Corporate Travel Company - Management - Case Study Example

IT alignment: Case study of Corporate Travel Management Company Name: Number: Course: Lecturer: Date: Introduction The use of information technology to bring competitive advantage has been seen to be evident in many organizations. Your organization, Corporate Travel Management, should also adopt the same by way of aligning the services it offers so that it taps from technology. For this to be realized, there are several factors that need to be taken into consideration so that the whole process of information technology is adhered and taken care of. In the 1980s, IT was not a major issue with many management executives. This has been due to the fact that information technology had not yet been an important integral function of business processes. This is no longer the case. There has been growing concerns that businesses should align themselves to tap from information technology. There have been four major issues that have been said to be of major concern with many organizations. One of the issues include business process engineering, business and IT alignment, IT strategic planning and privacy and security. As the CEO of the company, there is the need to align the IT processes in the company so that it takes into consideration the changing times and the emerging technologies. The undertaking of business process redesign (BPR) is for the benefit of achieving improvements which are in order-of-magnitude over other outdated form of organization. There are developments which have been made by the academicians and the practitioners in the business and technology world which are aimed and overhauling the structuring of the forms of the current focus of concern. Many of these developments have not been successful yet. The main objective of this paper is to address the need for business and IT alignment to Corporate Travel Company. This report is to be used by the CEO of this company. Company background Corporate Travel Management is a company which is based in Australia. This company deals with travel management for corporate clients. This company handles all types of travel issues for corporate clients ranging from travel air tickets, arranging for the places to visit so that the travelers get things when they are in order. They get requests from host of companies in Australia and sometimes will need to service requests from abroad. This therefore needs to have effective ways of communicating with the varied clients. Since this company handles travel issues of many companies, there is need to have advanced technologies. ISO-IEC38500-2008 Corporate Governance of IT Standard Due to the inadequacy of information technology systems, the organizations face stiff competition and undesired performance or exposure to risks of noncompliance with the legislation thus the emergence of the ISO-IEC38500-2008 standards that gives a better guidance on the role of the top management concerning the corporate governance of information technology. The ISO-IEC38500-2008 corporate governance of IT applies to business or non business organization; public and private companies, government bodies and non-profit making organizations. Due to the efficiency of IT governance of this standard, those at the top management levels understand and fulfill their legal, regulatory and acceptable obligations concerning use of IT in their organizations. The framework is made up of three key aspects; definitions, the principles and a model. The same sets out six principles of excellent corporate governance of IT that suggests better manner isms to be considered when making decisions. These are responsibility, acquisition performance, strategy conformance and human behavior. The role of the standard is to strengthen effectiveness, efficiency and ethical use of IT in entire organizations by assuring the organizations’ stakeholders that they can be confident of realizing corporate governance of IT if the standards are followed to the later. The standard also informs and guides the directors to govern the use of IT in the organization. In addition the standard is a basis for objective evaluation of the corporate governance of IT. Value and IT & Business Alignment Information technology in the context of value cannot be limited to software and hardware; rather, it entails the efforts and expenses made so as to adapt organizations, processes involved, and people to enjoy the power of technology. Information technology encompasses study, design, development, implementation, support or management of computer-based information systems. Technology projects are now becoming the greatest investment that a Corporate Travel Management invest in. Almost all organizations today invest heavily on ERP systems, a network upgrade, intranets and many more IT projects. Failure of Corporate Travel Management email for instance is enough to tell how Information Technology has become so important in the life of every organization today. Since many organizations today are heavily investing in the technology, there are so many questions that cross the minds of the executives; what is the reason for making this technology investment? What are the potential benefits that the institution is likely to enjoy? Are we spending extra in technology? What size of technology do we need and why? Value of IT • IT promotes the business tactic, aspirations and objectives, adds value to the business and compels business success. • Demands on IT are run and met in an efficient and consistent way. • Suitable and effective procedures are in place to ensure efficient quality delivery. • IT complies with relevant laws and regulations. • Performance is measured to continuously better the way IT forms business value. • With an aligned architecture in place, this will permit the dexterity of the organization to react on changes in the organizational setting. Concerns Organizations that lack Business-IT alignment often have the following concerns: • IT-controlled projects do not meet time & budget limits. • IT investments do not pay off (poor ROI). • Vagueness whether IT strategy and principles are suitable. • IT organization is not in a position to meet the business requirements. • Struggling with the various compliance requirements. • Financial information is not available in a timely and accurate manner. • Unclear (out) sourcing