Business briefing series IT paper

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In association with Deloitte, the Institute has produced a thought leadership paper titled 20 issues on IT as a strategic partner. The paper presents 20 significant IT issues set to impact organisations now and in the immediate future.

‘We understand that business leaders are time poor. Our paper presents 20 issues likely to be at the forefront in shaping the role and contribution of business IT over the next decade,’ said Leadership and Quality General Manager, Lee White.

The issues are divided into five core elements that contribute to the value IT brings to an organisation. These include strategic alignment, information management, IT effectiveness, agility and innovation, and operational efficiency.

The practical paper includes quick references and a list of questions so readers can consider and apply the information to their organisation and individual circumstances.

http://www.charteredaccountants.com.au

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Business briefing series IT paper

  1. 1. Business briefing series 20 issues on IT as a strategic partner
  2. 2. Deloitte provides audit, tax, consulting, and The Institute of Chartered Accountants in Australia financial advisory services to public and private (the Institute) is the professional body representing clients spanning multiple industries. With a globally Chartered Accountants in Australia. Our reach extends connected network of member firms in 140 countries, to more than 65,000 of today’s and tomorrow’s Deloitte brings world class capabilities and deep business leaders, representing some 53,000 Chartered local expertise to help clients succeed wherever Accountants and 12,000 of Australia’s best accounting they operate. Deloitte’s 150,000 professionals are graduates who are currently enrolled in our world-class committed to becoming the standard of excellence. postgraduate program. Deloitte’s professionals are unified by a collaborative Our members work in diverse roles across commerce culture that fosters integrity, outstanding value to and industry, academia, government and public markets and clients, commitment to each other, and practice throughout Australia and in 110 countries strength from diversity. They enjoy an environment around the world. We aim to lead the profession by of continuous learning, challenging experiences, delivering visionary thought leadership projects, setting and enriching career opportunities. Deloitte’s the benchmark for the highest ethical, professional and professionals are dedicated to strengthening corporate educational standards, and enhancing and promoting responsibility, building public trust, and making a the Chartered Accountants brand. positive impact in their communities. We also represent the interests of members Deloitte refers to one or more of Deloitte Touche in government, industry, academia and the general Tohmatsu, a Swiss Verein, and its network of public by actively engaging our membership and local member firms, each of which is a legally separate and international bodies on public policy, government and independent entity. Please see www.deloitte. legislation and regulatory issues. com/au/about for a detailed description of the The Institute can leverage advantages for its members legal structure of Deloitte Touche Tohmatsu and its as a founding member of the Global Accounting member firms. Alliance (GAA), an international accounting coalition In Australia, Deloitte has 12 offices and over 4,500 formed by the world’s premier accounting bodies. people and provides audit, tax, consulting, and The GAA has a membership of 788,000 and promotes financial advisory services to public and private clients quality professional services to share information across the country. Known as an employer of choice and collaborate on international accounting issues. for innovative human resources programs, we are The Institute is constituted by Royal Charter and was committed to helping our clients and our people excel. established in 1928. Deloitte’s professionals are dedicated to strengthening For further information about the Institute visit corporate responsibility, building public trust, and charteredaccountants.com.au making a positive impact in their communities. For more information, please visit Deloitte’s web site at www.deloitte.com.au Disclaimer: This discussion paper presents the opinions and comments of the author and not necessarily those of the Institute of Chartered Accountants in Australia (the Institute), Deloitte or their members. The contents are for general information only. They are not intended as professional advice – for that you should consult a Chartered Accountant or other suitably qualified professional. The Institute and Deloitte expressly disclaims all liability for any loss or damage arising from reliance upon any information contained in this paper. All information is current as at June 2010 First published June 2010 Published by: The Institute of Chartered Accountants in Australia Address: 33 Erskine Street, Sydney, NSW 2000 Deloitte Address: Grosvenor Place, 225 George St, Sydney, NSW 2000 Business briefing series: 20 issues on new technologies First edition ISBN: 978-1-921245-62-6 ABN 50 084 642 571 The Institute of Chartered Accountants in Australia Incorporated in Australia Members’ Liability Limited. 0510-28 ABN 74 490 121 060 Deloitte Touche Tohmatsu.
  3. 3. Business briefing series 20 issues on IT Throughout the last decade there have been a host of newer, faster and friendlier information technology (IT) options developed to assist business leaders and their as a strategic partner organisations remain competitively positioned. During this time the challenge for business leaders has been dedicating the time to analyse and cut-through the many options available in order to find those that have the potential to impact the organisation more successfully. It is in this regard that the Institute has engaged with Deloitte, to produce this leadership paper entitled, Business briefing: 20 issues on IT as a strategic partner. The paper provides business leaders with an introduction to the 20 most important technology issues likely to be at the forefront in shaping the role and contribution of business IT over the next decade. The issues are divided into five core elements that contribute to the value IT makes to the operation of the organisation: • Strategic alignment • Information management • IT effectiveness • Agility and innovation • Operation efficiency. Business briefing: 20 issues on IT as a strategic partner has been written and presented in such a way as to maximise the reader’s understanding of the issues. Each of the five sections contain pull-out boxes – or ‘jargon busters’. The discipline of IT is notorious for specialised terminology, jargon, acronyms