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19 August 2009 • 7:00 am With the voices in the debate over U.S. health care reform becoming even more shrill, and opponents decrying the prospective loss of free-market competition in the health care industry, I’ve been thinking a bit on the topic of monopolies.
In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it, according to the late economist Milton Friedman. We generally think of monopolies as a bad thing; monopolists gain pricing power that enables exploitation of consumers. But the provision of goods and services in a capitalist economy is actually accomplished by a blend of free-market players and monopolies, as it must be. Some monopolies are necessary, and even good.
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7 July 2009 • 7:00 am Does your enterprise have a single, all-encompassing budget for information technology spending? If so, I’d like to share with you an argument for an alternative approach to IT budgeting that I developed a few years ago.
Instead of one overall IT budget, imagine putting all IT expenditures into two buckets, mandated and discretionary. Mandated spending “keeps the lights on” to operate the business into the foreseeable future “as is,” without making strategic changes. Discretionary spending is simply how the enterprise chooses to invest to change its technology capabilities.
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2 July 2009 • 7:00 am Our prior consideration of the Strategy-Focused IT Organization and strategy map design intersect today as I present a framework for developing strategy for the IT organization. Please note the considerable distinction between IT strategy and IT organization strategy; the former generally refers to the intent of an enterprise with respect to technology and enterprise information architectures, standards, approaches to sourcing decisions, technology site design and redundancy, etc. These are important considerations about the deployment of technology in the enterprise. But IT organization strategy is about the management, composition, direction, and evolution of the IT organization (hence, ITO) itself.
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23 June 2009 • 7:30 am In the 20 years that I have been a management consultant, I’ve seen over a hundred IT organizations (ITOs) up close. Although I have come to see the ITO as a strategic asset to the organization, unfortunately, more often than not, the ITO has been seen as a liability by the most members of the parent enterprise. In the diversity of ITOs that I have seen, I observed that ITOs seem to evolve through a series of stages until their value to the parent enterprise is fully mature (first described in an article I wrote in 2001). The maturity model was based on my observations about the different change agenda I saw in different ITOs. In short, ITOs are either Defensive, Reactive, Responsive, or Strategy-Focused.
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15 June 2009 • 11:11 am In the previous post, we considered the first two of the four domains of desired change in IT organizations that was introduced in my 2001 article in Harvard Business School’s Balanced Scorecard Report. Satisfactory performance in the domains of Cost and Quality is merely hygienic and expected of every competent IT organization. Cost and Quality are the primary domains for desired change in traditional IT organizations. But in those enterprises where IT is essential to the value proposition (e.g. firms born during the “dot-com” era), IT leaders focus more on the agility of the IT organization and infrastructure, and their ability to innovate with technology on behalf of the parent firm. Here, we examine these domains a bit more closely.
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14 June 2009 • 1:42 pm In 2001, I developed a model for organizing the change agenda for IT organizations that was published in Harvard Business School’s Balanced Scorecard Report. The model arose from observations of the many IT organizations with whom I had been consulting, and described four broad domains of desired change in IT organizations: Cost, Quality, Agility, and Innovation. I had observed that in older, more traditional IT organizations, the main concern of IT leaders was to lower (or at least manage) costs, and to improve quality. By contrast, in those enterprises where IT was essential to the value proposition (e.g. firms born during the “dot-com” era), IT leaders tended to focus more on the agility of the IT organization and infrastructure, and their ability to innovate with technology on behalf of the parent firm.
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5 June 2009 • 10:34 am In earlier posts, we considered the first two of three principles of aligning IT with business strategy:
and
Today, we build on these ideas to form Principle III.
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3 June 2009 • 4:14 pm A story in today’s New York Times portrays Aneesh Chopra, the recently confirmed Chief Technology Officer of the United States. I am impressed by the weight of the job title alone: CTO of the entire country. Hmmm. The position was created by President Obama in fulfillment of a campaign promise. So how does Mr. Chopra, the former Secretary of Technology for the State of Virginia, describe his job?
Mr. Chopra says that his top goal is economic development using government policy to create jobs and business around technology. “My job is to serve as the innovation platform champion in addressing private market opportunities in support of public priorities.”
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28 May 2009 • 11:46 am As was asserted in a previous post, the first principle of aligning IT with enterprise strategy states that strategy execution cannot be accomplished without information technology. This principle has powerful implications for the way IT is managed inside most enterprises.
Business unit (BU) managers(*) understand that their success depends on information technology, both in terms of day-to-day operations (keeping the business running) and long-term success (changing the business to achieve strategy, as described in Principle I). They know that if IT fails, the business fails. Thanks to the steady drumbeat of technology innovation, members of the IT vendor community are delighted to describe how an investment in new this technology will undoubtedly improve performance in a variety of ways: operational reliability and efficiency, improved customer service, access to new customers and markets, etc. Hardware improvements quickly obsolete past investments; try to imagine convincing an executive in your firm to use a five year old laptop. The promise of new technology, as small as a new PDA or as big as a new enterprise-wide software solution is always high on their lists of needs.
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22 May 2009 • 7:41 pm An overview of the history of information technology in organizations shows that at one time, decisions about IT spending were simple cost-benefit calculations made to reduce labor. Things are very different today.
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