strategy; • Service levels offered by the IT service providers not satisfactory. • Security controls not sufficiently implemented. • Not able to optimize the IT budget utilization. Business –IT Alignment (BIA) is a term that is used to describe a desired state whereby an organization is capable of using Information Technology in an effective way so as to meet business goals and objectives normally improved performance in terms of finance and market competition. Phases involved in IT/Business Alignment Below are the phases describing activities, best practices, and benefits linked to each individual phase. i. Plan This involves translation of business objectives into quantifiable IT services. This phases helps close the gap between managers and expect and what IT offers. To close this gap, IT needs continuous dialogue so as to clarify business requirements in business terms. When business needs change, the IT should be able to adapt and modify their services accordingly. CIOs should ensure use of disciplined service level management process that will agreement on specific IT services and service levels needed to support business objectives. The management can then carry out translation of service definitions and service levels into rules and priorities that empower and guide IT resources. Lastly, the IT needs a way to measure and track both business level services and the underlying capabilities that support the services. ii. Model This phase identifies those resources that are required to ensure IT service delivery at dedicated levels. It involves mapping the IT assets, processes and resources back to IT services then prioritize and plan resources that help support business significant services. For successful prioritization of resources, IT needs a service impact model and a centralized configuration and asset management database to tie the infrastructure components back to specific IT services. This combination is crucial if IT is to effectively plan, prioritize, and constantly convey services at accepted service levels and at the same time reducing costs. iii. Manage The manage stage allow the IT personnel to convey assured levels of service. For CIOs to ensure that their organization meets prospects, they need to provide a single position for business users to forward all service requests. These requests also need to be prioritized based on pre-defined business precedence. To ensure the effectiveness of the service desk, the IT staff needs to offer: A means for prioritizing service requests considering business impact that they have. A well-organized change management procedure to reduce the danger of negatively affecting service level dedications. IT event management system to examine and handle components that promote business essential services. The fundamental operational metrics that facilitate service delivery at guaranteed levels, as well as the way for quantifying and following the progress of service level dedications using the metrics. iv. Measure This phase aids cross-organization visibility into operations and service level dedications. For ongoing service availability, component-level metrics and measures are actually important. Interpretation of these measures in a wider business context, including their relationship to business-critical services however supports real-time resource allocation decisions. Lack of business context for interpreting measures and metrics cause isolated functional groups to miss a holistic view of IT services that promotes business’s set objectives. Competitive Advantage and IT&BA Competitive advantage refers to the sole benefit that n organization enjoys over another organization that tends to be in competition. Some organizations that have invested generously in IT and are working hard to achieve the fruits of the same are enjoying the competitive advantage offered by their IT department. This is because IT provides great services at relatively low costs. Use of IT in marketing for instance gives an organization a better competitive edge over its competitors who have not invested in IT. Presence of technology offer clients real-time information through secure browser applications and smart phones. Such technology enabled solutions gives advantage to the organizations as their clients can access information regarding the organization anywhere and at anytime. Business and IT Alignment Alignment is the concept of fitting the business and Information Technology in their strategic alignment model (Henderson and Venkatraman, 1993). Fitting IT solutions to business requirements is challenging due to the rise of information systems, the need of alignment of their use with business processes and the strategies. However, methodologies of IT planning and system development were developed to avert this challenge. These includes business system planning (IBM Corporation, 1981), Information Systems Study and Information Engineering (Martin, 1982). The strategic alignment model The result of alignment BIA refers to the alignment of business strategy, plans and priorities and IT strategy, plans and priorities (Chan and Reich, 2007). A good number of scholars confirm that, organizations that manage to successfully align their business strategy and their IT strategy performs better than non-aligned peers (e.g. Chan et al., 1997; Irani, 2002; Kearns and Lederer, 2004). The relationship between business strategy and IT strategy is therefore an area that needs more research. Mapping IT and business strategies (based on Sabherwal and Chan, 2001) In “IT for efficiency”, IT is geared towards domestic and inter-organizational efficiencies and enhanced decision making. This strategy matches the defender’s business strategy well. The prospector’s strategy is best served by “IT for flexibility”, which mainly centers on market elasticity, time-to-market and speedy decision making. The analyzer’s strategy is best matched by “IT for comprehensiveness”, which permits for fast reactions and ample decision making, based on awareness of market trends and other organizations. A practical issue with aligning IT to business strategy is as a result of increasing dynamics in markets. Organizations are continuously adapting to changes in their environment (Silvius, 2009); changes in market conditions, in technology, in customer preferences, etc. Because of this continuous process of change, business strategy