IT Strategy and Management Teaching Aids Chapter 1-11 (Final)

IT STRATEGY AND
MANAGEMENT
SANJIVA SHANKAR DUBEY
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 7590 minutes each.
IT Strategy and Management
(Author: Sanjiva Shankar Dubey)

[Note to faculties: Please check the speaker notes on every
page.]
This outline is designed around 20 sessions.
[
Strategy
IT
Session
Management
Slide No.
12
Introduction
1. Business Strategy: Challenges and Opportunities for IT
2. Business and IT Alignment
16
7 15
16 24
34
3 Strategic IT Planning
25 46
56
4. Enterprise IT Architecture
47 56
78
5. IT Application Strategy
57 68
910
6. Technology Management Strategy for IT
69 76
Mid-term/ quiz,
etc.
IT
Chapter
Author can be contacted for quiz papers and questions for both mid-term
and end-term assessments.
1112
7. Strategy for IT Program Management and PMO
77 101
1314
8. IT Service Management Strategy
102 119
1516
9. IT Sourcing Strategy
120 133
1718
10. Planning and Measuring Returns on IT Investment
134 141
1920
11. Strategies for Managing IT-Led Change
142 149
150
Author contact details
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--vis competitors.
Comprises
IT application strategy
Technology management strategy for IT
IT management strategy.

10
1.4.1 IT Application Strategy
IT application strategy involves answering these

questions:
Application types belong to either:
Which applications are to be used?

For which business areas, and for what benefits and at
what cost are they to be used?
Support,
Factory,
Turnaround, or
Strategic categories.
This is discussed in detail in Chapter 5 (Session 3).

11
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.

12
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.

13
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).

14
[Note to faculties:
Please refer to review questions and ask the students
to answer them.]
End of Chapter 1
15
2
BUSINESS AND IT ALIGNMENT

16
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.
17
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

ITs ability to identify and partner with business
ITs ability to deliver.
Three levels of alignment: Refer to Fig. 2.2.

18
2.3 3D FRAMEWORK FOR ALIGNMENT
Discipline
Design
Drive for results.

19
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 Benbasts extension.

20
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.

21
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).

22
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).

23
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
24
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

25
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.

26
3.1 BUSINESS IMPLICATIONS OF IT

STRATEGY AND PLANNING
Where are we now?
Where do we want to go?
How will we get there?

27
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.

28
3.3 STRATEGIC IT PLAN MOTIVATIONS

Refer to page 33.
It is to reduce cost and increase competitiveness
and integration.

29
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.

30
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.

31
3.7 SITP APPROACHES AND PREVALENT

RESEARCH
IBM business systems planning

Rockarts critical success factors (CSF)
Stages of growth: Nolans stages theory
Porters competitive forces model
Porters value chain analysis
E-business value matrix
Linkage analysis planning
Scenario planning.

32
SITP overall planning processes
See Fig. 3.4.

Refer to Figures 3.5, 3.6 and 3.7 for SITP approaches.

33
3.8 CRITICAL COMMENTS ON VARIOUS

APPROACHES
Refer to Table 3.1, p. 45.
3.9 INTEGRATED PLANNING APPROACH
Refer to Fig. 3.8.

34
3.10 CONTENT OF SITP

Refer to Fig. 3.9.
Earl, Mocker and Teubner defined the components of
SITP as
ISM component
SMI component
MIS component.
3.10.1 Typical Content Of SITP

Refer to pp. 47-48.

35
3.10.2 Six Planning Stages of SITP

Refer to pp. 4952. 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 projects portfolio and define the scope of projects
and their prioritization
6. Evaluate IT projects for inclusion in application portfolio.

36
3.11 CONSIDERATIONS FOR SYSTEMS

OPERATIONS
Systems operations considerations include running the

firms 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).

37
3.12 IT PLANNING HORIZON
Operational3 months
Tactical3 months2 years
Strategic3-5 years.
3.12.1 Rapid Response Planning for Internet

Applications

38
3.13 RESOURCE PLANNING
People planning
Financial planning
Administrative actions
Technology planning.
3.14 MANAGING PROJECT SCOPE TIGHTLY

39
3.15 IMPLEMENTATION CONSIDERATIONS

OF SITP
Refer to Fig. 3.12.

The following are important for the success of SITP process as planning
as shown by Gottschalks studies:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Adequacy of resources the implementation

Level of user involvement during the implementation
Adequacy of analysis of the organizations information needs
Anticipation of changes in the external environment
Solutions to potential resistance during the implementation
Information technology to be implemented
IT projects relevance to the business plan
Who owns the responsibility for the SITP implementation
Level of management support for the implementation
Communication issues
IT issues
General business-related issues.
40
Completing SITP
SITP implementation best practices (p. 60)

Pitfalls to be avoided as per Luftmans studies
Refer to Fig. 3.13.

41
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

42
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?

