IT Strategy and Management Teaching Aids Chapter 1 11 Final

IT STRATEGY AND
MANAGEMENT
SANJIVA SHANKAR DUBEY
1
IT Strategy and Management:
Introduction
 Today, Information Technology (IT) has become the strategic value creator
and differentiator for most companies.
 Therefore, it needs to be managed strategically, effectively and efficiently to
optimize its benefits.
 We need to understand the proven principles and practices of IT strategy and
get a holistic perspective of its planning, execution and management.
 We need to examine IT as a strategic resource and adopt a strategic
approach for its management, and align it with overall business strategy.
 Once the various building blocks of IT strategy are developed, we need to
 Prepare an effective plan for its implementation
 Evaluate the impact of IT on organizations and their workforce
 Measure returns on IT investment.
 Also, IT management frameworks such as ITIL (Information Technology
Infrastructure Library), IT service management (ITSM), MOF (Microsoft
Operations Framework), CobiT and standards such as ISO 2000 and
B527001 need to be adopted.
 All the above is covered in 11 chapters of this book, which is intended for a
full credit course spanning 20 sessions of 75–90 minutes each.
IT Strategy and Management

(Author: Sanjiva Shankar Dubey) 2
[Note to faculties: Please check the speaker notes on every
[
page.]

This outline is designed around 20 sessions.
Session Chapter Slide No.
1–2 Introduction 1–6
1. Business Strategy: Challenges and Opportunities for IT 7 – 15
2. Business and IT Alignment 16 – 24
Strategy
3–4 3 Strategic IT Planning 25 – 46

IT
5–6 4. Enterprise IT Architecture 47 – 56

7–8 5. IT Application Strategy 57 – 68
9–10 6. Technology Management Strategy for IT 69 – 76
Mid-term/ quiz, Author can be contacted for quiz papers and questions for both mid-term
etc. and end-term assessments.
Management
11–12 7. Strategy for IT Program Management and PMO 77 – 101

13–14 8. IT Service Management Strategy 102 – 119
IT
15–16 9. IT Sourcing Strategy 120 – 133

17–18 10. Planning and Measuring Returns on IT Investment 134 – 141
19–20 11. Strategies for Managing IT-Led Change 142 – 149
Author contact details 150
End-term exams

IT Strategy and Management: Why
 Information Technology (IT) is a strong contributor to
globalization.
 IT helps modern corporations in continuous
transformation.
 IT is not only a supporter or enabler but is also a strategic
value creator and differentiator.
 The growth of IT has accelerated due to the Internet and
convergence.
 New challenges and opportunities have emerged in
managing IT as a strategic resource.
 IT is strategic in nature and needs a long-term
perspective.
 IT management can be a difficult area.
Learning Pause: What do you think?
 Name one example where IT has dramatically
changed the ways in which business is conducted.
 Can these businesses survive without IT? Consider
what will happen if IT stops functioning.
 Therefore you need a proper and methodical approach
for IT Strategy and Management.

IT Strategy and Management:
What to do?
 Analyze and critically evaluate information as a key
resource.
 Analyze IT systems’ ability to meet strategic information
needs.
 Evaluate the use of Information Systems (IS) or IT to
gain competitive advantage.
 Prepare an effective plan for the implementation of
information strategy.
 Evaluate IT function service capabilities and enhance it
using ITSM processes.

1
BUSINESS STRATEGY: CHALLENGES
AND OPPORTUNITIES FOR IT

1.3 WHAT IS BUSINESS STRATEGY?
 Set of objectives, plans and policies for the firm to
compete in the market
 Plan, Pattern, Position, Perspective and Ploy.
 What is The Role of IT in Formulating Business
Strategy?
 What is The Impact of IT on Business Strategy?

1.3.1 What are the Challenges and
Opportunities with IT?
 Efficiency improvement through the use of digital
nervous systems
 Delivering different mixes of value
 Innovation for IT.
Why it is so?
 Global competition, global marketplace and global
connectivity.

1.4 WHAT IS IT STRATEGY?
 It is both
 Competitive necessity: To do business in any industry
 Competitive advantage: Developing products, services,
processes, or capabilities, giving the company a superior
position vis-à-vis competitors.
 Comprises
 IT application strategy
 Technology management strategy for IT
 IT management strategy.

1.4.1 IT Application Strategy
 IT application strategy involves answering these
questions:
 Which applications are to be used?
 For which business areas, and for what benefits and at
what cost are they to be used?
 Application types belong to either:
 Support,
 Factory,
 Turnaround, or
 Strategic categories.
 This is discussed in detail in Chapter 5 (Session 3).

1.4.2 Technology Strategy for IT
Long-term approach for planning and selection of
underlying information technology components and tools
(see Chapter 6, Session 3).
1.4.3 IT Management Strategy
 See Chapters 7, 8 and 9.
 More complex and involved in current times
 Managing underlying risk in the event of system failure
 Ensuring that IT projects and programs meet business
expectations within the desired time, cost and budget limits
 Decision on outsourcing versus doing in-house
 Establishing IT systems management processes
 Change management strategies for people.
1.5 DEVELOPING IT STRATEGY FOR
COMPETITIVE ADVANTAGE
 Understanding the strategic dimension

 Exploring the points of opportunity as well as areas of
concern
 Deciding whether corporate strategy should drive IT or
vice versa
 Setting long-term direction for IT.

1.6 STAGES OF IT STRATEGY DEVELOPMENT
 Aligning business and IT strategy (Chapter 2)
 Developing strategic IT plan (Chapter 3)
 Developing enterprise architecture (Chapter 4)
 Developing IT application strategy (Chapter 5)
 Developing technology strategy for IT (Chapter 6).

[Note to faculties:
 Please refer to review questions and ask the students
to answer them.]
End of Chapter 1

2
BUSINESS AND IT ALIGNMENT

2.1 WHAT IS BUSINESS – IT ALIGNMENT?
 Alignment between IT and business means that IT
delivers what businesses need to their satisfaction.
 IT also plays a strategic role in shaping new business
strategy.
 Refer to Fig. 2.1 to show the alignment framework.
 Alignment must happen between four elements as
shown, spanning
 Functional integration
 Strategic fit.
 Refer to Section 2.1.1 for the broader definition of

alignment and relevant examples.
 Refer to Sections 2.5, 2.6 and 2.7 for research by
 Cathleen and MacFarlane
 David Nickels.

