IT business value density

While struggling today with an article I'm writing on IS evaluation and Objectivist Ethics, I integrated two ideas that have been on my mind lately, IT business value and value dense living.  If value density is the principle that individuals should seek to maximize values gained from their actions and resources by rationally evaluating synergies across goals and objectives, then IT business value density would be the principle that organizations should seek to maximize values gained from their IT resources and IT activities by rationally evaluating synergies across business goals and objectives.  I believe this concept would help to explain a number of issues in IS evaluation literature, including the productivity paradox, IT infrastructure investments, IT infrastructure flexibility, IT adoption and diffusion problems, and political issues in the evaluation process. There are probably more issues to discuss, but this is just a start to my brainstorming.  However, I can see enough value in this concept to warrant a massive review article for MISQ.  It would require a ton of work and would likely require a co-author or two.  But the reward would be immense.  And all of these issues can be tied to Rand's theory of ethics - at least I see the road map in my mind, I just need to translate it onto paper.

While this could be an exciting paper, I'm struck by the notion that I would virtually have to scrap my existing IS evaluation paper to write about this new concept.  But then again, I'm struggling with my existing paper because I lack a clear take-away.  As one researcher put it, there has to be a "so what?" moment.  I don't have that yet.  And I'm hesitant to put forward half baked article because other researchers will immediately pick up on that and slam the article (as they should) along with possibly Objectivism and me (as I do not want).  So unless I can find my hook soon (other than IT business value density), I may have to put the current article on hold and divert my energies elsewhere.

IT Governance

Here's a topic that I've been struggling to conceptualize lately.  What does information technology (IT) governance mean and why is it important?  This is another of my thinking out loud posts, so please feel free to offer any helpful suggestions for improving my understanding.

IT governance stems from the concept of business governance.  And the term governance is borrowed from the political concept of governing a nation.  When governing a nation, the government sets and establishes the freedoms and constraints on individual action and decision making.  I'm not saying this is the best definition of government, but it is my working premise.  Similarly, business and IT governance set the context for decision-making in organizations by setting freedoms and constraints.

Governance in both these contexts is differentiated from management and strategy.  Strategy can be described as the long term goals and objectives of an organization.  Established by the executives, this vision of the company's future drives lower level tactical and operational objectives.  Management involves the implementation of these long-term goals and objectives.  It involves the directing the people and resources so as to achieve the desired goals efficiently and effectively.  In my understanding of governance, it provides the framework for how to make management level decisions.

For example, a strategic goal may be to facilitate IT growth through outsourcing partnerships with major consulting firms.  At the managerial level, the expectation would be that decisions that require IT growth should strongly consider outsourcing partnerships.  The problem comes from ensuring that managers throughout the organization enact the strategic goal in similar and congruent fashions.  The solution to this problem is developing a governance board the creates frameworks for decision-making and reviewing major decisions to ensure compliance.  In the case of outsourcing partnerships, the governance board might establish policies for reviewing consulting companies in an objective and systematic way to ensure that the best partnership is established, that the existing partnerships are given full consideration, and that the IT solution is congruent with the overall strategy.  They may further review outsourcing proposals to ensure they meet the appropriate criteria and constraints.

Every organization will govern IT in unique ways.  Some will be very strict and require every new IT project to be approved by an IT governance board.  Some will only require medium and large project approval, say projects over $100,000 budget.  Some organizations will have primarily business managers on the IT governance board, while other organizations will stock the board with primarily IT managers.  Some organizations will have very weak governance, enabling local decision-making with few constraints, while other organizations will have a strong centralized governance.

IT governance becomes an essential part of an organization as it grows too large for a single person to confirm and direct the implementation of strategy by managers.  While the traditional hierarchical management structure works for simple strategies, the sprawl of today's organizations makes for radical differences in implementation of IT resources unless a governance board directs and reviews lower level decisions.  Furthermore, efficiency from economies of scale can only be gained when the entire organization uses the same IT infrastructure, which is only possible if a centralized decision making unit provides the necessary framework.

Not that all is rosy using governance boards.  There can be problems when governance boards become so restrictive that business units end up adopting new technologies that are not best for them, even if the technology is best for another business unit.  I saw an example of this at one of the consulting projects I worked on years ago.  Our client had adopted SAP's ERP system.  While we were implementing our proprietary project management system, their governance board was questioning whether they should scrap our project and use SAP's project management system.  However, the business unit with whom we were working strongly recommended against using this ERP module because it did not met their business needs.  We finished implementing our software before this disagreement was resolved, but articulates what I see as a potential problem with governance boards.

As part of this process in understanding IT governance, a colleague and I will, over the next couple years, start a research project looking at IT governance, particularly a subset called data governance, in a variety of organizations.  Some of the research questions we want to answer are: What, if any, are the relationships between governance structures and management practices?  What, if any, are the relationships between governance structures and methodology?  What, if any, are the relationships between governance structures and external regulations?  Since my colleague and I are both IT ethics researchers, our larger research question will be how does ethical and political theories influence data governance structures?  And how do those structures enable or prohibit ethical decisions in organizations?  We may also explore how various ethical perspectives of senior executives impact the choice of governance boards or how the ethical perspectives of the governance board impacts the choice of directives.  There are a number of angles we can pursue that should hopefully enable a better understanding of the role of ethics in IT organizations and suggest best practices for enabling organizational success.