43
5. Write a short note on the following SITP approaches espoused by the

leading researchers:
(a) IBM business systems planning
(b) Rockarts critical success factors (CSF)
(c) Stages of growth: Nolans stages theory
(d) Porters competitive forces model
(e) Porters 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
ISM, SMI and MIS to underline all factors?
44
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 firms SITP?
What is the role of the steering committee in this effort?

45
[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
46
4
ENTERPRISE IT ARCHITECTURE

47
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.

48
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.
49
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.

50
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).

51
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.

52
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.

53
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

54
4.6 STANDARDS FOR EITA
ANSI/IEEE Standard 14712000

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
TOGAFs latest form version 7
Covers ANSI/IEEE Standard 14712000.
Other frameworks used by the United States government are

as follows:
Federal enterprise architecture framework (FEAF)
Treasury enterprise architecture framework (TEAF)
Spewaks enterprise architecture planning (EAP)
Zachmans framework.
55
[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
56
5
IT APPLICATION STRATEGY

57
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

58
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)

59
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).

60
5.2 WHY DEVELOP APPLICATION PACKAGE
Low cost
Changing requirements
Simple application
Good talent pool
Low recurring cost.

61
5.2.1 Why COTS ?
Affordability
Scalability/modularity
Flexibility
Easy to use
Good quality
Accelerating rates of COTS enhancement and
expanding system requirements.

62
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.

63
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
64
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.

65
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.

66
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.
67
[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
68
6
TECHNOLOGY MANAGEMENT
STRATEGY FOR IT

69
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.

70
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.

71
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.

72

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 sourcingbuild versus buy.
It helps in infrastructure standardization and management of
costs.
See Fig. 6.4.

73

STRATEGY CONSTITUENTS
The constituents of technology management strategy

are as follows:
Data strategy (see Fig. 6.6)
Strategy for solution and application integration

strategy3 sub-strategies (pp. 108109); various
application integration strategies (Table 6.2).
Technology component strategies covering the

network strategies
Security strategy for data and network.

74
6.7 PREVALENT TECHNOLOGY MANAGEMENT

FRAMEWORKS AND ARCHITECTURES
6.7.1 The Open Group Architectural

Framework (TOGAF)
TOGAF version 8 (see p. 113)
TRMTechnical Reference Model (see p. 113)

SIBStandard Information Base (see p. 114)
BBIBBuilding Blocks Information Base.
Resource Base
ADMArchitectural Development Method

(see p. 115).

75
[Note to Faculties:
References and websites of TOGAF should be

visited.
All review questions should be answered.]
End of Chapter 6

76
7
STRATEGY FOR IT PROGRAM
MANAGEMENT AND PMO

77
7.1 INTRODUCTION
Strategies for managing IT projects, program and
portfolio, addressing inter-project management
issues, managerial as well as financial concepts.

78
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.

79
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.

80
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.

81
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.

82
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.

83
7.6 BENEFITS OF PMO
Studies show 80% ROI, 20% reduction in project time,

and 3035% successful project delivery, whereas
companies without a PMO experienced 74% project
failure rate.

84
7.7 QUALITIES OF A PMO

A Project Management Officer must
Have thorough understanding of the firms 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.

85
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

86
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
87
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.

88
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?

89
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.

90
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.

91
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 managedincrease over year, target
versus actual
Number of training classes delivered (target versus actual)
92
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.

93
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.

94
7.17 MATURITY ASSESSMENT OF PROJECT

MANAGEMENT PRACTICES
This is achieved through various models such as CobiT,
OPM3, ISO 15504 and CMM/CMMI.

95
7.18/7.19 CobiT
CobiTControl Objectives for Information and related
Technologyis developed and promoted by IT Governance
Institute.
CobiT maturity levels are:
1. LEVEL 0: Non-existent
2. LEVEL 1: InitialAd hoc and disorganized
3. LEVEL 2: RepeatableFollows regular pattern
4. LEVEL 3: DefinedDocumented/communicated
5. LEVEL 4: ManagedMonitored and measured
6. LEVEL 5: OptimizedBest practices followed/automated.

96
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).

97
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. 13940
Scope verification and scope change control: After project is
delivered.

98
7.22 MANAGING OVERALL RISK
The four types of risks are:

1. Business risks
2. Organizational risks
3. Technical risks
4. Execution risks.

99
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.

100
[Note to Faculties:
References to be reviewed
End of Chapter 7

101
8
IT SERVICE MANAGEMENT
STRATEGY

102
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.

103
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.

104
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.

105
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.
106
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).
107
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.

108
8.4.1 ITIL Overview
See Table 8.1.

Various processes have been grouped under
Version 2.0
Version 3.0.

109
8.5 SERVICE SUPPORT
See Fig. 8.4.

Incident management
Problem management
Change management
Release management
Configuration management
Service operation
Service operation
Service transition
Service transition
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.
110
Typical SLA contract
See p. 155, Fig. 8.5.
8.6.3 Capacity Management
Table 8.2Dependence of capacity management

process on other processes.
8.6.4 IT Service Continuity management (ITSCM)
RPO and RTO concepts
Addressing risk through ITSCM.

