IT STraTegy: ISSueS and PracTIceS
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IT STraTegy: ISSueS and PracTIceS
T h i r d E d i t i o n
James D. McKeen Queen’s University
Heather A. Smith Queen’s University
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Library of Congress Cataloging-in-Publication Data
McKeen, James D. IT strategy: issues and practices/James D. McKeen, Queen’s University, Heather A. Smith, Queen’s University.—Third edition. pages cm ISBN 978-0-13-354424-4 (alk. paper) ISBN 0-13-354424-9 (alk. paper) 1. Information technology—Management. I. Smith, Heather A. II. Title. HD30.2.M3987 2015 004.068—dc23 2014017950
ISBN–10: 0-13-354424-9 ISBN–13: 978-0-13-354424-4
10 9 8 7 6 5 4 3 2 1
CoNTENTS
Preface xiii
About the Authors xxi
Acknowledgments xxii
Section I Delivering Value with IT 1
Chapter 1 DeVelopIng anD DelIVerIng on The IT Value propoSITIon 2 Peeling the Onion: Understanding IT Value 3
What Is IT Value? 3
Where Is IT Value? 4
Who Delivers IT Value? 5
When Is IT Value Realized? 5
The Three Components of the IT Value Proposition 6 Identification of Potential Value 7 Effective Conversion 8 Realizing Value 9
Five Principles for Delivering Value 10 Principle 1. Have a Clearly Defined Portfolio Value Management
Process 11
Principle 2. Aim for Chunks of Value 11
Principle 3. Adopt a Holistic Orientation to Technology Value 11
Principle 4. Aim for Joint Ownership of Technology Initiatives 12
Principle 5. Experiment More Often 12 Conclusion 12 • References 13
Chapter 2 DeVelopIng IT STraTegy for BuSIneSS Value 15 Business and IT Strategies: Past, Present, and Future 16
Four Critical Success Factors 18
The Many Dimensions of IT Strategy 20
Toward an IT Strategy-Development Process 22
Challenges for CIOs 23 Conclusion 25 • References 25
Chapter 3 lInkIng IT To BuSIneSS MeTrICS 27 Business Measurement: An Overview 28
Key Business Metrics for IT 30
v
vi Contents
Designing Business Metrics for IT 31
Advice to Managers 35 Conclusion 36 • References 36
Chapter 4 BuIlDIng a STrong relaTIonShIp wITh The BuSIneSS 38 The Nature of the Business–IT Relationship 39
The Foundation of a Strong Business–IT Relationship 41
Building Block #1: Competence 42
Building Block #2: Credibility 43
Building Block #3: Interpersonal Interaction 44
Building Block #4: Trust 46 Conclusion 48 • References 48
Appendix A The Five IT Value Profiles 50
Appendix B Guidelines for Building a Strong Business–IT Relationship 51
Chapter 5 CoMMunICaTIng wITh BuSIneSS ManagerS 52 Communication in the Business–IT Relationship 53
What Is “Good” Communication? 54
Obstacles to Effective Communication 56
“T-Level” Communication Skills for IT Staff 58
Improving Business–IT Communication 60 Conclusion 61 • References 61
Appendix A IT Communication Competencies 63
Chapter 6 BuIlDIng BeTTer IT leaDerS froM The BoTToM up 64 The Changing Role of the IT Leader 65
What Makes a Good IT Leader? 67
How to Build Better IT Leaders 70
Investing in Leadership Development: Articulating the Value Proposition 73
Conclusion 74 • References 75
MInI CaSeS Delivering Business Value with IT at Hefty Hardware 76
Investing in TUFS 80
IT Planning at ModMeters 82
Contents vii
Section II IT governance 87
Chapter 7 CreaTIng IT ShareD SerVICeS 88 IT Shared Services: An Overview 89
IT Shared Services: Pros and Cons 92
IT Shared Services: Key Organizational Success Factors 93
Identifying Candidate Services 94
An Integrated Model of IT Shared Services 95
Recommmendations for Creating Effective IT Shared Services 96
Conclusion 99 • References 99
Chapter 8 a ManageMenT fraMework for IT SourCIng 100 A Maturity Model for IT Functions 101
IT Sourcing Options: Theory Versus Practice 105
The “Real” Decision Criteria 109
Decision Criterion #1: Flexibility 109
Decision Criterion #2: Control 109
Decision Criterion #3: Knowledge Enhancement 110
Decision Criterion #4: Business Exigency 110
A Decision Framework for Sourcing IT Functions 111
Identify Your Core IT Functions 111
Create a “Function Sourcing” Profile 111
Evolve Full-Time IT Personnel 113
Encourage Exploration of the Whole Range of Sourcing Options 114
Combine Sourcing Options Strategically 114
A Management Framework for Successful Sourcing 115
Develop a Sourcing Strategy 115
Develop a Risk Mitigation Strategy 115
Develop a Governance Strategy 116
Understand the Cost Structures 116 Conclusion 117 • References 117
Chapter 9 The IT BuDgeTIng proCeSS 118 Key Concepts in IT Budgeting 119
The Importance of Budgets 121
The IT Planning and Budget Process 123
viii Contents
Corporate Processes 123
IT Processes 125
Assess Actual IT Spending 126
IT Budgeting Practices That Deliver Value 127 Conclusion 128 • References 129
Chapter 10 ManagIng IT- BaSeD rISk 130 A Holistic View of IT-Based Risk 131
Holistic Risk Management: A Portrait 134
Developing a Risk Management Framework 135
Improving Risk Management Capabilities 138
Conclusion 139 • References 140
Appendix A A Selection of Risk Classification Schemes 141
Chapter 11 InforMaTIon ManageMenT: The nexuS of BuSIneSS anD IT 142 Information Management: How Does IT Fit? 143
A Framework For IM 145
Stage One: Develop an IM Policy 145
Stage Two: Articulate the Operational Components 145
Stage Three: Establish Information Stewardship 146
Stage Four: Build Information Standards 147
Issues In IM 148
Culture and Behavior 148
Information Risk Management 149
Information Value 150
Privacy 150
Knowledge Management 151
The Knowing–Doing Gap 151
Getting Started in IM 151 Conclusion 153 • References 154
Appendix A Elements of IM Operations 155
MInI CaSeS Building Shared Services at RR Communications 156
Enterprise Architecture at Nationstate Insurance 160
IT Investment at North American Financial 165
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