Introduction
Businesses work towards the end that they make profits. The business plan, structure and strategy, is what determines whether the company ends up in profits or not. The task of developing business plans, systems and their alignment strategy and analysis, rests with the top leadership.
The chief executives must determine the overall business strategy and the operating systems that support the implementation of business goals. Business planning has to do with business goals identification, existing design and business priority clarification.
The framework also outlines the company’s action plans to complete the set goals, objectives and priorities. The achievement of business plans requires effective implementation made possible by use of operating systems such as the information technology system.
Information system design has to do with the aligning of all available information technology (IT) resources and functions towards the facilitation of the business goals and objectives. It is acknowledging the vital role that information technology plays in the success of business ventures.
It is necessary to understand business goals and IT goals and their interconnection (Steven, 2007). Aligning IT investments with business goals is already bearing fruits in some business corporations in the USA (Heather, 2004).
This means that the chief executives must develop the linkage between the business goals and the information technology system, a process known as, business – IT alignment. It describes a situation where the information technology resources developed must be applied harmoniously with the business priorities, strategies and goals (Luftman, 2000, p. 3).
Information Technology System Case Study Analysis
Organizational transformation value indices include the business, IT and prudent measures. IT plays a significant role in the transformation of business corporations and other institutions (Abareshi, Martin & Molla, 2010).
The fact that information technology plays a crucial role towards the achievement of business goals and priorities is clear (Luftman, 2000). Case studies confirm the basic coexistence between businesses and IT. Such is the case study of Sunshine State Share Dealing Service (SSSDS).
The conversion project entailed bulk share dealings that could have been frustrating to do manually. The conversion process involved dealing with over 5 million customer accounts. The process was not easy.
Challenges
SSSDS executives realized that they had to face challenges to tackle in order to achieve their goal:
Sorting the files containing customer details. This was a difficult task because of two reasons. The extent and scope of the work was enormous and tedious. It entailed dealing with 5 million customer accounts. The customer accounts seemed disorganized and chaotic.
Creation of integrated customer registers. The conversion from a building society to a share dealing service demanded IT system to integrate the details of customer accounts in the share register. This task was difficult because the details in the customer accounts were not even.
Bulky share issuing and trading (dealing). Without precedence in large share trading, the Sydney Stock Exchange was not prepared to handle such a vast process. Developing a share dealing service that could perform client’s instructions without providing advice became necessary. It was a difficult decision to make.
IT Enablers
The key IT enablers for the SSSDS included the governing board approval of the structural and IT system changes that needed to be undertaken. There was also a conceptual understanding of the IT products and how they could be aligned to meet the business needs. The IT professionals understood their role and worked diligently to deliver on the targets.
Information Technology (IT) developed as a great enabler in the practice of business change management (including conversion). Business conversion like the one undertaken by SSSDS depends on successful strategic alignments. In this case, there is a prerequisite for a quality management system that facilitates the relationship between IT enablers and strategic partnerships (Li et al, 2004).
SSSDS conversion process involved heavy reliance on Information Technology. Strategic partnerships and alignments by the governing board became necessary. The SSSDS administration went into partnership with three separate corporations (Adapted from the case study document on SSSDS).
The Macquarie Financial Service (MFS) handled all the customer share registrations and banking procedures. They built the nominee account system to which the Sunshine State linked their customer account system for easy administration of the share dealings.
The other strategic alignments included partnering with Turball and Associates to prepare the bid and offer prices for the Sunshine State traded shares. This partnership benefitted the conversion process because Turball and Associates had distinguished itself as a specialized retail market maker in Australia.
They traded the shares well. The Sunshine State also went into partnership with the WACCA Synergo who supplied the software, HANDS – UP. This was a client – server system that managed all the electronic dealings of the conversion.
Information Technology (IT) Governance Framework
Excellent IT governance practices yield increased returns to the business. This refers to issues relating to IT decision making within the corporation – who qualifies to make decisions and how are IT domain decisions made (Weill, Woodham, 2002).
The chief executive has a basic function to execute the company’s information technology system. This involves setting the right organization structures. It also involves the operation and a decent management leadership.
