Paradigm Shift
I. Computing Paradigm Shift
II. Business Paradigm Shift
Dr. Chen, The Challenge of the Information Systems Technology TM -TM -11
I. Computing paradigm
Users
Networks
Computers Networks
Users
Computers
II. Business Paradigm Shift
Open Systems
Proprietary Systems Mainframes
New Enterprise, Expert Systems
BPR, Paperless Office
Automated Enterprise,
Back Office Automation
On-Line Transaction Processing
Legacy Enterprise, Manual Back Office
Manual Front Office
Client/Server, MultimediaDistributed ComputingObject-Orientation
1970s
1960s
1980s
1990s
and Beyond
Chapter 2Manageable Trends
• Strategic Impact of IT• Integrating Changing Technology Platforms• Assimilating Emerging Technologies• Sourcing Policies for the IT Value Chain• Applications Development Process• Partnership of Three Constituencies
Dr. Chen, The Trends of the Information Systems Technology TM -4
N
Theme 1: Strategic Impact
• Operational/manufacturing impacts– cost– coping with complexity– coordination– integration of technology into product
• Marketing impacts– choice of product– service (e.g., order confirmation, tracking)– value-added information– product customization
Dr. Chen, The Trends of the Information Systems Technology TM -5
Defense
Consulting
Banks Airlines
Retail
Paper
High
fashion
HighLow
High
Low
Figure 2-1 IT Impact: Position of Industry Leaders
Information technology impact on marketing (customer focus, reaction to change, provision
of differentiation. Etc.)
Information technology impact
on operations (cost/complexity management, coordination,
integration, etc.)
Dr. Chen, The Trends of the Information Systems Technology TM -6
CI
SW
CHEM AA
UA Citi
HighLow
High
Low
Figure 2-2 IT Impact: Position of Key Players in Airlines and Banks
Information technology impact on marketing (customer focus.)
Information technology impact on
operations
Key:AA - American Airlines
UA - United Airlines
Citi - First National Citibank
CHEM - Chemical Bank of NY
CI - Continental Illinois
SW - Southwest Airlines
Dr. Chen, The Trends of the Information Systems Technology TM -7
HighLow
Low
Marketing gap vs. industry leader
Ope
ratio
ns g
ap v
s.
indu
stry
lead
erFigure 2-3 Targeting IT-Based Investment (as Compared with Industry Leaders
Increase integrative capacity
Catch up
Maintain advantage
Increase flexibility, responsiveness/
Differentiate products and
services
A Contingency Approach to IT Use
What four competitive investment strategies used when organizations are comparing their positions with industry leaders?
High
Dr. Chen, The Trends of the Information Systems Technology TM -8
• What four IT environments are created by variation in strategic impact of existing systems and strategic impact of the applications development portfolio?
Hig
h
Factory Strategic
Exi
stin
gA
pp
lica
tion
s
Lo
w Support Turnaround
Low High
Future Applications
A Contingency Approach to IT ManagementA Contingency Approach to IT Management
Dr. Chen, The Trends of the Information Systems Technology TM -9
POLICIES
INFORMATION
TECHNOLOGY
STRATEGIES
Theme 2: Integrating Changing Technology PlatformsTheme 2: Integrating Changing Technology Platforms
How to Capitalize on the real Business Opportunities?
Integrating ...Integrating ...
ORGANIZATION
Dr. Chen, The Trends of the Information Systems Technology TM -10
Who should be Involved in the Project Development?
TM -TM -1111
Consists of ...Consists of ...
PROJECT PROJECT MEMBERSMEMBERS
TECHNICAL TECHNICAL PROFESSIONALSPROFESSIONALS
USERSUSERS
MANAGEMENTMANAGEMENT
Dr. Chen, The Trends of the Information Systems Technology
Theme 2: Integrating Changing Technology Platforms
• Advances in – Processing power– Data storage– Communications
• Integration of – Computing– Telecommunications– Office support – Broadcasting
• Reasons– Physical interconnections– Development involves multiple technologies– Opportunities for integration
Dr. Chen, The Trends of the Information Systems TechnologyTM -12
Theme 3: Assimilating Emerging Technologies
• Phase 1: Technology Identification and Investment– Identify technology of interest – Pilot project (usually in IT) to test
• Phase 2: Technological Learning and Adaptation– Users test technology in pilot projects– Will the technology make us more effective?
