In “IT Governance: Stop the Pendulum,” Doug Lewis argues that the IT governance structure falls into one of three categories; centralized, decentralized and hybrid and that the appropriate IT governance structure really depends on the overall strategy of the individual firm. Lewis finds that companies often switch back and forth between centralized and decentralized IT organizational models, but are often unsatisfied with both. Each restructuring or return to centralized/decentralized brings change in informational leadership, disruption to the company and large productivity losses. Despite restructuring and developing a new governance model filled with the promises of new value, the new model frequently fails because leadership fails to consider the fit between the governance model and the overall strategy and structure of the company. Both the centralized and decentralized models contain strengths and weaknesses. A centralized IT organization is efficient and able to run stable and repetitive global operations. However, don’t expect a centralized IT structure to respond to local requirements quickly or with flexibility. In comparison, decentralized governance models are well-aligned to strategies that require responsiveness and flexibility to local requirements. However, don’t expect a decentralized model to respond well to standardization or cost-effectiveness. Finally, Lewis recommends the hybrid governance model- which applies a centralized model to centralize processes that need economies of scale and don’t require agility. As expected, it will decentralize functions that need to be responsive to market conditions and business unit strategies and are specific to business unit groups. Lewis argues that in order for the hybrid model to be successful, a governance document is required that will outline the working relationships between individuals, applications and networks; describe how to handle disputes; and provide orientation on the day to day tasks in IT business.
When Lewis’ model is compared general business knowledge, it appears that his analysis is not a groundbreaking suggestion. As with any individual business unit in a corporation, the individual business unit’s structural model and strategy needs to be aligned with the firm’s overall business strategy in the global business environment. For example, human resources strategies need to be aligned with the firm’s overall business strategy. What Lewis falls short of suggesting is that the firm’s IT governance model should coincide with the firm’s global business model. It seems appropriate that there are similarities between different IT governance structures and different global business strategies. Therefore, it would be worth exploring whether a multinational enterprise who requires local responsiveness and flexibility would be better off with a decentralized IT governance which can develop platforms flexible enough for local customization A hybrid could be best used in a global enterprise to centralize/standardize functions to obtain economies of scale while keeping other functions local to reinforce flexibility.
Question for Monday’s Discussion: Is Business Intelligence Applicable for Small to Medium Size Business Owners
As I read “The Brain Behind the Big, Bad Burger and Other Tales of Business Intelligence” and “Business Intelligence: Not Just for Bosses Anymore,” I noticed that there was little discussion on how business intelligence can be beneficial to small or medium-sized privately owned businesses. In “The Brain Behind the Big, Bad Burger and Other Tales of Business Intelligence,” the benefits of business intelligence were demonstrated in the fast-food industry for large fast food restaurants such as Hardees, Wendy’s, and Ruby Tuesday’s where the use of business intelligence to promote operational excellency is the difference between success and bankruptcy. In “Business Intelligence: Not Just for Bosses Anymore,” the new application of business intelligence for companies such as Hillman Group, Avnet, and Quaker Chemical were explained along with their relative success. While the use of business intelligence was beneficial to an extent for these three companies, it is important to remember that Hillman, Avnet and Quaker Chemical are relatively large companies who are publicly traded, have over a thousand employees, or a global presence. Neither article discusses or analyzes the benefits of business intelligence for the business owners of small to medium-sized companies who may be reading that article and pondering the application of business intelligence in their business. Would a business intelligence application or program be beneficial for the owner of a women’s clothing boutique that operates two different stores? Would the owner of a locally well respected family restaurant and bar benefit from a business intelligence system and would it differ from the systems used by Wendy’s, Hardee’s, and Baja Fresh? Would a business owner be able to use Business Intelligence to transition their handful of fast food restaurants to a growing regional chain?
My observations boil down to the following questions that I would like to be addressed in our Management information system’s class on Monday:
Do you think that Business Intelligence is a realistic application for small to medium sized businesses? If so, what requirements would the systems need to have to be beneficial for the business owner and how would the business intelligence systems for a small or medium sized firm differ from that used by a larger company?