2.2 CHALLENGES OF BUSINESS AND
IT ALIGNMENT
 Absence of a well-articulated strategy
 Completeness, comprehensiveness and speed to
gather the end-users’ requirements
 Uniform and seamless communication of the strategy,
objectives and critical success factors to the entire
organization.
 Alignment Inhibitors
 Leadership level congruence
 IT’s ability to identify and partner with business
 IT’s ability to deliver.
 Three levels of alignment: Refer to Fig. 2.2.

2.3 3D FRAMEWORK FOR ALIGNMENT
 Discipline
 Design
 Drive for results.

2.4 HOW TO ACHIEVE BUSINESS AND IT
ALIGNMENT
 This section discusses the three-perspective
framework.
2.4.1 Communication School
 See page 18.
 What happened to the task force manager? Discuss
the case.
 Discuss Rockert, Earl and Ross’ bidirectional
approach and Rich and Benbast’s extension.

2.4.2 Architecture School (see Box 2.1)
 Integrated architecture framework
 Quality Function Deployment (QFD)
 Design and Engineering Methodology for Organizations
(DEMO) by Jan Dietz
 Information Engineering (IE) by James Martin.

2.4.3 Technology School
 ITIL (Information Technology Infrastructure Library)
frameworks
2.4.4 People School
 Approaches of Indira and Michelle on the role of IT
professionals, skills required, and aspiration
 Approach of Charles about alignment as a
collaborative process
 Business and IT alignment framework summary (Table
2.1)
 Role of IT professional (Fig. 2.3).

2.5 BUSINESS AND IT ALIGNMENT
TOOLS, TIPS AND TRAPS
 Relationship between all schools (see Fig. 2.4)
 Role of IT strategy played out at different stages of
business maturity (see Fig. 2.5).

CASE STUDY: BANK OF
HINDUSTAN
[Note to Faculties:
 Read the case study on page 28 and answer the review
questions.
 Read the definitions of acronyms on page 26.]
End of Chapter 2

3
STRATEGIC IT PLANNING
 Strategic planning is the systematic examination of opportunities and
threats in the business environment so that you are in the position to
identify those opportunities that should be exploited and the threats
that should be avoided.
—George Steiner
 Strategic planning is to create opportunity that can be leveraged to
create differential advantage in the marketplace.
—N. Les Clark

 In this chapter we

Develop a conceptual framework about the process
of SITP (Strategic IT Planning)
 Identify which planning methodologies really work
and why
 Examine the content of SITP, its measurement and
appraisal
 Dwell on the roles and responsibilities of
 Executives in integrating and aligning IT with the

business strategy
 IT professionals in ideal conditions.
 Refer to Fig. 3.1.

3.1 BUSINESS IMPLICATIONS OF IT
STRATEGY AND PLANNING
 Where are we now?

 Where do we want to go?
 How will we get there?

3.2 WHAT IS STRATEGIC IT PLAN?
 Nothing seems more logical, more reasonable or more
appropriate than planning. Doing things today to make
us better tomorrow. Because the future belongs to
those who make the hard decisions today.
—Anonymous (Page 33)
 A strategic plan maps out where the firm is headed,
short and long-range performance targets and actions
of the management to achieve outcomes.

3.3 STRATEGIC IT PLAN MOTIVATIONS
 Refer to page 33.
 It is to reduce cost and increase competitiveness
and integration.

3.4 SITP PROCESS: PLANNING APPROACHES
 Top-down analytical approach
 Bottom-up evaluative approach (Fig. 3.2)
 Creative Approach (Fig. 3.3).
3.5 DIFFICULTIES IN DEVELOPING

AND EXECUTING
 SITP: 3 difficulties according to McNurlin.

3.6 BEST PRACTICES FOR ACHIEVING SITP
 Segars, Grover and Teng (1998) define the following
best practices:
 Comprehensiveness
 Formal
 Focused
 Smooth flow
 Wider participation
 Consistency.

3.7 SITP APPROACHES AND PREVALENT
RESEARCH
 IBM business systems planning
 Rockart’s critical success factors (CSF)
 Stages of growth: Nolan’s stages theory
 Porter’s competitive forces model
 Porter’s value chain analysis
 E-business value matrix
 Linkage analysis planning
 Scenario planning.

SITP overall planning processes
 See Fig. 3.4.
 Refer to Figures 3.5, 3.6 and 3.7 for SITP approaches.

3.8 CRITICAL COMMENTS ON VARIOUS
APPROACHES
 Refer to Table 3.1, p. 45.
3.9 INTEGRATED PLANNING APPROACH

 Refer to Fig. 3.8.

3.10 CONTENT OF SITP
 Refer to Fig. 3.9.

 Earl, Mocker and Teubner defined the components of
SITP as
 IS–M component
 S–MI component
 M–IS component.
3.10.1 Typical Content Of SITP

 Refer to pp. 47-48.

3.10.2 Six Planning Stages of SITP
 Refer to pp. 49–52. These are:
1. Assemble a planning team
2. Assess information needs
3. Develop a vision and a mission
 Examples of mission/vision statements of Saturn division
of GM as well as Eastman Kodak
4. Communicate the vision and seek buy-in
5. Arrive at the project’s portfolio and define the scope of projects
and their prioritization
6. Evaluate IT projects for inclusion in application portfolio.

3.11 CONSIDERATIONS FOR SYSTEMS
OPERATIONS
 Systems operations considerations include running the
firm’s applications according to the defined processes.
3.11.1 Considerations for Committed Service Levels

 Refer to Table 3.2 (Typical list of IT projects)
 Refer to Table 3.3 (Typical TPS applications).

