Strategic Information Technology Management

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Strategic Information

Technology Management

37E00200

Tomi Dahlberg, Ph.D., Professor, University of Turku, Executive in residence, Aalto University School of Business

Timo Saarinen, Ph.D., Professor, Vice dean, Aalto University School of Business Elena Mazurova, Ph.D. student, Aalto University School of Business

Fall 2017

Lecture 11

customers, personnel, etc. with an idea application, does this imply that innovations are considered from open innovations approach? (Open innovation means that innovativeness is considered as an feature of human beings and that both internal and external people are encouraged to participate (co-create) to innovations. Closed innovations mean that innovations are considered to be created by specialized persons, e.g. r&d department, internal to the enterprise

2.  In what kind industries – if there are any differences between industries – is

the role of the CIO and the IT function significant in innovations

management? What other factors could impact CIO’s and the IT function’s role in this issue?

3.  What could the CIO of the Media Plc. be in innovation management

3. The use of IT to support and enable innovations

ü 

IT is used in to ways in innovation contexts

–  Innovation process management (IPM) software is used to support and enable innovation process

•  According to the IT barometer less than ¼ of enterprises appear to use sophisticated IPM software of which Idea systems are most used •  The “stage gate” model of innovation process where ideas pass

decision gates was touched briefly during lecture 9. ü 

IT (business technology) is the source of innovations

–  Multiple skills need to synchronized to manage innovations successfully •  According to my (=td) experience and survey results the deployment of

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Integration of Innovation process and IT

especially software (SW) development:

(1) SW is not included in synchronization

R&D

Sales and marketing Production and logistics Services

Product/service development program

Full Market penetration Ramp-up

Planning of the

program Synchronization points

R&D

Sales and marketing Production and logistics Services

Product/service development program

Full Market penetration Ramp-up

Planning of the

program Synchronization points Software production

Integration in only synchronization points is usually not enough to steer and manage SW production due to slowness and need of more control points

Integration of Innovation process and IT

especially software (SW) development: (2)

SW included in synchronization ->

Intensified synchronization need

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Phases of innovations and IT

development prior to market launch

(Linear / interpretative) prototype, iterative, agile models – objective to increase speed, to reduce risk through versioning and to make business and IT professionals to work together

Traditional waterfall model

Needs definition (use case) Technical definition Coding Application And integration testing Preparation of SW launch Business needs to evaluate and accept each phase and for that reason checking at synchronization points alone is insufficient for integration to happen Time required for SW development is often underestimated

Differences between the fuzzy front-end

and systematic implementation –

tools are different

ü  Fuzzy front-end: ease of use, high

availability, networking

ü  Systematics and protection of business

sensitive information increases with time: Functional features which help to guide and manage innovation process

Systematics, managed changes Openness, Continuous changes Fuzzy front-end Systematic implementation Time Iterative model Interpretative model Waterfall model

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Use IT to support innovations - the value

proposition of innovation process

management (IPM) systems

ü 

Value proposition

–  Today 2-10 % of innovations are successful in terms of industrialization and commercialization (Source: Jörn Bang Andersen, advisor of the Nordic Council)

–  This proportion can be increased with small investments and improvements which add the use of systematics and methods. Typical areas are idea management and innovation process support <-> IPM systems ü 

Recent trends in idea and innovations management

–  Open innovation approach (Henry Chesborough, 2003), “social network creativity”, ”Know who management”, ”Innovation ecosystems”

–  ”Architecture of participation”, O’Reilly

–  The Striz method (”solution to any human problem has already been discovered – find and apply it”)

Best-of-Breed and platform

approaches to Innovation Process

Management (IPM) software

Internal users / innovation process

Innovation portal Intranet Customers partners WWW Extranet Innovation portal Creativity e.g. mind map Idea- management Project and portfolio management Document management Group work

support Information _Search Reporting

Email office CRM ERP DB… Product and requirements management

Infrastructure, applications and data

Best-of-breed approach means that each module Is acquired separately and that lack of integration is accepted as the ”cost” of superior functionality

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Typical Innovation Process Management

modules / applications

ü 

Market information databanks, IPR/patent databanks –

Business intelligence

ü 

Creativity software – e.g. Mind Map software

ü 

Idea creation and idea management

ü 

NPD (New Product Development) process management; from

requirements management to product launch

ü 

Project Management (generic or bespoke to innovation

process)

ü 

Innovation portals, platforms and work rooms

–  Intranet and extranet links

–  Document storage and management –  Reporting

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IT as the source of Innovation - emerging technologies:

Electronic, Mobile and Ubiquitous Business

ü  Electronic business:

–  The use of electronic means to conduct an enterprise’s business internally and/or externally

ü  Mobile business:

–  The use of wireless electronic means to conduct an enterprise’s business internally and/or externally – subset of electronic business with different base technologies (in Europe mainly mobile phones/networks, mobile Internet)

