4 Chapter 1 • Managing IT in a Digital World

Computer Networks: High Bandwidth, prefer due to a superiority in characteristics such as

Wireless, Cloudy product innovativeness or image, product quality, or
customer service
The introduction of a Web browser in the mid-1990s that
used an Internet communications standard (TCP/IP) to link
Computers can lower the costs of products or services by
companies and individuals to the Internet has been de-
automating business transactions, shortening order cycle
scribed as a “killer application” due to its widespread global
times, and providing data for better operational decision
impact. Demands for high-speed Internet access have
making. Since the 1980s, a flood of IT innovations have led
spurred investments by government and the private sector to
to efficiency gains in manufacturing firms alone—such as
install fiber-optic (high-bandwidth) lines. Today, many
shortening the time to develop new products with computer-
households in developed countries pay a monthly fee for
aided design tools; optimizing a plant floor process with
cable, satellite, or a telephone utility for integrated data,
software that implements a human expert’s decision rules;
voice, and perhaps television services in their homes. New
and speedily changing a production line with computerized
investments by Western countries in high-bandwidth lines to
planning systems based on sales information.
their own rural areas as well as to emerging nations in Africa
IT has also been used by companies to differentiate
are also being announced as this textbook goes to press.
their products or services from those of competitors. IT
Satellite and cellular technologies now link remote
applications can provide sales personnel with information
workers to central support centers, travelers to travel serv-
to help them better service a specific customer; just-
ices, and delivery personnel to transportation schedulers.
in-time replenishments of supplies for business customers
Wireless technologies have also enabled some emerging
based on inventory levels rather than manually initiated
countries to bypass expensive investments in hardwired
purchasing orders; and decision support applications with
telecommunications lines to more remote areas.
embedded industry knowledge, such as best practices for
Investments in wireless connectivity to better support
first responders to treat a heart attack or stroke patient.
mobile workers inside an organization’s walls have also
After the introduction of the Web browser in the
recently increased. For example, physicians and nurses
mid-1990s, most companies first began to use the Web to
with mobile computer and communications devices have
create a brand “presence” on the Internet: Managers regis-
increased their productivity and service quality by commu-
tered memorable names for a URL for their company’s
nicating more easily with clinicians on other hospital floors
public Web site and then posted information (initially just
or at other worksites as well as by accessing electronic
based on hard-copy materials dubbed “brochureware”) for
patient records and test results at the patient’s bedside.
potential customers, stockholders, and other stakeholders.
Another growing trend has been the usage of the
By the late 1990s, traditional companies could see how
Internet to obtain remote “hosting” or other IT capabilities
Amazon.com and other dot-com innovators were using the
from “the cloud” (Bala and Henderson, 2010). In Software-
Web, and they too began to find innovative ways to use
as-a-Service (SaaS) models, third-party service providers
Web technologies to reach customers. However, since the
deploy, manage, and remotely host software applications on
features of a public Web site are also visible to competitors
a rental or lease agreement. This is an especially attractive
and can be quickly copied by them, it has also become
option for small organizations, but industry pioneers (such
more difficult for companies to compete by product or
as salesforce.com) also provide 24*7 access to distributed
service differentiation via the Web than it perhaps was for
organizations and remote workers for Fortune 1000 compa-
them in an offline world.
nies. Other vendors offer computer infrastructure services
For example, a company’s customers may use Web
(IaaS) via the Internet, such as computer server processing
sites that allow them to easily compare not only their prod-
and data storage, which enable organizations to more effec-
ucts or services—and their prices—but also those offered
tively handle peak processing loads.
by competitors. Consumers can also request their “own”
price and be electronically alerted to price changes as they
NEW WAYS TO COMPETE occur. The airline companies in particular have faced se-
vere industry pressures for low prices and have found it
Computers and communication networks enable compa-
more difficult to differentiate their services.
nies to compete in two primary ways (Porter, 2001):
On the other hand, the Internet can increase a compa-
• Low Cost—competing with other businesses by ny’s “reach” to new customers and new suppliers, who may
being a low-cost producer of a good or a service even be on different continents. Airline companies now
• Differentiation—competing with other businesses have a direct channel to consumers and business customers,
by offering products or services that customers which means they don’t have to pay travel agents or online
 Chapter 1 • Managing IT in a Digital World 5