3.12 IT PLANNING HORIZON
 Operational—3 months
 Tactical—3 months–2 years
 Strategic—3-5 years.
3.12.1 Rapid Response Planning for Internet

Applications

3.13 RESOURCE PLANNING
 People planning
 Financial planning
 Administrative actions
 Technology planning.
3.14 MANAGING PROJECT SCOPE TIGHTLY

3.15 IMPLEMENTATION CONSIDERATIONS
OF SITP
 The following are important for the success of SITP process as planning
as shown by Gottschalk’s studies:
1. Adequacy of resources the implementation
2. Level of user involvement during the implementation
3. Adequacy of analysis of the organization’s information needs
4. Anticipation of changes in the external environment
5. Solutions to potential resistance during the implementation
6. Information technology to be implemented
7. IT projects’ relevance to the business plan
8. Who owns the responsibility for the SITP implementation
9. Level of management support for the implementation
10. Communication issues
11. IT issues
12. General business-related issues.

Completing SITP
 SITP implementation best practices (p. 60)
 Pitfalls to be avoided as per Luftman’s studies

3.16 CHANGE MANAGEMENT ISSUES OF SITP
DEVELOPMENT AND IMPLEMENTATION
3.17 MONITORING AND MEASURING SITP
SUCCESS
3.17.1 IT Strategy Committee: 9 important functions

Review Questions
1. What is a strategic IT plan? What are the business implications and
motivations for IT strategy and planning?
2. What are the prevalent planning approaches for the SITP process? What are
its advantages and disadvantages? Which one will you choose for a large
public sector oil distribution company?
3. Enumerate and explain some of the prominent best practices for achieving
good SITP.
4. What are, according to McNurlin, the difficulties in developing
(conceptualizing and realizing) and executing SITP?

5. Write a short note on the following SITP approaches espoused by the
leading researchers:
(a) IBM business systems planning
(b) Rockart’s critical success factors (CSF)
(c) Stages of growth: Nolan’s stages theory
(d) Porter’s competitive forces model
(e) Porter’s value chain analysis
(f) E-business value matrix
(g) Linkage analysis planning
(h) Scenario planning.
6. List the various stages and deliverables of the integrated IT planning
framework as discussed in the chapter.
7. What are the three major constituents of SITP as elaborated and explained
by researchers such as Mocker and Teubner? How can they be summarized
as
IS–M, S–MI and M–IS to underline all factors?

8. What are the typical contents of an SITP?
9. What are the different stages through which the IT planning
process is undertaken?
10. What factors are considered while classifying and ranking
projects?
11. What are the important and constituents of the resource planning
exercise in strategic IT plan?
12. How can we successfully implement an SITP? Enumerate some
of the implementation best practices.
13. What are the change management issues of SITP development
and implementation?
14. How can we monitor and measure the success of a firm’s SITP?
What is the role of the steering committee in this effort?

[Note to Faculties:
 Ask students to work on a industry/company that they
are familiar with (or get insight through research or
interview with CIO) and examine
 If such best practices are being followed
 What is going wrong?
 What has gone right?]
End of Chapter 3

4
ENTERPRISE IT ARCHITECTURE

4.1 INTRODUCTION
 Enterprise IT architecture covers the architectural
principles and practices under whose guidance IT
applications are built, purchased, customized and
deployed within the organization.
4.1.1 Challenges Addressed by Enterprise

IT Architecture
 See Fig. 4.1.
 Enterprise IT architecture is the link between business
strategy and results through IT.

4.2 WHY DEFINE ENTERPRISE IT
ARCHITECTURE?
 To deal with a diverse set of requirements in a fast
manner
 To make IT systems that are able to meet these local
requirements for global corporations.
4.2.1 Enterprise IT Architecture Aids Global
Firms to Become Agile
 According to Weill, business agility can only be achieved
through EITA.
 It is a framework that helps align information technology
(IT) with business processes in a well-orchestrated
fashion.

4.3 WHAT IS ENTERPRISE IT
ARCHITECTURE?
 Enterprise IT architecture (EITA) is the articulation of the
structure of IT systems, its elements or components that
comprise these systems, their externally visible
properties, and their interrelationships.
 EITA defines business capabilities which comprise
 People (who),
 Process (what and how), and
 Technology (through what)
working together to produce business results.

 EITA is made up of five sub-components:
 Business process architecture (BPA)
 Information systems or solutions architecture (ISA)
 Information technology architecture (ITA)
 Security architecture (SA)
 Organizational architecture (OA).

4.4 NEED FOR ENTERPRISE IT
ARCHITECTURE
 Significant research done by Scott, Spewak and Zachman needs
to be reviewed.
 Enterprise IT Architecture is an increasingly mature area of
professional practice that provides a link from strategy to
execution of information systems.
 The term Enterprise Architecture (EA) was first coined by John
Zachman in 1987.
 Dr. Steven Spewak conceptualized the need of EA planning.
 Currently, several large corporations use EITA approach to
integrate strategic, business, and technology planning
processes.
 EITA primarily helps to communicate, control and direct the
decisions related to IT investments.

4.4.1 Advantages Of Defining Enterprise
IT Architecture
 Promotes better planning and decision making
 Improves communication between business and IT
 Provides architectural views to communicate the complexity
of large systems and facilitate management of extensive,
complex environments
 Focuses on the strategic adoption of emerging technologies
 Enhances consistency, accuracy, timeliness, integrity, quality,
availability, access, and sharing of IT-managed information
across the enterprise.

 Provides a tool for the assessment of benefits, impacts, and
capital investment measurements and supporting analyses of
alternatives, risks, and trade-offs
 Develops greater quality and flexibility in applications without
increasing cost
 Can lead to economies of scale through sharing across the
firm
 Facilitates integration of legacy as well as new systems
 Leads to increased adherence to legal and regulatory
compliance.
4.5 CONTENTS OF A TYPICAL ENTERPRISE IT

ARCHITECTURE

4.6 STANDARDS FOR EITA
 ANSI/IEEE Standard 1471–2000
 TOGAF (The Open Group Architecture Framework)
 TOGAF origins can be traced to Technical Architectural
Framework for Information Management (TAFIM) developed by the
US Department of Defense
 TOGAF’s latest form version 7
 Covers ANSI/IEEE Standard 1471–2000.
 Other frameworks used by the United States government are
as follows:
 Federal enterprise architecture framework (FEAF)
 Treasury enterprise architecture framework (TEAF)
 Spewak’s enterprise architecture planning (EAP)
 Zachman’s framework.