• Phase 3: Rationalization / Management Control– Develop support systems and controls for efficient use of
technology• Phase 4: Maturity / Widespread Technology Transfer
– Spread technology throughout the organization
1. Innovation (Technical-oriented)
2. Learning(User-oriented)
3. Rationalization
4. Maturity
Dr. Chen, The Trends of the Information Systems Technology TM -13N
Theme 4: Sourcing Policies for the IT Value Chain
What is outsourcing?
Dr. Chen, The Trends of the Information Systems Technology TM -14
• The phenomenon that appeared in the information systems field in the late 1980s was outsourcing, which means turning over a firm's computer operations, network operations, or perhaps other information systems functions to a vendor for a specified time - generally, at least for three years.
OUTSOURCING
CONTRACTING:• COMPUTER CENTER OPERATIONS• TELECOMMUNICATIONS NETWORKS• APPLICATION DEVELOPMENT
TO EXTERNAL VENDORS
*
Dr. Chen, The Trends of the Information Systems Technology TM -15
Why Outsoucing?
• Outsourcing has become an option that most CIOs need to consider to satisfy their management that their operation is being run efficiently, effectively, and economically
Dr. Chen, The Trends of the Information Systems Technology TM -16
The Driving Forces Behind Outsourcing
• Two drivers – focus
on core business
– value shareholder
Dr. Chen, The Trends of the Information Systems Technology TM -17
Outsourcing As an Economic Strategy
• Core competencies
• Which sources are less expensive
• How much control is needed
Dr. Chen, The Trends of the Information Systems Technology TM -18
Dr. Chen, The Trends of the Information Systems Technology TM -19
The Expanding Scope of Vendor Options
To buy professional servicesTo buy a productTo buy a transactionTo use a systems integrator - project basedOutsourcing - time based
Quality Products/ServicesSpeedCost
Dr. Chen, The Trends of the Information Systems Technology TM -20
The Expanding Scope of Vendor Options
To buy professional servicesTo buy a productTo buy a transactionTo use a systems integrator - project basedOutsourcing - time based
Quality Products/ServicesSpeedCost
Dr. Chen, The Trends of the Information Systems Technology TM -21
When to Outsourcing?• Which IS activities are strategic to our
company's business?
• Will outsourcing save us at least 15 percent?
• Does our firm have access to the needed technology and expertise?– If not, outsourcing may be the answer to acquiring
these resources.
• Does outsourcing increase our firm's flexibility?
Dr. Chen, The Trends of the Information Systems Technology TM -22
What Activities that Management should not Outsource?
• strategy • policy role• the decisions about when to introduce
information systems into the organization• the management of the vendor• when the system (IS) department is well
managed, and where IT is a core competency
Dr. Chen, The Trends of the Information Systems Technology TM -23
OUTSOURCING BENEFITS
• Economy• Service quality• Predictability• Flexibility• Making fixed cost variable• Freeing up human resources for other projects• Freeing up financial capital
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CONS OF OUTSOURCING
• Loss of control
• Vulnerability of strategic information
• Dependency
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Outsourcing Recommendations
• Write shorter contracts - less than 5 years
• Subcontract control
• Selective outsourcing
Dr. Chen, The Trends of the Information Systems Technology TM -26
Desirable Outcomes and Implementation Issues
• On-time• On-budget• Full functionality• user acceptance• Favorable cost-to-benefits ratio• Low maintenance• Scalability• Integration with other systems• Reusability
Dr. Chen, The Trends of the Information Systems Technology TM -27
Theme 4: Sourcing Policies for the IT Value Chain
• Why Make?– Custom to needs– Confidentiality– Insulate from external vulnerability– Easy to adapt– Leading-edge competence
