Based on well-established studies in the US, the results of this local survey are reported on the perceived importance of 24 critical issues of information systems management in Hong Kong in 1999 and in 2004. "Improving the Effectiveness of Software Development" and "Building a Responsive IT Infrastructure" are still the top concerns of CIOs, while five out of the top ten issues concern with IT and business relationship. Although the average score on the importance of critical issues in 2004 is rising, "Outsourcing Selected Information Services" and "Facilitating/Managing Decision and Executive Support Systems" are gaining higher importance. Comparing results with the latest studies in the US, Australia and Taiwan as well as previous studies in Hong Kong also help to identify issues of common concern, trends and implications. The critical issues study not only suggests some general directions and emphasis for IS executives and general managers to compare and contrast their own concerns against their peers, but also reinforces the need for educational plans in teaching and research to be sensitive to the views of IS executives.

1. Introduction to the Critical Issues of Information Systems Management

An Information Systems (IS) manager or Chief Information Officer (CIO), who is managing the IS / Information Technology (IT) function of an organization, will certainly have encountered problems in the development of information systems plans. They should be concerned with the need to consider those IS management issues, which are thought to be the most important in this era of dynamic change.

A number of studies on critical issues of IS management have been published reflecting CIO's concerns in the United States since 1980 (Ball & Harris, 1982). Similar studies were replicated in Hong Kong, Australia, Europe and Asian countries. The investigation of critical IS management issues serves to enhance the understanding of the concerns of IS/IT management and to provide guidance to CIOs and senior management in the planning and control of these issues.

Table 1: Classification of IS Management Issues

Legend: M/T = Management or Technology; P/C = Planning or Control; I/E = Internal or External

The 24 critical issues of information systems management are based on a similar study in the US in 1994 (Brancheau et, al. 1996). They are classified in Table 1 with issues on Business Relationship (BR), Internal Effectiveness (IE), Technology Application (TA) and Technology Infrastructure (TI). The BR group (7 issues) mainly concerns with the IS department and the business, while the TI group (6 issues) concerns with the facilities needed to support the use of IT. The IE group (7 issues) and TA group (4 issues) have a narrower focus and relate specifically to how well the IS department performs certain key functions. These classifications are meant to provide some explanation on the major concern of the organizations under study. Furthermore, they are also grouped under M/T (12 Management issues versus 12 Technology issues), P/C (4 Planning issues versus 20 Control issues) and I/E (10 Internal issues versus 14 External issues) in order to provide analyses from multiple perspectives.

2. Research Design and Survey

The survey instrument is shown in Appendix 1, which provides detailed descriptions of each of the critical issues of IS management. Respondents were requested to rate each issue on a scale from 1 to 10, where 10 indicates his/her most important issue(s) and 1 indicates his/her least important issue(s). Apart from the 24 issues as listed in Appendix 1, respondents were also requested to write down other important issues and their respective rating.

200 questionnaires were sent to members of the IT Management Club in the last quarter of 1998 and the first quarter of 1999. Most of them are CIOs or IS managers in medium/large organizations in the Hong Kong Special Administrative Region (HKSAR) of China. The questionnaire requested the participants to rate the importance of IS management issues in the current year (1998/1999) and five years ahead (2003/2004) based on a 10-point scale with 1 being least important and 10 being most important. Data of the 28 returned questionnaires (a response rate of 14%) were analyzed and compared to previous studies in Hong Kong by Burn, Saxena, Ma & Cheung (1993) in 1990 and by Moore (1996) in 1994 as well as the analysis of critical issues of IS management from an international perspective.

3. Results of the Survey

The 24 issues in Table 2 have been listed in descending order from most important to least important based on the average rating by the respondents for the current year (1999).

Table 2: IS Management Issues ? a Hong Kong Study (1999)

Classification: BR = Business Relationship IE = Internal Effectiveness

TA = Technology Application TI = Technology Infrastructure

3.1 Top 10 IS Management Issues of the 1999 Study in Hong Kong

The top 10 IS management issues of the 1999 study in Hong Kong are briefly discussed below in order to provide insight into the rationale behind the issue and its relationship to other issues. The tracking of its historical ranks in 1990 and 1994 as well as its projected rank in 2004 are also presented. Since the study in 1990 used a different research instrument for identifying the top 10 issues (instead of 24), only a few issues can be compared.

While the demand for IS is increasing, the application development backlog remains high. This has been a well-known but unresolved problem for 30 years! Improving the effectiveness of software development as a means to address the application development backlog was perceived by CIOs in Hong Kong as the most important issue in 1994 and 1999 as well as a very important issue in 1990 and 2004. The effectiveness of software development can be enhanced if user requirements can be readily associated with data resource (issue #4) and supported by appropriate information architecture (issue #5). Selective end user computing in the development of reporting/inquiry applications (issue #9) may also help. Traditional development methods and platforms are no longer satisfactory but new methods and platforms have not yet proven themselves. For example, computer-assisted software engineering technologies or CASE (issue #24) was often considered as a potential solution to the backlog problem. However, the use of CASE was not highly rated by CIOs in Hong Kong (24/24), the US (20/24) and Australia (31/31). Sophisticated users are getting impatient.