intermediaries to sell all of their tickets. Advertising via the MANAGING IT IN ORGANIZATIONS
Internet has also become increasingly common. Web sites
can be programmed to display screens using a different lan- Within organizations, supporting these new ways of com-
guage, different currency, and even perhaps local pricing, peting and new ways of working with computer systems
depending on the user’s browser location or selected pref- and networks is the responsibility of the information sys-
erences. Many businesses also buy, or sell, products using tems (IS) department. Although essentially all modern
Web-based auctions with suppliers or business customers organizations today are dependent on IT networks and
that they may never work with face-to-face. applications for processing transactions and managerial
decision-making support, not all organizations have the
same level of dependency on IT. Some organizations may
NEW WAYS TO WORK still use IT primarily for back-office support but rely heav-
Recent IT innovations in computer hardware, software, ily on person-to-person communications to operate their
and networks have also enabled people to work more pro- business; others may be heavily dependent on information
ductively as employees in an office—as well as working as systems up and running 24 ! 7 for all their business oper-
telecommuters at a site far from a home office, as members ations but don’t aggressively invest in newer technologies
of “virtual” teams, or even as “free agents” contracted by to enable newer strategies (Nolan and McFarlan, 2005).
organizations for a short-term period. Organizations also don’t always have the same level of IT
Sales personnel and other traveling managers have dependency over time. For example, a change in the
become telecommuters with portable computers and other organization’s business leadership may result in more
mobile equipment that give them access to company data aggressive IT investments.
anytime (24 hours a day, 7 days a week) and essentially any- Managing IT Resources
where with an Internet connection. Some cities have also ex-
perimented with laws that require businesses to support Today’s increased dependence on IT by businesses in many
telecommuting by implementing work schedules that require different industries also requires IT leaders who know how
less commuting—such as four days working in the office and to effectively plan for and manage the organization’s IT
one day working outside it—to help protect the environment. resources, as well as IT-savvy business leaders who can
Some new businesses might not even have a physical office envision strategic IT utilization (Ross et al., 1996; Weill and
building or headquarters. Instead, the company might operate Ross, 2009). In Figure 1.1, we introduce three types of IT
as a “virtual organization” made up of individual profession- resources, which we discuss in more detail below.
als scattered across different domestic or global locations.
Working as a member of a virtual team—that is, TECHNOLOGY INFRASTRUCTURE Managing technology
teams with members who are separated too far geographi- resources requires effective planning, building, and operat-
cally to work face-to-face—has also become increasingly ing of a computer and communications infrastructure—an
common. Team members may use software that supports information “utility”—so that managers and other employ-
online team meetings and document sharing as well as per- ees have the right information available as needed, anytime,
haps videoconferencing from an online computer or in
specially equipped videoconferencing rooms. Team lead- Technology Infrastructure
ers have learned to motivate workers and coordinate across Computer, software, and networks that enable
different time zones at different work sites on different an organization to conduct business and share
continents. information across organizational units as well as
Individuals with specialized skills may also choose business partners
to work independently as free agents who contract out Human Resources
their services without being a permanent employee of any IT professionals and managers who have the needed
organization. Organizations may locate and hire free mix of technology, business, and interpersonal
agents (from a Web site such as guru.com) to take advan- skills to plan for, design, and manage the other
tage of time zone differences for designing slideshows, IT resources
Web site development, telemarketing, or other specialized Business/IT Relationships
skills that are temporarily needed for a specific project or Established relationships between business and
only needed periodically. By using free agents, companies IT workers to ensure that the other IT resources are
also avoid having to make a long-term commitment to an aligned with business needs
employee for salary and expensive benefits (such as health
care insurance). FIGURE 1.1 Three Types of IT Resources
6 Chapter 1 • Managing IT in a Digital World

