The Use of IT Strategies with Business Goals - Assignment Example

? IT governance for a service organization Contents Executive Summary 3 Dell – an overview 4 Dell – service strategy 5 IT governance issues 7 IT governance frameworks – evaluating ITIL and Cobit 8 Replacing ITIL with Cobit 11 Risks and threats related to online business strategies 12 Governance controls for e-business 13 Benefits and challenges of new governance standards 13 Benefits 13 Challenges 14 Conclusion 15 References 16 Executive Summary IT tools and applications have become a standardized way of performing business operations today with most organizations seeking enhanced quality in the nature of goods or services provided to the clients and meeting the expectations of the clients in terms of speed of delivery, effectiveness of goods and services and reduced cost of operations for improved profits. IT-enabled operations and business infrastructures are found to be more capable of producing desired results in terms of effectiveness of operations, cost advantage, and quality standards. The application of innovative technologies and tools in diverse industrial sectors has reported an increase in value appreciation and speed of operations that has a positive impact on productivity and profitability of business establishments. However, the implementation of IT tools and technologies is not an easy task since it requires huge investment outlays, personnel training and a changed outlook to existing governance practices that adapt to new methods of operation. The advantages and scope of implementation of these tools and technologies must be supported by strong governance practices that support a highly advanced system of work operations. “The problem of how to deploy IT in such a way that it adds value to the business is far from new and has been the focal area for information managers for a number of years” (ISACA, 2008). Often the implementation of effective IT governance practices is limited by budgetary constraints, lack of awareness of new and emerging technologies, and the proper planning for optimal use of existing resources. The report provides a deeper insight into the application of popular IT governance frameworks like ITIL and Cobit within an IT service organization to analyze its effectiveness, identify its limitations and define its scope and possibilities. The organization chosen for this report was Dell owing to its global market presence and leading service provider to millions of customers around the world. Dell – an overview The role of IT in the present business environment has assumed increased significance with most organizations adopting it as the prime strategy to achieve business goals. Leading IT companies like Dell have influenced the ways in which the conventional role of IT thus has shifted from being an operational support mechanism to a primary enabler contributing to increased efficiency and effectiveness in organizational performance. The report provides a deeper insight into the IT governance standards and controls adopted by one of the leading IT service organizations, Dell. Regulatory compliance and audit controls over organizational operations have become a reality today with more and more companies adopting globally accepted IT governance frameworks for increased returns on investment and increased security in operations. IT organizations like Dell today operate under increased legislative pressures to ensure high standards of service, effective compliance with governance and legislative requirements, and optimizing work processes for increased information security. IT governance has been defined by ITGI (2009) as the “responsibility of the board of directors and executive management. It is an integral part of enterprise governance and consists of leadership and organizational structures and processes that ensure that the organization’s IT sustains and extends the organization’s strategies and objectives”. The controls and standards established through various frameworks like ITIL and Cobit provide the IT companies with the direction to control and monitor activities in the IT sector to fulfill specific goals and objectives. Dell is a global IT solutions provider based in Texas, United States. The company offers its customers with a wide range of computer hardware, software solutions, and business services. The company is focused on delivering high value services through innovative enterprise based solutions that are tailored to meet the specific needs of the customer (Dell company website, 2012). The company’s IT policies and practices are based on the principles of reducing costs and increasing productivity through simplifying IT operations and streamlining IT investments with business goals and objectives. The company is considered as one of the leading IT service providers catering to the IT solution needs of millions of business enterprises across the world. The report identifies the key aspects of IT governance and its implications for operational efficiency through an in-depth exploration of Dell’s IT governance strategies to identify loopholes and service gaps, and what are the ways in which it can leverage its business goals and objectives through effective governance practices in the IT sector. Based on the findings and observations the report provides definite conclusion on how it can strengthen its governance practices for increased efficiency in operations and achievement of goals. Dell – service strategy The company has structured its operations and work processes over the years to accommodate increased efficiency and effectiveness in operations. The focal strategy of the company has been on leveraging its people, processes and technology towards optimized performance (Dowling, 2002). This is evident in the way the company has adapted rapidly to the changing needs of the dynamic business environment. Work processes at Dell are subjected to a constant process of change and updating in response to business challenges and new market opportunities presented by evolving technologies. The company has a horizontal organizational structure that enables increased