Due to the continuous change of new technology platforms and the demand for new software, IT departments are required to re-skill their IT professionals and to adopt new/better software approaches, development methods/standards, quality assurance processes, and productivity tools in order to improve/maintain the effectiveness of software development.

This task is frustrated by the continuing rapid changes in infrastructure technology and the increasing breadth and depth of applications, which need to be supported. Many organizations recognized that building an appropriate technology infrastructure, which supports existing applications while remaining responsive to change, is a key to long-term enterprise productivity.

IS is often viewed as an operational activity with little recognition for its strategic contribution to the organization. This can result in executive management viewing IS strictly as an overhead expense. Funding can be cut resulting in missed opportunities for using IT to solve important business problems. This issue is closely related to "IS Strategic Planning" (issue #7) whereby the mission and IS charter are often reviewed.

The organization's data resource is growing in size, complexity, and value. Despite this, it remains largely unrecognized, inaccessible, and underutilized. IS must develop a climate within its department and throughout the organization which values the data resource as a corporate asset. Effective Use of the Data Resource can be achieved if the information architecture (issue #5) can support the integration of information across departmental, functional or geographical boundaries. While information architecture provides the systems and structure to manage information more effectively, managers are often unaware of what data is available, or they do not know how to access the required data in a timely manner and use it effectively to support decision making. Perhaps, the use of data warehousing and data mining technologies may help managers in making effective use of the data resource. This issue has consistently received high rating by CIOs in Hong Kong as well as in other countries.

An information architecture represents the major information categories within an enterprise and their relationship to business processes. An information architecture is needed to guide and coordinate application systems development, facilitate the integration and sharing of data and provide the common foundation structure for building a coordinated, responsive and long-lasting set of business applications.

An IS organization's effectiveness in supporting the needs of the enterprise is dependent on its organizational structure (such as centralized versus decentralized) and its organizational location within the enterprise. This issue tied for the lowest standard deviation of the 24 issues (S.D. = 1.83), indicating a relatively high consensus among the respondents and it has consistently received high rating by CIOs in Hong Kong as well as in other countries.

With more business dependent on IT as a strategic resource for achieving and sustaining competitive advantage, the importance of aligning long-range IS plans with strategic business plans has always been high. However, IS strategic planning is a very difficult task due to rapidly changing business environment, increased involvement and demand of executives, accelerated technology change as well as the lack of familiarity with IS planning methodologies. This issue has consistently received high rating by CIOs in Hong Kong as well as in other countries.

Some senior executives and IT managers have begun to build creative and innovative systems that can be utilized to create new business opportunities and enable an organization to differentiate itself in the marketplace. This issue has consistently received high rating by CIOs in Hong Kong as well as in other countries. This issue is dependent on the effective use of data (issue #4), the development of an appropriate information architecture (issue #5) and its impact in improved IS strategic planning (issue #7).

The proliferation of end-user computing through personal computers offers the promise of improved productivity but also the dangers of inadequate management control. Information systems management must balance control against the need for slack. Clarification of IS and end-user roles is a necessity.

Most organizations have a large investment in their existing applications portfolio. Some "legacy" applications may need to be retired quickly if the cannot be maintained or the maintenance cost is far too high. Others may need to be leveraged for many years before they are replaced. Integrating new technologies and migrating to new operating environments can be difficult. The Y2K issue has raised the importance of converting the legacy applications to become Y2K compliant. Some legacy applications cannot become Y2K compliant and they will have to be replaced with new systems/packages, reducing/eliminating the need to support some legacy applications in the next millennium.

3.2 Future Issues

In general, CIOs gave higher average rating for issues in 2004 than its counterparts in 1999. The major change of the IS management issues between 2004 and 1999 are compared and discussed below.

3.2.1 More Important Issues for the Next Century

CIOs gave the following issues much higher average rating for 2004:

Outsourcing Selected Information Services: it scored higher rating (+1.72) and jumped from 23^rd in 1999 to 13^th in 2004. This issue has received the highest jump both in average rating and ranking. When more outside contractors may be able to provide some services more cost effectively, the internal IS organization is no longer has a monopoly and more organizations are expected to outsource part or all of their IT functions. What services should be outsourced? How should contractor relationships be managed? Fair and objective evaluation techniques are needed for assessing costs and benefits as well as potential risks from loss of control. For example, the Information Technology Services Department of the government of the Hong Kong Special Administration Region has planned to outsource two-third of its IT projects from 2000.

Facilitating/Managing Decision and Executive Support Systems: it scored higher rating (+1.32) and jumped from 21^st in 1999 to 11^th in 2004. Increasing the ability to exploit situations for competitive advantage depends on enhancing the ability of management to "experiment" with decision possibilities. Many other issues also depend on this capability. Decision support tools have long been viewed as a method for introducing modelling tools to executives to improve their decision making. However, these efforts have met with mixed success.

