ICT in Business ICT Strategy Part 3b: Organizational issues Bas Kruiswijk Leiden University, April...

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ICT in Business

ICT StrategyPart 3b: Organizational issues

Bas Kruiswijk

Leiden University, April 2010

Strategic sourcing of ICT

ICT processes, tasks and infrastructure:outsource or embed in the business?

ICT Organisation

BusinessStrategy

ICTStrategy

OrganizationalInfrastructure

ICTInfrastructure

Business ICTExte

Demand

Supply

Architectures

Processes Skills

The classical ICT Organisation

Strategic

Tactical

Operational

Setting strategy• Strategic planning• Architecture design / technical planning

Delivering applications• Business requirements definition• Application development• Support of end-user decisions

Supporting infrastructure• Data center operations• Network operations• Desktop support• Applications maintenance

Source: Gartner Group, Charles Chang

The classical ICT Organisation

• Role of the ICT organisation based on– Environmental changes took place slowly and

incrementally– Long-term business strategies– Stable end-user requirements that lasted for years– Technology changes took place over years

• But what is needed today?– Continuous and radical change needs managing– New products demand IT-based innovation– Virtual organizations require entrepreneurship and

end-to-end supply chains• And...

– Can you do it all by yourself?

Source: Gartner Group, Charles Chang

What tasks belong in the ICT organisation?

Strategic

Operational

Tactical

Embed inthe business

Delegateto a third party

Core-tasks of an ICT Organisation

• Some tasks can be embedded in the business• Some tasks can be outsourced to a third party• But the core tasks of an ICT organisation are

– Stimulate innovation– Manage the consistency in ICT solutions

and applications– Manage ICT implementations (Change

Management)– Manage outsourced services

Example roles within an ICT organisation

Strategic

•Technischbeheerderhardware &netwerken

•Service-medewerker

•Systeemeigenaar

•Informatie-architect

•Functioneelbeheer

•Technischbeheerdersoftware

•Coördina-tor ICT

•Project-leider

Operational

•Programmeur

•Technisch specialist

•Systeemanalist

•Contract-manager

Tactical

•Inkoper•Web-

master

•Directie

Technicalmanagerhardware &network

Service-support

Information-

architect

Technicalmanager

software

Programmer

Technical specialist

Systemanalist

Contract-manager

Purchaser

Informationmanager

Systemowner

Functionalmanager

Projectmanager

Web-master

Roles embedded in the business or outsourced

Strategic

•Systeemeigenaar

•Project-leider

Operational

•Programmeur

•Systeemanalist

•Contract-manager

Tactical

•Inkoper•Web-

master

•Directie

Service-support

Information-

architect

Technicalmanager

software

Contract-manager

Purchaser

Informationmanager

Systemowner

Functionalmanager

Projectmanager

Web-master

Programmer

Systemanalist

And the core tasks...

•Systeemeigenaar

•Project-leider

•Programmeur

•Systeemanalist

•Contract-manager

•Inkoper•Web-

master

•Directie

Service-support

Information-

architect

Technicalmanager

software

Contract-manager

Purchaser

Informationmanager

Systemowner

Functionalmanager

Projectmanager

Web-master

Programmer

Systemanalist

Stimulate innovation

Manage consistency

Manage changes

Manage outsourced services

What is sourcing?

• Dynamically planning and organizing ICT capacity (people, technology and processes), needed to meet the goals of the business

• Central issues of strategic sourcing1. What is the sourcing problem, related to the

business (business goals, business model)?2. Which part of the ICT services (or ICT processes)

are subject to outsourcing?3. Analyse the ICT services to decide exactly what

will/can be outsourced• Technology (ICT infrastructure)

• Processes

• People

1: Business model and its sourcing problem• Problems of an ICT organisation

– Manage and reduce ICT costs– Align ICT investments with business goals– Build a stable ICT service portfolio– Selectively outsource ICT tasks and manage the hiring of

external ICT expertise– Manage internal and external staff– Security, architecture, integration...

• Choices to be made– How does an organisation create value for its customers?– What resources are needed, and how to organise these

resources to create added value?

• Different business models ask for a different approach to strategic sourcing

Business models

DigitalAbundance

PhysicallyScarce Resources

eCustomer focusedCustomized services

KPNShell

AkzoLucent

TNTUPSDaf

NikeSmart

Bol.comDocdata

Philips

Amazon.comBuyITdirect.com

Organisation with BU / SU focus

Organisation focused on core-competences

Supply-chain organisation

Network- organisation

Traditional organisation

Virtual organisation

Supplier focusedMass production

Sourcing issues related to the business model

Traditional Focused Core competences

Supply chain

Network Virtual

All in oneHierachy

Service and business units

Outsourcing to suppliers

Partnerships Partnerships with shared goals

Event driven, incidental relationships based on added value

How to obtain qualified ICT capacity?

How to optimize the ICT competence?

Which ICT supplier and how to handle unneeded resources?

How to optimize the revenue of the partnership?

How to share responsibili-ties and how to smart-source?

Who are my partners, and how to organise co-operation?

2: Which ICT processes are subject to outsourcing?

• What are the ICT processes – The complete value chain from strategy to

operational implementation of ICT services• Which processes are subject to outsourcing?

Environment

Organisation

Products & services

Management processes

raw material data, etc.