communication and collaboration between various departments and functional units (Holzner, 2006). The organization is headed by its CEO Michael Dell. Dell since its early days, has focused its service strategy on customer needs and requirements that have gradually evolved from desktop personal computers to laptops and notebooks. Enterprise solution development services by the company focuses on providing its clients with customized application tools to help businesses streamline their operations, integrate functional aspects for efficient outcomes (Macomber, 2012). One of the key features of Dell’s operations is its close networking with suppliers, and distributors that help them remain connected with the customer at all times. The company has effectively adopted the policy of outsourcing key work processes to ensure round the clock customer service. The focus is on improving customer service and accessibility to Dell’s services instantly. Sales and technical support are the key processes outsourced for greater efficiency and increased market shares. The global functions in marketing and technical support are handled by regional headquarters who are responsible for framing and planning strategies (Kraemer and Dedrick, 2002). The company IT operations are governed by ITIL framework and standards that enable the company to visualize new service opportunities, streamline existing operations for extended business benefits and focusing on enhanced service scope. Over the past few years Dell has focused its energies on simplifying IT operations and promoting scope for innovative work practices to sustain market shares and increase competitive advantages. Much of the company’s investment is geared towards driving innovation and implementing infrastructural capabilities in accordance with ITIL work processes. The complexities of business processes under conventional legacy systems were transformed to accommodate simplified work processes that served to reduce complexities and promote globally accepted work standards. The IT governance controls ensured increased transparency in operations and high level of management participation at each stage (Yochem, 2010). IT governance issues Quality control and audit mechanism have focused increasingly on issues related to data breaches and potential violations that can result in loss of reputation and customer confidence. The existing work protocols are based on increasing networking possibilities that materialize through multiple alliances and partnerships in solutions development and service networking. This goal of such enterprise strategies is reducing costs, simplifying work processes, mitigating operational risks, and improving customer service. Such strategic decisions have not only opened new opportunities for revenue generation and expanding into new markets, but it has also improved the IT processes and policies within the organization. However, this is not an easy task given the complexities of global markets, emerging technology tools, and increasing competitive pressures that force organizations to adapt rapid changes within its existing work processes and operational networks. The key issue lies in identifying emerging trends and optimizing resources for effective results in global markets. IT sector is an increasingly dynamic field that is exposed to widespread changes in terms of technology, work processes and innovative applications that creates the need for new perspectives and transformation in existing work processes. This is not only a challenging task but requires distinctive capabilities in terms of manpower skills, competencies and leadership that can support the organization in sustaining profitable ventures. Dell faces similar challenges in retaining its key capabilities and sustaining its competitive edge through the adoption of governance frameworks like ITIL. While IT governance frameworks like ITIL provide the standards and control mechanism for effective IT strategies, the key to effective operations lie in molding policies and practices to the needs of the emerging markets. There are other frameworks like Cobit that provide organizations with similar standards. The subsequent section of the report provides a comparative analysis of ITIL and Cobit and how frameworks like Cobit can help Dell in overcoming such challenges. IT governance frameworks – evaluating ITIL and Cobit Governance frameworks like ITIL define the scope of IT management and work processes in general but it must be noted that the IT Governance requirements are different for each company. The management should look into these requirements and design a methodology, techniques and standards to achieve it. The composite framework which has been drawn should have mechanisms used for steering, controlling the working of an organization. Therefore, most of the organizations revolve around globally accepted standards that help the organizations in integrating and streamlining its operations for greater efficiency in terms of performance and costs. The IT Infrastructure Library (ITIL) is a popular framework that enables the organizations to customize its operations in an attempt to promote quality computing services in the IT sector. The framework provides a scope for the identification, planning, delivery and support of IT services to an organization. ITIL is totally focused on IT operations and therefore it is different. The IT work processes and operations are based on the service strategy and design protocols established in the ITIL framework. The focus is on cost cutting and establishing well-grounded compliance standards that can help the company meet the needs of the market. In the IT sector, it is common to have constant changes and the organizations must support and be ready for the changes. The role of the Chief Information Officer (CIO) is critical in preparing the organization for relevant changes and plan innovative strategies that help the organization adapt to the changing times, achieve its goals without much problems. Dell’s CIO Robin Johnson felt that the organization was functioning in a complex IT environment with orders for new configuration