SOLUTIONS MANUAL IT Strategy & Innovation 5/E James McKeen
CHAPTER 1 OVERVIEW
Chapter one introduces us to the value, or in many cases, the “perceived” value of Information
Technology (IT). Any good IT director knows and understands the value that IT brings to their
organization, however, frequently business leaders view IT as a cost center. As a result, you will
often see CEO’s and Finance leaders looking for ways to reduce IT expense, not realizing the
full value of IT and what these reductions might ultimately do to the business in the long run.
What is value? There are five layers of value:
1. Identifying what value an IT organization/initiative is trying to deliver. A clear
prerequisite to any value delivery is ensuring everyone involved with an IT initiative
agrees on this.
2. Where one looks for IT value. At a senior management level, typical value drivers such
as cost savings or revenue tend not to be visible at lower levels of the organization.
Failure to consider the value implications of technology at each level can lead to a value
proposition that is counterproductive in some parts of an organization and which may not
deliver the value that is anticipated.
3. Agreeing on who will be responsible for value delivery. It is the interaction of people,
processes and technology that delivers value, not IT alone. Therefore, IT and business
should share this responsibility.
4. Time. Many technology initiatives become successful only when the business adapts and
eliminates complexities, complementary technologies are added, the business learns to
leverage new capabilities, and/or network effects are created. Time can also change
perceptions of value.
5. How value is delivered. Decisions made at this level about cost, technologies, and
delivery mechanisms can significantly affect the value IT can deliver to an organization if
these factors are not included in value discussions.
Perceptions of value:
• IT leaders need to realize that the actions of their department will influence perceived
value.
• The perceptions of value affect expectations of IT and stakeholder behavior which can
impact the quality of the business-IT partnership.
• Perception also influences efficient use of IT resources and often creates higher
expectations of IT resulting in reduced impressions of value.
• Often perception of IT is negative which is not the fault of IT. For example, the business
may set unrealistic expectations on installing new projects when there are simply not
enough IT resources to pull this off. Background issues like IT compliance are often
overlooked by business leaders, yet this must be at the forefront of IT’s attention, as does
older technologies that need to be replaced.
, • “Silver bullet thinking” by business leaders can often harm IT perception because IT
cannot always deliver something that is going to fix a business problem.
• When business leaders believe IT will fix their problem and do not, the perception of IT
value goes down.
When value goes down:
• Articulate IT value to the business leaders.
• Tell your IT story, demonstrate IT’s understanding of business goals and strategies.
• Show how IT can contribute at multiple levels by moving from IT strategy to specific
contributions.
• Provide a convincing business narrative and use appropriate metrics.
• Talk about the business, not IT, and relate technology to overall business objectives.
• Tailor impacts to stakeholders and groups using business language and terms.
• Explain the importance (why to care, the “so what?”), be specific (what) and articulate
the business engagement expected (how), demonstrating the value results (outcomes).
• Clearly demonstrate how IT strategy is aligned with the business strategy and match IT
investments to these strategies.
• Engage both IT and businesspeople at multiple levels, talking about business needs--not
the technology.
In conclusion, IT experiences many challenges in delivering IT value to the business. Delivering
this value requires people, processes and technology, a strong commitment over time in
addressing multiple stakeholder needs. It also requires an ongoing commitment to leveraging
value, often in unanticipated ways, over time. Different audiences may perceive different types
of value depending on their expectations of IT and their most recent pain points. Given all this, it
is no wonder that IT experiences many challenges in delivering business value with technology.
The best business value from technology comes when business strategy is clearly articulated and
when business and IT work collaboratively to deliver it.
, CHAPTER 1 REVIEW QUESTIONS
1. What are the five layers of IT value?
#1 identifying what value an IT organization/initiative is trying to deliver.
#2 is where one looks for IT value.
#3 is agreeing on who will be responsible for value delivery.
#4. the fourth layer is time.
#5 is how value is delivered.
2. Which perceived measures of IT value most strongly correlate to objective measures of
its value?
IT’s overall perceptual measures at this level correlate most strongly with more objective
measures of IT value. Things like 100% uptime, laptops and desktops for the most part working
properly, networks running well, and most importantly new need of the company implemented in
a timely manner and with no issues. If IT fails at these (and other perceived needs), they fall into
a distrust syndrome which is hard to climb back out of.
3. What business needs must IT meet before it can participate in strategic business
decision-making?
IT competence is the big thing. Only once IT competence has been achieved and IT does
what it says it will do, will its ideas be listened to. When it achieves this basic need (by upper
management), IT must then demonstrate that it understands the business and can develop trusted
relationships. Then, and only then can IT deliver the higher levels of value that come from
transformation, innovation, and creativity; and only then will it be invited to participate in
strategic business decision-making.
, 4. Describe how context affects IT value?
The value IT is allowed to deliver can depend on what is happening in the business. IT is an
enabler and has more impact on performance in growing industries and less in weaker or
shrinking ones. As a result, in context IT has more impact on performance in growing industries
as opposed to weaker or shrinking industries.
5. What is "silver bullet thinking"?
This thinking assumes that one can “just plug in technology and value will be delivered”.
One case study found that implementing transformative technology is just part of the effort
needed to deliver value; the majority of the work involves adapting and streamlining processes
and challenging cultural assumptions. If companies think that IT is the cure for any of their
business problems, they will most likely fail, blame and distrust IT, and then we get back to
question 3 which will never come to fruition because of the failures and distrust of IT, which is
often brought on by this silver bullet thinking.
6. How does technical debt inhibit IT value delivery?
There are several significant risks arising from technical debt, including: difficulty
innovating, slowed IT productivity, inhibited performance, reliability and security, and reduced
customer satisfaction. This real problem for IT is compounded by business' lack of interest in
dealing with it because addressing it does not deliver any short-term benefits.
7. What are the two most important approaches IT should adopt to best describe its
value to the business?