111
ITSCM Strategies
See p. 159.
Recovery options are:
Cold standby
Warm standby
Hot standby
Other methods such as manual recovery and reciprocal
arrangement.

112
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.
113
8.7 SERVICES LIFE CYCLE AS DESCRIBED

IN ITIL V3
This includes:
Service strategy formulation

Service design
Service transition
Service operation
Continuous service improvement.

114
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.

115
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.164165.
8.9 SUCCESS TIPS FOR ITSM / ITIL

IMPLEMENTATION
8.10 LEADING VENDORS AND THEIR
ITSM PRODUCTS
116
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

117
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.

118
[Note to Faculties:
The students should go through all the references given.
The relevant websites should be visited.
End of Chapter 8

119
9
IT SOURCING STRATEGY

120
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.

121
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.
122
9.3
Outsourcing means engaging an external service

provider company to run internal business functions
such as IT.
9.4
WHAT IS OUTSOURCING?
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.

123
9.5 MOTIVATION AND NEED TO OUTSOURCE
See pp. 177178.

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.

124
9.6 OUTSOURCING AND ASSOCIATED RISKS
See pp. 178179. The risks relate to:
Information security
Confidentiality
Apparent loss of control
Hidden costs
Outsourced companys lack of ability and experience.

125
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.

126
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 organizations
needs and are competitive differentiators.

127
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.

128
9.11 BUSINESS PROCESS OUTSOURCING

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

129
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
130
9.16 CONTRACT MANAGEMENT AND

GOVERNANCE
This involves:
Relationship management
Performance monitoring.

131
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. 192193).
Key actions include:
Staff recruitment and retention
Focus on building expertise
Ensuring regular progress meetings and

reporting.
132
[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

133
10
PLANNING AND MEASURING
RETURNS ON IT INVESTMENT

134
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.

135
10.2 IT BUSINESS VALUE FRAMEWORK
Business value includes all forms of value beyond

economic value.
Framework by Kwon, WattsSussman, 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.
136
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.

137
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.

138
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.

139
10.7 COMMUNICATING AND MARKETING

BUSINESS BENEFITS
The following factors are important:
Scale of IT service
Regular publication
Benefits measurement (post-implementation).

140
[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

141
11
STRATEGIES FOR MANAGING
IT-LED CHANGE

142
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.

143
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.

144
11.2.111.2.3 Issues
These exist at the following levels:
Business alignment
End-users
IT professionals (in-house as well as partners).

145
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. 206207)
Inadequate attention to the various Change
Management stages (see Fig. 11.2).

146
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.

147
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

148
[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

149
In case of any query, please contact

Sanjiva Shankar Dubey at:
sanjiva_dubey@yahoo.com

150

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IT STRATEGY AND

IT Strategy and Management:

Prepare an effective plan for its implementation

Also, IT management frameworks such as ITIL (Information Technology

IT Strategy and Management

6. Technology Management Strategy for IT

7. Strategy for IT Program Management and PMO

8. IT Service Management Strategy

10. Planning and Measuring Returns on IT Investment

11. Strategies for Managing IT-Led Change

Author contact details

IT Strategy and Management: Why

Information Technology (IT) is a strong contributor to

Learning Pause: What do you think?

Name one example where IT has dramatically

Can these businesses survive without IT? Consider

Therefore you need a proper and methodical approach

IT Strategy and Management

IT Strategy and Management:

Analyze and critically evaluate information as a key

IT Strategy and Management

1.3 WHAT IS BUSINESS STRATEGY?

Set of objectives, plans and policies for the firm to

IT Strategy and Management

Efficiency improvement through the use of digital

IT Strategy and Management

1.4 WHAT IS IT STRATEGY?

Competitive necessity: To do business in any industry

IT Strategy and Management

1.4.1 IT Application Strategy

IT application strategy involves answering these

Application types belong to either:

Which applications are to be used?

This is discussed in detail in Chapter 5 (Session 3).

IT Strategy and Management

1.4.2 Technology Strategy for IT

1.4.3 IT Management Strategy

IT Strategy and Management

1.5 DEVELOPING IT STRATEGY FOR

Understanding the strategic dimension

IT Strategy and Management

1.6 STAGES OF IT STRATEGY DEVELOPMENT

Aligning business and IT strategy (Chapter 2)

IT Strategy and Management

IT Strategy and Management

2.1 WHAT IS BUSINESS IT ALIGNMENT?

2.2 CHALLENGES OF BUSINESS AND

Absence of a well-articulated strategy

Leadership level congruence

Three levels of alignment: Refer to Fig. 2.2.

2.3 3D FRAMEWORK FOR ALIGNMENT

Drive for results.

IT Strategy and Management

2.4 HOW TO ACHIEVE BUSINESS AND IT

This section discusses the three-perspective

2.4.1 Communication School

See page 18.

IT Strategy and Management

2.4.2 Architecture School

(see Box 2.1)

Integrated architecture framework

IT Strategy and Management

2.4.3 Technology School

2.4.4 People School