anywhere. Just like cell phone users expect to be able to workers in marketing, accounting, manufacturing, and other
send and receive calls without being “dropped” by the net- business functions, as well as knowledge of an industry
work, computer users expect computers to be up and run- (e.g., financial services or healthcare). IT professionals who
ning, and networks to be available and fast, so that they can have a business education, as well as technical skills, are
access software applications and data quickly and easily. therefore especially in demand for these types of roles.
Organizations with high operational dependence on IT sys- Business-facing positions such as these are also most effec-
tems are so dependent on IT that if an information system tively sourced by internal employees—not by employees of
fails for a minute or more, or online response time exceeds an outsourcing firm or by temporary external personnel.
a few seconds, employees can’t get their work done. When In the United States today, there are growing con-
customer transactions can’t be processed, and suppliers cerns about whether the supply of new college and univer-
can’t receive orders for materials, business revenues suffer. sity graduates with IT-related majors will be lower than the
In a widely read but poorly titled article (called “IT demand for entry-level, domestic IT workers. Although
Doesn’t Matter”) published in the Harvard Business companies in developed countries such as the United States
Review a few years ago, the author argued that the primary have increasingly been utilizing IT workers in less devel-
IT management role today is to manage the costs and vul- oped countries to take advantage of lower labor costs for
nerabilities of the computing “utility”—the data centers and software programming tasks in particular, IT professionals
networks that provide access to business data and applica- are still critically needed to perform important “in-house”
tions (Carr, 2003). However, while this is a critical IT man- IT roles. (These will be discussed further in Chapter 13.)
agement role, sometimes outsourced to IT vendors, it is not
the only one. Managing IT also requires identifying what BUSINESS/IT RELATIONSHIPS The importance of this
new technologies to invest in and how to specifically tailor type of IT resource was first brought to light in the mid-
these new IT solutions to improve the way a specific com- 1990s as packaged software systems and the Internet were
pany does business. Effective management of the technolo- catalysts for an increase in new IT investments (Ross et al.,
gy asset therefore requires not only skilled IT managers and 1996). How well an organization uses joint IT-business
IT professionals—the human resources asset—but also decision making for making investments in a firm’s tech-
active participation by business managers as captured by nology assets is so critical today that there needs to be a
the third IT asset: the business/IT relationship asset. “blending” or “fusion” of IT and the business (see the box
“Fusing IT and the Business”). Achieving business value
HUMAN RESOURCES Managing the people resources for from IT investments requires aligned goals for strong
any business function requires attention to recruiting, devel- working partnerships between business managers and IT
oping, and retaining the best talent available. Today there is managers (Brown, 2004) to develop the business case for
a high demand not just for IT personnel with specialized investing in new IT solutions and skill sets, for specifying
technology skills but also for personnel who have both tech- the business requirements that will be used to design new
nology skills coupled with business knowledge and interper- IT applications, and for effectively implementing these
sonal skills. Business analyst and systems analyst roles new IT solutions so that the potential benefits become
require personnel who can understand the IT needs of realized benefits.

Fusing IT and the Business

When Terry Pearce was an IT manager at a large financial services company several decades ago, he
found that the business managers who refused to help the IT managers understand what new informa-
tion systems they actually needed were the managers who ended up with the least successful IT projects.
Their projects were delayed and more expensive than planned. He concluded that it wasn’t intentional.
Rather, the business managers just couldn’t appreciate why their involvement was important; they saw IT
as merely a tool—not as integral to their business. But to succeed in today’s digital economy, senior busi-
ness managers in companies dependent on information need to be “IT-savvy.” When IT is the basis for a
company’s competitive capabilities, business managers need to be confident in their abilities to build their
company’s IT capabilities into a strategic asset.
[Based on Pottruck and Pearce, 2000; Weill and Ross, 2009]
 Chapter 1 • Managing IT in a Digital World 7

CEO or
President

Business Business Business

Unit #1 Unit #2 Unit #3 CIO

Corporate
VP (IT) Applications
VP (IT) VP (IT) Enterprise Planning and Systems
Retirement
Individual Group Payroll Architecture Finance Operations
Services
HR