The Art of Nonfiction

After reading about 3/4 of the way through the book, I can safely say that The Art of Nonfiction is the best writing advice I have ever heard.  It has filled all the missing links in my knowledge of how to write, enabling me to be a successful writer.  I still need tons of practice to perfect those skills, but now I understand the "why" for many of the best practices I have learned over the years, such as how to outline, how to write a first draft, and how to edit. She articulates the role of both your conscious and subconscious minds in writing and how to tap each at appropriate times for maximum effectiveness.  She discusses common writing problems (I have my share) and how to overcome them. 

While I don't apply her suggestions much to this blog (because I write more extemporaneously here), I have noticed an impact in my research articles I'm writing.  And if/when I start writing books, theses skills will provide the foundation for completing the books effectively.   The Art of Nonfiction is a book I will have to revisit often over the coming years to remind myself how to be a good writer and to avoid pit falls that many writers succumb too.  I highly recommend it to anyone that writes any nonfiction. 

On IT Business Value

Today, I was reading an academic article that defined information technology (IT) business value as the organizational performance impacts of information technology at both the intermediate process level and the organization-wide level, and comprising both efficiency impacts and competitive impacts (IT and Organizational Performance, MISQ, 2004, Melville, Kraemer, and Gurbaxani).  This definition did not satisfy me as an adequate representation of this concept.  In this post, I will attempt to think through my definition of IT business value and its relation to Objectivist ethics, so that I might apply it to an article I am writing.  As a thinking post, please consider feedback most welcome.  My ideas are not finalized on this topic.

Organizational performance strikes me as part of a larger concept for business value.  There is also missing a direction of the impact.  Impacts can obviously be good and bad.  Can we legitimately call it a value if the impact is bad?  I don't think we can.

To address organization impact, lets look at a root concept - business.  The purpose of business is to facilitate the creation of value for trading partners by systematically organizing resources for the production of goods and services.  Businesses are not transient one-time events, nor are they disorganized mobs of traders.  Businesses have a definitive boundary within which individuals interact in an organized fashion.  Business value can take on multiple meanings, depending on with whom you refer.  Business value can refer to the value-added process for a product that the business sells.  Business value can refer to shareholder wealth created from the business growth and profits.  Business value can also refer to the overall fitness or long-term sustainability of the business as a whole.  It is to this last notion of business value that I believe is most comprehensive context.  Using value in this way implies a relationship to ethical values.

As Ayn Rand described values:

It is only a living organism that faces a constant alternative: the issue of life or death. Life is a process of self-sustaining and self-generated action. If an organism fails in that action, it dies; its chemical elements remain, but its life goes out of existence. It is only the concept of ‘Life’ that makes the concept of ‘Value’ possible. It is only to a living entity that things can be good or evil.

In business, a similar constant alternative exists, the life or death of the business.  Business processes consists of generated and sustaining actions.  If the business dies, the people and resources remain, but its existence as such is gone.  It is only the concept of business life that makes the concept of business value possible.  Lest we take this analogy too far, businesses are sufficiently different in that they can be created by men, can be willfully destroyed by men, and can be recreated by men if they so desire.  So it is not self-generated action.  It is composed of many individuals acting together in mutually agreed upon ways, trading products and services with each other.

But, when entrepreneurs create a business, they generally do so with the purpose of continuing the business indefinitely.   Ethical values only refers to those values created for the individual, but in the entrepreneur's case, the business becomes an extension of the entrepreneur's value system.  The business value refers directly to value to the entrepreneur.  As the entrepreneur disassociates his personal values from the business values, the business can only continue its existence if its values perpetuate long term sustainability.   For example, a business must maintain a positive cash flow.  A business must organize the operations, logistics, and the supply chain to ensure raw goods arrive, are transformed into finished products, and sold.  A business find customers and demonstrate the value offered by what they're selling.  A business must systematically replace employees or grow into new business areas.  The topic of business strategy attempts to answer this question of business value in terms of long term sustainability.

Is the idea of long term sustainability sufficient for business value?  Is there more or less?  Is it all about profits?  What about the community?  Without going to far down this road, I will say that it is not all about profits, but profits are a healthy indicator that things are going right (just ask the auto companies).  And the community may be considered a healthy base for trading, so helping the community can often help the business.  However, the community does not hold any rights over the business and the business does not owe the community anything other than justice when trading with individuals therein.

So where does IT fit in?  IT business value, in my conception, is information technology that enables long term sustainability by fostering value creation in business processes, resources, and relationships. This value creation can take many forms - increased efficiency, more effective processes, improved flexibility, increased communication, decreased errors, improved relationships with stakeholders, better management of assets, heightened security, etc.  Value creation such as heightened security may increase long term sustainability by preventing competitors from stealing trade secretes, it may not increase organization performance, as the authors I first cited claimed.  In fact, the impact of heightened security might slow innovation and organizational decision making, but be a necessity for competitiveness.

So this is the extent of my thinking on this concept.  I believe the real innovative piece of thinking I'll be adding is the relationship between individual values and business values.  Hopefully, I can get some input from other Objectivists on my ideas in that realm.

Headed for strike?

The way things are going at EMU, I would not be surprised to see a strike in the near future.  Due to the recent budget crunch, the president wants to cut back on spending, including faculty salaries.  The faculty union of course doesn't like this and suggests spending cuts should come primarily from athletics and administration.  The president has stated that athletic cuts are not on the table and administration cuts... well, it probably won't be enough.  That to me, looks like an impasse.

I don't care one way or another because I'm moving to a new institution (Hello, ECU!).  All that I ask is that they hold off on any strikes until after I receive my last check.