Part 3: Lecture 6a - Maturity of the firm & IT Engagement Flashcards
Explain the definition ‘Resources’ within an enterprise.
Resources are ‘things’ like hardware, software licenses, people, data, etc.
• A firm owns (or has access to) certain amounts of resources
• Of interest (RBV-theory) are VRIN resources (Valuable, Rare, In-imitatable, Non-substitutable)
• “you may count how many resources a firm has”
Explain the definition ‘Competence’ within an enterprise.
Competence = the ability to use the resources
• Having sufficient knowledge and skills (and resources) to do a task
• Competence is another word for an individual’s know-how or skill
• Relevant question for competence is “Who knows how?” and “How well do they know?”
• “you may count how many competences a firm has”
Explain the definition ‘Capability’ within an enterprise.
Capability = capacity * ability
• Capacity = how much does a firm have; ability = a person that can do it
• Capability is a feature or a process that can be developed or improved.
• The relevant question for capability is “how can we get done what we need to get done?” and “How easily is it to access, deploy or apply the competencies we need?”
• “you may count how many capabilities a firm has”
• Counting capabilities may be regarded as assessing “Business processes”
What is the famous maturity model?
CMM: Capability Maturity Model for software development
What are the 5 stages of the maturity model?
Stage 1: Business Silos Stage 2: Standardized technology Stage 3: Optimized core Stage 4: Business modularity Stage 5: Dynamic venturing
Explain the role of the department/division in stage 1.
Divisions / departments: responsible for their own ways of working and accountable for own results
Explain the role of the IT in stage 1.
Role of IT: Automate specific business processes. Business managers decide business process design
Explain the focus of IT investment in stage 1.
Focus of IT investments: delivering solutions for local business problems and opportunities. Justification is local business case, usually cost reduction
Explain the architecture in stage 1.
Silos and spaghetti architecture: high design debt.
Explain the value of EA in stage 1.
- Focus on creating insight & oversight in portfolio of applications and portfolio of IT competences
- Support the learning, reuse and co-development of systems
What are the behavioral guidelines in stage 1?
- Respect the total accountability of the divisions
* Help divisions to create success
Explain stage 2 (Standardized technology).
In this stage, the CIO comes in. They try to link the applications and data.
• Objective: decrease the number of platforms to be managed
o Reduce risk and costs of shared services, improves reliability, security and development time.
o Key management issue: management of technology standards
• Result: fewer choices for IT-solutions. Acceptable trade-off.
What are the benefits of stage 2?
- Lower cost
- Easier technical integration
- Basis for future co-development
Explain the IT organization of stage 2.
- Creation of the corporate CIO-role
- Centralized
- Selection & knowledge of technology platforms
- Definition of infrastructure is extended
• Local
- Focus remains on automating local business processes
- But: shift from functionality to cost- effectiveness and reliability
What is the misunderstanding in stage 2?
Business implicitly assume that “shared systems = shared info”. Business (top) management in stage 2 tends to be confused on the “technology platform” versus the “actual business implementation”
Explain stage 3 (Optimized core/the digital firm)
From local data and applications to enterprise wide systems and enterprise wide data.
What is the strategic role of IT in stage 3?
Strategic role of IT:
- Facilitate achievement of enterprise objectives
- By building reusable data and business process platforms
What is the challenge, condition and choices of stage 3?
• Challenge: convince local business managers to hand over control of process design.
• Condition: team work of senior IT and business managers
• Choices: which data and which process platforms should be shared?
- The choice is which data en process platform can we share in our organization to reduce the diversity between business units.
What are the benefits in stage 3?
Benefits: • Higher profitability • Faster time to maker • Higher ROI It investments • Better access to shared customer data • Lower risk of mission-critical system failure • 25% lower IT costs