The changing nature of it infrastructure capability

other, infrastructure investments must meet defined and measurable business needs and are monitored for the value they provide.

7. Towards a model of infrastructure capability

The links identified statistically between firm context and the pattern of IT infrastructure capability in the firms are summarised in Table 3. A strong association was evident between higher levels of IT infrastructure capability and firms which: value business unit synergies, integrate information and technology needs into overall firm-wide planning processes and had specific practices in place aimed at achieving firm-wide strategic intent. The link between firm context and IT infrastructure capability is clearly more complex than that in the preliminary model Fig. 2. The revised model, drawing on our research, is presented in Fig. 4 showing the thin base of the five core services and the extensive capability provided by all 23 services. The revised model depicts the increasing impor- tance of IT infrastructure capability to firms with particular characteristics. There were industry differences with extensive infrastructure capability of less importance to the less information intense manufacturing firms. Firms with a focus on identifying synergies between business units, integrating information and IT needs as part of planning processes and tracking the implementation of strategy have more extensive IT infrastructure capability in the form of both more shared services and greater reach and range. While all firms had the five core services, the pattern of the further 18 services varied considerably. IT infrastructure services in the areas of communications, applications, IT management, and standards management were consistently associated with a focus on identifying business unit synergies, the integration of IT planning and well developed planning processes. While communications provide a basic technical capacity, the other three focus more on the application of human expertise and intellect in light of the firm’s long term investments. This pattern is consistent with recent findings on the significance of IT managerial skills and knowledge in achieving sustained competitive advantage Mata et al., 1995 and appropriate business and technology strategy integration Boynton and Zmud, 1987.