Developing and Managing Electronic Data Interchange (EDI): it scored higher rating (+1.32) and jumped from 22^nd in 1999 to 17^th in 2004. Electronic communication (via the Internet or proprietary EDI networks) with customers and suppliers may offer competitive advantage to a company or it may be a requirement for staying in business (competitive necessity). IS executives must develop (or adapt to) standard transaction formats, keep current on technology developments, and learn to manage inter-organizational projects. The author believes that EDI services would be migrated from proprietary EDI networks (e.g. Tradelink) to Internet-based EDI networks, which will facilitate both local and global access at a very low cost in order to attract a critical mass of customers, especially small and medium enterprises (SMEs).

Using Information System for Competitive Advantage: it scored higher rating (+1.00) and jumped from 8^th in 1999 to 1^st in 2004. In many businesses, long-term survival is dependent on using information systems to gain competitive advantage. Competitive advantage results from recognition of opportunities through creativity and innovation, which will be followed by rapid implementation. These are historical weaknesses of the IS organization.

3.2.2 Less Important Issues for the Next Century

CIOs gave the following three issues lower average rating for 2004:

Managing the Existing Portfolio of Legacy Applications: it dropped from 10^th (6.89) in 1999 to 23^rd (5.88) in 2004. The decrease in its importance in this 5-year period is partly due to legacy applications being gradually replaced/outsourced in order to resolve the Y2K problem.

Increasing Understanding of IS Role and Contribution: it dropped from 3^rd (7.29) in 1999 to 13^th (7.08) in 2004. IS is often viewed as an operational activity with little recognition for its strategic contribution to the organization. This can result in executive management viewing IS strictly as an overhead expense. Funding can be cut resulting in missed opportunities for using IT to solve important business problems.

Recruiting and Developing IS Human Resources (ISHR): it dropped from 10^th (6.57) in 1999 to 23^rd (6.44) in 2004. Current and future shortages of qualified IS personnel threaten the organization's ability to make effective use of information technology. More emphasis needs to be put on developing business skills such as object-oriented and multimedia applications. This issue is closely associated with IS Outsourcing. When more IS services are outsourced, "Recruiting and Developing ISHR" will become less important. Perhaps, the direction for ISHR is to increase emphasis in the evaluation of IT products and services, contract negotiation and service level management.

4. Critical Issues of IS Management ? an International Comparison

Since the study adopts a similar structure that is used in several countries, it may be useful to compare and contrast a number of critical issues. Hence, this section provides a cross-comparison of the Hong Kong study in 1999 together with results from three other studies from the US in 1994 by Brancheau et, al. (1996), from Taiwan in 1994 by Yang (1996) and from Australia in 1996 by Pervan (1997). The ranking of these issues among the four studies is shown in Appendix 1 with the issues listed in descending order from most important to least important based on the ranking of results from the 1999 Hong Kong study.

4.1 Critical Issues of IS Management ? Cross-comparison

Among the top 10 issues of the 1999 Hong Kong study listed in Appendix 1, six are in the top 10 rankings in the US study; six are among Taiwan's top 10 rankings; and five are among Australia's top 10 rankings. The following three issues are among the top 10 rankings in all four studies:

• Improving the Effectiveness of Software Development (IE)
• Making Effective Use of the Data Resource (BR)
• Developing and Implementing an Information Architecture (TI)

"Building a Responsive IT Infrastructure" is ranked as the most critical issue in the US and the second most important issue in Hong Kong and Australia, though it was not included in the Taiwan study. "Using Information System for Competitive Advantage" is ranked as the most critical issue in Taiwan, Australia and Hong Kong (2004).

5. Conclusions

This study provides a framework of analysis on the critical issues of IS management in Hong Kong in 1999 and compares with previous studies in Hong Kong, USA, Australia and Taiwan. It should be useful for CIOs and senior executives in the management and control of the IT function, especially in IS strategic planning.

The small number of survey respondents affects the reliability of this study. Hence, it is difficult to use the results to generalise and draw more precise conclusions. A further study with larger samples will be desirable. The Y2K problem has a tremendous impact on the priorities of CIOs and senior executives in choosing important IS management issues, the author believes that another study after the changeover of the new Millennium may eliminate this temporal impact. Some CIOs in "other issues" of the questionnaire indicated some important issues that were not included in the research instrument (e.g. electronic commerce and knowledge management) and these issues should be included in the next round of study. While the comparisons of the results from the latest studies in various countries provide some useful cross-references, it would be desirable if a large-scale study could be conducted in the same year in several countries.

CIOs and senior executives in public sector and private sector may have very different priorities on various IS management issues. Hence, more focused studies on the similarities and differences between two groups will be desirable. Also, the role of government (e.g. ITBB, ITSD, universities, VTC, HKPC, etc.) and professional bodies (e.g. HKCS, HKIE, HKMA, etc.) in addressing these critical issues should also be examined.

Appendix 1: Survey Research Instrument

Critical Information Systems Management Issues

The following 24 issues have been listed in descending order from most important to least important based on the average rating by the respondents for the current year (1999). Respondents were requested to rate each issue on a scale from 1 to 10, where 10 indicates his/her most important issue(s) and 1 indicates his/her least important issue(s). The original sequence in the survey questionnaire is different from this list.

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