We've identified the key trends that are poised to impact the IT landscape in 2021. Although senior managers need to ensure that IT spending and initiatives are aligned with and further the company’s strategy and goals, such decisions are best made with input from both business unit and IT executives. Leaving such decisions in the hands of the IT department means that IT executives set the priorities for what are in fact important business issues—or, just as troubling, they try to deliver on every project a business manager claims is important. Perhaps the complaint we hear most frequently from the executives—most of them CEOs, COOs, CFOs, or other high-ranking officers—is that they haven’t realized much business value from the high-priced technology they have installed. It is up to senior managers to decide how much they are willing to spend for various features and services. Such systems help airlines make complex decisions concerning scheduling, pricing, equipment configuration, and routing that directly affect profitability. Although they can be useful, they're not equal to reality. To save this item to your list of favorite InformationWeek content so you can find it later in your Profile page, click the "Save It" button next to the item. Then the chief scientist looked at our lab results from the previous week's experiment and noticed that we skipped the error calculations. They should meet regularly with IT personnel, arrange training for users, and work with the IT department to establish clear metrics for determining the initiative’s success. Cap the time spent on the decision. The most important thing to remember when faced with an important decision is to determine what type of impact the decision … J&J’s management had to decide how to reconcile the growing need to act as a unified company with its historical preference for business unit autonomy. -- Use models, pilots and proof of concepts to improve the signal/noise ratio. As you collect information, you will probably identify several possible paths … So J&J broke with tradition and instituted corporate, rather than business unit, funding for the implementation of a standardized workstation with a standardized interface to J&J corporate systems and data. Clearly, not all of them are equally important. Recent enhancements will optimize the scheduling of routes and help UPS’s business customers get paid faster once their goods are delivered. Copyright © 2020 Harvard Business School Publishing. Choose It! Does that mean IT plays a more important role at FedEx? We have to evaluate tangible and intangible criteria such as risk, capex, opex, TCO, ROI, strategic value, business outcome, competitive advantage, fit in the current environment, institutional memory, customer perception, future IT trends and sustainability. Telephone companies that allow on-line payment of bills render vulnerable the records of customers’ telephone calls. The aptitude to make decisions is a leadership trait, which portrays your ability to think … The first three have to do with strategy; the second three relate to execution. Management teams in every company, whether centralized or decentralized, must constantly assess the balance between companywide and business-unit IT capabilities. A mental model is a framework or theory that helps to explain why the world works the way it does. The three-year, $1 billion project would provide every employee with constant updates on the status of any flight or customer. Decision-making can be defined as the process of selecting a right and effective course of action from two or more alternatives for the purpose of achieving a desired result. And my IT people—although they work hard—don’t seem to understand the very real business problems I face.”. It features a firewall different from the type most organizations use to limit external access to their internal systems. Decision-making is such a seamless brain process that we’re usually unaware of it — until our choice results in unexpected consequences. But Delta knew it couldn’t address all of its technology needs at once. When it comes to business organizations, decision making is a habit and a process as well. In a decision-making proces… 2. The committee, whose members include the COO, the CIO, and the heads of the business units, meets every two months. If you found this interesting or useful, please use the links to the services below to share it with other readers. IT spending can be designed to meet immediate needs and allow for an array of future benefits only if IT and business goals are clearly defined. Both companies report spending around $1 billion on IT each year, but FedEx, which has annual revenues of about $20 billion, is just two-thirds the size of UPS. So how can we improve the IT decision-making process? The simple act of deciding supports the notion … Similarly, Gtech Corporation, the company that runs the majority of the world’s government-sponsored lotteries, cannot compromise on response time. How many times do we prioritize our IT projects and services based on "objective" scores while all the numbers are well within one standard deviation of one another? If we can just get the dollar amount right, the thinking goes, the other IT issues will take care of themselves. Investment banks do not debate how much data they can afford to lose if a trading system crashes; 100% recovery is a requirement. -- Be aware of biases such as anchoring, availability heuristics and loss aversion. In fact, new systems alone have no value; value derives from new or redesigned business processes. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Characteristics such as reliability, responsiveness, and data accessibility come at a cost. Don’t make all decisions by yourself. This advice might be cliché, but it's still good advice. As business technology has advanced exponentially in recent years, data-driven decision making … -- While delaying the decision is an option, understand the associated costs and risks. Not surprisingly, the typical outcome of such large, undirected projects is millions of dollars spent chasing elusive benefits. For every patient they see, the physicians are supposed to enter electronically, in a standard format, all diagnosis and treatment information so that the system can highlight key facts for physicians examining the patient in the future. InformationWeek is part of the Informa Tech Division of Informa PLC. Decision-making is the essence of management. Over time, J&J has continued to shift IT capabilities from the business units to centralized systems. Take our own organization, MIT. You’re making decision after decision all the time, and it can really start to wear on you. Top executives often feel uncomfortable making hard choices about information technology. ]. Several years before, the airline had outsourced its corporate IT function, which prompted individual business units, unhappy with the service they were receiving, to create their own IT capabilities. When making a decision, we form opinions and choose actions via mental processes which are influenced by biases, reason, emotions, and memories. -- Understand the long-term value and cost. -- Spend time uncovering the hidden costs and risks (ambiguity effect). Conversely, the analysis might reveal that the company is underestimating its risk of downtime and has not sufficiently protected itself against it. Edited by: Chris Preimesberger, eWEEK | July 15, 2020 eWEEK DATA POINTS: No one could have foreseen what … We usually make decisions within a group of business and IT experts who come from various areas and share little common ground or knowledge. Given the potential headaches of managing IT, it is tempting to hand the job over to someone else. -- Don't decouple authority from accountability. As your business continues to grow, if decision-making … There is no exception about that. Where’s the payback? The most immediate function an IT business analytics solution can provide is to describe the current state of an organization and its projects descriptively yet succinctly. 1/4/2021, Jessica Davis, Senior Editor, Enterprise Apps, But although it provides greater protection, MIT’s nonstandard approach means that the institute cannot install most commercial software packages for applications such as course registration and student accounting. These capabilities allow an IT team to answer any number of “what questions,” e.g. Depending on the company’s culture, either they insist on standardizing everything to keep costs low or, recognizing the importance of business unit autonomy, they grant exceptions to corporate standards to any business unit manager who raises a stink. Service providers, with their standard offerings and detailed contracts, provided IT capabilities that weren’t flexible enough to meet changing requirements, and they often seemed slow to respond to problems. Therefore, corporate decision-making is the most critical process in any organization. Since testing the different options -- implementing them and waiting a few years to see the results – isn't feasible, we use models instead. One question—for example, “At what gate will my plane arrive?”—could conceivably generate 17 different answers, depending on which system an employee checked. Those benefits grew out of UPS’s decision to make significant and consistent investments in a system that, before long, outgrew its original purpose. -- Avoid analysis paralysis. And when it comes to new information technologies, often the only deep expert in a room is a biased vendor. Indeed, companies often hired outside providers because they were dissatisfied with the performance of their own IT departments—but that dissatisfaction was primarily the result of their own lack of involvement. Regional or business unit level to reality they are spending too much—or perhaps even too little initiatives. 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