This requires a framework that can reduce the gap between the system controls, business risks and technical matters. Decision making should be the focus of the general framework adopted in business (Kellerman, Lofgren, 2008).
One such a framework is the CobiT Framework. It is a data management system which defines the need for IT, its uses and stakeholder. CobiT frameworks bridge the gap to business requirements and provide a measurement against them, models the business activities within appropriate processes. The framework also identifies the business objectives to be met and resources at the disposal for the process.
CobiT is a framework needed by three levels of stakeholder including people with interest in the IT services as a tool for decision making or assistance to the operations. Other stakeholder includes the IT service providers (within and from outside the business) and IT controllers both external and internal.
CobiT is a need based IT governance framework built on five principles. These principles allow CobiT to achieve business – IT alignment effectively and efficiently (IT Governance Institute, 2007).
Business focus – it provides guidance for managers and business owners while still serving the auditors, regular users and the service providers.
Process orientation – it generates business activities within the four main IT domains. It provides an effortless user language that enables all users to handle IT activities.
Controls based – it provides the overall control framework for the management of all IT related operations in the business.
Measurement focus – it provides a solid process of assessing the business – IT alignment. It provides the status report with which management teams can choose the next course of action. It does this by providing performance measurement matrices to check alignment of IT to business goals, benchmarking maturity models that define the basics for system improvement and process execution activity goals.
Applying Earl’s Multiple Methodology by using CobiT alignment maturity model
The case study document defined SSSDS to be a multi-project with several sites and suppliers. Alignment maturity models help top managers to be able to gain control over the information technology infrastructure. In CobiT, this alignment begins with a thorough assessment of the processes to determine the current status of the business enterprise (in this case SSSDS).
The goal to be achieved and the measurement tools to ensure SSSDS meets the intended goals complete the assessment. CobiT defines the generic maturity scale that top managers use to find areas that need improvement in the CobiT processes. The scales must not be gritty.
The Earl’s Multiple Methodology tackles the needs of the company from three angles: the top –down analysis, bottom – up and inside – out measurement. With this method, Earl clarifies the business strategy verses the IT strategy, evaluates the current IT systems, use how to integrate legacy systems and innovation of new opportunities that the IT system can provide.
Top – down analysis
The top – down application analysis begins with the review of the SSSDS general business plan. This determines a number of IT goals to be articulated. IT goals describe the process goals that fulfill them and, in turn, the process priorities break down into activities (activity goals).
Bottom – up analysis
The bottom – up application begins with the IT systems and processes already in place at the SSSDS. The method checks the current status of the IT system in order to determine strength or weakness and then recommend the areas of improvement. The overall goal is not the determining factor but rather the performance levels of the current processes and systems.
SSSDS Application Matrix Model
Traditional models of application portfolios did not link business with IT. Emphasis is on the relationship between the systems and tasks to be performed. The modern application portfolio models outline IT contribution to the business. The model considers applications which have immediate and future relevance to the business. It also the metrics used to measure the impact of applications.
Process identification using CobiT Framework
The top – bottom analysis would work best on the level 0 in CobiT generic maturity scale. At level 0, the management processes of SSSDS have not been applied. The overall objectives of SSSDS determine process goals and activities.
In the CobiT alignment maturity model, the bottom – up application would take place at each of the stages 2,3,4 and 5 of the generic scale and improvement made on each process rather that overhauling the entire system.
Assessing Business – IT Alignment Maturity
Firms compete to win the market by providing a range of products and services, affordable pricing and technology. The pressure in highly competitive markets forces the firms to develop new business strategies (Karin, 1998). Business strategy in such markets is dependent on alignment with the right information technology.
There are 5 levels of maturity according to the Strategic Alignment Maturity Model (Luftman, 2000). The 5 maturity levels include:
- introductory level,
- commitment level,
- established/focused level,
- improved/managed level and
- optimized level.
SSSDS Process Maturity Rating using SAM
SAM model usage shows how SSSDS aligned the company strategy with its technology. It significantly increased the relation between IT and business at SSSDS and outlined some weaknesses.