In Etienne Wenger’s Communities of Practice: A Brief Introduction, Etienne Wenger introduced and overviewed the concept of communities of practice. Communities of practice are formed by people who engage in a process of collective learning in a shared domain of human endevator. The concept of “communities of practice” has been a useful perspective for those observing the lesson on knowing and learning. Learning can be the reason the community comes together or an incidental outcome of member’s interactions. The community of practice typically has a domain (shared common interest), the community (engaging in joint activities and discussions, help each other, and share information), and the practice (share a practice through a repertoire of resources). The community of practice can engage in problem solving, requesting information, seeking experience, reusing assets, coordination and synergy, discussing developments, documentation projects, visits, mapping knowledge and identifying gaps. The concept can be seen being applied in organizations, government, education, associations, social sector, international development and even the web. In short, one can find communities of practice everywhere. In this age of technology and wireless communication, communities of practice can easily develop in multiple mediums and quickly.
In this week’s case of Katzenbach partners, the consultancy firm already had a community of practice but needed to organize their information and knowledge in a new fashion since the knowledge that was being developed was not accessible to everyone and extremely disorganized. In order to understand what needed to change in their practice of knowledge keeping, the knowledge management teamed observed the common patterns of knowledge management in the firm and then identified goals that they wanted to incorporate into HUB+. The consultancy firm observed that they wanted a highly interpersonal knowledge management system that reflected their current style, flexibility, openness, rule agnostic, intuitive and personal system. By developing an intuitive system with an interactive interface, support roles and responsibilities and new project life cycle management standards, Katzenbach partners was able to re-mold their community of practice into an internet experience that reflect the growing and changing dynamics of their firm. The case, when combined with Wegner’s article on community of practice, demonstrated that knowledge management needs to adapt and change to conform to a growing community of practice that has new demands and challenges ahead.
In “The Rise of Crowdsourcing,” Wired Magazine examines and celebrates the growing ability of companies to use distributed labor networks to exploit the power of multiple contributors and create efficient and low-cost solutions. This is not necessarily something that has happened very recently. We see companies engaging in crowdsourcing everywhere we look. Wikipedia engages in crowdsourcing by having enthusiasts both create and monitor the content of individual entries for the online encyclopedia. Other companies that use crowdsourcing are E-Bay and Amazon. These companies use the internet and our highly connected world to harness solutions, content or ideas created by hobbyists, enthusiasts, or even spectators. The article shows how this potential has been captured from media companies like VH1 to pharmaceutical manufacturer Eli Lilly.
The article mainly focuses on the benefits and future possibilities of crowdsourcing. Crowdsourcing has enabled companies to slow the rising costs of R&D and offered individuals the opportunity to engage in new ventures through an unconventional course and collaborative process. Now tasks that cost thousands of dollars for companies to outsource can be completed for literally five bucks by an enthusiast or hobbyist.
While Wired’s contributing editor, Howe, and the interviewee suggest that this opportunity is an amazing opportunity with a promising future, Howe overlooks the existence of an equitable relationship and various legal implications that are attached to crowdsourcing and can create liability for the company and harm the independent contractor. In any business relationship, there are legal issues that exist regarding equity and fairness. While companies are able to achieve minimal costs for previously expensive services through crowdsourcing, how can we ensure that the relationship and payment system set up are truly equitable to the business and independent contractor? For example, using Innocentive, Ed Melcarek was able to solve a problem that stumped in-house researchers at Colgate-Palmolive involving the injection of fluoride powder into a toothpaste tub. Melcarek provided a very simple solution to Colgate-Palmolive and was given $25,000 for his efforts. While this payment may seem generous, does the $ 25,000 payment really represent the value of the solution for Colgate-Palmolive. Additionally, what are there Intellectual Property rights at issue here? Can Colgate patent this technology that Melcarek happily provided and is Melcarek aware of his rights?
