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A Perspective for the Chief Executive Officer Alas Air I. Omand* What is so different about the personal computer that it causes management such discomfort? Why is it so hard to figure out which issues deserve top management's attention? First, the personal computer marketplace is extremely cly- namic. Changes in the technology are coming rapidly, apparently too fast for management to know what to buy. Almost daily the trade journals announce new microcomputer products, but no- body knows which are best for the Tong term. Some of the claims are misleacling, and prices are always changing. It is a much clif- ferent pace from that of the traclitional world of large computers. Second, there is no longer an obvious central point for control. Central management information systems (MIS) departments have traditionally controlled the development and operation of computer systems, as well as the data user! by them. End users have worked through programmers or MIS liaison people to get their work done. With personal computers, raw computing power is now available on the desktop of the user, who can do many if not all of the things formerly done by the MIS group. Further, this computing power is available to the user at rela *Alastair I. Omand is executive in charge, General Motors Information Systems and Communications Activity, Warren, Michigan. 7~

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72 MANAGING MICROCOMPUTERS tively low cost. This is significant not only because it signals an economic shift away from the large mainframes, but because many users can now approve the purchase of computers on their own authority. As a result, the marketing tactics of computer vendors have changed. Formerly, they marketed to the MIS peo- ple in the organization. Microcomputer vendors now are skirting the MIS department and aiming directly at end users. Before we can deal with the issues surrounding personal com- puters, we need to define personal computing and unclerstand where it fits in the overall computing activities of an organization. Personal computing is one of three fundamentally different modes of computing in a corporate environment: Large-scale computing services represent the traditional mocle, in which application systems are managed by MIS professionals rather than by ens! users. The users provide the data needed, and the MIS organization provi(les the application programs and pro- cessing services to produce the output. Good examples of such applications are payroll processing and product warranty sys- tems. These kinds of applications will continue. The large-scare computing environment typically uses large mainframe com- puters manager! in a restricted facility by the MIS department. Some organizations in the corporation have adopted an alterna- tive departmental computing mode, often implemented on locally installed minicomputers. Departmental computing is character- ized by shared use of computer resources among members of a department. An example would be a production scheduling sys- tem for a manufacturing plant. Then there is the personal computing mode, in which the indi- viclual performs tasks unique to the specific job. Personal com- puting automates the function of the indiviclual, not that of the department, the division, or the corporation. My definition of personal computing is the use of a computer by an individual to help prepare his or her work product. This defini- tion is important because most microcomputers today are de- signed for personal computing, that is, for individual users. Thus, the focus is not on payroll processing or shared databases, but on improving the productivity of the individual. In discussing what the microcomputer management issues re- ally are, we need to draw a clear line between personal computing and departmental computing. Departmental computing systems

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A PERSPECTIVE FOR THE CEO 73 require a significantly higher level of control since they affect the jobs of many people and may be the repository for corporate re- cords. The danger is that personal computer activities may grow into departmental systems without the necessary controls. The most frequently discusser! issues concerning the use of per- sonal computers in business may be grouped into five categories: data management; product proliferation; acquisition practices; level of user maturity; the shift in skill sets. Data management means assuring that the information needs of the corporation are met by the activities that collect data, pro- duce ciata, or maintain records. This inclucles providing data ac- cess and security. Three specific concerns about data manage- ment have been raised relative to the use of personal computers. The first concern is accessibility of data. The traditional MIS solution to providing data needed by several people was to store it in a central database, in the computers of the central data process- ing shop. With personal computers, however, data can resicle in many places, creating difficulties for access. Knowledge of data location becomes a major problem. The second concern is consistency and compatibility of ciata. Without central control of data there is a concern that users will employ different names and formats for the same ciata. Similarly, they might use the same names for different data, which couIcI lead to a comparison of apples and oranges. To reconcile such di- versities could require major conversion efforts and cause delays in responding to business needs. The third concern is data security. Traditionally, security was ensured by the MIS department with its expertise, elaborate con- trols, and physically secure facilities. With personal computers responsibility for security is put in the hands of people who may have little or no experience with it. Moreover, with personal com- puters there is no longer a single logical place to concentrate secu- rity expertise and efforts. A second set of issues relates to the proliferation of personal computer products *om many different vendors. This prolifera- tion raises concerns about connectivity. How c30 we get IBM

