuse cash security/confidentiality
•Evaporization of cost savings
What Can be Outsourced?
 Sell entire IS Department
 Sell portions only
 outsource non-strategic portions only
 outsource non-critical portions only
 outsource independent portions only

 Use outsourcing as a threat for dramatic

improvements in internal cost efficiency
The Famous Kodak Story
 The most famous example
 Kodak shook the IT world in the late
1980s
 Intense Competitive Pressure
 lost Polaroid lawsuit
 cost pressure from Fuji
 Downsized twice—in a firm never before
laying anyone off
What Did They Do? (1/2)
 Kathy Hudson, VP of IT, had $50 million
approved for a new data center
 Rather than spend the money, she sold
the existing MIS department for $250
million!
 Immediate inflow of cash
 Why not spend the money?
 Replicable investment
 Weak competitive position
What Did They Do? (2/2)
 Former employees were now hired by
vendors
 They used 3 vendors:
 IBM for their data center
 DEC for networking
 BusinessLand for PC services
 Made the venture into a strategic alliance
What was different? (1/2)
Traditional View Hudson’s View

Nature of Relationship Facilities management

Vendor characteristics Experienced with outsourcing

Nature of Contract Rigid, specified in detail

Management
Hands off – contractual
Philosophy
 What was different? (2/2)
Traditional View Hudson’s View

Nature of Relationship Facilities management Strategic alliance

Experienced with Common interests &

Vendor characteristics outsourcing strong outlook

Flexible, merely a
Nature of Contract Rigid, specified in detail
framework

Management
Hands off – contractual Collaborative
Philosophy
 The Dos of Picking an
Outsourcing Vendor
 Ask for and check references and exercise due
diligence
 Assess the culture of your outsourcing partner
 Evaluate multiple options – both suppliers and
approaches
 Metrics matter – use them
 Pick an outsourcing partner with a strong partner
network
 Get it in writing!
 The Don'ts of Picking an
Outsourcing Vendor

 Buy on price alone

 Overlook the reference-checking process
 Forget to provide for contingencies
 Communicate via committee
 Ever hand over the project management
 Single-source
 Let your head be turned by goodies
Outsourcing Conclusion

”An outsourcing deal that is too one-

sided, too favorable to one party at
the expense of the other, usually
ends up as a bad deal for both sides”
CENTRALIZED
VS.
DECENTRALIZED
ORGANIZATIONAL
STRUCTURES
Overview
 Centralized – bring together all staff,
hardware, software, data, and processing
into a single location.
 Decentralized – the components in the
centralized structure are scattered in
different locations to address local
business needs.
 Federalism – a combination of centralized
and decentralized structures.
Federalism

 Most companies would like to achieve the

advantages derived from both centralized and
decentralized organizational paradigms.
 This leads to federalism – a structuring
approach which distributes, power, hardware,
software, data and personnel between a
central IS group and IS in business units.
FOOD FOR THOUGHT:
GOING OFFSHORE FOR IS DEVELOPMENT

Managing a Global Network

 Managing a global network is a challenge,
particularly when different parts of it are owned
by different enterprises.
 Offshoring is used (as covered earlier) by more
and more companies.
 Offshoring has resulted in a high number of lost
IT jobs (500,000 in 2004 in the U.S.).
 Some states are attempting to curb this trend by
regulating the privatization of state services.
 There is likely to be continued pressure on curbing
offshoring by government and major corporations.
 However, offshoring has cut consumer costs by 10-30%.