Amazon’s Mechanical Turk
In another example, Sunny Gupta from iConclude was able to solve a recent problem using Mechanical Turk. For the service the Turkers provided, Gupta usually had to pay 2,000 dollars. However, using Amazon’s Mechanical Turk, Gupta was able to hire a Turker who fixed the solution for only five dollars. While this may seem a steal for this company, it still remains a question if the Turker’s abilities were being taken advantage of through such a bargain-bin price. Are these Turkers really just jolly hobbyists happy to lend their services for such a low price or are they recently laid off employees looking for any opportunity to make end’s meet? With these crowdsourcing initiatives, Wired’s article fails to caution companies and individuals on the legal implications and fairness of crowdsourcing.
Upon further research, it appears that I am not the only concerned with the legal implications of crowdsourcing. In “Look Before You Leap: Legal Pitfalls of Crowdsourcing,” Stephen M. Wolfson considers key five legal issues that the crowdsourcing community needs to discuss to form the practice and future policy. Wolfson finds that legal implication of crowdsourcing exist in employment law, patent inventorship, data security and Federal Trade Commission, copyright issues, and securities regulation of crowdfunding. Wolfson recommends that if a company engages in crowdsourcing, it needs to mindful of the law, define relationships in advance, and be open and honest with crowdworkers.
So if you considering crowdsourcing or are concerned about your current crowdsourcing, I will leave you with the advice my marketing professor gave me. When considering the ethical implications or legal liability of a venture, always ask yourself how you would appear to the public if you were being interviewed by Andy Rooney on 60 minutes. If it would sound wrong on 60 minutes, chances are its not an ethical or legal practice.
In the introduction to Christensen’s Seeing Whats Next, Christensen explores the idea and application of theories of disruptive innovation to predict industry change. Christensen’s main point in the introduction is that instead of focusing on the forecasting techniques used by analysts and financial firm, companies can predict the future by using an “‘outside-in’ analysis of how innovation will change an industry” that will help will help in making decisions or recommendations to a company based on the industry’s future.
The introduction focuses on explaining the core concepts behind disruptive innovation theory. In short, disruptive innovation theory holds that “existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But established companies almost always lose to attackers armed with disruptive innovations” (3). Unlike sustaining innovations, disruptive innovations introduce a new value proposition that create new markets or reshape existing markets. There are two types of disruptive innovations – low end disruptive innovation and new market disruptive innovation. Low end disruptive innovation occurs when existing products are overpriced relative to the value existing customers can use. New Market occurs when charactersitics of existing products limit the number of potential consumers or force consumption to take place in a standard setting. Christensen’s introduction then explores the resources, process and values theory that reinforces why existing companies have a hard time combatting disruptive innovations and the value chain evolution theory to explain how companies intergrate to improve what is good enough.
What I really want to focus on is the overall theory of disruptive innovation. Christensen analyzed all of these theories through the scope of the telecommunications industry. However, I believe that there is a disruptive innovation taking place right now in cable television and video streaming that is relevant to Christensen’s analysis in Seeing What’s Next. Last night, at our typical Sunday family dinner, my sister and I were comparing our cable bills. Like every time that we have the discussion, my sister returned to encouraging me to discard my Comcast digital cable and instead embrace the power of video streaming through my Sony Google TV. My sister’s argued that it was time to get rid of cable television since 1. It cost way too much 2. the fixed package offered way too many channels 3. There never seemed to be anything good on the 200 channels provided. Instead, she suggested that by paying a $10 membership to video streaming content websites such as HULU and Netflix, I gained superior value since for a low price I could gain access to an unlimited amount of television shows and movies that were customized to my preferences and available to me 24/7. When I suggested that I would then miss out on my news channels like BBC, CNN, FOX, and MSNBC, she provided a strong rebuttal that most of those networks already provided live content on their websites that I could access through my IPAD. Therefore, I would be able to access the television shows and movies that I liked without having to pay a hefty, ridiculous fixed cable bill.
My discussion with my sister reminded me of the theory of disruptive innovation. Video streaming websites such as Hulu and Netflix appear to be reshaping the market of wireless and mobile users by offering a new value proposition that offers an innovation that offers a low-end solution to the overpriced and fixed cable television offerings that force consumption to take place in an inconvenient, impractical and centralized cable packages. Therefore, these companies offer new access to television or movies that for the past decade required a hefty cable bill and access to OnDemand. Additionally, in comparison, cable companies such as Comcast and Verizon have an extensive amount of fixed infrastructure and hardware that prevent it from offering the more customized and lower priced innovations that Hulu and Netflix provide. Additionally, Netflix and Hulu are now even offering original content on their streaming memberships to compete against cable companies. The rise of Netflix and Hulu along with the proliferation of mobile and wireless tablets, phones and even televisions raises the question: what will happen to cable television?