ü  Electronic commerce:

–  Transacting, (selling, purchasing etc.) of products and services online via Internet and/or other telecommunications networks – subset of electronic business

ü  Mobile commerce:

–  Transacting, (selling, purchasing etc.) of products and services online with wireless terminals and via wireless telecommunications networks – subset of electronic commerce

ü  Ubiquitous business:

–  The use of electronic and wireless always on technologies (electronic and mobile) to conduct an enterprise’s business internally and/or externally

ü  Challenges to IT governance and business-IT alignment

–  Not only business-IT, but business-business, IT-IT, business-IT-HR-… -> digital strategy –  Emerging technologies may not provide value immediately

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IT as the source of Innovation - emerging technologies:

Social Media, Cloud services, Bring Your Own Device/

Data (BYOD), Big Data,…

ü  Social media:

–  Innovations applying social media are dominated by marketing communications related innovations whereas other activities of enterprises have so far been less impacted

ü  BYOD and IT consumerization:

–  BYOD could at the same time mean the deployment of social media and cloud computing and is also called consumerization of IT. Most new IT services/applications are now first produced to consumer markets and then to enterprise markets. As IT’s role as the source of innovations has increased all the time this is an important aspect of innovation and IT management

ü  Cloud services:

–  Cloud services consists of hardware and software related services and are an important source of innovations as it offers new ways to provide IT services

ü  Big Data:

–  A large volume of data does not make it “big”. Rather complexity and controversy of data structures, data sources and speed of data creation are typical to big data

ü  And so on – robotics, artificial intelligence, Blockchain, machine learning, cocreation

ü  In summary, IT has been and is increasingly an integral aspect of innovations. This is

one of the reasons business executives need to involved in IT governance

Summary: CIO’s profession with an innovation twist

ü  There a few natural roles for the CIO and the IT function to support the

execution of the business and activities of an enterprise

–  CIO and the IT function as the strategist of the enterprise – IT is used to transform the strategy, business models and operative model of the enterprise (or it can block this)

–  CIO and the IT function as the architect of the enterprise – to deploy IT it is necessary to understand the business as a whole and in details

–  CIO and the IT function as the process developer of the enterprise – IT is involved in most if not all doings and tasks

–  CIO as the customer, vendor, etc. experience manager of the enterprise – most activities with customers, partners, vendors etc. are based on IT and impact their experience

–  CIO and the IT function as the managers of data and reporting – data reflects the activities of the enterprise and needs to be stored and managed to be useful for business users (who bear responsibility for its content)

–  CIO and the IT function as the innovation management officers (IMO) of the enterprise – IT is used to renew the products, services, processes of the enterprise with both disruptive and incremental innovations and also to enable the innovation process

ü  In my (=td) mind these are complementary, although a single CIO / IT function

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4. IT as enabler for innovative business and operative models

Dissolution of value chains

Porter’s classical value chain model for an enterprise

Support Activities

Primary Activities

Inbound

logistics Opera- tions Outbound logistics Marketing and sales After sales service Enterprise level infrastructure, Information technology Human resource management

Technology development Accounting and financing

Logistics Operations Sales Marke- _ting Customer _service

Value Chain

R & D Finance

Outsourcing Value Web / Network

Production Sales Service

Engi- neering Marketing Customer service $ $ Main market in country 2 (Outsourced) Internet in country 1

From value chains to value networks

Planning HR

Accounting and finance

Value chains started to change due Increased use of (out)sourcing IT has facilitated this development

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R & D Finance

Outsourcing Value Web / Network

Production Sales Service

Engi- neering Marketing Customer service $ $ Main market in country 2 (Outsourced) Internet in country 1

From value networks to multisided value platforms

Increased use of (out)sourcing IT has facilitated this development Together with specialization

Complicated network relationships may lead to a more robust platform type network, where the roles of network parties are better defined

Multisided platforms business models could be

describes with Osterwalder & Pigneur Canvas

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Or with the CSOFT Business Model Canvas,

Or with the Canvanizer tool kit

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Summary – How to succeed in

innovations with IT

1.  IT is able to support and enable the innovation process of an enterprise with either best of

breed applications or an integration platform. If an open innovation approach is applied the use of IT will provide more value

2.  At least for incremental innovations it is possible to link data from legacy applications such

as logistics applications (e.g. bill of material data), HR application (e.g. cost of labor) etc. to budget models

3.  Innovation processes consist of the fuzzy front end (idea creation) and more systematic

development phase. IT can be used to support both types of activities. The ease of use of IT during the fuzzy front end more important than during the development phase 4.  IT is an integral part of most innovations, often even the main source. During the

innovation process several skills need to integrated and synchronized. IT intensifies the need of synchronization

5.  IT intensive innovations impact several strategic choices within the operational model of an

enterprise. These include technology decisions, marketing decisions, logistics decisions, financial decisions and diffusion and timing decisions

Strategic Information Technology Management