15 Feb 2000  Executive Education

Delivering Information Services: A 30-Year Perspective

When the HBS Executive Education course Delivering Information Services (DIS) began nearly three decades ago, the focus was on the management of mainframe computers. HBS Professor Richard L. Nolan discusses how the program and the way it's taught have kept pace with change in the Internet Age.

 

Editor's Note— As the information economy emerges and technology transforms "business-as-usual," senior-level executives need to understand the "big picture" of how IT impacts their entire organization—from top to bottom. The HBS Executive Education course Delivering Information Services (DIS) offers executives a broader understanding of IT in the context of the company, industry, and world, while teaching them to think about IT management in a way that is appropriate for the 21st century. Professor Richard L. Nolan, faculty chair of DIS, discussed the evolution and goals of the course with a member of the Executive Education staff.

EE: How has "Delivering Information Services" evolved in the nearly thirty years it has been taught?

Nolan: The course has kept pace with all three of the dominant eras in information technology (IT): from mainframe computers to microcomputers to today's Network Era characterized by the Internet. From roughly 1970 to 1980, DIS concentrated on the management of mainframes and the chief individual responsible for information technology, the Information Systems (IS) manager. At that time, computers were fairly centralized in the organization, and the role of the IS manager was to integrate them in support of the business's transaction processes. Then around 1980 we started to see the emergence of the microcomputer; for the next fifteen years or so, DIS reflected how microcomputers and PCs were going beyond merely supporting the transaction processes of business to supporting individual professionals within the organization. In the mid-1990s, we entered the Network Era manifest by the Internet. Today my colleagues and I are at work on a set of case studies that examine how networks impact the organization's structure and how organizations are taking advantage of "e-commerce," an entirely new distribution channel.

EE: Can you give some examples of these cases?

Nolan: We've recently put together a series of cases on Cisco Systems, Inc., perhaps the leading company in networked technologies. Cisco has grown from its IPO in 1990 to a $10-billion company today, with a market value of close to $140 billion! I'm also doing research for a case on Drugstore.com, which is essentially a drug store "built" on the Internet. It's getting ready to launch even as we speak and promises to give stiff competition to well-established firms such as Walgreen's and Rite Aid. We also look at Amazon.com, another upstart that can claim to be "the biggest book store in the world." By looking closely at these companies' use of the Internet— which I believe is the analog to the factory of the Industrial Age—we can begin to understand how this unprecedented technology is shaping business activity. The course also examines why many established enterprises are having such a difficult time keeping up with these new, Internet-driven entrants.

EE: Do you believe that any company can take advantage of the Internet to market its products or services?

Nolan: I do, albeit it's a different experience for the consumer to buy a book from Amazon.com, let's say, than it is from a retailer such as Barnes & Noble. The value added by the Internet is in the complexity of transactions it enables. For example, Drugstore.com can capture in a database all of the current test information available on a particular drug, so that a person can learn about any potential side effects.

EE: Are there any non-high-tech cases in the DIS course?

Nolan: Oh, yes. I chose to do my research in high tech realizing that it probably represents about 2 percent of all companies—and these are way ahead of the curve. The idea was to get a glimpse at the most aggressive, leading-edge uses of technology and to get the longest experience that I could in some of these companies to try to determine what the benefit streams are. An example of a non-high-tech company we study is H.E. Butt Grocery Company. This is a large, very successful privately held chain in southern Texas that has used technology to combat some of the threats of its competitors, including Walmart. In our case discussions, we work backwards from our insights into the high-tech companies' use of technology to see what lessons may apply, and then we examine the differences that the grocery chain, manufacturing firm, or other type of organization, might engender.

EE: How have companies like H.E. Butt used technology to gain an edge over their competitors?

Nolan: H.E. Butt, as we learn, was not taking full advantage of the information gleaned from its scanning technology, as Walmart does. Walmart has built a huge database from which it can identify right down to the particular customer and store what sold on a given day; they're able to convey that information to suppliers to maximize efficiency of the supply chain. This idea, which my colleague Steve Bradley and I have termed "sense and respond," correlates to the Industrial Age notion of "make and sell." Today we assume you can make the product; now we have to move on to sense customers' needs (by electronically monitoring their purchasing decisions) and respond to them (by integrating that information with the supply chain).

EE: Do participants in the DIS course tend to come to HBS with a specific work-related problem to solve?

Nolan: To some extent yes, although most participants are really interested in getting a snapshot of where information technology is headed over the next few years. It moves so fast, and new entrants come in so quickly they can turn an industry upside-down in a matter of months. It's important to be able to stay ahead of the game and to be able to respond effectively to the competition.

EE: Is there a "typical" participant in this course?

Nolan: The typical participant in DIS is the individual with major responsibility for information technology investments in the organization. Where once that person was the IS manager, today it's the CIO (chief information officer) and others spread throughout the organization.

EE: One theme you address in DIS is how the relationship between the CEO and CIO is changing. How so?

Nolan: This comes to light very clearly in the Cisco case, where the CIO is a leader working hand-in-glove with the senior managers and CEO—not the second-class citizen the IS person once was. The CEO is also quite comfortable with the technology, which is different from the past, when IT decisions tended to be delegated to others.

EE: So CEOs themselves are becoming better educated about technology?

Nolan: Better educated and more accepting of CIOs as partners.

EE: As much as CIOs have this new leadership role, they must also be careful not to steer the company down an errant technology path, isn't that so?

Nolan: Yes. This happened to some extent with Barnes & Noble, which was really taken by surprise with the success of Amazon.com. As a result, they found themselves in what I term "strategic jeopardy"; that is, they literally were forced into scrambling to protect their market share. If you're not alert to the technology trends going on in your industry or if you're in an environment a new entrant can parachute into, you might find yourself behind the eight ball—and it's very, very difficult to catch up once a competitor gets a head start in IT.

EE: What is the role of intranets in today's organizations?

Nolan: If you think of the intranet as the factory, then it's the corporate web site and all of the technology distributed inside the organization. While the web site is essentially the open door to the business, you still have to build the other capabilities using the Internet's standard technologies. This is one of the confusing areas that many companies simply don't "get." They put up a web site that anyone can access, but it's hollow; there is nothing there other than some financials and a picture of the company's headquarters. They haven't understood how to create the store like Amazon.com or Drugstore.com—and it's impossible to play ball in the world of e-commerce without understanding the difference.

EE: What do you most want participants to take away from this course?

Nolan: In two full weeks, through extensive case analysis, we're able to immerse executives in the experience of many leading IT companies. In this deep immersion process, participants gain a basic foundation in how these companies achieve competitive advantage via the Internet. Even more important, they come away understanding that we're truly living in a revolution and that there are tremendous opportunities for those who get out in front of it.