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74 MANAGING MICROCOMPUTERS personal computers to talk to Wang or DEC equipment? How do we get ciata from one personal computer to another without rekeying? There are also concerns regarding technical support. How can a large corporation reasonably expect to provide technical support for all of the products used? Must we limit ourselves to only a few vendors? How many vendors will we have to deal with for service or resolution of problems? Finally, product proliferation raises concerns about duplication of clevelopment efforts. Will the same systems have to be clevel- opecI many times to run on different equipment? The thirc! set of issues involves acquisition practices. In this area, there is concern that large corporations will miss opportuni- ties for significant cost savings unless a central group coordi- nates the quantity purchase of personal computers to attain price leverage. There is also concern about vendor interface. End users are cleating directly with vendors, a responsibility formerly manager! by knowledgeable MIS professionals. Users cannot possibly be well informed on all of the available products and their technical complexities. Purchases may not be appropriately justifier] since many users do not really know why they need a personal com- puter. In some cases a terminal might do just as well. Obsolescence is another concern in the area of acquisitions. The rapid advances in microcomputer technology may require new computers to be purchased within a few years. Finally, there is concern about the obligations created by license restrictions where control of software piracy may be difficult or impossible. Will the corporation inadvertently incur legal liabilities? The fourth set of issues involves the organization's level of ex- perience in using computers. This is illustrated by the "stages of growth" model clevelopecI by Dick Nolan. Nolan claims that MIS activities have evolves! through a series of stages. The first is ini- tiation, in which computing is first introduced. This is followed by a period of contagion, in which computer applications proliferate throughout the organization in many functional areas. Eventu- ally, the need for controls is recognized. The thirst stage is thus marked by centralization of many support functions and control procedures in MIS departments. The fourth and later stages are characterized by increased stability ant} the clevelopment of infor- mation management disciplines.

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A PERSPECTIVE FOR THE CEO 75 The MIS activities of most companies today are in the third stage, market! by central controls. However, the growth of per- sonal computing and end-user experience is generally back in stage one-, initiation, or entering stage two, contagion. We are still in the process of learning what personal computing is all about, where the benefits are, ant! how it is going to work. At the same time developments are spurring rapid increases in use. This disparity of stages is a source of concern about the growth of personal computing. A major concern in stages one and two, initiation and contagion, lies in the unpreclictability of end-user development projects. Without adequate controls in place there are risks that systems will not achieve expected benefits and will not be developed on time and within budget. There are risks that inflexible systems may result. Without proper development tech- niques for personal computers the systems developer! by end us- ers will be difficult to understand, difficult for others to modify, and unresponsive to changing business needs. In the traditional MIS environment these risks were addressed in the control stage by a variety of systems-development disci- plines and review procedures. Well-defined programming guicle- lines were developed. But no such roacimaps exist to guide users today in developing applications for personal computers. The last set of issues relates to the shift in skills required by widespread use of personal computers. First, users will become developers, a function formerly in the domain of the MIS commu- nity. Yet many users today do not have the skills to manage the development process properly. Second, end users must learn to manage computers and deal with the risks involved in their use. They will be responsible for backup, data integrity, security, and error detection. In the past the MIS organization has taken care of most of these tasks. Third, end users must learn to clear with shifting technical trends. You can't install new systems every time a new gimmick hits the market, but you don't want to miss major opportunities because you are locked into obsolete equipment. The growth in personal computers means a change in the roles of MIS personnel as well. This began with the development of user-friendly languages, information centers, and timesharing and has accelerated with the use of personal computers. Many MIS professionals who have spent their careers as developers will move to user departments; others will become consultants or