[Note to Faculties:
 Students should
 Go through the articles given as reference:
• Peter Weill, The Agility Paradox, 2

• Ralph Whittle, Enterprise Business Architecture: The
Formal Link between Strategy and Results
• J.A. Zachman, A Framework for Information Systems
Architecture
• S.H. Spewak and S.C. Hill, Enterprise Architecture
Planning: Developing a Blueprint for Data, Applications
and Technology.
 Attempt to answer all the review questions.]
End of Chapter 4

5
IT APPLICATION STRATEGY

 See Fig. 5.1.
5.1 INTRODUCTION
 IT application strategy is the choice between building (i.e., developing)
or buying a commercially off-the-shelf available package (COTS).
 It is the next step after SITP.
 The task is more complex due to enterprise size, spread and coverage
of application package. The approach, though generic, will be applicable
to the entire life cycle of planning, acquisition and execution of the major
enterprise package (COTS) systems such as
 ERP
 CRM
 Billing
 Supply chain automation/optimization
 Accounting, treasury management

 Cash management
 E-business and e-commerce
 E-procurement
 E-selling and e-marketing
 E-employee care
 Business intelligence, data warehousing and data mining
 Knowledge management
and many more.

 IT Application Strategy steps are:
 How to select the right alternatives from among developing an IT
application, selecting a commercially off the shelf available

(COTS) package; and assembling an IT application from COST
components (see Section 5.2)
 How to address the requirements engineering, a common
challenge for these approaches (see Section 5.3)

 COTS package selection life cycle (see Section 5.4
• Identification of candidate packages (see Section 5.4.1)
• Defining evaluation criteria and selection process (see
Section 5.4.2)
• Package customization strategy (see Section 5.4.3).
 Implementation management: Strategy (see Section 5.5).
 Post-implementation support and management (see Section 5.6).

5.2 WHY DEVELOP APPLICATION PACKAGE
 Low cost
 Changing requirements
 Simple application
 Good talent pool
 Low recurring cost.

5.2.1 Why COTS ?
 Affordability
 Scalability/modularity
 Flexibility
 Easy to use
 Good quality
 Accelerating rates of COTS enhancement and
expanding system requirements.

5.3 REQUIREMENT ENGINEERING
 Both COTS and applications developed in-house need
proper requirement engineering to ensure that
 Architectural requirements
 Domain requirements
 Organizational requirements
are captured properly.
 Rosemann defines stages for gathering complete
requirement sets as shown in p. 85.

5.4 COTS PACKAGE SELECTION
LIFE CYCLE
5.4.1 Identification of Candidate Packages

5.4.2 Defining Evaluation Criteria and Selection
Process
 See Fig. 5.2.
 Ncube and Maiden defined their approach to iterative
evaluation as a framework called procurement-oriented
requirements engineering (PORE) consisting of the following
steps:
 Step 1: Plan and control selection activity
 Step 2: Requirements acquisition process
 Step 3: Supplier selection process
 Step 4: Software package selection to locate
candidate packages

 Step 5: Contract with package suppliers covering
commercial and licensing aspects
 Step 6: Package acceptance according to original
requirements.
 Concept of RFI and RFP (see p. 88, Fig. 5.3 and
Table 5.1).
5.4.3 Package Customization Strategy

 See Fig. 5.5.

5.5 COTS IMPLEMENTATION STRATEGY
 Any COTS implementation is a major change in the
organization process as well as the underlying technology
that supports it. If the COTS package is like ERP that
touches many functions at the same time, its
implementation becomes a real challenge due to people,
process as well as technology issues.
 Read Somers and Nelson as well as Akkermans and
Heldan CSFs on p. 92.
5.5.1 Best Practices for Successful Implementation
 See p. 92, Fig. 5.6.
5.5.2 Multi-Unit Implementation Alternatives
 See Fig. 5.7.

5.6 POST-IMPLEMENTATION
SUPPORT AND MANAGEMENT
 The success of any COTS package implementation is largely dependent
upon how well the package has been implemented, as well as how well
it is being continuously evolved, enhanced and maintained as the
business needs grow.
 Post-implementation services include those services that are related
with the version upgrade, code optimization and adding new
functionalities. Major issues are:
1. Managing version upgrade
2. Optimizing performance
3. Adding new interfaces
4. Customized report development
5. Managing commercial and support issue with vendor
6. Measuring benefits and attainment of objectives.
 See Table 5.5 for post-implementation assessment of objectives.
[Note to Faculties:
 Review the articles given in the References.
 This is the most useful chapter and students must be subjected to at
least a 45-minute quiz using the review questions.]
End of Chapter 5

6
TECHNOLOGY MANAGEMENT
STRATEGY FOR IT

6.1 NEED FOR TECHNOLOGY MANAGEMENT
STRATEGY
 Need for a technology management strategy for IT arises
because:
 IT investments impact heavily on the bottomline
 Most business functions, nowadays, depend heavily on
their respective IT applications
 It would cost dearly to correct a wrong decision later.

6.2 TECHNOLOGY MANAGEMENT
STRATEGY FRAMEWORK
 A technology management strategy framework
(see Fig. 6.1) helps in deciding
 Technology choice, standards and interface
requirements
 Technology sourcing and interconnectivity issues
 Data standards
 Security and network.

Technology Management Strategy Process
 It is an iterative process covering the following 4 steps:
1.Track technology evolution trajectory
2. Sponsor to adopt new technology
3. Deploy technology internally and reap results
4. Ascertain technology adoption in peer group of
industry.
 See Fig. 6.2 and Fig. 6.3.

STRATEGY MOTIVATION
 Strikes a good balance between the architecture discipline and
the project needs.
 It helps in maintaining support service levels
 It ensures directions for business continuity, availability and
disaster recovery facilities.
 It facilitates data management and consistency.
 It ensures intuitive, easy-to-use applications.
 It gives security and provides intellectual asset protection.
 It creates strategy for services sourcing—build versus buy.
 It helps in infrastructure standardization and management of
costs.
 See Fig. 6.4.