• Why Buy?– Access to specialized skills– Cost– Staff utilized for most important products– Personnel costs– “Professional” management of service organization– Proliferation of services available
Dr. Chen, The Trends of the Information Systems Technology TM -28
Theme 5: Applications Development Process
• SYSTEM SYSTEM DEVELOPMENT DEVELOPMENT PROCESS LIFE PROCESS LIFE CYCLE (CYCLE (SDLC))
Dr. Chen, The Trends of the Information Systems Technology TM -29
• SYSTEMS ANALYSIS
• SYSTEM DESIGN
• PROGRAMMING
• TESTING
• CONVERSION
• PRODUCTION & MAINTENANCE
*
SYSTEM DEVELOPMENTSYSTEM DEVELOPMENT(Life Cycle) PROCESS (Life Cycle) PROCESS
Dr. Chen, The Challenge of the Information Systems Technology TM -30
SYSTEMS DEVELOPMENTSYSTEMS DEVELOPMENT
CORE ACTIVITYCORE ACTIVITY DESCRIPTIONDESCRIPTION
SYSTEMS ANALYSISSYSTEMS ANALYSIS IDENTIFY PROBLEM(S)SPECIFY SOLUTIONSESTABLISH INFORMATION REQUIREMENTS
SYSTEMS DESIGNSYSTEMS DESIGN CREATE LOGICAL DESIGN SPECSCREATE PHYSICAL DESIGN SPECSMANAGE TECHNICAL REALIZATION OF SYSTEM
PROGRAMMINGPROGRAMMING TRANSLATE DESIGN SPECS INTOPROGRAM CODE
Dr. Chen, The Challenge of the Information Systems Technology TM -31
SYSTEMS DEVELOPMENTSYSTEMS DEVELOPMENT
CORE ACTIVITYCORE ACTIVITY DESCRIPTIONDESCRIPTION
TESTINGTESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST
CONVERSIONCONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF
PRODUCTION &PRODUCTION & OPERATE SYSTEMMAINTENANCEMAINTENANCE EVALUATE SYSTEM
MODIFY SYSTEM
Dr. Chen, The Challenge of the Information Systems Technology TM -32
Theme 5: Applications Development Process
• Design– User request or IT/user proposal– Analysis– (Logical) Design
• Construct– Detailed design– Coding– Documentation– Testing– Acquisition
Dr. Chen, The Trends of the Information Systems Technology TM -33
Theme 5: Applications Development Process (Cont.)
• Implement– Redesign– Install– Train– Systems test
• Operate– Acceptance test– Retrain
• Maintain– “Modernization”– Continuous improvement
Dr. Chen, The Trends of the Information Systems Technology TM -34
Dr. Chen, The Challenge of the Information Systems Technology TM -TM -3535
Consists of ...Consists of ...
ManagementManagement
IT ManagementIT ManagementUSERS USERS ManagementManagement
GENERAL GENERAL ManagementManagement
Theme 6: Partnership of Three Constituencies
Theme 6: Partnership of Three Constituencies
• IT Management– Pool of technical skills– Technology scan– “Professional” development– Process reengineering
• User Management– Movement of operational responsibilities to IT– Availability of outside services– User IT sophistication and experience
• General Management– Must balance IT / User issues– Executives balance IT/strategies
Dr. Chen, The Trends of the Information Systems Technology TM -36
SPECTRUM OF ORGANIZATIONAL CHANGE
AUTOMATION RATIONALIZATION
REENGINEERINGPARADIGM SHIFT
ORGANIZATIONAL CHANGE
Dr. Chen, The Trends of the Information Systems Technology TM -37
SPECTRUM OF ORGANIZATIONAL CHANGE
• AUTOMATION: Using technology to perform tasks efficiently / effectively
• RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks
• BUSINESS PROCESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology
• PARADIGM SHIFT
Dr. Chen, The Trends of the Information Systems Technology TM -38
What is Business Process and Business Reengineering?
• Business process: A set of logically related tasks performed to achieved a defined business outcome
• Business reengineering means radically changing how people work - changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs.
Dr. Chen, The Trends of the Information Systems Technology TM -39
1. Develop business vision, process objectives
2. Identify process to be redesigned
3. Understand, measure performance of existing processes
4. Identify opportunities for applying information technology
5. Build PROTOTYPE of new process
BUSINESS REENGINEERING STEPS:
Dr. Chen, The Trends of the Information Systems Technology TM -40
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