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76 MANAGING MICROCOMPUTERS educators. Both alternatives represent new career paths for MIS people. All of these issues are important. But which ones should legiti- mately concern the chief executive officer (CEO) of a company? Where should top management focus its efforts? And who is best suites! to deal with the remaining issues? I believe that some of these issues should not, and in some cases cannot, be addressed through top management control measures. They can be adequately resolved through normal business prac- tices or by further developments in technology. From my perspec- tive, the CEO shouIci focus on the first and last issues outlined above ciata management and the shift in skill sets. The other three categories product proliferation, acquisition practices, ant! level of user maturity are best dealt with at lower levels in the organization. In terms of the first of these lower-level concerns, it is not at all clear that we should try to control product proliferation at this stage. The diversity of products is a good indicator that the poten- tial uses and the best approaches for personal computers are still evolving. The technology will continue to evolve as well. Although some de facto standards have emerged they may be only temporary. The IBM PC has obviously created some of these stanclarcis, but that product represents only one of several plateaus in the evolu- tion of personal computer technology. The next plateau probably belongs to systems running UNIX, the AT&T operating system, and supporting more sophisticated user interfaces derived from the Apple Lisa. Unfortunately, even though we may be able to identify some of the likely future standards, tociay's products do not yet support them. The best approach, therefore, is to take advantage of cur- rently available products to meet current needs. The connectivity issue can be ad(lressed where necessary, but setting standarcls for centralized development and support isn't worth the effort. Cen- tralizec! developers cannot possibly keep up. Besides, vendors will provide technical support and maintenance to maintain their rep- utation and survive in the marketplace. The choice of products should be driven primarily by the personal needs of the individ- uals who are to use them. The current basis of personal computer purchases should be specific needs and opportunities, not antici- pated potential.

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A PERSPECTIVE FOR THE CEO 77 MIS people can help users sort out alternatives and evaluate the applications. But they should not be given too much author- ity. Keep the users in charge. Acquisition practices for computers are important, as they are for any expenditure. But the primary responsibility in this area rests with an organization's purchasing staff. They should be looking for equivalent products at lower prices and they shouIc! recognize and pursue opportunities for volume discounts. In fact, this is much easier to do for microcomputers than it ever was for data processing equipment. There are many interchangeable products, particularly peripherals like printers and (lisplay moni- tors. Purchasing people also have the responsibility for seeing that license agreements are reasonable. They should be allowed to do their jobs. Similarly, the investment decision shouIc3 be controlled by tra- ditional financial procedures. Budgets and appropriation proce- clures are no less applicable to personal computers than to any other equipment bought to run a business. For the most part major investments are not involved. Thus, the risks are minimal. Most personal computers purchaser! now shouIcI have paid for themselves by the time they are clearly obso- lete. Savings opportunities shouldn't be missed because it might be possible to make a better decision later. There will continue to be uncertainties. The disparity in the level of user experience between MIS de- partments and users of personal computers is uncleniable. While MIS organizations are busy controlling their resources and tun- ing their operations, the whole microcomputer marketplace is in the contagion stage. This neecin't cause great concern. It should be exploited, not controlled. When data processing activities were in the contagion stage million-dollar investments in equipment and development proj- ects were involved. The risks were high that projects would not meet expectations on time, within budget. This is not the case with personal computers. With small-scope systems the invest- ment is small. The business impact is focused on the job of a single indiviclual. The development investment may be simply one incli- vidual's learning curve, not the expenditure of years of effort by full-time technical experts. Finally, auditors should be allowed to do their job. Their respon- sibility is to assure that good business practices are followed. If