machines piling up and service centers struggling to fulfill their growing targets (Computerweekly, 2010). An evaluation of the workplace revealed that the organization was working with legacy equipment that needed to be scaled for improved performance. The workplace used a mixture of servers that created its own complexities in operations management. Based on this evaluation, Johnson decided to standardize the IT functions and work processes by introducing standardized servers and updating existing machines to meet the demands of the customers effectively. The drive for standardization proved cost effective and improved work efficiency. Another significant step taken by Dell towards improved IT governance was automated server positioning and virtualization that reduced engineering costs and power costs immensely (Computerweekly, 2010). ITIL is a popular framework adopted by a number of organizations like Dell, however, the approach does have its limitations. One of the key limitations lie in the amount of restructuring involved in the process of implementing ITIL. ITIL governance standards enable a technician at Dell to resolve IT issues instantly by following set procedures or similar complaint handling log that enables the technician to refer and address the client issues immediately. In case the problem is serious or complex, it is escalated to the senior management team for redressal. This helps in increasing the value of services provided to the customer besides streamlining its operations effectively. The service standards outlined by the ITIL is comprehensive and effective. However, the adoption of all governance measures by ITIL requires widespread changes in the way business processes are run in order to provide extended benefits to the organization. This is on account of the fact that the ITIL covers service delivery scope, planning, implementing service management, infrastructural management, application management and IT security management. Thus, while the IT support service policies at Dell help in providing its customers with immediate action, the IT department fails to recognize the actual problem that is causing these customer complaints and the measures that can be taken to reduce such complaints (Worthen, 2005). Cobit on the other hand provides organizations with an end to end life cycle control. It is based on globally accepted best practices that encompasses extended knowledge sharing and constantly evolving practices. One of the primary benefits of adopting Cobit IT governance standards is its alignment with enterprise goals and objectives. It ensures that the IT services are delivered while conforming to high quality standards and effective implementation of security protocols. The above instances reflect that organizations like Dell struggles with the blueprint as it is not easy for the IT department to set the guidelines of its goals, position, services and the need for constant changes and then let the business customers know about the capabilities and services. Cobit can contribute to greater operational efficiency at Dell through its value added principles based on knowledge sharing work processes. Thus, the customer service unit at Dell can utilize the feedback and customer grievances to improve product features, design effective solutions strategy and provide innovative solutions for expanded market shares. Replacing ITIL with Cobit Replacing ITIL governance framework with Cobit indicate widespread changes within the organization. The incorporation of Cobit requires a phase by phase approach where the implementation team can evaluate the distinctive work processes, identify the performance gaps, and deploy strategic measures to align IT processes with core business functions. The primary goal of these activities must be to integrate core business functions and units with IT infrastructure and controls for efficient management. A knowledge sharing work culture through the deployment of IT services can contribute to streamlined operations at all stages and a well defined business process that provide a clutter-free work environment. While information processing and sharing form a vital aspect in developing operational efficiency, the business information needs must conform to Cobit criteria that include relevant, timely, confidential, integrity, accessibility, compliance and reliability conditions. Thus business information sharing must be relevant to the context, delivered timely, maintain confidentiality, provide accuracy, accessible easily, comply with regulatory norms, and must be from reliable sources. Such measures are important to ensure that the IT governance practices align strongly with the business goals. A key aspect in defining effective governance structure within Dell is communicating and creating employee awareness on vital issues related to the implementation of Cobit framework. IT governance is required to monitor the IT investments. Adopting strategic frameworks like COBIT will help the company in defining its responsibility and delivery of IT investments. However, the changes associated with such implementations require people involvement and participation to ensure successful outcomes. The implementation team needs to define and explain the strategic consequences, its benefits and implications at each operational level, and promote employees to participate in the discussion sessions for improved understanding. Training workshops and awareness sessions are important measures that can contribute to successful implementation of Cobit standards within Dell. Risks and threats related to online business strategies IT governance issues have assumed increased significance with most organizations shifting to online commerce that provides vast potentials in the form of direct customer interaction, increased accessibility and convenient online business transactions. The virtual environment presents the immense marketing scope and potentials, however, it also presents increased risks in the form of threats and vulnerabilities that can plague online application tools and systems. Data protection issues become a serious concern for both business