8. The changing nature of it infrastructure capability

In this section we reflect on our operationalisation of the construct of IT infrastructure contrasting our theoretical model Figs. 1 and 2 with the empirical evidence. Over the course of the study we noticed a gradual increase of the use of the words and concepts of infrastructure and shared services in the management lexicon. The trend of greater adoption of both standard and shared applications is evident in many industries, though the underlying rationales can differ. We observed a significant increase in the firm-wide adoption of selected modules of publicly available software packages to support the operation of shared services. These implementations often had long-term aims of reducing costs across the firm and providing greater consistency in business and financial information. For example many manufactur- ing firms have adopted all or part of an enterprise resource planning ERP package such as M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 173 M. Broadben t et al. Journal of Strategic Informat ion Systems 8 1999 157 – 187 174 Table 3 Firm context and IT infrastructure services and reach and range all table entries represent statistically significant relationships p 0 : 10 Eight IT infrastructure service areas Number of services Reach range Applications Communications Data mgmt IT Educat’n IT Mgmt IT RD Security Standards Industry Finance firms – – – – – – – – – – Retail firms – – – – – – – More – – Manufacturing firms Fewer – Fewer Fewer – – Fewer Fewer Fewer – Marketplace volatility Firms that value organisational flexibility – – – – – – – – – – Firms that base resource decisions on current needs – – – – – Fewer – – – – Firms that need to change products quickly More – More – More – – – – – BU synergy Firms that document how a BU contributes to achievement of FIRM strategic intent – – – More – – More – – – Firms that identify synergy between BU’s More Higher More More More – More – More More Strategy formation processes Firms that integrate information and IT needs into the overall planning process More Higher More More More More More More More More Firms that report progress towards the achievement of Firm strategic intent More Higher More More – More More – – More Firms that name those responsible for tracking achievement towards Firm strategic intent More Higher More More – – More – – More Firms that describe how to measure achievement towards firm strategic intent More – More More More – More – More – SAP as their standard. In these firms the provision of the ERP modules e.g. finance, and the client server infrastructure and expertise required, has become shared, standard and centrally coordinated and thus part of the IT infrastructure. 11 In the banking industry, groups such as Citibank Asia have centralised and standardised back room processing across five Asian countries. The driver for this change is ‘Citibank- ing’—‘combining relationship banking with technology that enables the customer to exercise greater control over his or her funds’. 12 The technology enables the Citibanking vision in two major ways: first, with a one-stop paperless account opening, instant account availability, instant card and check issuance; second, with a customer relationship database that supports cross-product relationships, creation of customised products, and relationship pricing that more closely matches the value to the customer. The Citicard is the key to Citibanking services such as checking, money market, and bankcard accounts. In addition, the centralisation of card processing operations for Asian countries reduced costs per card to less than one-third the previous costs and enabled a 23-fold increase in productivity. For banks such as Citibank the driver to identify shared and standard applications has been a combination of strategic intent i.e. Citibanking and cost saving via sharing and centralisation. Citibank’s IT infrastructure includes both shared IT services e.g. centra- lised large-scale processing and customer relationship database and shared applications e.g. account opening and check issuance. In the firms studied we estimate less than five percent of the annual IT investment was in shared and standard applications whilst 52 i.e. 57 less 5 was firm-wide IT M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 175 Fig. 4. Revised model: firm context and IT infrastructure capability. 11 Very recently we have observed a falling off in demand for ERPs, perhaps caused by the cost and complexity of implementing these all encompassing packages. 12 Neo, B.S. and Soh, C. Case Vignette of Citibank—Asia Pacific: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1994. infrastructure. However, from the future plans identified by the 26 CIOs the investment in shared and standard applications will grow rapidly. The shared and standard applications may be provided by implementing ERPs, “best of breed” modules selected from a number of vendors or custom developed software. Historically these applications have been general management applications such as general ledger, human resources management and budgeting. However, now we are observing strategic positions driving the adoption of shared and standard applications for key processes e.g. order processing. This trend is reflected in a revised model of IT infrastructure capability Fig. 5 which includes both IT services and shared and standard IT applications as infrastructure. The definition of IT infrastructure must be altered slightly to be: the base foundation of budgeted-for IT capability both technical and human, shared throughout the firm in the form of reliable services and shared applications, usually centrally coordinated. The services and shared applications are treated separately in the revised model as they have different characteristics and thus need to be managed in different ways Grossman and Packer, 1989. 13 The IT infrastructure services must be defined and provided in a way that allows them to be used by multiple applications including the infrastructure applications. The objective is to enable economies, reuse, synergies and flexibility. The nominal owner of these shared services thus must have firm-wide responsibility e.g. the CIO. An application such as M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 176 13 In our ongoing work Weill and Broadbent 1998 we have identified two further services which have emerged since the research was completed. These are: i provide firm-wide intranet capability e.g. information access, multiple system access; ii provide firm-wide electronic support for groups e.g. Lotus Notes. Fig. 5. Emerging model of IT infrastructure. order processing may use as many as five or six services which all must be in place and accessible. To achieve this level of modularity and integration requires careful specifi- cation of the IT architecture Keen, 1995, p. 45 and particularly the specification of the interfaces to infrastructure services new applications will need to comply with. IT infrastructure applications are shared and standard applications applied across the firm and are often the result of strategic objectives. Unlike IT infrastructure services, the scope of the application is for a particular business process. We observed examples where the “notional owner” of the infrastructure applications was a manager of the particular business process e.g. buying in retailing or, in some cases, the CIO. Interestingly most of the CEs were very comfortable with notion of infrastructure be it information technology, human resources or buildings. This was equally true for the CIOs who had a firm-wide responsibility and were constantly facing the decisions of what should and what should not be infrastructure and thus shared and standard. However IT managers in BUs were often less comfortable with the concept or the practicalities of operation. The BU managers were concerned about “lack of control”, being “forced to comply by the corporate IT group” and required to adopt applications which were a good “average fit across the firm” but not optimal for their BU. In general, most BU managers both general and IT were more comfortable with IT infrastructures at the business unit level. The BU managers argued they could tailor the infrastructures to their needs and had far more control on the quality and cost of the services. Many BU managers grudgingly acknowledged the need for firm wide IT infra- structures but were quick to point out the problems they had experienced. The question of at what level i.e. firm-wide or BU-wide a particular IT infrastructure service i.e. client database should be provided was a source of tension in many firms. The benefits of firm- wide provision were cited as economies of scale, synergies and cross-selling, while the BU IT managers argued for the increased levels of customisation and control afforded by local provision. Some firms never formally resolved this dilemma with each new initiative opening the debate afresh. Other firms resolved this dilemma with a business maxim Broadbent and Weill, 1997 from corporate providing direction and credibility for firm-wide shared IT infrastructure services.

9. Limitations