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78 MiLNAG1NG MICROCOMPUTERS there is concern that such practices might be ignored with the use of personal computers, auditors should be called in. When many of the personal computer issues are handler! at ap- propriate, lower organizational levels, the CEO can focus atten- tion on the more critical issues. Data management is one of the most complex of these critical concerns. To understand how the growth of personal computers affects data management it is helpful to identify the functions: Business processes, particularly those that involve multiple departments, should be streamlined through business systems analysis. Interclepartmental interfaces must be clearly defined and supported with communications facilities to assure data avail- ability. Sources of business data must be defined to assure that the proper controls are exercised and necessary records are kept. Data security must be assured through the identification of risks and the definition of control requirements and precautions. These functions focus primarily on mainstream business sys- tems rather than on personal computing. They involve multiple departments rather than the individual. But there is little doubt that personal computers, like their users, wiB become participants in these larger systems. Personal computers win be used to process corporate data; they wiD thus influence the clevelopment of larger systems that go beyond the scope of personal computing. The CEO can take three steps to ensure that data management is properly acIdressed in the area of personal computing as well as in other areas of the organization. The first step is to place organizational responsibility for data management. Data management is a coordination and control function. It requires the participation of all departments, but it also requires a focal point of responsibility. General Motors is en- couraging both divisions and corporate staffs to create a depart- ment called Business Information Management. Its activities in- clude the MIS functions, but with a new mission. Rather than controlling the use of computer technology, its function is to help other departments exploit the technology while providing the co- ordination and control necessary for data management. The next step for the CEO is to initiate the definition of appro- priate policies and practices, mainly in the area of data security

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A PERSPECTIVE FOR THE CEO 79 and integrity. The data management organization should lead this effort, but it requires the participation of other parts of the organization as well. These measures must address the new risks associated with personal computers. Personal computers are lo- catect in offices instead of data centers, and they store large amounts of ciata on diskettes that are easy to transport. These and related factors create new security risks that must be faced. Finally, the CEO should initiate policies and practices that con- troT the scope of personal computing. Such policies should be rein- forcect by data management efforts. It is fairly easy for a personal computing effort to grow into a clepartmental system. A recI flag must go up when an individual starts maintaining departmental records on a personal computer. Although various inclividuals need copies of corporate data, the organization must not depend on them and their personal computers as the sole source of such data. The second critical area for CEO concern involves personnel. The growth of personal computing is just one aspect of the in- creasing involvement of ens! users in the application of com- puters. As a result, the responsibilities and many of the skills re- quired for computer application development must migrate from the MIS organization to the end user. For this migration to be effective the CEO must be prepared to make a significant investment in education. This will take the form of classes, seminars, and the cost of a learning curve for us- ers, all of which translates into clolIars. End users must be trained to manage the new responsibilities that come with personal computing. First they must gain an ade- quate understanding of the general concepts of computer and telecommunications technology. Then they must learn about mi- crocomputers in particular. They must be skilled in proper tech- niques for systems design ant! security. MTS professionals will also require education. Some will be relo- cated in user departments and will need a greater understanding of the user's business. Many others will refocus their careers from systems developers to consultants for end users and must de- velop consulting skills. The education effort will also need to extend beyond users of computers. People in purchasing departments must have an in- creased understanding of technology in general and will need to develop selection criteria for various vendor products. This will

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80 MANAGING MICROCOA~UTERS require a much greater knowledge of personal computers than they have tociay. Auditors must have a greater awareness of the latest microcomputer technology as well. They will need to be aware of the risks involved in using these machines and be able to assess alternative measures. All of these educational needs will cost money, ant! manage- ment should expect to spend it to get the most benefit from the new technologies. Our work force must get smart on the risks and the opportunities if the investment in personal computers is to yield the desired return. In short, here is my advice to organizations trying to cope with the personal computer invasion. Don't try to stop it. Don't try to standardize the technology. Don't limit the user's innovation and initiative. Instead, focus your attention on the critical success factors. Manage your ciata resources to assure that the right peo- ple continue to have access to the right data. Educate users so they can take advantage of the technology, properly manage it, ant! deal with the attendant risks. Dissertations have been written about the disparity of invest- ment in productivity between production workers and knowledge workers. Personal computing is one of the most promising oppor- tunities to increase knowlecIge-worker productivity. It is manage- ment's responsibility to make sure that people have every chance to exploit it.