STRATEGY CONSTITUENTS
 The constituents of technology management strategy
are as follows:
 Data strategy (see Fig. 6.6)
 Strategy for solution and application integration
strategy—3 sub-strategies (pp. 108–109); various
application integration strategies (Table 6.2).
 Technology component strategies covering the
network strategies
 Security strategy for data and network.

6.7 PREVALENT TECHNOLOGY MANAGEMENT
FRAMEWORKS AND ARCHITECTURES
6.7.1 The Open Group Architectural
Framework (TOGAF)
 TOGAF version 8 (see p. 113)
 TRM—Technical Reference Model (see p. 113)
 SIB—Standard Information Base (see p. 114)
 BBIB—Building Blocks Information Base.
 Resource Base
 ADM—Architectural Development Method
(see p. 115).

[Note to Faculties:
 References and websites of TOGAF should be
visited.
 All review questions should be answered.]
End of Chapter 6

7
STRATEGY FOR IT PROGRAM
MANAGEMENT AND PMO

7.1 INTRODUCTION
 Strategies for managing IT projects, program and
portfolio, addressing inter-project management

issues, managerial as well as financial concepts.

7.2 WHY HAVE A STRATEGIC VIEW FOR
PROJECT, PROGRAM AND PORTFOLIO
MANAGEMENT?
 When IT strategy initiative is undertaken, multiple
projects and various functional areas will start
operating, and create impact on each other.
 All these would need close management of resources
through a program management office.

7.3 PROGRAM MANAGEMENT OFFICE (PMO)
 Program Management Office (PMO), according to Archibald,
is “a long-term undertaking which is usually made up of more
than one project”.
 Other definitions:
 A service for managing projects in an enterprise,
 A centralized service of project coordination and
communication,
 A vehicle to establish a project management culture.
 PMO promotes overall success and strategic alignment of

information technology initiatives by
 Serving as a bridge between program and project
managers and leadership to facilitate coordination.

 67% of IT organizations have set up PMOs.
 So, what constitutes a Project? The Project Management
Book of Knowledge (PMBOK) defines a project as “a
temporary endeavor undertaken to create a unique product or
service”.
 PMO oversees ongoing and repetitive operations even though
the projects it oversees have distinct beginnings and ends.
 This mindset shift is a key realization for the success of PMO.
 PMO remains a permanent entity within the IT function.
 Figure 7.1 defines these terms in a context.

7.4 WHAT IS PROGRAM MANAGEMENT ?
 PMO is strategically driven to synergize all projects
 Olson and Branch say: “Programs are integrally related
projects, which together move towards the realization of a
particular organizational goal”.
 Program management is the process of managing multiple
ongoing projects to achieve business objectives.
 It combines the ability and resources to define, plan,
implement, and integrate every aspect of a comprehensive IT
strategy program.

7.5 WHY SET UP A PMO?
 To avoid delay and overbudgeting of IT projects due to lack of
coordination; to standardize project management
methodology; and to adhere to project management practices
 PMO helps to
 Manage all projects by consistently utilizing best practices
and achieving higher project completion rates

 Manage strategic change with programs
 Achieve well-defined strategic goals
 Rank and select important tactical improvement projects
 Prevent overcommitment of resources.

7.6 BENEFITS OF PMO
 Studies show 80% ROI, 20% reduction in project time,
and 30–35% successful project delivery, whereas
companies without a PMO experienced 74% project
failure rate.

7.7 QUALITIES OF A PMO
 A Project Management Officer must
 Have thorough understanding of the firm’s business and
functional process
 Embody continuous learning and implementation of best
practices
 Team-building and spreading motivation across projects
 Deep project management experience
 A positive attitude and a friendly and supportive personality
 Ability to deal with business ambiguity.
 PMO is a senior management role responsible for overall business

outcome and is accountable to either the business sponsor, IT
Director or CIO.
 PMO can act as a knowledge powerhouse to provide high-level
architectural advice.

7.8 MATURITY OF PMO
 Baby Stage: Vision is still under development and the
PMO operations are carried out following a trial-and-error
approach.
 Teen Stage: Its vision would be somewhat aligned with
business strategy.
 Matured Stage: PMO starts to take portfolio focus and
approaches all activities in a strategic manner.
 See Fig. 7.2.
 Focus of PMO changes at all these stages as shown in
Fig. 7.3.
7.9 WHAT DETERMINES THE PMO TYPE

7.10 WHAT PMO DOES
 PMO has five major sub-functions like
 Eyes: Gathering information about projects progress and
soliciting feedback
 Ears: Gathering issues and risk factors, and ensuring
communications between central groups and project teams
 Tongue: Monitoring project progress in terms of time, resources
spent and cost incurred. Also ensuring communication, giving
advice on processes and tools, and acting as a channel of
communication to senior management
 Skin: Capturing and taking action on softer issues of projects.
Leads Change Management and also gets processes and
systems installed for software configuration management,
operations processes, standards for forms and reports, earned
value management, integrated change control, resource
management and integrated work/service request

 Nose: Sensing if anything is going wrong, which is
achieved by maintaining the overall coordination and
control role, leading decision-making, including
commitment of time, money and resources, issue
resolution, project monitoring and integration, and
maintaining master project schedule.

7.11 MANAGEMENT OF PMO
 PMO governance covers aspects such as
 How will it be organized?
 Who reports to whom (line of business versus IT
organization)?
 What skills are required?
 Who will it report to (board, steering committee, CIO,
CEO, others)?
 How will it interact with operational and development
functions?
 What is the reporting process for communicating status
and progress?

7.12 PMO IS ABOUT BRINGING CULTURAL
CHANGE
 PMO needs management support to be successful.
7.13 IMPLEMENTING PMO STRATEGY

 Revolutionary approach
versus
 Evolutionary/incremental approach.

7.14 STAFFING OF PMO
 The typical roles skills needed are
 PMO director/manager
 Project manager
 Project portfolio manager
 PM process/methodology trainer
 Solution architects
 Relationship/account manager
 Tools support/administration
 Project office administrative support
 Librarian/document control.