This week’s case analysis was “Google, Inc.” by Benjamin Edelman and Thomas R. Eisenmann. The article related to this week’s topic of “Enterprise Applications.” “Google, Inc.” focused on the rise of Google, the apparent lack of symmetry in their product development, and the course of future product development in Google. The article thoughtfully outlined Google’s start as a search engine featuring paid listings to the company’s game-changing improvements to search engines and advertising. Additionally, the article delved into Google’s organization including the corporation’s values, philosophy and core business. The article also discussed the conflicts in Google’s existing product line and the forays Google has made into new areas of technology (Youtube & content hosting, productivity applications, etc). Finally, the article briefly mentioned Google’s approach to public policy and clashes with well-known competitors. However, despite this level of detail, the article main question was, “So what next, Google?”
Due to Google’s power and presence in technology, the options are virtually limitles. On one hand, Google can continue to focus on optimizing their superior search engine and developing their targeted advertising. Or Google could expand into a full portal, develop their Checkout function, etc. No matter what, Google’s CEO Eric Schmidt explains that whatever they develop must remain “consistent with the mission of the company…we’re in the business of making all the world’s information accessible and useful.” (Edelman & Eisenmann, 13).
However, as with any action, there will be an equal and opposite reaction. As Google continues to develop products that reflect their business of making the world’s information accessible and useful, public policy relating to copyrights, patents, and the realm of personal privacy become relevant and highly combative topics. One of Google’s latest products, Google Wallet, has recently been suspended due to discovered flaws that allow individuals to use stolen cards through the transaction system. (Ray, 2012) Google’s suspension prevents new customers from signing up, but also damages consumer confidence in the system and the protection of their privacy. NFC World has recently criticized Google for launching the product before working out all of the issues related to the payment process. (Ray, 2012).
Together, these recent events demonstrate that no matter where Google tries to expand their business to next, they will undoubtedly have to manage the natural conflict created from the business of making all the world’s information accessible and useful.
Ray, B. (2012, February 13). Google lock Wallets- no new customers for now. Retrieved February 13, 2012, from The Register: http://theregister.co.uk
In the article “What IT can learn from the railroad business,” Tom L. Barnett compares the IT industry to the train industry and suggests that if Information Technology continues to focus on their role of “information technologists” instead of their ability to deliver value as “business enablers” the industry will be in a weak position to combat change in technology and the business world. Just as the train companies became practically obsolete due to their focus on their product and ignoring their intrinsic value, IT can become obsolete or unnecessary if they do not focus on their role as a business enabler. Therefore, IT companies must constantly ask and analyze their own intrinsic value through the service that they provide.
The article reminded me of the overwhelming fear mongering that occurred after Google Scholar announced that their search engine would now include Legal journals and opinions. Suddenly, observers questioned the future existence and relevance of paid for legal research services such as Westlaw and LexisNexus. However, Westlaw and LexusNexus’ superb strategy suggest that the value of a free search service will not overcome the intrinsic value of paid search engines such as Westlaw and Lexis Nexus. Westlaw and LexisNexus market their products as services which can save law firms, governmental institutions, and non-profit organizations a large amount of time and therefore money. Unlike Google, Westlaw and LexisNexus allow a customer to customize and tailor their searches to fit specific geographic regions, areas of law or resources with ease that enable the attorney to pinpoint the relative resource with little effort. Therefore, the attorney is able to use a smaller amount of billable hours on research and passes on a lower cost to their client. Finally, both search engines allow law firms to customize their research package to fit the needs of a small law firm, large firm, government department or non-profit organization. Using the lessons learned from the train companies, IT companies such as LexusNexus and Westlaw have continued to remain highly relevant in the legal field despite the free service that Google Scholar now offers.