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viduals and teams are highly dependent on the company situations and have to
be developed uniquely for every company. Nevertheless, the table in Exhibit 6.6
gives a good perspective on what is required.


NEW INFORMATION ECONOMICS PRACTICES
The New Information Economics is a set of coordinated practices base on prin-
ciples and integrated activities that effectively connect business and IT manage-
ment processes and, thereby, connect the enterprise™s business strategies to its
IT initiatives and activities. NIE is a complete view of the required relationships
between business units and IT, based on the overriding principle that all enter-
prise activities and resources must support the enterprise™s strategies and impact
its bottom line. This requires a consistent, integrated set of practices for plan-
ning, innovating, prioritizing, aligning and allocating resources, and managing
100 ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION


EXHIBIT 6.6 Management™s Role in the Value Chain
Deliverable Senior Business Technology Value Chain
Name Leadership Team Leadership Team
Leadership Process Owner
Team (IT Impact
Management)
1 Business Approve and Revise and review Create initial
Strategic strategic intentions
weight draft strategic
Intentions strategic intentions
intentions (strawman)
2 Assessed Review Assess portfolios/ Contribute to portfolio Manage
Portfolios development
alignment, service, portfolio
quality development
Assess portfolio/
Strategic Planning Cycle




technology Manage the
assessment
process
3 Strategic IT Approve Develop IT Agenda Participate in IT Create the
Agenda for Agenda process initial drafts
Use of IT (strawman)
4 Strategic IT Review Review IT Plan Develop IT Plan Create the
Plan initial drafts
(strawman)
5 IT Strategic Review Develop Participate in IT Drive the
Requirements Requirements requirements process process
Prioritization
Recommend
decisions
6 Review, Create project Form detailed Assure that
Projects approve requirements and projects and technical project
business cases requirements
large formation works
projects right
7 Annual Make Prioritization Establish annual Drive the
Project Plan process
decisions or project plan and
Recommend
schedules
approve funding
funding
Annual/Tactical Planning Cycle




8 Annual Approve Review IT plans Advise Assure this
Business Plan happens
Establish business
unit plans
9 Annual Approve Review Develop IT plans Assure this
Establish budgets happens
IT Plan
10 Annual and Approve Develop budgets Participate in budget Create initial
Capital planning draft (strawman)
Projects
Budgets
11 Annual Lights- Review Review Develop budget Create initial
On Budget draft (strawman)
Initiate plans
12 Performance Approve Establish business Establish IT Assure this
Measurement performance metrics happens
performance
Metrics metrics Create initial
drafts (straw-
man)




performance across the enterprise. This also requires attention to the manage-
ment culture that can inhibit the adoption of NIE practices.
In practical terms, as we noted earlier, companies have existing, though pos-
sibly disconnected, management processes that deal with IT planning and budgets.
These existing processes deal with plans, resource decisions, and operationalizing
101
New Information Economics Practices


those plans through budgets and metrics. We propose to connect those existing
processes, define the appropriate deliverables, and make them effective in pro-
ducing business impact (IT™s contributions to profitability, and in the case of
government and nonprofit, impact on the organization™s mission). We do so by
applying the five basic NIE practices, defining the information to be produced
(e.g., the annual project plan), and embedding them in the company™s processes.
With the right goals in mind, and mindful of the management culture needed
to support the NIE practices, the result is that the company processes that deal
with plans, resources, and operationalizing will produce the outcomes that result
in the right IT actions and the right business results. Management will be able
to answer the affordability and alignment questions posed in Chapter 1, lead-
ing to controlling IT spending and improving IT™s bottom-line impact.

New Information Economics Practices in the Value Chain
New Information Economics is a set of five practices, shown in Exhibit 6.7, that
are tools for IT and business managers to use, embedded in management processes,
in translating a company™s business strategies into programs and initiatives that


EXHIBIT 6.7 Practices in the Value Chain
1: Demand/Supply Planning
3: Prioritization
4: Alignment
5: Performance
5: Measurement
2: Innovation

Plans: Establish Business Requirements
and IT Solutions based on business strategy IT
Actions
Business Resource Decisions: Justify and prioritize Programs ”
Strategies and Projects based on business strategy Business
Results
Operationalizing: Establish Budgets, Plans,
and Metrics based on business strategy
Portfolio Management
IT Impact Management
Culture Management


Supporting Practices



IT can implement. The table in Exhibit 6.8 shows where the five NIE practices
apply with respect to the information (deliverable) in the Value Chain.
The five practices are defined briefly below.