7.15 MEASURING PMO PERFORMANCE
 This combines metrics depending upon maturity and
roles.
 Typical business value metrics: What benefits PMO and
gives savings/ROI
 Typical functional performance metrics: These are
• Project management budget/resources
• Process improvement metrics
• Number/per cent projects completed on or ahead of
schedule
• Number/per cent projects completed on or below budget
• Number of projects managed—increase over year, target
versus actual
• Number of training classes delivered (target versus actual)

 Service level metrics: SLA/SLO (service level
agreements/ objectives) expressed in a variety of ways.
Examples of service level metrics are
• Turnaround time on business cases
• Turnaround time on responding to stakeholders’ request for
support
• Customer satisfaction based on survey results
• Turnaround time on resolution of issues.

7.16 SUCCESS FACTORS FOR PMO
 Clear charter, right expectations and defined boundaries
 Top-down support and bottoms-up buy-in
 Strong sponsor and equally strong LOB representation
 Strong communication/PR initiative
 Mix of performance metrics that demonstrate business and
customer value.
 Inculcation of high degree of prestige associated with its
function
 Doing the right projects effectively as well as efficiently
 Customer service focus
 Ensuring that the core of the PMO is compact enough.

7.17 MATURITY ASSESSMENT OF PROJECT
MANAGEMENT PRACTICES
 This is achieved through various models such as CobiT,
OPM3, ISO 15504 and CMM/CMMI.

7.18/7.19 CobiT®
 CobiT®—Control Objectives for Information and related
Technology—is developed and promoted by IT Governance
Institute.
 CobiT® maturity levels are:
1. LEVEL 0: Non-existent
2. LEVEL 1: Initial—Ad hoc and disorganized
3. LEVEL 2: Repeatable—Follows regular pattern
4. LEVEL 3: Defined—Documented/communicated
5. LEVEL 4: Managed—Monitored and measured
6. LEVEL 5: Optimized—Best practices followed/automated.

7.20 STRATEGY OF APPLICATION
PORTFOLIO MANAGEMENT
 Application portfolios, as shown in Table 7.1, consist of a variety of systems
that satisfy different requirements.
 The applications, which deliver a function, can be divided into the following
three levels of business performance impact:
 Low
 Medium
 High.
 They can also be grouped as
 Infrastructure
 Utility (mission-critical but about not improving performance, such as
payroll)
 Business enhancement (such as supply chain management)
 Customer-facing (such as customer relationship management).

7.21 PROJECT SCOPE MANAGEMENT
 Initiation
 Scope planning
 Scope definition
 Scope verification
 Scope change control
 Also involves
 Project categorization: Size, type and priority
 Project cost and expected returns: Using net present value
(NPV) analysis, return on investment (ROI) and payback analysis

(see the formula worked out on p. 137)
 Project charter: Defining project scope and returns (see Fig. 7.4,
p. 138)
 Individual project planning: See pp. 139–40
 Scope verification and scope change control: After project is
delivered.

7.22 MANAGING OVERALL RISK
 The four types of risks are:
1. Business risks
2. Organizational risks
3. Technical risks
4. Execution risks.

7.23 PMO DASHBOARD
 Helps senior leadership with crucial information covering the
following:
 Integrated project calendar, status at a glance, or detailed drill
set down by line of business

 Issues and risk register
 Assets register; summary numbers
 Project dependency matrix
 Resources deployment status and outlook
 Financial outlook
 Cost matrices
 Turnaround time of various resources.

[Note to Faculties:
 References to be reviewed
End of Chapter 7

8
IT SERVICE MANAGEMENT
STRATEGY

8.1 INTRODUCTION
 IT Service Management Strategy is needed to
 Evaluate IT cost, complexity, reliability, and conformance to the
business needs
 Ensure proper management of IT infrastructure that has become
too complex and expensive

 Ensure reliable/interoperable applications
 Manage risk, service impact, cost of failure as well as visibility
(see Fig. 8.1).

 Unless the IT industry is able to address these fundamental
challenges, it will decline.
 ITSM strategy has gained significant importance due to
increased reliance on IT for running the business.
 ITSM denotes the philosophies, methodologies and best
practices required to bring discipline for managing the IT
infrastructure with an integrated approach.
8.2 WHY HAVE STRATEGIES FOR IT
SERVICE MANAGEMENT?
 Strategies are needed to
 Meet business objectives
 Ensure that business processes and functions coexist,
run on common IT infrastructure and facilitate exchange
information and data between each other.
 All these IT components have to be managed as
together as a service (IT service management),
ensuring proper support to business processes to
achieve the organizational objectives.

 The three key objectives of ITSM are:
 Align IT services with the current and future needs of
the business and its customers

 Improve quality of IT services
 Reduce long-term costs of IT service provision.
 The goal is to bring quality consciousness into the

management of IT services.

8.3 WHAT IS ITSM?
 ITSM is a set of guiding principles covering
 Process
 Tool
 People and partners.
 It is delivered through competent people with right

cultural framework and measured appropriately.
 It helps in managing the outsourcing of the IT service
functions.
 It includes not just how to manage technology efficiently
or effectively, but the associated processes and people
as well.
 It manages the complete life cycle of IT services.

8.4 INFORMATION TECHNOLOGY
INFRASTRUCTURE LIBRARY (ITIL)
 ITIL was developed in the 1980s by the Office of
Government Commerce (OGC) in the United
Kingdom.
 It is a non-proprietary approach.
 It has documented IT service areas, processes and
standards in 8 books.
 It has been further improved by a number of industry
leaders such as IBM, HP and Microsoft as well as IT
Service Management Forum (ITSMF) and British
Standards Institute (BSI).

 It began as a
 Set of best practices (Version 1)
 Extended into a process-led approach (Version 2), and
 Was redesigned into a service life cycle approach
(Version 3).
 See Fig. 8.3.

8.4.1 ITIL Overview
 See Table 8.1.
 Various processes have been grouped under
 Version 2.0
 Version 3.0.

8.5 SERVICE SUPPORT
 See Fig. 8.4.
 Incident management — Service operation
 Problem management — Service operation
 Change management — Service transition
 Release management — Service transition
 Configuration management — Service transition.
8.6 SERVICE DELIVERY

 Service level management (continual) — Service improvement
 Financial management — Service strategy
 Capacity management — Service design
 IT service continuity management — Service design
 Availability management — Service design.