is quite often not a clear target. A strategy simply put is therefore not a destiny that is ever reached. It gives a course, not a destiny (Silvius, 2007b). How to achieve alignment Alignment is a task that requires processes, structures, capabilities, relationships and strategies (Keen, 1991). Luftman’s model has been employed as a framework for analyzing the well known insights and the remaining matters concerning the way alignment can be realized. Each variable is explained below: 1. Communication Effective communication is of paramount importance as far as alignment is concerned. According to Kaplan and Norton (2004), organization can be considered aligned there is commonality of purpose among the employees, a shared vision and an understanding of how individual performance promotes the overall strategy. Effective communication within an organization is brought about by the provision of structures and processes of communication. ITIL (Information Technology Infrastructure Library) is the famous process framework that structures the communication between business and IT. 2. Value measurement Value may be a result of Business Information Alignment; however, value demonstration is the key building block of alignment maturity. Measuring of IT investments is a concern to many organizations and is one of the most important issues for top IT managers. This has led to development of various models that are used to measure this sort of metric (Frisk, 2007). According to Stefanoue (2001), IT can be used as a driver of value, but organizational change is needed if any benefits are to be noticed. It is therefore noteworthy that value depends on the context of the organization and on the IT investment in place, project or asset on hand. It is also important to be aware that value cannot be quantified in terms of money. Multi-criteria methods are therefore solutions to issues of capturing the full value of IT investments in just financial metrics. These methods focus in identification of different relevant aspects of value and risk so as to enable a though and informed discussion (Frisk, 2007). 3. Governance Business governance of IT is aimed at ensuring that IT investments and their use are squarely aligned with business strategies and in full compliance with rules and regulations. According to Van Grembergen and De Haes (2008), IT governance refers to the organizational capacity exercised by the board, executive management and IT management to steer the formulation and implementation of IT strategy and in the same way ensuring the fusion of the business and IT. In his study, Van Grembergen and De Haes (2008), organizations with mature IT governance practices also have a higher level of alignment maturity compared to organizations that have less mature governance practices thus there is correlation between the IT governance and the BIA. IT governance is important since it influences the benefits resulting from IT investments. 4. Partnership This is the most intangible building block of alignment. It encompasses the shared visions, perceptions and goals of business and IT executives. The perception of the role that the IT plays in business is an underlying question of the typology of IT strategies and this typology is constructed as a framework that distinguishes how (senior) management perceive the impact of IT. 5. Scope and Architecture An architectural approach towards the design of business processes, information systems and IT structures is instrumental in the realization of alignment of business and IT. Scope is another aspect of the alignment. This tries to answer the question of boundaries that are considered when aligning business and IT. Also, the question of whether alignment is aimed for on the level of part of an organization, the level of the organization as a whole or the level of the organization and its external partners. According to Luftman (2000), the highest level of alignment maturity is reached when the scope of IT is the organization and its external partners. 6. Skills This key element of alignment illustrates that visions, strategies and processes only leads to successful alignment if the ability to execute matures which basically depends on the competencies of the entire organization and the individual expertise, to perform and deliver. Next to being competent in the technical aspects, a modern IT expert also should have social skills and business knowledge so as to be able to add value to business of the organization that he/she is attached to. Morneau (2006), states that the changing landscape of IT and security is in need of IT expertise that have a mix of business and technological intelligence. Risk and Alignment Westerman (2009, p. 109) asserts that the aspect of risks is an essential component for IT and business alignment since integrating risk into IT management debates helps IT and business managers to make effective decisions on how to address the needs for strategic change and operational flexibility. The author indicates that using the language of risk does generate a shared understanding between the IT and the business managers as the former can convey business logic and costs of varied IT management approaches and technological systems while the latter can similarly use it to explain to IT managers on preferences attributed to operational enterprise and technical needs using language they can easily comprehend and process. This an aspect a company seeking to experience benefits of IT and business alignment can easily adopt. The use of risk management in IT and business alignment helps dissolves the alignment tension caused by changes the business may want to attain and safeguarding against situations it would prefer to avoid (Westerman, 2009, p. 111). Westerman notes that the intricacies of analysing IT risks can considerably be minimized by taking into considerations the business risks connected to business goals of availability where business processes are required to consistently operate and accessibility where the right personnel are accessible to information and applications required to safeguard against unauthorized persons from accessing them. Moreover, accuracy where the information provided to all stakeholders is accurate, well-timed and reliable and agility where business is able to adjust to new requirements efficiently and at the right cost (Westerman, 2009, p. 