Innovation is often seen as the engine of growth, but there is a dark side: Unmanaged innovation frequently leads to excessive business complexity--in supply chain, sales and marketing, product development, IT, and administrative processes--leading to higher expenses and difficulties for customers and employees. Every time customers are asked to enter the same data twice, have inconsistent experiences when interacting with different parts of the business, or are forced to contact multiple people to get something done, it hurts the company. Every time employees can't access important information or their decisions get derailed by silos, it hurts the company. Excess innovation can even destroy a business. The authors offer three guidelines to address this problem: (1) Focus on product integration rather than proliferation; (2) Make sure that product developers are in close touch with customer-facing employees; and (3) Define your purpose in a way that will guide decision making.

This is an MIT Sloan Management Review article. Companies can monetize their data by improving internal business processes and decisions, wrapping information around core products and services, and selling information offerings to new and existing markets. Adopting any of these approaches, however, requires management commitment to specific organizational changes and targeted technology and data management upgrades.

This is an MIT Sloan Management Review Article. As companies recognize how important a digital strategy has become, they find themselves torn between different strategic options. The first decision is to choose between a customer engagement or a digital solutions strategy. Which to pursue depends on existing capabilities and competitive direction - but companies should avoid trying to do both.

Today's rapid technological changes have transformed the role of global IT outsourcing in companies'strategies. Traditionally viewed as a cost-saving measure, IT outsourcing is also increasingly being leveraged as a strategic tool for acquiring cutting-edge innovation. This pursuit of emerging technologies and capabilities, however, has elevated the complexity of managing supplier portfolios. In this article, the authors introduce the "long-tail"strategy, an innovative IT outsourcing model that combines a few key partnerships with a dynamically changing number of smaller contracts with other suppliers that can deliver specific value propositions beyond the capabilities of the key partners. Representing a dynamic, diversified, yet disciplined approach toward outsourcing, the long-tail strategy embraces and even fosters a flow of new suppliers, so companies are continually acquiring new capabilities that enable them to prosper in turbulent business environments. The authors'extensive in-depth interviews with major companies in financial services, business services, technology, manufacturing, and energy suggest that the long-tail strategy can help diverse organizations achieve their business goals. For example, the long-tail strategy helped a major global bank establish and maintain technological leadership in the financial-services industry, and allowed Toyota Motor North America to realize rapid innovation. In order to implement the long-tail strategy successfully, companies should institute five key practices: (1) distributing responsibility within the company for scanning for new technologies; (2) nurturing relationships with new "long-tail"suppliers; (3) encouraging sales pitches from suppliers; (4) governing the entire outsourcing portfolio; and (5) designing for integration. When implementing these practices, organizations should seek to create a more proactive, entrepreneurial, and dynamic culture in IT outsourcing.

Why do companies have so little to show for their investments in big data? The biggest reason is that they aren't doing a good job using the data they already have. They don't know how to manage the information embedded in their operating systems, analyze it in ways that enhance their understanding, and then make changes in response to new evidence and insights. The few companies that have adopted evidence-based decision making ensure that all decision makers have performance data at their fingertips every day. They also follow four practices: (1) Agree on a single source of truth. Using performance data from just one source yields a more accurate view of costs and profitability. (2) Use scorecards. Perhaps the best way to teach people how to use data to create business benefits is to provide them with data about their own performance. (3) Explicitly manage business rules. Little data can have a big effect on performance when managers use the data to assess and improve the business rules that govern their operations. (4) Use coaching to improve performance. Adopting evidence-based decision making is a big cultural shift. Employees need help learning how to base their decisions on data instead of on instinct. Fortunately, companies that make the shift don't usually go back, and they improve their operations in ways that rivals can't easily replicate.

This is an MIT Sloan Management Review article. Uses two different studies--a survey of CIOs at 256 enterprises in the Americas, Europe, and the Asia/Pacific region and a set of 40 interview-based case studies at large companies such as Johnson & Johnson, Carlson Companies, UPS, Delta Air Lines, and ING DIRECT--to conclude that when senior managers take the time to design, implement, and communicate IT governance processes, companies get more value from IT. Toward that end, they offer a single-page framework for designing effective IT: a matrix that juxtaposes the five decision areas (principles, architecture, infrastructure, business application needs, and prioritization and investment decisions) against six archetypal approaches (business monarchy, IT monarchy, federal, duopoly, feudal, and anarchy). Illustrates how successful companies use different approaches for different decisions to maximize efficiency and value for both IT and the overall enterprise. Offers recommendations to guide effective IT governance design.

New research from MIT's Center for Information Systems Research and others reveals that successful companies are revolutionizing the way IT investments get decided. Investments are no longer justified merely on the basis of making a functional silo more profitable. Today, the strategic needs of the whole company come first. In the last 15 years, write professors Jeanne Ross of MIT's Sloan School of Management and Cynthia Beath of the University of Texas, a tidal wave of IT-enabled initiatives has elevated the importance of investing strategically. The Internet alone has created numerous opportunities: to reengineer processes, introduce online products and services, approach new customer segments, and redo business models. The opportunities seem limitless, but the resources required--capital, IT expertise, management focus, and capacity for change--are not. How to choose? Traditionally, companies justified a given project by presenting a strong business case. But with IT's growing strategic importance, companies must now weigh individual ROIs against demands for organizationwide capabilities--and must assess opportunities to leverage and improve existing systems and infrastructures, create new capabilities, and test new business models. The authors recommend a new investment approach based on a framework they developed after studying the e-business initiatives and supporting IT investments of 30 enterprises. The framework encourages simultaneous investment in four kinds of IT initiative. Transformation investments are necessary if a company's core infrastructure limits its ability to develop applications critical to long-term success. Renewal investments maintain the infrastructure's functionality and cost effectiveness. Process improvements allow business applications to leverage infrastructure by delivering short-term profitability. Experiments enable learning about opportunities and testing the capabilities of new technologies.

Senior managers often feel frustration--even exasperation--toward information technology and their IT departments. The managers complain that they don't see much business value from the high-priced systems they install, but they don't understand the technology well enough to manage it in detail. So they often leave IT people to make, by default, choices that affect the company's business strategy. The frequent result? Too many projects, a demoralized IT unit, and disappointing returns on IT investments. What distinguishes companies that generate substantial value from their IT investments from those that don't? The leadership of senior managers in making six key IT decisions. The first three relate to strategy: How much should we spend on IT? Which business processes should receive our IT dollars? Which IT capabilities need to be companywide? The second three relate to execution: How good do our IT services really need to be? Which security and privacy risks will we accept? Whom do we blame if an IT initiative fails?

This is an MIT Sloan Management Review article. Provides an overview of the future role of the IT organization, examining the business and technological changes that effect change in many IT units. The four major process changes in the way firms operate all have a major impact on the IT unit: reengineering operational processes, reengineering support processes, rethinking managerial information flows, and redesigning network processes. A distributed computing environment, new development software methods, capabilities like the Internet and other networks, new entrants in the computer industry, and outsourcing are the technological changes affecting the IT organization. The authors cite eight imperatives in which IT organizations must excel to succeed: achieve two-way strategic alignment; develop effective relationships with line management; deliver and implement new systems; build and manage infrastructure; reskill the IT organization; manage vendor partnerships; build high performance; and redesign and manage the federal IT organization.