NIE Practice 1: Strategic Demand/Supply Planning
Goal: IT planning is explicitly driven by business strategies and business require-
ments. It is all too easy for IT planning to focus on technology matters rather
102 ADOPT EFFECTIVE PROCESS TO PRODUCE ACTION


EXHIBIT 6.8 NIE Practices in the Value Chain
Strategy-to-Bottom-Line Value Chain
Deliverable Name Deliverable Description NIE Practice
1 Business Strategic Demand/Supply Planning
Mission plus weighted
Intentions Innovation
Strategic Intentions
2 Assessed Portfolios Alignment
As-is alignment, service,
Strategic Planning




Performance Measurement
quality, technology, use
3 Strategic IT Agenda for Demand/Supply Planning
Strategic Intentions to
the Use of IT Strategic Initiatives
4 Strategic IT Plan Demand/Supply Planning
Strategic Intentions to
Innovation
Strategic Initiatives
5 IT Strategic Demand/Supply Planning
Initiatives ” 3 to 5 years
Requirements Prioritization
horizon ”portfolio format

6 Projects Real, doable projects

7 Annual Project Plan Prioritization
One year annual horizon ”
with portfolio format
Annual/Tactical Planning




8 Annual Business Plan Documentation according
to company practices
9 Annual IT Plan Documentation according
to company practices
10 Annual and Capital Alignment, Prioritization
Documentation according
Projects Budgets to company practices
11 Annual Lights-On Budget Alignment
Documentation according
to company practices
12 Performance Performance Measurement
Documentation according
Measurement Metrics to company practices




than strategic business matters. Planning that is not business-strategy-driven
means that IT plans respond and connect to individual business unit tactical
needs rather than the business strategy, and by extension, the senior manage-
ment team will not believe that IT is connected to strategy. As a result, the com-
pany cannot be certain it is able to proceed from their business strategies to the
necessary IT actions.
IT strategic plans are constructed with two distinct components:

1. A description of the demand for IT services, generated by the business
strategies and goals, and articulated as strategic IT requirements,
2. A description of the future supply of IT services, represented by the IT
strategic agenda.

In this way the strategic plan clearly separates the requirements for IT, driven
by the business strategies, from IT™s response to those requirements. Separating
these components allows business management to see in specific terms the
demands that their strategies are placing on IT, while allowing a clear “matching”
of IT™s responses to those demands. We explicitly answer the questions: What
are the strategic demands on IT, and what is IT going to strategically supply?
103
New Information Economics Practices


Management Process ”Desired Business”Desired Outcomes
Outcomes
Strategic IT and business planning are fully The company improves strategic and
Demand/Supply connected and integrated. bottom-line impact from its IT
Planning investments.




NIE Practice 2: Innovation
Goal: Effectively translate new IT opportunities into competitive advantage and
bottom-line results.
IT has an important role and responsibility to bring innovative opportuni-
ties to the business that can shape new products, services, and processes. In this
way, IT™s role includes responding to current requirements and influencing
future requirements. Without a concerted effort on innovation, IT will only sup-
port existing business operational requirements, particularly those for its major
user organizations. Innovation always gets squeezed when operational needs are
most clearly in view.

Management Process ”Desired Business”Desired Outcomes
Outcomes
Innovation IT-enabled innovations impact The company continually improves
business planning and offer new products, processes, and bottom-line
strategies. performance through IT innovations.




NIE Practice 3: Prioritization
Goal: Spending priorities are primarily determined by business strategies. As the
Prioritization Practice description in Chapter 8 discusses, in the absence of a
strategy-based prioritization practice, priorities will be set by politics, the loud-
est voices, or historical practices. The result is that new investments will be
determined not by business strategies but by tactical needs. As a result, IT
resources are probably not being invested in the right places.

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