112). In order for the Corporate Travel Management Company to ensure that both the IT and business managers collaborate and effectively engage each other in identifying IT investment opportunities, implementing the right IT infrastructures that supports business strategies and in making effective decisions that ensures the benefits and expectations on IT and business alignment are achieved, it needs to define and develop a shared purpose and attend to specific needs of the firm (Hirschiheim, et al., 2010, p. 37). Moreover, nurture an ethic of participation and engagement, create scalable systems for coordinating efforts from relevant units and establishing an infrastructure where teamwork is valued and appreciated as suggested by Adler et al. (2011, p.97). Among present IT infrastructures aligned to business strategies includes cloud computing and enterprise social networking as discussed by Keen (2010, p. 63) After gaining the in depth knowledge highlighted in this report, the CEO at the events management company is better placed to analyse and effectively integrate and implement the ISO-IEC38500-2008 Corporate Governance of IT Standard in the company’s organizational culture and effectively counter the challenges of IT and business alignment and instead achieve the anticipated IT and business alignment benefits and outcomes. The company will merely use the standard as a guideline to help in assessing, directing and monitoring utilization of IT within the firm and ensure there is consistent fit between the business and the IT units as supported by ISO (2008, p. v). IT Governance Among effective ways of ensuring the benefits anticipated from IT and business alignment meets or even better, surpasses the expectations of the organization, governance is a fundamental aspect to take into consideration. Governance entails developing clear, relevant and suitable IT control to help incorporate IT and business plans and strategies and ensure credibility and reliability is generated consistently between the IT and business managers (Chan & Reich, 2007, p. 309). Top performing organizations are successful in acquiring value from IT compared to others partly because they implement effective IT governance that supports business strategies and facilitates best practices. Weill indicates that the main aim of IT governance is to foster desirable conduct in IT usage and it is an integral aspect because it influences the outcomes and gains obtained from IT investments made by the enterprise. IT governance is the aspect of stipulating decision rights and responsibilities for fundamental IT decisions to foster IT usage. Based on findings from a study done by Weill on the relationship between performance of a firm and IT governance, organizations that had above average performance in terms of IT governance and had specific strategies like customer relations management indicated increased and higher productivity and profitability compared to organizations that performed poorly on poorly on IT governance but with specific strategies. As a company that is interested in embarking on implementing effective IT and business alignment, the events management company should be keenly aware that IT governance does not deal with making specific decisions which is the primary role of management but deals with systematic establishment of who are accountable for making every type of decision, determining persons who contribute their inputs to decisions made and establishing how the relevant persons can be held responsible for their assigned responsibilities. The standard supports these thoughts by indicating that governance differs from management. As Weill (2004, p. 3) notes, effective IT governance borrows from corporate governance standards to manage and utilize IT to attain corporate performance objectives and it fosters and leverages the resourcefulness and creativity of all employees within business and IT units to utilize IT while adhering to the visions and ideals of the organization. The management is charged with directing, evaluating and monitoring in governing IT (ISO 2008, p.7). References Chan, Y.E. & Reich, B.H. (2007), ‘IT alignment: what have we learned’, Journal of Information Technology advance online publication, 18 September 2007; doi: 10.1057/palgrave.jit.2000109. Chan, Y.E. (2002), ‘Why Haven’t we Mastered Alignment? The Importance of the Informal Organization Structure.’ MIS Quarterly Executive, Vol. 1, No. 2. De Haes, S. & Van Grembergen, W. (2008), ‘Analyzing the Relationship between IT Governance and Business/IT Alignment’, 41st Hawaii International Conference on Systems Science (HICSS-41), Waikoloa, Big Island, HI, USA. Henderson, J.C. & Venkatraman, N. (1993), ‘Strategic alignment: Leveraging information technology for transforming organizations’, IBM Systems Journal, Vol. 32, no. 1. Hirschheim R. & Sabherwal R. (2001), ‘Detours in the Path toward Strategic Information Systems Alignment: Paradoxical Decisions, Excessive Transformations, and Uncertain Turnarounds’, California Management Review, 44(1), pp. 87-108. Irani, Z. (2002). ‘Information Systems Evaluation: Navigating through the problem domain’, Information Management, 40(1): 11–24. Kaplan, R.S. and Norton, D.P. (2004): ‘Measuring the Strategic Readiness of Intangible Assets’. Harvard Business Review. 82(2): p. 52-63. Keen, P. (1991), ‘Every Manager's Guide to Information Technology’, Harvard Business School Press, Boston. Luftman, J.N. (2000), ‘Assessing Business-IT Alignment Maturity’, Communications of the Association for Information Systems, Vol 4, Article 14. Luftman, J.N. (2003). Competing in the Information Age; Align in the Sand, Oxford University Press, NY. Morneau K. (2006). Presentation on the IT Security World Conference & Expo, San Francisco. Sabherwal, R. & Chan, Y. E. (2001), ‘Alignment between Business and IS Strategies: A Study of Prospectors, Analyzers, and Defenders.’, Information Systems Research, 12(1), pp. 11-33. Silvius, A.J.G. (2007b), ‘Business & IT Alignment in Theory and Practice’, 40th Hawaii International Conference on Systems Science (HICSS-40), Waikoloa, Big Island, HI, USA. Silvius, A.J.G. (2009) ‘Alignment and strategy; the chicken or the egg?’, 2nd Conf-IRM conference, AlAin, UAE. Stefanoue, C.J. (2001), ‘A framework for the ex-ante evaluation of ERP software’, European Journal of Information Systems, 10, 204-215. Read More