it strategy challenges

Winning with Information Technology in the Network Era

Professor N. Venkat VenkatramanDavid J. McGrath Jr. Professor of Management

October 19, 2009

Discussion Overview

2©2009: N. Venkatraman

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IT is everywhere

© 2009: N. Venkatraman 3


And could influence even more in the future….


And change the geography of work

(c) Venkatraman, 2009

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Live

Work

Play

Learn

Connect

Innovate

Consume

Transact


Why am I so bullish on IT?


Take the three I.T. ‘laws’ together..


The Scope of IT extends beyond processes


A working framework to understand the scope of IT

TechnologyDomain

BusinessDomain

ProcessProduct Service

Moore’sLaw

Metcalfe’sLaw

BandwidthLaw

Discussion Overview

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Focus of IT Strategy



Accelerated Pace of Innovation

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Sketching out the possibilities…

© 2009: N. VenkatramanIBM, 2005

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GM OnStar

http://www.onstar.com/


Business Implications:Auto Sector as a Case in Point

IT Strategy in the Auto Sector


Product Process Services

Bandwidth Law

Metcalfe’s Law

Moore’s Law Traditional business process focus in the auto sector

Automobile– “computers on wheels”


“Cost of electronicsin cars” (~20--50%)

Automobile– “computers on wheels”


Lines of Software Code

‘Black Box’

http://spectrum.ieee.org/feb09/7649

OnStar’s impact is broader than the core service domain


Microsoft’s Role in Automotive


http://www.microsoft.com/auto/default.mspx

Ford (and Microsoft): Sync


Business transformation underway…


Source: GM

http://fastlane.gmblogs.com/archives/2009/01/re-invent_the_automobile_help_transform_the_way_we_live.html

© 2009: N. Venkatraman

Management ideas for network era

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20th Century 21st Century


Computer industry [circa 1980]

Source: Bill Gates TestimonySource: Bill Gates Testimony


Computer industry [circa 2002]

Source: Bill Gates Testimony


We can apply the same logic in many sectors…..

Discussion Overview


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Value from IT Resources

Leadership Responsibility

StrategicFocus

Innovation

Implementation

Business IT/IS

CostCente

r

© 2009: N. Venkatraman

Cost Center

Focus Best in Class global IT infrastructure

Business Case Lowest delivered cost benchmarked against external referent; activities not directly connected to business strategy; but necessary to run the business

Organization Separate and distinct from business operations; much like a utility

Sourcing Best in class global sourcing partners and vendors

Performance Indicators Cost indices

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StrategicFocus

Innovation

Implementation

Business IT/IS

CostCente

r

ProfitCente

r


Profit Center

Focus Supporting current business operations

Business Case Contributions to customer value creation and delivery; achieving current profitability levels by supporting all aspects of the enterprise operations

Organization Embedded (and partnering) with business operations

Sourcing Selective use of best in class global sourcing partners and vendors

Performance Indicators Contributions to performance indices




StrategicFocus

Innovation

Implementation

Business IT/IS

CostCente

r

ProfitCente

r

Growth

Center


Growth CenterFocus Shaping future growth trajectories through new business

model innovationsBusiness Case Exploring different avenues for growth; examining the

transformational changes required to rebuild the business models

Organization Embedded (and partnering) with business operations;Shared business-IT responsibility for business model transformation

Sourcing Selective use of innovation networks

Performance Indicators Contributions to growth and transformation indices




StrategicFocus

Innovation

Implementation

Business IT/IS

CostCente

r

ProfitCente

r

Growth

Center

Investment

Center


Investment Center

Focus Influence future growth trajectories through selective experimentation

Business Case Allowing for experimentation of how IT could create and shape new business models

Organization Decoupled from current operations to give a sense of separate identity for pursuing new trajectories

Sourcing Selective use of innovation networks and partners

Performance Indicators Indices on exploring initiatives that shape business models


Managing their relative emphasis;and dynamic shifts


StrategicFocus

Innovation

Implementation

Business IT/IS

CostCente

r

ProfitCente

r

Growth

Center

Investment

Center


There are significant gaps in reality..

IT Capital for Innovation

IT Capital for Implementation

Today Desired

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IT competence for Innovation

IT competence for Implementation

Today Desired

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IT Sourcing for Innovation

IT Sourcing for Implementation

Today Desired

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IT Performance for Innovation

IT Performance for Implementation

Today Desired

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IT Mandate for Innovation

IT Mandate for Implementation

Today Desired

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Leadership challenges

• We say innovation… but we manage for implementation

• We say future… but we manage for today (and yesterday)

• We say business value.. But we get bogged down with IT costs

• We say shared business-IT responsibility but we blame IT for the problems


Winning with IT

Value creation for today & tomorrow

No business innovations without IT

“You”


So….in conclusion

• IT’s impact beyond traditional process domain• We are in the early stages of transformation with IT• Business models built on and with IT functionality• Business organizations architected with IT• Continuous balancing of innovation and

implementation• More diffused but coordinated responsibility for IT


Winning with IT:Can you make it happen?

Thanks very much….

it strategy challenges

Business

automobile

significant

computer industry

possibilities

wheels 2009

manage

sketching

winning