Question

1. Select an organization of your choice (IBM), describe the organization and its governance structure that is currently being followed. Please note you have to provide references for your response.

a) Based upon the available IT governance structure – discuss the pros and cons of the specific model

b) Be creative and suggest changes to the current model that is being used to overcome issues.

c) Identify another organization – compare & contrast IT governance model between the two organizations

Answer 1

IBM Organization :

According to Wikipedia , “International Business Machines Corporation (commonly referred to as IBM) is an American multinational technology company headquartered in Armonk, New York, United States, with operations in over 170 countries. The company originated in 1911 as the Computing-Tabulating-Recording Company (CTR) and was renamed "International Business Machines" in 1924.”

IBM (International Business Machines) ranks among the world's largest information technology companies, providing a wide spectrum of hardware, software and services offerings.

In its early years, IBM was widely associated with the punched card, invented by Herman Hollerith. Hollerith was part of the Computing-Tabulating-Recording (CTR) Company, when, in 1914, Thomas J. Watson joined the company as general manager. The CTR Company itself had been formed from three companies that sold grocery store scales, time recording devices and tabulators. Over the next few decades, Watson built the business machine company of the future, now known as International Business Machines. IBM has one of the largest workforces in the world, and employees at Big Blue are referred to as "IBMers". The company was among the first corporations to provide group life insurance (1934), survivor benefits (1935), training for females (1935), paid vacations (1937), and training for disabled people (1942). IBM hired its first black salesperson in 1946, and in 1952, CEO Thomas J. Watson, Jr. published the company's first written equal opportunity policy letter, one year before the U.S. Supreme Court decision in Brown vs. Board of Education and 11 years before the Civil Rights Act of 1964.

Governance structure :

The IBM company's organizational Governance structure consists of a board of directors. Who is responsible for the overall running of the company and board committees that cover specific areas of responsibility. According to the corporate governance guidelines on the official IBM website, the board of directors ideally has between 10 and 14 members, In addition, executive officers take care of hands-on operations and are the voice of the company. The standing committees as of 2014 include the audit committee, the directors and corporate governance committee, the executive compensation and management resources committee, and the executive committee. As of 2014, the chairman of the board of directors, chairman of the executive committee and CEO of the company is Virginia M. Rometty.

Other executive officers handle various aspects of the international business including sales and distribution, strategic partnerships, global technology services, human resources, marketing and communications, research, software and systems, and other specific aspects of organization and function.

IT governance structure

Simply put, it’s putting structure around how organizations align IT strategy with business strategy, ensuring that companies stay on track to achieve their strategies and goals, and implementing good ways to measure IT’s performance. It makes sure that all stakeholders’ interests are taken into account and that processes provide measurable results. An IT governance framework should answer some key questions, such as how the IT department is functioning overall, what key metrics management needs and what return IT is giving back to the business from the investment it’s making.

According to the IT Governance Institute, there are five areas of focus:

• Strategic alignment: Linking business and IT so they work well together. Typically, the lightning rod is the planning process, and true alignment can occur only when the corporate side of the business communicates effectively with line-of-business leaders and IT leaders about costs, reporting and impacts.
• Value delivery: Making sure that the IT department does what’s necessary to deliver the benefits promised at the beginning of a project or investment. The best way to get a handle on everything is by developing a process to ensure that certain functions are accelerated when the value proposition is growing, and eliminating functions when the value decreases.
• Resource management: One way to manage resources more effectively is to organize your staff more efficiently—for example, by skills instead of by line of business. This allows organizations to deploy employees to various lines of business on a demand basis.
• Risk management: Instituting a formal risk framework that puts some rigor around how IT measures, accepts and manages risk, as well as reporting on what IT is managing in terms of risk.
• Performance measures: Putting structure around measuring business performance. One popular method involves instituting an IT Balanced Scorecard, which examines where IT makes a contribution in terms of achieving business goals, being a responsible user of resources and developing people. It uses both qualitative and quantitative measures to get those answers.

Model:

• CoBIT: This framework, from the Information Systems Audit and Control Association (ISACA), is probably the most popular. Basically, it’s a set of guidelines and supporting toolset for IT governance that is accepted worldwide. It’s used by auditors and companies as a way to integrate technology to implement controls and meet specific business objectives. The latest version, released in May 2007, is CoBIT 4.1. CoBIT is well-suited to organizations focused on risk management and mitigation.
• ITIL: The Information Technology Infrastructure Library(ITIL) from the government of the United Kingdom runs a close second to CoBIT. It offers eight sets of management procedures in eight books: service delivery, service support, service management, ICT infrastructure management, software asset management, business perspective, security management and application management. ITIL is a good fit for organizations concerned about operations.
• COSO: This model for evaluating internal controls is from the Committee of Sponsoring Organizations of the Treadway Commission. It includes guidelines on many functions, including human resource management, inbound and outbound logistics, external resources, information technology, risk, legal affairs, the enterprise, marketing and sales, operations, all financial functions, procurement and reporting. This is a more business-general framework that is less IT-specific than the others.
• CMMI: The Capability Maturity Model Integration method, created by a group from government, industry and Carnegie-Mellon’s Software Engineering Institute, is a process improvement approach that contains 22 process areas. It is divided into appraisal, evaluation and structure. CMMI is particularly well-suited to organizations that need help with application development, lifecycle issues and improving the delivery of products throughout the lifecycle.
• There are a lot of framework choices.

