Managerial View on Information Infrastructures

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Managerial View on Information Infrastructures

• Edoardo Jacucci
• Department of Informatics
• UiO
• edoardo_at_ifi.uio.no

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Aims

• See examples of Information Infrastructures
• Understanding key issues dilemmas
• Identifying Strategies
• Literature
• (discussion limited to Corporate Infrastructures
  of commercial businesses)

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Content

• Managerial Concerns
• Strategic Alignment Weill Broadbent
• Critic of Strategic Alignment Ciborra
• IT today does IT matter? Carr Brown
• Example Accenture Curtis et al.

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IT Strategic Alignment

• Increasing diffusion of IT computing,
  (Inter)networking, telecommunication
• New distribution channels
• Supply chain
• Retail
• Marketing
• New forms of organization
• Process orientation
• Virtual teams/organizations
• Partnerships/collaboration
• New business models
• Amazon
• E-Bay
• TLC sector

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IT Strategic Alignment

• implies that IT can be a source of competitive
  advantage
• Price (process innovation) (examples?)
• Differentiation (product innovation)
• Questions
• What business strategy?
• What does IT strategy mean?
• What the relation between them?
• What IT anyway?

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Str. Al. What IT?
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Str. Al. What it IT strategy?

• The IT Portfolio

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Str. Al. IT portfolio
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What is Strategic Alignment?
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Any challenge to Strategic Alignment?(Management
literature perspective)

• Expression barriers
• Lack of direction in Business Strategy
• Changing Strategic Intents
• Insufficient Awareness if IT
• Specification barriers
• IT function/CIO separated from CEO and biz
  strategy
• Implementation barriers
• Business units are different..
• IS THIS ALL?!?!?!?! Piece o cake!

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Unveiling Information Infrastructures
From Control to Drift

• Embeddedness
• Transparency
• Reach or scope
• Membership
• Links with conventions of practice
• Embodiment of standards
• Built on installed base
• Visible upon breakdown
• Heterogeneous

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Rethinking alignment

• Alignment, as a conceptual bridge, urges to
  reflect on the true nature of the foundations on
  which it lies management strategy and
  technology
• The researchers mgnt literature of the
  original theory of strategic alignment took
  these concepts for granted.
• Use of geometrical representations of business
  variables and interdependencies grant them
  independent and unquestioned essence and
  existence
• Its a de-world image of the organization,
  outcome of anidealization process
• gt In the world-out-there alignment does not work
  because strategy is not such a clear concept of
  practice

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Alternative path

• Stick to basic evidence
• Encounter the world as it presents itself in
  everyday situation
• and you will see that
• Infrastructure implementation is rich of
• Unexpected outcomes
• Side effects
• Frequent adaptations, tinkering and reinventions
• gt DRIFT

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Reasons of failure of IT alignment

• Separation between formulation and implementation
• Espoused theory vs. Theory in use
• Single-loop learning
• Separation between management politics and
  politics of non-human components

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Conclusion

• Rethinking control
• Loose coupling
• Control devolution
• Change in fundamental principles of management
  and of role of IT towards these principles in
  highly complex business context

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Does IT Matter?
1 A last word on strategy

• Nicholas Carr, HBR May 2003IT Doesnt Matter
• John Seely Brown, John Hagel, HBR July 2003Does
  IT Matter?
• Discuss strategic role of IT
• (see last lecture, IS Strategy section)

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IT Doesnt Matter IT is not scarce
1 A last word on strategy

• Assm IT potency and ubiquity have increased
• So has its strategic value
• Carr Wrong
• What makes a resource truly strategic is not
  ubiquity but scarcity
• Power and ubiquity gt from strategic resource to
  commodity factor

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IT Doesnt Matter IT is a commodity
1 A last word on strategy

• Comparison with other broadly adopted
  technologies
• E.g. steam engine and railroad, telegraph and
  telephone all reshaped the industry
• For brief period provided competitive advantage
• But as availability increased and prices
  decreased they became commodity inputs
• Invisible to strategy

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IT Doesnt Matter IT is infrastructural
1 A last word on strategy

• Proprietary technologies
• May provide competitive advantage to early
  adopters, innovators
• More value when in isolation
• Infrastructural technologies
• become part of the cost of doing business
• More value when shared

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IT Doesnt Matter IT is infrastructural
1 A last word on strategy