Typical SLA contract
 See p. 155, Fig. 8.5.
8.6.3 Capacity Management
 Table 8.2—Dependence of capacity management
process on other processes.
8.6.4 IT Service Continuity management (ITSCM)
 RPO and RTO concepts
 Addressing risk through ITSCM.

ITSCM Strategies
 See p. 159.
 Recovery options are:
 Cold standby
 Warm standby
 Hot standby
 Other methods such as manual recovery and reciprocal
arrangement.

8.6.5 Availability Management
 Availability Management ensures that all IT services are available to
meet the business objectives in a cost-effective manner by reducing
the frequency and duration of incidents that impact IT availability.
 Availability would be dictated by the SLA.
 Data collected about IT service component failure(s) is used in
defining targets.
 New availability and recovery capabilities are designed, which may
include additional IT hardware, software or processes
 Also, it monitors and reports IT components’ deviations in
availability, reliability and maintainability.
 All IT service management disciplines have an influence on IT
availability; availability management, by implication, interfaces with
all disciplines.
 The availability management process leads to reduction in the
frequency and duration of IT service failures.

8.7 SERVICES LIFE CYCLE AS DESCRIBED
IN ITIL V3
 This includes:
 Service strategy formulation
 Service design
 Service transition
 Service operation
 Continuous service improvement.

8.7.1 SEI-Defined Maturity Level of Processes
 The levels are:
 LEVEL 0: Undefined
 LEVEL 1: Initial
 LEVEL 2: Repeatable
 LEVEL 3: Defined
 LEVEL 4: Managed
 LEVEL 5: Optimized.

8.8 IT SERVICE MANAGEMENT
IMPLEMENTATION STAGES
 The stages are:
 STAGE 1: Create awareness
 STAGE 2: Create change agents
 STAGE 3: Planning and implementation
 STAGE 4: Continuous improvement.
 Refer to pp.164–165.
8.9 SUCCESS TIPS FOR ITSM / ITIL

IMPLEMENTATION
8.10 LEADING VENDORS AND THEIR
ITSM PRODUCTS
8.11 COMPLEMENTARY FRAMEWORKS
IN ITSM SPACE
 See Table 8.3.
8.11.1 Comparison between ITIL, BS 15000 and
ISO 20000
 See Fig. 8.6.
8.11.2 Relationship between MOF and ITIL

8.12 MEASURING AND REALIZING IT
SERVICE MANAGEMENT ADVANTAGES
 For concepts of KPI, see Fig. 8.7.
 For ITSM measurement framework, see Fig. 8.8.
 For example of IT balanced scorecard, see Table 8.4.

[Note to Faculties:
 The students should go through all the references given.
 The relevant websites should be visited.
End of Chapter 8

9
IT SOURCING STRATEGY

9.1 BACKGROUND
 IT sourcing strategy is needed to find strategic
alternatives for deploying IT applications.
 It is necessary because IT systems have become
complex and mission-critical.
 All IT activities cannot be done in-house.
 A prudent choice between what to do in-house and what
to outsource to partners and vendors is needed.
 This chapter covers what strategies an organization
can adopt while outsourcing IT and recommends
methods for successful sourcing strategy.

9.2 IMPERATIVES FOR OUTSOURCING?
 Several reasons for outsourcing exist. These areas:
 IT is not a core competency.
 Keeping a highly skilled and motivated in-house team in
the long-term is difficult.
 There are cost advantages due to wage differential in
developing countries.
 There is easy availability of connectivity through telecom
infrastructure.
 IT specialized services need specialized skills.
 Dr. Joseph O. Okpaku concludes that outsourcing
epitomizes the quintessence of true globalization.

9.3 WHAT IS OUTSOURCING?
 Outsourcing means engaging an external service
provider company to run internal business functions
such as IT.
9.4 WHAT TO OUTSOURCE?

 The following activities can be outsourced:
 Application development
 Support of application
 Database or end-user equipment development
 Business processes, e.g., CRM /SCM and back office
functions such as payroll.

9.5 MOTIVATION AND NEED TO OUTSOURCE
 See pp. 177–178.
 Outsourcing is needed due to:
 Advantages of the specialized services and skills of the
outsourcing partner
 Inability to attract, hire and retain IT skills
 Cost predictability
 Better management hardware and control of software
 Better IT management of service levels and response
time
 Use of low-cost labour as well as higher skills as needed
 Need to clear the backlog of maintenance requests.

9.6 OUTSOURCING AND ASSOCIATED RISKS
 See pp. 178–179. The risks relate to:
 Information security
 Confidentiality
 Apparent loss of control
 Hidden costs
 Outsourced company’s lack of ability and experience.

9.7 HOW TO MINIMIZE RISKS
 See p. 179. The following are needed:
 Right partner
 Proper requirement gathering
 Proper cost-benefit analysis
 Partnership approach.
9.8 IT MANAGEMENT LAYERS AND

CONSIDERATIONS FOR
OUTSOURCING
 See Fig. 9.1.

9.9 STRATEGIC VERSUS GENERIC
OUTSOURCING
 Generic outsourcing refers to generic IT activities,
e.g., system operations, security and firewall
management, networks management and end-user
support.
 Strategic outsourcing refers to areas that require
customized solutions for the specific organization’s
needs and are competitive differentiators.

9.10 VARIANTS OF OUTSOURCING
 See Fig. 9.2. The variants are:
 Offshoring
 Near-shoring
 Inshoring
 Smart-shoring, smart-sourcing or multi-sourcing
 Full outsourcing.