Primary business processes

Innovation, R&D & knowledge management

Business support

processes

ICT processes

ICT processes in context

= Information flows

Supplier

Customer

ICT Processes

ICT Suppliers

ICT end users

Managefunctional requirements

Planning of ICT capacity

andservice levels

Production, delivery andsupport

Contractmanagementservices and products

ICT StrategyArchitecture

andAlignment

Primary processes

Businesssupport

processes

Innovation,R&D and

knowledgemanagement

Customers in thebusiness

Management processes

Insource or outsource

3: Analyze what to outsource

• The ICT infrastructure• The ICT processes, necessary to supply the

servics• The people and the organisation, necessary to

supply the services

ICT Infrastructure(technology)

ICT processesICT organisation

and staff

ICT Infrastructure

OfficeInformationsystems

Businessinformationsystems

TechnicalInformationsystems

Functional

Specific

Generic

Physical

ICT infrastructure components

User Support andApplication Management

SystemManagement

ICT infrastructurelayers

functionality

NetworkManagement

ICT Function/processes

= central

ICT Infrastructure

• Infrastructure layers (based on the OSI-model)– Physical: hardware, cables, power supply– Generic: routers, name servers, network– Specific: operating system, application servers– Functional: application, content, business

rules• Functional areas

– Office: office, email, internet– Business: finance, HRM, production planning,

business planning– Technical: CAD, production process support,

scientific applications

ICT Processes

• Strategic processes– ICT Strategy, alignment and architecture

• Tactical processes– Planning of services and capacity– Service management with suppliers and customers– Contract management

• Operational processes– Incident control– Change, problem, configuration management– System, technical and functional management

• Operational processes are most likely to be outsourced• ITIL is a best-practice model to organise these processes

People and organisation

Strategic

•Technischbeheerder

hardware &netwerken

•Systeemeigenaar

•Project-leider

Operational

•Programmeur

•Systeemanalist

•Contract-manager

Tactical

•Inkoper•Web-

master

•Directie

Technicalmanager

hardware &network

Service-support

Information-

architect

Technicalmanagersoftware

Contract-manager

Purchaser

Informationmanager

Systemowner

Functionalmanager

Projectmanager

Web-master

Programmer

Systemanalist

Sourcing: the big picture

Organisation

Products & services

Raw material,data etc.

Environment

ICT-management

leveranciers

ICT gebruikers

3. Afstemmen klantenbehoefte

2. Plannen ICT dienstcapaciteiten niveaus

4. Produceren, afleveren& ondersteunen diensten

5. Contract managementdiensten en produkten

1. Vast-stellen ICT strategie en afstem-men ICT met de businessbehoefte

primaire processen

Bedrijfs onder-steunings processen

innovatie, R&D enkennismgtprocessen

zakelijke klantenmanagement proces

In/out sourcen

leveranciers

ICT gebruikers

3. Afstemmen klantenbehoefte

2. Plannen ICT dienstcapaciteiten niveaus

4. Produceren, afleveren& ondersteunen diensten

5. Contract managementdiensten en produkten

1. Vast-stellen ICT strategie en afstem-men ICT met de businessbehoefte

primaire processen

Bedrijfs onder-steunings processen

innovatie, R&D enkennismgtprocessen

zakelijke klantenmanagement proces

In/out sourcen

uitbesteden aanderden

onderbrengen in lijn-

organisatie

beheren van contracten en en relatie eindgebruikers

stimulerenvan innovaties

ChangeAgents

uitbesteden aanderden

organisatie

beheren van contracten en en relatie eindgebruikers

stimulerenvan innovaties

ChangeAgents

Kantoorinformatiesystemen

Bedrijfsinformatiesystemen

TechnischeInformatiesystemen

Functioneel

Specifiek

Generiek

Fysiek

ICT infrastructuur componenten

User Support enApplicatie Management

SystemManagement

ICT infrastructuurlaag

ICT functionaliteit

NetwerkManagement

ICT Functie/processen

Kantoorinformatiesystemen

Bedrijfsinformatiesystemen

TechnischeInformatiesystemen

Functioneel

Specifiek

Generiek

Fysiek

ICT infrastructuur componenten

User Support enApplicatie Management

SystemManagement

ICT infrastructuurlaag

ICT functionaliteit

NetwerkManagement

ICT Functie/processen

Supplier

Customer

Why strategic sourcing?

Most Important Business Motives in Sourcing Strategy

Source: Computer Sciences Corporation14th Annual Survey of IS Management Issues

What activities are currently outsourced?

Source: Computer Sciences Corporation14th Annual Survey of IS Management Issues

Information management and the CIO

Roles and tasks of the information manager or his boss: the CIO

Information managementDemand and supply

BusinessStrategy

ICTStrategy

OrganizationalInfrastructure

ICTInfrastructure

Business ICT

Demand

Supply

The map for information management(Amsterdam Information Model)

Source: prof. dr. ir. R. MaesUniversiteit van Amsterdam

Information managementthe business and information dimension

The CIO

• Chief Information Officer• In the top of an organization• Responsible for demand and supply

• Accent on different roles– ICT partner in strategy– Information policy maker– ICT Trendwatcher– ICT Facilities manager– Application manager– User support– Business partner– Alignment manager

The roles of the Information manager / CIO

ICT Partner in strategy

Discover strategic ICT opportinities for the business

Information policy maker

Outline and implement policy regarding information provision

ICT Trendwatcher

Keeps up to date with ICT developments and trends

ICT Facilities manager

Ensure that the technical facilities form a reliable whole

Application manager

Responsible for the daily operation of all ICT resources

User support Responsible for the actual use of ICT facilities

Business partner

Participant in business process design in relationship with ICT

Alignment manager

Aligning business and information facilities

Source: ‘Who is managing the information?”Primavera working paper, Universiteit van Amsterdam

ICT in Business ICT Strategy Part 3b: Organizational issues Bas Kruiswijk Leiden University, April...

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