HC 2 ICTSM Today s economy is drive by Information & Services (slide 5) o Services are taking an ever increasing place in the economy o 84% of

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1 HC 2 ICTSM Tday s ecnmy is drive by Infrmatin & Services (slide 5) Services are taking an ever increasing place in the ecnmy 84% f ecnmic activity is based n services ICT/service paradx (slide 6-8) The effect f this grwth isn t being prprtinally translated int the prductivity data. Fr ICT vendrs fr example this is reflected in the revenues assciated with their services There is a slwdwn in prductivity and there is sme evidence that suggests that services industries play an imprtant rle in this slwdwn (slwdwn is greater in nn-gds prducing prtins f the ecnmy) Due t mismeasurement? it is very difficult t develp methds fr measuring the utput f different services. S an increasing prtin f utput is nt captured in the statistics There is n verall theme t measurement prblems in services industries. Each appears t be a special case, with specific measurement prblems unique t the unique characteristics f services industry utput. Business Services : wh shuld receive credit fr the prductivity gains recrded by the users f business services? business services are intermediate prducts, they have n implicatin fr the measurement f ecnmy wide prductivity, nly its distributin. Retail trade E-cmmerce: What des e cmmerce d t the prductivity f firms that adpt it? Hw des it affect internal business prcesses, and therefre prductivity? We may nt be measuring the decline in the csts f cmmunicatin well. Insurance: The utput may still be mismeasured, the industry s true prductivity grwth may be strnger than the available current data shws. A majr unreslved prblem in measuring the utput f insurance is the measurement and valuatin f risk. Banking: Current price banking utput is defined as the spread between brrwers and depsitrs interest rates, plus fees fr services that are explicitly priced. Medical care The secnd ecnmy (slide 9) After the industrial ecnmy (revlutin) Digitizatin! Physical jbs are disappearing Hw big is this secnd ecnmy? Labur prductivity (utput per hurs wrked) in the US has grwn at sme 2.5% à 3% annually frm which 65% à 100% is assigned t the digitizatin. dubles every 30 years; s if things cntinue, in 2025 the secnd ecnmy will be as large as the 1995 physical ecnmy. Prductivity increase f 2.5% means tw things: Or we prduce 2.5% mre gds, r the same gds can be prduced by 2.5% less peple. Less jbs (maybe n prblem fr the future: shrter wrkweeks, n jbs needed anymre, everything is being dne autmatically, )

2 Every 60 years r s, a bdy f technlgy cmes alng and ver several decades, transfrms the ecnmy. What used t be dne by humans is nw executed as a series f cnversatins amng remtely lcated servers. (RFID-tags, barding f a plain, ) S we can say that anther ecnmy a secnd ecnmy f all f these digitized business prcesses cnversing, executing, and triggering further actins is silently frming alngside the physical ecnmy. It isn t prducing anything tangible. When steam engine appeared, the ecnmy develped a muscular system in the frm f machine pwer. Nw it is develping a neural system metaphr ICT desn t seem t pay back (slide 10) Strassman The lack f crrelatin between infrmatin technlgy spending and prfitability is cntrary t advertised claims. It defies the cmmn belief that investing in electrnic prcessing f infrmatin smehw leads t lwer csts and results in cmpetitive advantage. Van Nievelt Van Eersel The mre yu invest in IT, the lwer the return n investment (ROI) Brynjlfssn: there is a clear psitive relatinship, but als a great deal f individual variatin in firms success with infrmatin technlgy. these 3 statements are f curse wrng! Only 2 dimensinal graphs, there are ther imprtant variables. Standish chas reprt results.. (slide 11) Still a lt f prjects fail (nightmare fr the managers) IT desn t matter (slide 12-15)

3 Tday, n ne wuld dispute that infrmatin technlgy has becme the backbne f the cmmerce. As IT's pwer and presence have expanded, cmpanies have cme t view it as a resurce even mre, critical t their success. Tday, CEO's talk ften abut the strategic value f IT and n hw they can use it as a cmpetitive edge (e.g. digitizatin f their business mdels). But, Carr says that all cre functins f IT have becme available and affrdable t everyne; and therefre, they are becming csts f ding business that must be paid by all but prvide distinctin t n ne. They became cmmdity inputs because their availability increased and their cst decreased. What Carr says is that rganizatins shuld treat infrmatin technlgy (IT) as a cmmdity in which it shuld attempt t keep csts t a minimum, minimize vulnerabilities, and avid risk-taking. By cmparing infrmatin technlgy t ther cmmditized industries like the railrads and electricity, Carr attempts t cnvince his audience f executive management and IT leaders that IT's rle within an rganizatin shuld nt be treated much differently than any ther cst it seeks t minimize. Carr believes that rganizatins shuld nt attempt t build cmpetitive advantage thrugh IT investment because advantages built with it are shrt-lived as the innvatin spreads thrugh the industry and becmes cmmditized. The nly advantage mst cmpanies can hpe t gain frm an infrastructural technlgy after its buildut is a cst advantage - and even that tends t be very hard t sustain. A resurce becmes essential t cmpetitin but incnsequential t strategy, the risks it creates becmes mre imprtant than the advantages it prvides. Fr example slide 13: yu nly ntice these csts when it desn t wrk. It was lng thught that ICT has n effect n prductivity. It als still is true that investing in innvative ICT is risky. Carr recmmends under thse circumstances t play it safe Tips frm Carr: SPEND LESS ON INFORMATION TECHNOLOGY CUT THE IT BUDGETS DO NOT INVEST IN ICT INNOVATIONS FOLLOW, DON T LEAD INVEST ONLY IF OTHER HAVE SUCCEEDED DELAY ICT INVESTMENTS, prices drp anyway FOCUS ON VULNERABILITIES, NOT OPPORTUNITIES REFOCUS ICT DISREGARD VENDOR s INNOVATIVE OFFERINGS Infrmatin/cmmunicatin versus technlgy (slide 16) Infrmatin is data that gets a meaning in a particular cntext The value is t add the crrect semantics Classical Infrmatin Management Framewrks (slide 17)

