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In Chapter 12, we talked about developing a vision for the IS role in the organization, which determines IT
architecture planning and other strategic IT investments. In this chapter, we focus on the management
activities that IS leaders need to conduct to achieve the IS organization’s vision and provide value to the
business. IS leaders are responsible for managing the organization’s computer systems, networks, and IT
personnel. IS leaders are also responsible for managing business/IT relationships (Ross et al., 1996). IT is so
pervasive today that effective IT decision-making requires some level of participation by every major
organizational unit and key business manager. Without a close working relationship with business managers,
the IS department will not be well aligned with the goals of the business, and the business will not be making
strategic IT investments.
Rapid changes in information technologies and business expectations for how IT can be leveraged in
organizations have led to significant changes in the IS organization’s mission. Changes in legal and regulatory
environments—as well as the need to respond to unanticipated economic events—have also impacted IT
investments and IS leadership roles. A rise in growth-by-acquisition business strategies also brings new challenges,
including consolidating dozens of data centers. However, not all organizations desire to invest in the same
information resources at the same level at the same point in time. The extent to which IS plays a strategic role in an
organization depends on the extent to which its IT investments are for mission-critical IT operations as well as for
new technologies to enable innovative business initiatives (Nolan and McFarlan, 2005). These investment choices,
in turn, depend on the information intensity of the industry and business-specific goals for positioning a company
in that industry.
The ability of an IS organization to respond to enterprise-wide or business division initiatives will depend on
its IS leadership capabilities as well as its governance structure. Ensuring payback from appropriate IT
investments, being able to respond quickly to changing external events, and leveraging technology for increased
business value are all challenges that an organization’s IS leaders need to be prepared to meet. Many
organizations therefore have IS leaders with aChief Information Officer(CIO) title (see the box “The Executive
IS Leadership Role”). In some firms in the IT industry, the executive IS leader has a Chief Technology Officer
(CTO) title. By 2007, the average compensation for a firm’s top IS leader was about $200,000, but CIOs at major
corporations were reporting salaries more than three times that average (Tam, 2007).
In the next sections, we first briefly discuss the key responsibilities of the IS organization and the reasons for
choosing centralized or decentralized IS governance designs. Then we focus on practices for managing the orga-
nization’s IT resources: the delivery of IT services (including supporting computer users), portfolio management
of software applications, IS personnel skills and retention issues, and managing relationships with the business.
The chapter ends with a discussion of two IS leadership challenges that reflect today’s increasingly digital world:
managing a global IS organization and managing IT outsourcing.