Vermont Teddy Bear Case

Q.1.

In accordance with Jeanne W. Ross and Peter Weill’s 2002 Harvard Business Review entitled, “Six IT Decisions Your IT People Shouldn’t Make,” IT managers should avoid making six central decisions. This essay will explore those decisions as well as explain what should be done about them. Additional analysis will address my own perspective on the authors’ points including whether or not I agree with their reasoning.

According to Jeanne W. Ross and Peter Weill’s research into IT management practices at “hundreds of companies around the world,” the reason why “most organizations are not generating the value from IT investments that they could be,” is because senior managers often fail to provide adequate governance. In fact, “when senior managers abdicate responsibility” to IT departments (rather than answering critical IT questions themselves), “disaster often ensues.” In other words, after conducting their research, the authors learned that many “senior executives failed to realize that adopting [IT] systems posed a business – not just a technological – challenge. Consequently, they didn’t take responsibility for the organizational and business process changes the systems required.”

From here, the authors name the six central questions that should not be answered by IT managers. While IT people should answer questions such as which IT functions to outsource, “the choice of technology standards, the design of the IT operations center, the technical expertise the organization will need, [as well as] the standard methodology for implementing new systems,” IT managers should not answer the following six questions:

1. How much should we spend on IT?
2. Which business processes should receive our IT dollars?
3. Which IT capabilities need to be companywide?
4. How good do our IT services really need to be?
5. What security and privacy risks will we accept?
6. And, finally, whom do we blame if an IT initiative fails?

All six of these questions determine the impact of IT on a company’s business strategy. The first three questions correlate to company strategy. For instance, when answering the question of how much a particular company should spend on IT, senior managers must begin by first stating the strategic role IT will play in the organization. Only then can an appropriate budget be allocated. According to the authors, IT managers are not capable of accomplishing this feat. In order to assess the optimal IT budget that can “meet immediate needs and allow for an array of future benefits,” IT and business goals must be clearly defined by top executives. Similarly, senior management should not simply look outside to industry IT budget benchmarks to devise a budget. In the same way all companies are unique, so should be their IT budgets. In fact, according to the authors’ research, the reason why many businesses ended up failing to develop a reliable IT budget is because “some management teams offer[ed] only a vague vision.” In essence, whenever business executives fail to outline definite strategies, “IT units respond to such ill-defined goals by trying to build a platform capable of responding to any business need.” This in turn results in unnecessary increases in costs and a waste of resources spent “chasing elusive benefits.”