4 Business and IT dn t knw each ther but they shuld be aligned Strategic Alignment Mdel Strategic alignment between IT and business ccurs when IT is used t dynamically create and explit business pprtunities. It can be used t transfrm business prcesses and als t create business dislcatins in the market place. Prper alignment will allw an rganizatin t use infrmatin technlgy efficiently t achieve its business bjectives. Strategic fit between external (business strategy & I/T strategy) and internal (Organizatinal Prcesses & IT Infrastructure & Prcesses) Functinal Integratin between business and infrmatin technlgy 4 alignment perspectives: Strategic Executin : Business Strategy Organizatinal I & P I/S infrastructure Technlgy ptential: Business Strategy I/T strategy I/S infrastructure Cmpetitive ptential: I/T strategy Business Strategy Organizatinal I & P Service level: I/T strategy I/S infrastructure Organizatinal infrastructure The need fr infrmatin/ cmmunicatin (slide 18-19)

5 Data analysis = mre data will nt result int mre knwledge. Having lts f infrmatin technlgy des nt mean we have lts f infrmatin Cmmunicatin is needed between business and IT IT service Management Frum ITIL (slide 20) Service Management : management f the agreed service t meet the custmers requirements ITIL : infrmatin technlgy infrastructure library (pen surce) Ensure that IT services are aligned t the needs f custmers and users (measurable) Imprve availability and stability f services Imprve cmmunicatin within IT and with users Imprve efficiency f internal prcesses Service Supprt: prcesses that prvide supprt fr day-t-day peratin f IT services Service Delivery: prcesses that fcus n lng-term planning and imprvement f IT services these 2 are linked tgether thrugh the Service Desk ICT/S services are in the middle between business and technlgy The need fr structure (slide 21) Structure is needed between internal and external prcesses Services versus Technlgy/Resurces (slide 23) SERVICE = A MEANINGFUL BUNDLE OF ASSESTS/TECHNOLOGY/RESOURCES SATISFYING A PREDEFINED SERVICE CONTRACT!! (deze definitie past hij drheen heel de cursus te; heeft hij vaak in de les benadrukt! ;)) Slide 25: Service rent: sustained added-value fr services

6 Service Level Agreements: (SLA) is a part f a standardized service cntract where a service is frmally defined. Particular aspects f the service scpe, quality, respnsibilities are agreed between the service prvider and the service user. A cmmn feature f an SLA is a cntracted delivery time Cnstraint Degrees in Cntracts (slide 27) {INV and PRE}SERVICE{POST and INV} A service needs precnditin as input + generates a pst cnditin as utput (+ Invariants) Services vs prcesses (slide 28 29) E.g. Ordering prcess cnsists ut f 4 business services. Precnditins are specified. Services cannt be decmpsed in subservices Characteristics f Services (slide 32) Intangibility: Services cannt be seen, tasted, felt, heard, r smelled befre purchase Hetergeneity: Quality f services depends n wh prvides them and when, where and hw Inseparability: Services cannt be separated frm their prviders Perishability: Services cannt be stred fr later sale r use A Service Management Framewrk (slide 33-43)

7 Mtivatin: Mst fcus has been put n Business-ICT Alignment n the Strategy level. This paper fcuses n the Operatinal layer f the framewrk. Gal: Intrductin f an analytical methdlgy fr Operatinal Alignment based n Activity-Based Csting (ABC). Activity-based csting (ABC) is a csting methdlgy that identifies activities in an rganizatin and assigns the cst f each activity with resurces t all prducts and services accrding t the actual cnsumptin by each. This mdel assigns mre indirect csts (verhead) int direct csts cmpared t cnventinal csting. SLA s are fundamental t ensure prper alignment between dimensins f Maes framewrk.