All the 5 maturity levels in SAM focus on six criteria of assessing maturity including communication, competency, governance, partnership levels, IT scope and architecture and presence of relevant skills. SSSDS shows a growing rating for all the six criteria in the SAM model and categorizes the share dealing service at level three (2) – the committed level.
The description of the six criteria used in assessing maturity levels of SSSDS follows: (refer to Appendix 1 for the data).
The evolved Information technology undertakes a strategic role in business enterprising. The problem encountered is the lack of active frameworks within which to apply IT (Venkatraman & Henderson, 1999).
Using the Henderson & Venkatraman’s SAM, the domain that best describes the SSSDS strategy is the internal domain. This domain focuses on the company’s internal processes, skills and issues such as customer service and attention. This domain operates along two considerations namely the strategic fit and the functional integration (Lien, 2008 p. 21, 22).
SSSDS Systems Rating Justification
The share dealing service is using cost – effective methods within their organization and functions. This becomes easier because of the GABBA system. The system comes in handy for the daily running of the company. The HANDS – UP system also reduces cost and models a client – server.
The other systems such as the market maker, voice recognition, telephone – based banking and the self select system also impact the company significantly. The management team meets every two weeks to monitor the progress of all the systems. There is reasonable business – IT linked matrices shown against score card reported at the bi-weekly management meetings.
Recommendations
The business – IT connection is yet to be fully understood. This needs improved communication. The various functionalities of the SSSDS system are yet to be fully harmonized.
- The top management should invest more resources towards the development of IT workers in order to improve their business – IT alignment.
- Embrace continuous briefings between the management and the IT service providers, assessments and system development.
Questions for SSSDS Rating
The questions to the board members concerning IT governance and assessment depend on the strategic position IT plays in the company and its relevance. These questions vary from organization to organization (Chris & Ofir, 2010). To the various leaders of SSSDS, these questions should be asked.
- How many processes are not yet documented at SSSDS?
- What are the current staffing levels?
- What strategies help users and service providers understand the business – IT alignment?
- Did the company handle protocol inflexibility?
- What are some of the business metrics utilized at SSSDS?
- What are the budgetary control strategies for SSSDS?
- Will SSSDS consider having a business sponsor/donor in the future?
- What will the executive do to enhance creativity and entrepreneurship at SSSDS?
Conclusion
Information Technology is one of the leading business development factors. The company is profitable to the level which it utilizes technological assets.
The management should provide a well documented framework which enables the understanding of the business – IT alignment and controls the degree of the system operations. The system should undergo continuous assessment to determine maturity levels in order to have continuous improvements.
Reference List
Abareshi, A., Martin, B., Molla, A., 2010. Determinants of Organizational Transformation: An IT-Business Alignment Perspective1. Interdisciplinary Journal of Contemporary Research In Business, 1(11), pp.8-27.
Chris, B., Ofir, T., 2010. IT and the Board of Directors: An Empirical Investigation into the “Governance Questions” Canadian Board Members Ask about IT. Journal of Information Systems, 24(2), pp.147-172.
Heather, H., 2004. Bad Times Boost Efforts to Align IT, Business Goals. Computerworld, 38(43), p.5.
Karin, B., 1998. Can you align IT with business strategy? Strategy & Leadership, 26(5), pp.16-21.
Kellerman, J., Lofgren, P., 2008. Application Portfolio Management. Master Thesis in Informatics. Report no. 55, ISSN: 1651 – 4769
Li, S., Rao, S., Ragu-Nathan, T. S., and Ragu-Nathan, B., 2004. IT Enablers and Partner Relationship, the Keys to the Practices of Supply Chain Management. Computer Information Systems Working Papers. Paper 11.
Luftman, J., 2002. Assessing Business – IT Alignment Maturity. Communications of the Association for Information Systems. 4(14).
Steven, D.H., 2007. How does the Business drive IT? Identifying, Prioritizing and Linking Business and IT goals. ISACA Journal, (6), pp.45-48.
Venkatraman, H., Henderson, J.C., 1999. Strategic alignment: Leveraging information technology for transforming organizations. IBM Systems Journal, 38(2/3), pp.472-484.
Weill, P., Woodham, R., 2002. Don’t Just Lead, Govern: Implementing Effective IT Governance. SSRN Working Paper Series.