FIGURE 1.2 Typical Example of IS Organization Chart for a Large Company with Multiple Business Units

IT Leadership Roles
(indicated by the solid lines) as well as a “matrix” reporting
Many organizations today have created an officer-level relationship to the general managers of the business units
position for the senior IT executive in the organization: the they support (indicated by the dotted lines). This dual
chief information officer (CIO). Although in other organi- reporting relationship helps ensure that the IS department’s
zations, the senior IT leader may not be formally designated resources are well aligned with the business; it is one
as a CIO, all of today’s IT leaders are all expected to work approach to establishing and maintaining a strong
closely with other senior managers to keep the company’s business/IT relationship.
IT resources aligned with the goals of the business. Senior Other important new roles for IT managers have also
IT leaders may report directly to a president or CEO or may emerged. For example, some companies have created a
report to another officer in the company—such as a chief chief security officer (CSO) position to plan for and moni-
financial officer (CFO) or chief operating officer (COO). tor compliance with new federal laws and reporting
CIOs and other senior IT leaders come from a vari- requirements and to ensure that appropriate investments are
ety of backgrounds. Some managers are chosen to lead the made in technologies and procedures to manage IT security
IT organization because of their in-depth technical knowl- risks. Other new roles at the middle-management level help
edge, but others may be chosen because of their abilities to ensure that contracts with key outsourcing suppliers have
work well with senior business leaders, not because of successful outcomes (Willcocks and Griffiths, 2010).
their technical know-how. Senior business managers also play IT leadership
A typical organization chart for an IS department in a roles by serving on committees that approve and priori-
large company that has multiple business units is shown tize new IT investments and by sponsoring IT invest-
in Figure 1.2. Reporting to this CIO are IT managers ments for their business areas. Other business managers
responsible for system operations (data centers and may serve as business process experts on IT project
networks), technology and financial planning for the teams to select, design, and implement software pack-
IS department, designing and building the company’s ages. All of these business manager roles are critical
IT architecture, and acquiring and maintaining software because business leaders are the most knowledgeable
applications. The latter includes IT managers over corpo- about what changes in work processes will be needed to
rate applications (payroll and HR functions) as well as three achieve the greatest business benefits from a new IT solu-
IT vice presidents who are responsible for acquiring and tion. Business managers can also best anticipate what
maintaining applications for the company’s three business operational obstacles might be encountered when imple-
units. Unlike the other IT managers, these three vice menting a new software application and actions that can
presidents have a direct reporting relationship to the CIO be taken to avoid them.
8 Chapter 1 • Managing IT in a Digital World