• In early phases, an infrastructural technology
  can act as a proprietary technology, delivering
  isolated competitive advantage
• Trap think that this early comp adv. will last
  indefinitely
• By end of bildout phase this opportunities will
  be gone
• Competitive advantage moves from micro to macro
  (differences between countries, US vs. Europe)

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IT Doesnt Matter IT is infrastructural
1 A last word on strategy

• IT is an infrastructural technology
• Rapid commoditization
• It is a transport mechanism
• More valuable when shared
• Increases interconnectivity and interoperability
• Involves increased standardization of technology
• Homogenization of functionality
• Highly replicable ()
• Highly scalable ()
• Standardizes business processes (best practices)

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IT Doesnt Matter Evidence
1 A last word on strategy

• Internet will allow purchase of web services
• MicroSoft and IBM are trying to position
  themselves as IT utilities
• IT service on demand

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IT Doesnt Matter Implications
1 A last word on strategy

• Spend less
• Follow, dont lead
• Focus on vulnerability, not opportunities
• E.g. your competitive advantage of today in a
  early phase of a infrastructural bildout can turn
  into a competitive disadvantage it becomes a
  costly legacy system in a world of cheap
  commoditized services

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Does IT Matter? Where the real innovation lies
1 A last word on strategy

• IT by itself rarely confers strategic
  differentiation. IT is inherently strategic
  because of its indirect effects
• For these effects to take place and for IT to
  create competitive advantage, need to
• Innovate business practices

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Does IT Matter? What is really scarce
1 A last word on strategy

• IT continuously creates new possibilities
• IT is viewed as commodity when people are not
  creative or innovative enough
• IT may be commodity, but the insight and ability
  to create economic value (i.e. comp. adv.) are
  scarce

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Does IT Matter? Implications
1 A last word on strategy

• Bildout is not over new architectures
  continuously create new possibilities
• IT vendors have been to technology driven buy
  this to gain that
• Real value, real com. adv. comes from creative,
  aggressive innovation of business practices,
  catalyzed by the new possibilities

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Conclusions
1 A last word on strategy

• There is some true in both
• Carr
• Increasing role of standards,
• IT as infrastructural (grid technology)
• Reply
• comp adv is not from technology but from the use
  of it
• Which implies that the context of use is very
  important
• i.e. PEOPLE STILL COUNT

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Accenture analysis of a successful business model

• 100000 employees in 48 countries
• Services
• Consulting
• Technology
• Outsourcing
• www.accenture.com
• Double digit growth
• Fastest growing global technology consulting
  business
• HOW?

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Accenture financial performance

• Compound annual growth rate
• 16

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Accenture understanding the biz model

• Change in the service mix
• Industrialization of IT services (how they do it)
• Standardization
• Outsourcing
• Globalization of service delivery
• Why industrialization? (why can they do it)
• Standardization/integration/consolidation of
  existing infrastructure (industry focus of last 5
  years)
• Commoditization of IT infrastructures
• Global availability of IT service workforce
  (India)
• Cutting costs to spend in strategic investments

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Conclusions strategic value of IT 1

• Strategic alignment is a good concept
• BUT there are different ways of viewing it
• Mngmnt literature positivist and simplistic
• Social studies help to
• Have better understanding of complexity of II
  dynamics
• Better inform consequences of management actions

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Conclusions strategic value of IT 2

• Trend towards infrastructuralization and
  commoditization of IT (IT as electricity) - Carr
• Still competitive advantage built on
• Business models
• Enterpreneurship
• Organizational effectiveness PEOPLE
• HOW you use IT
• Still large space for innovation Brown
• Market shows both are right (Accenture, IBM)

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• Value Discovery Gary Curtis et al.
• http//www.accenture.com/xd/xd.asp?itenwebxdide
  as5Coutlook5C3_20035Cinfo_technology.xml

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Porters Competitive Strategy Framework 1
4 IS Strategy

• Industry analysis framework of competitive
  strategy to help identify competitive forces that
  any (for profit) company needs to consider
• Five forces are identified competitive advantage
  is obtained by intervening in these five
  dimensions
• IT/IS has a role in shaping the competitive
  advantage of a company, by intervening in the
  five dimensions

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Porters Competitive Strategy Framework 2
4 IS Strategy
Potential Entrants
Threat of new Entrants
Industry Competitors Rivalry amongexisting
firms
Suppliers
Customers
Bargaining Power of Customers
Bargaining Power of Suppliers
Threat of Substitute product Or services
Substitute Products/services
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The Strategic Role of IT
4 IS Strategy