Most companies go with CoBIT or ITIL, but others can also fit the bill. For operations, try ITIL. For application development and lifecycle issues, try CMMI. For risk, use CoBIT. CoBIT is also a great umbrella framework. But combining frameworks can also make sense, says Ron Saull, an IT Governance Institute trustee. You might want to use CoBIT as an overall framework; then use ITIL for your operations, CMMI for development and ISO 17799 for security. In fact, combining frameworks is fairly common; the PricewaterhouseCoopers study found that in 65 percent of cases, companies use CoBIT and ITIL together or with lesser-known frameworks. But most importantly, use a framework that fits your corporate culture and that your stakeholders are familiar with. If the company is using one of these frameworks and can leverage it to be its IT governance framework, all the better.

TCS IT Governance and IBM IT Governance:

TCS develops an IT operating model for a leading industrial manufacturing group.

TCS designed a new IT operating model that streamlined the interface between business and IT.

The Customer: TCS’ client is a leading global provider of industrial productivity solutions with operations in over 150 markets. The group develops and manufactures compressors, power tools, assembly systems, construction and mining equipment for a wide range of industries.

Business Scenario:
The Company had an established IT shared services unit, based on the internal service provider model. This model
aimed to drive better standardization and cost control, allowing the divisions to focus on their core businesses. While this model delivered certain benefits, it was not agile and effective in fulfilling the business needs.

Some key challenges included the following:

• The client's focus was on ensuring smooth functioning of day-to-day operations, resulting in inadequate contribution of IT toward business development
• High costs and communication inefficiencies due to the size and complexity of the IT setup
• A lack of focus on the adoption of new technologies and solutions

TCS’ Solution:
TCS used a holistic approach to design an IT target operating model, which was built along the following lines:

• Operating context: By defining the operating context, we addressed the key areas relating to the role of IT, the placement of various IT functions and the required roles, skills and IT governance arrangements.
• Role and task mapping: We mapped the various activities in the IT value chain to the respective roles, highlighting individual responsibilities for each key IT performance measure.
• Implementation approach: We provided a transition roadmap (from the existing to the target operating model) and ensured that the new model delivered the intended results within the estimated time.

The target operating model included two main components:

• Value IT: Business was accountable for driving the use of IT with its core focus on business value creation
• Utility IT: IT was accountable for driving the use of commodity IT and managing IT service delivery

This change would reflect in the roles, responsibilities and placement of the various activities across the shared
service IT unit and business area IT teams.

Benefits:
The new IT operating model will help the group with the following:

• Streamline the interface between business and IT to ensure agility and responsiveness to business-IT requirements
• Focus internal IT capabilities on creating Value IT solutions that provide the group with a competitive advantage
• Establish business accountability for driving IT usage to create business value
• Embed innovation as a part of the organization’s culture
• Achieve cost efficiencies in the delivery of Utility IT services by leveraging external IT service providers

IBM IT Governance Approach(ITGA)

>Business Performance through IT Execution.

>Optimizing business performance through IT strategy, goals, and objectives.

> Enabling and empowering people to deliver strategic business value.

> Automating IT governance with IBM Rational software.

The IBM ITGA is an iterative approach to planning, designing, implementing, deploying, Monitoring, controlling, and changing the operational processes of business operations that rely on information technology. This approach provides your company a comprehensive, repeatable, and predictable life-cycle business process for the development, adoption, and continual improvement of your IT governance solution. It provides all of the concepts, activities, artifacts, roles, and associated relationships among these elements that you would expect from the definition of a robust business process.

The IBM ITGA presents and discusses the critical characteristics of IT governance solutions For example, it addresses the solution’s relationship to project risk dynamics, strength of governance, and value interests. Although the approach does not present any specific design or framework for your IT governance solution, “IT governance solution strategy” The IBM ITGA is an iterative approach to planning, designing, implementing, deploying, monitoring, controlling, and changing the operational processes of business operations that rely on IT. A baseline IT governance solution is developed and deployed through the four life-cycle phases: Plan, Implement, Manage, and Assess. The area under the curve that is associated with each discipline illustrates the relative amount of effort and activity required to define and deploy an IT governance solution.

The IBM ITGA is a robust, proven, engineering-oriented approach that applies the following

principles:

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Adapt the process.

Scale your governance solution to be effective for the business, organizational unit, or project.

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Balance competing stakeholder priorities.

Understand the requirements, goals, and objectives of the business, and adjust priorities accordingly.

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Collaborate across teams.

Establish organizational transparency. Harmonize the efforts of the whole business for a collaborative effort.

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Demonstrate value iteratively.

Attack major business, programmatic, and technical risks first. Enable feedback for improvement by delivering incremental value in each iteration.

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Elevate the level of abstraction.

Reuse existing assets, reduce the amount of human-generated output through higher-order tools

and languages, and architect for resilience, quality, understandability, and complexity control.

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Focus continuously on quality.

Ensuring high quality requires that the entire team owns quality. It involves all team members and all parts of the governance life cycle.