THE TOPICS AND ORGANIZATION systems thinking concepts and design methods that
OF THIS TEXTBOOK are common across the systems development
methodologies described in the subsequent chapters.
The primary objective of this textbook is to increase your Chapter 9 discusses in detail both traditional and
knowledge about IT management so that as a manager you newer methodologies for custom application devel-
can effectively invest in and utilize new and old informa- opment. Although the primary focus is on custom
tion technologies. The remaining chapters of this textbook software engineering by IT professionals, user appli-
have been grouped into four distinct parts, as described cation development methods are also discussed.
below. At the end of each part, we provide several full- Chapter 10 focuses on the selection, design, and
length case studies that were primarily written by the au- implementation of purchased software packages,
thors specifically for this textbook. Although some of the and Chapter 11 presents effective practices for man-
organization names are camouflaged, all of these cases are aging IT projects in general. Special project manage-
based on real-world practices and events. ment challenges addressed here include managing
IT projects—including managing IT project risks
Part I. Chapters 2, 3, and 4 on computer systems, net-
and implementing business change as part of an
works, and data present fundamental technology con-
IT project.
cepts and major IT industry developments. As will be
described, business managers are frequently the desig- Part IV. Chapters 12, 13, and 14 focus on how to
nated “owners” of systems projects and organizational effectively plan and manage an organization’s
data sets (e.g., customer data, product data). Both IT IT assets. Chapter 12 focuses on the strategic IT
and business managers therefore share responsibilities planning of information resources from a portfolio
for ensuring data quality and appropriate security lev- perspective. Chapter 13 describes today’s IS leader-
els. Readers who have already studied the technolo- ship roles and responsibilities in detail, including
gies described in Part 1 will benefit from the summary alternative IS governance designs and effective
discussions, industry updates, as well as the sections IT outsourcing practices. Chapter 14 focuses on
on newer technology developments such as Web information security practices, including managerial
services, WiMAX networks, and cloud computing. practices to help ensure IT security at multiple levels
and IT-related compliance with federal laws and
Part II. Chapters 5, 6, and 7 provide in-depth
other regulations.
descriptions of three different categories of software
applications used by today’s organizations. Chapter The final chapter in this textbook, Chapter 15,
5 focuses on enterprise systems, including supply- addresses issues that extend beyond an organiza-
chain system applications that link a company with tional setting: social, ethical, and legal issues from
its customers or suppliers, as well as back-office the perspective of individuals and societies.
systems for financial reporting and managing the Included here are the importance of maintaining the
company’s human resources. Chapter 6 describes privacy of personal information and reducing vul-
different types of managerial support systems, which nerabilities to identity theft crimes. Also discussed
include applications to support daily operational are some “unintended” social impacts of today’s
decision making as well as strategic decision making digital technologies as well as some examples of
using sophisticated analytical toolsets. Chapter 7 IT-related ethical dilemmas faced by managers and
focuses on systems that leverage the Internet, computer users.
including business-to-business (B2B) and business- As our seventh edition of this textbook is prepared for
to-consumer (B2C) applications, as well as Web publication, we authors take pride in having witnessed the
sites that play intermediary roles (such as search first decades of a digital age that holds great opportunities
engines). Successful e-business examples of both for those in developed countries as well as governments,
traditional and dot-com companies provide useful organizations, and individuals in developing and emerging
models for how companies in different industries can countries across the globe. Yet all of us—in our roles as
leverage the Internet to compete in a digital world. managers, IT specialists, consumers, and world citizens—
Part III. The four chapters in Part III describe meth- need to remain vigilant about not only how to effectively
ods and techniques for developing and implementing design and use IT but also how to fulfill our social and
applications and managing IT projects, based environmental responsibilities for the appropriate usage of
on today’s “best practices.” Chapter 8 introduces today’s and tomorrow’s information technologies.
 Chapter 1 • Managing IT in a Digital World 9

Review Questions
1. Define what is encompassed in the term information 6. What kind of a business might choose to have low levels of
technology. dependence on IT?
2. What are some of the ways that IT has become “pervasive”? 7. What three types of IT resources need to be managed well?
3. What kinds of portable IT help employees work more effi- 8. What are some examples of newer IT manager roles, and
ciently and effectively? What may interfere with productivity? why are they needed today?
4. What kinds of IT can help support teams when team mem- 9. For what reasons might an IT manager have a reporting
bers work at different locations? relationship with a CIO as well as with a senior business
5. How have some businesses used the Internet to compete manager?
based on low cost, product/service differentiation, or both?

Discussion Questions
1. Provide an example of how a business function with which could be an effective design. What are some ways that the
you are familiar (e.g., sales, marketing, finance, operations/ organization could use IT to help them effectively run their
production, accounting, human resources) utilizes IT for oper- business?
ational and/or strategic purposes. 5. Would you like to work as a free agent? Why or why not?
2. Describe some ways that you personally use information 6. Using the Internet, identify what is meant by the term digital
technologies differently than you did just a few years ago. divide. What actions do you think could be taken to lessen this
3. Some organizations purposefully select a CIO that has strong divide—both within your own country and elsewhere in the
business management backgrounds, not just technical experi- world?
ence. Under what organizational circumstances do you think 7. Identify some Web sites for publications that could be useful
this might be an effective choice? supplementary resources for studying some of the IT topics
4. Describe a new business for which you think a “virtual in this textbook.
organization”—which has no physical office or headquarters—

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