Six IT Decisions Your IT People Shouldn't Make”, Jeanne W. Ross and Peter Weill, Harvard Business Review, January 2002, Product # R0211F

1. Six IT decisions IT
people should not take...
ISM-6155 Enterprise Information
Systems Management.
University of South Florida.
Presentation by:
Tanaya Bose
Kaustav Chaudhury

2. How to understand IT?
Top executives are unable to understand the business values of
the high priced technology they have installed for their
organization.
Companies are paying lots for IT but they are unable to utilize it.
● Is my understanding well enough?
● Where is the payback from the IT investment towards state of the
art technologies?
● Whenever senior managers assign responsibility for critical
decisions to IT executives, disaster often ensues. Why?

3. Ok!... So what are those decisions?
To help avoid IT disasters and generate values the authors
suggested 6 decisions that the seniors managers should
take instead of the IT executives.
● 3 strategic decisions
● 3 executive decisions

4. 1. How much should we spend on IT?
● Managers should weigh strategic
role that IT will play in the
organization and then establish
company wide funding level to
give green signal!
● “Happy surprises” often result in
total return on IT investment
greater than sum of the ROIs of
individual projects
● UNDIRECTED
PROJECTS/VERSATILE
PROJECTS often lead to spend
millions chasing elusive benefits.
United Parcel Service and FedEx :
● UPS: emphasis on -- -- standardized IT
environment ,consistency and reliability,
relatively low cost
● FedEx : emphasis on -- -- flexibility,
localized innovation, varied customers’
needs

5. ● Managers should play
active role in ranking IT
projects based on
significance and benefit
returned.
● choose between the
projects that will have a
significant impact on the
company’s success and
those that provide some
benefits but aren’t essential.
● Hershey Foods’ : too many IT projects :
missed deadline to deliver candies in 1999
halloween season
● Contrast to this “Delta Airlines” in house
IT department initiated in 1997. $1 billion
dollar project started to design “Delta
Nervous System (DNS)”. They did not work
on a simultaneous revenue
building system given its business and
resource limitations.
2. Which business processes should receive our IT dollars?

6. Lets Outsource our IT!
But will it be wise?
● Main IT capabilities in-house, while selective outsourcing is the best
approach.
● These decisions better left to the IT unit, based on their capabilities.

7. ● Senior managers should
decide which ones to merge
and which are the ones that
should remain separate.
● Depending on the company’s
culture, either standardize
everything to keep costs low
or recognizing the
importance of business unit
autonomy.
● Johnson & Johnson: global consumer
and health care company: For almost
100 years, J&J enjoyed success as a
decentralized organization.
● Multiple salespersons, invoices, and
shipments that resulted from doing
business through 200 units.
● Hence Global Data Definitions were
formulated by Senior managers.
● Like UPS they realized that shared
infrastructures sometimes do not meet
the needs of new, smaller businesses.
3. Which IT capabilities need to be companywide?

8. ● Senior managers to decide how
much they are willing to spend for
various features and services.
● Business managers should then, in
consultation with IT managers,
determine the appropriate level of
service at a price they can afford.
● Although Better is always best
choice, providing Cadillac service
when a Buick will do – is not right
always.
● Gtech Corporation: Govt. sponsored
lottery cannot compromise on
response times since penalty as
high as $10,000/min issued.
● Dow Corning On the other hand
brief downtime in ERP systems
does not stop entire production or
lose customer orders. Hence
negotiation in accepting the system
can be done. So in 1999 they opted
for a disaster recovery environment
for such situations.
4. How good do our IT services really need to be?

9. ● Security, like reliability and
responsiveness, is a feature of
IT systems.
● Increasing security involves not
only higher costs but also
greater inconvenience.
● It is up to senior managers to
assess the balance between
customer convenience and
privacy.
● MITs non-standard firewall approach
means that the institute cannot install
most commercial software packages for
applications such as course registration
and student accounting.
● Yale University’s admission status can be
checked using DOB+SSN. This allowed
Princeton University official to check the
status of same competing students.
These trade offs need to be weighed
accordingly by the senior managers.
5. What security and privacy risks will we accept?

10. ● Failed initiatives lead to finger
pointing.IT efforts fail to
generate the intended business
benefits
● New systems alone have no
value; value derives from new or
redesigned business processes.
● Regular meeting, arrange training
sessions, establish clear metrics,
PROVIDE REAL BUSINESS
VALUE
● Sustained commitment:
Longitudinal Medical Record
system, 1998 at Partners
HealthCare: practicing physicians
in management roles- they must
use the system, provide constant
feedback, and encourage
colleagues to sign on to the
project (to make its use
widespread.)
6. Whom do we blame if an IT initiative fails?

12. Final point
Best decisions are
made with input from
both business unit
and IT executives.

13. “Coming together is a beginning.
Keeping together is progress.
Working together is success."
- Henry Ford

14. Thanks!
Any questions?