enterprises and customers. Dell has similar services in place to cater to the increasing interaction with the customers. The subsequent paragraphs provide an overview of how Dell can mitigate these risks and adapt its IT governance practices for improved results in the long run. IT governance frameworks like Cobit can prevent security breaches in an online environment through regular audits and necessary frameworks that restrict unauthorized access to systems. The organization needs to evaluate the risks and vulnerabilities of the online system tools and applications before defining specific guidelines on how to prevent and minimize threats. Standard security protocols must define and outline user behavior and actions in specific situations. Regular internal audits will focus on implementing controls over employee actions and system risks for possible improvement in this direction. Governance controls for e-business Specific areas of operational concern for e-business strategies at Dell involve security audit controls, process optimization for improved controls over IT service delivery in the online environment, quality controls of products and services on an ongoing basis and aligning IT goals with business goals for enhanced organizational performance. While ITIL has been effective in establishing and outlining governance controls, it fails to address the key problems and challenges responsible for negative feedback or operational outcomes. The implementation of Cobit will enable Dell to align its IT goals with business goals, provide focused control over strategic areas in operations, provide a clear view of how IT can support management decisions, support clarity in understanding key responsibilities and scope for improvement in work processes, and fulfill the requirements of aligning IT functions to key business units such as finance, risk, quality and audit. Benefits and challenges of new governance standards Benefits The potential benefits of IT governance frameworks like Cobit are realized in achieving business objective by assigning each element of mission and strategy, guiding and enabling desirable behavior in using IT and executing outsourcing arrangements, overcoming shortcomings and providing stability, improving customer relationships and bringing customers, companies and external IT providers together into an IT governance framework. The critical success factors of the Cobit are that it should be defined effectively, taking all namely IT service management perspectives of people, process, technology and information as one, senior management’s commitment, assess projects based on alignment to business requirements, effective decision making processes, organizational maturity that includes IT governance and corporate governance. Challenges IT governance roles include directing steering committees with advisors, controlling architecture boards and planning committees, executing automation as required, communicating roles, and guiding principles of process owners. However, this does not imply effective governance practices. The key challenges in implementing Cobit over ITIL remain. The IT service management focal points will be people within the organization, processing the activities, the technology used, information on metrics and measurements, customers and service of requirements and delivery. The primary issue lies in equipping the employees with the specific understanding and knowledge of the framework, its application and implied outcomes. The widespread changes mandated by the incorporation of such standards indicate huge complexities in terms of monitoring results, identifying gaps and aligning processes effectively. IT service management objectives is to enable effective , efficient and adaptable IT services to the business The people with the right attitude and expertise in the subject using the available information, performing by using the right technology which helps in processes that are well guided, so that high quality services are given that satisfy the business requirements. IT service management focuses on people within the organization, process, technology, information and customer requirements. These factors are focused on if they are measured relative with service, time to value and cost. They also focus on shareholder value, market share, competitive advantage, market trends and business strategy (Leopoldi, 2010). These considerations create the primary challenges to effective implementation of Cobit governance frameworks since benefits are not tangible or visible in short term period. Conclusion IT governance means specifying the decision rights and the decision making mechanics to enhance the desired behavior in the use of IT. IT governance frameworks like ITIL and Cobit provide the basic framework and standards for making decisions related to IT investments and guiding IT operations. A good and effective IT governance ensures that investments made in IT are optimized to provide maximum benefit, deliver high value results to the business, minimize risks in operations and align IT strategies with business goals. While ITIL does support some of these objectives as highlighted in the report, it fails to address the key business objectives and its alignment with IT functions. Dell can enhance its operations and performance by replacing ITIL with Cobit. The report has highlighted the underlying issues and benefits associated with the incorporation of Cobit governance frameworks. References Computerweekly (2010). Budget for innovation: case study – standardising Dell. Available from http://www.computerweekly.com/feature/Budget-for-innovation-Case-study-standardising-Dell [accessed June 11th 2012]. Dell company website (2012). Dell management console: implementing ITIL best practices. Available from http://content.dell.com/in/en/business/d/sb360/dmc-itil-practices [accessed June 8th 2012]. Dowling, J. (2002). Anatomy of a technology selection. Available from http://www.technologyevaluation.com/research/articles/anatomy-of-a-technology-selection-16668/ [accessed June 8th 2012]. Holzner, S. 2006). 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