9.11 BUSINESS PROCESS OUTSOURCING
9.12 BEST-OF-BREED CONSORTIUM
9.13 INSOURCING
9.14 OUTSOURCING JOINT VENTURE

9.15 HOW TO SUCCEED WITH OUTSOURCING
9.15.1 Shortlisting Candidate Service Providers
9.15.2 Defining Comprehensive Contract Content
9.15.3 Investing Time And Energy In Thorough
Contract Preparation
9.15.4 Having Clear Scope Of Service
 See p. 188 for details of a typical scope of contract.
9.15.5 Rewarding and Penalizing
9.15.6 Safeguarding Dispute Area
9.15.7 Ensuring Objective Selection Process
9.16 CONTRACT MANAGEMENT AND
GOVERNANCE
 This involves:
 Relationship management
 Performance monitoring.

9.17 MANAGING OUTSOURCING TRANSITION
 This involves transitions of assets, processes,
applications, and at times, people.
 This is a key activity that can make or mar the success
of outsourcing.
 Both technical as well as ‘soft’ factors are to be taken
into account (see pp. 192–193).
 Key actions include:
 Staff recruitment and retention
 Focus on building expertise
 Ensuring regular progress meetings and
reporting.
[Note to Faculties:
 Review all questions, ask the class to find the answers
and present their applicability on some of the recent
outsourcing deals in India, such as Aircel, Idea and
Forbes.
 Ask students to search on the Web and find success
and failure studies.]
End of Chapter 9

10
PLANNING AND MEASURING
RETURNS ON IT INVESTMENT

10.1 BACKGROUND
 Planning and measuring of returns on IT investment is
needed because
 IT is not just the cost of doing business
 IT investment is now substantial in nature
 IT is a competitive toolkit
 IT needs ROI-like expectations of benefit
 The IT function will differ from firm to firm.

10.2 IT BUSINESS VALUE FRAMEWORK
 Business value includes all forms of value beyond
economic value.
 Framework by Kwon, Watts–Sussman, and Collopy
(refer to Section 10.2) is useful.
 See Fig. 10.1.
 Business value is dependent on scope, efficiency and
effectiveness.
 The steps are as follows (see pp. 196 – 197):
 Link business value to business performance
 Identify value drivers
 Determine current and future areas of improvement
 Create a top-down approach
 See p. 197 for typical value elements.

10.3 CRITICAL FACTORS FOR IT
BUSINESS BENEFIT REALIZATION
 See p. 198. The critical factors are:
 Whether IT is considered a strategic asset
 Whether business value is ascertained for every investment
 Well-defined ownership
 Maturity of IT.

10.4 HOW MUCH IT INVESTMENT IS
OPTIMUM
 Optimality of IT investment depends upon several
factors:
 Scope and geographical spread
 Organizational structure
 Stability and maturity of business
 IT in products and services
 Investment by peers.
 See Table 10.1.

10.5 HOW TO MEASURE BENEFITS FROM IT
 See Fig. 10.2.
10.6 DEFINING AND MEASURING RETURN

ON INVESTMENT
 Various cost components are involved here: direct,
indirect, etc.
 Various methods can be used: NPV, IRR, break-even,
etc.

10.7 COMMUNICATING AND MARKETING
BUSINESS BENEFITS
 The following factors are important:
 Scale of IT service
 Regular publication
 Benefits measurement (post-implementation).

[Note to Faculties:
 Refer to the article in Section 10.2.
 Ask the class groups to contact business
organizations of their choice and study any business
benefit measurement tasks carried out by these
organizations. They can interview the CIOs and other
business users to arrive at the IT reruns and business
benefits.]
End of Chapter 10

11
STRATEGIES FOR MANAGING
IT-LED CHANGE

11.1 INTRODUCTION
 IT strategy implementation is an exercise involving the
driving and managing of change.
 IT implements the guiding rails between which the
organization wants to function to ensure that all
required process changes are adopted by the people.
 One needs to be aware of the various issues and
challenges.

11.2 IT STRATEGY IMPLEMENTATION
 The target layers of people (see Fig. 11.1) consist of:
 Business leader
 Business user
 IT professional
 IT service provider
 IT outsourcing partner.
 All these would be affected and therefore would need
proper management, a difficult task in which setbacks
frequently lead to IT implementation failure.

11.2.1–11.2.3 Issues
 These exist at the following levels:
 Business alignment
 End-users
 IT professionals (in-house as well as partners).

11.3 BARRIERS TO CHANGE
 The various barriers to change involve:
 Not enough ‘buy-in’
 Lack of expectations management
 Inadequate training
 Not managing the middle
 Not managing and monitoring the change process
(see pp. 206–207)

 Inadequate attention to the various Change
Management stages (see Fig. 11.2).

11.4 MANAGING CHANGE
 See p. 208. The following steps are involved:
 Identify the target and impact
 Deduce motivation and issues of resistance
 Address these issues
 Communicate as often as possible
 Take feedback and modify the implementation of
points 2 and 3 as needed
 Celebrate the successes and reward the teams
 Record and implement the lessons learnt.

11.5 STEERING COMMITTEE
 See p. 210. This is a leadership-level committee that
helps in driving change.
11.6 NEW SKILL-SETS NEEDED, SOFT

SKILLS, PEOPLE ISSUE RESOLUTION

[Note to Faculties:
 Read the Rutima case and discuss it in the class.
 Go through the references and pick one or two articles
for class discussion.]
End of Chapter 11

In case of any query, please contact
Sanjiva Shankar Dubey at:
sanjiva_dubey@yahoo.com


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IT STRATEGY AND

IT Strategy and Management

3–4 3 Strategic IT Planning 25 – 46

5–6 4. Enterprise IT Architecture 47 – 56

11–12 7. Strategy for IT Program Management and PMO 77 – 101

15–16 9. IT Sourcing Strategy 120 – 133

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IT Strategy and Management

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 Understanding the strategic dimension

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 Refer to Section 2.1.1 for the broader definition of

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 Executives in integrating and aligning IT with the

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 Where are we now?

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3.5 DIFFICULTIES IN DEVELOPING

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3.9 INTEGRATED PLANNING APPROACH

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 Refer to Fig. 3.9.

3.10.1 Typical Content Of SITP

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3.11.1 Considerations for Committed Service Levels

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3.12.1 Rapid Response Planning for Internet

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3.14 MANAGING PROJECT SCOPE TIGHTLY

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4.1.1 Challenges Addressed by Enterprise

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 Process (what and how), and