and abbreviations, the jargon busters pick out some of the more commonly used abbreviations and esoteric terminology, and provide a brief explanation. In addition, each section begins with a diagnostic questionnaire to ensure the reader is thinking about the right questions when reading the paper. The questions are also consolidated on the one page at the back of the paper for quick reference and to enhance practicality. The coming years present considerable challenges for business leaders seeking to exploit IT and new technology innovations. Organisations looking to adopt new technology such as, social media, cloud computing and standard business reporting need to consider how these new technologies can help differentiate themselves from their competitors. I trust that you will find this thought leadership paper interesting and worthwhile reading. This leadership paper is an initiative of the Institute’s Business Leader Series. A series dedicated to providing guidance and resources to leaders working in organisations. Michael Spinks President Institute of Chartered Accountants in Australia Business briefing series: 20 issues on IT as a strategic partner 3
  4. 4. Business briefing series: 20 issues on IT as a strategic partner 4
  5. 5. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Strategic alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1. Business-IT alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2. IT governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3. IT investment and IT value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Information management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4. Management reporting and analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 IT effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5. Customer responsiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6. Collaboration technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 7. Social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 8. Wireless and mobile computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 9. Data security, confidentiality and privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 10 Business reporting (XBRL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Agility and innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 11. IT agility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 12 Cloud computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 13. Software as a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 14. Business rules management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 15. Service oriented architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Operational efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 16. Green IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 17. IT sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 18. Virtualisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 19. Systems security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 20. Disaster recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Issues checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Resources and further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Contact details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back cover Business briefing series: 20 issues on IT as a strategic partner 5
  6. 6. Introduction Few decades, if any, can compare with the first one of the 21st century when it comes to the extraordinary leaps and bounds the global society has achieved in the field of information technology (IT). Throughout the decade there has been a host of newer, faster, friendlier technologies introduced that have been promising revolutionary breakthroughs at any point in time. The difficulty for business leaders is that all forms of new technologies have the potential to significantly impact the operations of the business, as well as placing demands on existing IT hardware and processes. The technology is also presented to business leaders heavily laced with industry jargon and sales messaging. It is no wonder most find it difficult to cut through and pick out the technologies which have the potential to impact an organisation successfully. More often this analysis and agreement on their relative importance can come too late. This paper provides business leaders with an IT is becoming more and more integrated into the ‘fabric’ introduction to the 20 most important technology issues of organisations. IT and business processes have become likely to be at the forefront in shaping the role and so intertwined, arguably they are indistinguishable. The contribution of business IT over the next few years. The crisis has also served to highlight the major role of IT in paper helps business leaders consider questions such as: tackling business challenges, enabling transformation of • Are we getting value from our IT? operations and customer service, and ultimately leading to a better competitive position. • What opportunities do new technologies provide in our business and are we taking advantage of them? Why are new technologies important? • Are we recognising and managing the associated risks? Meanwhile, technological innovation continues at a rapid • How should we decide where to invest our IT dollars? pace. A number of technologies have emerged and are These questions are not new challenges in the being adopted which have the potential to drive real management of IT, but never has there been a change in many sectors, not just in efficiency but also in more pressing time in the current business climate, competitive positioning and the nature of the workplace. considering the ever-expanding use of the internet These include: podcasts being used to provide training and other e-innovations. material which employees can consume ‘on the go’; wireless networks and collaboration tools supporting What has changed recently? home-workers and a mobile workforce; business The past two years have been eventful for organisations applications available on laptops and smart-phones; all over the world. The financial crisis has impacted the hardware consolidation to enable green IT; and the use global economy in an unprecedented way and has forced of social media for ‘crowd sourcing’ and other marketing some organisations into make tough decisions. In these initiatives. turbulent times, the imperatives to free up cash, preserve The challenge for business leaders is to understand revenue and minimise costs have driven the need for these developments in IT, identify the opportunities and increased efficiency while at the same time enabling risks that these developments bring to the organisation, swift adaptation in a fiercely competitive environment. and direct IT investment to ‘do the right things’ and ‘do In this context, business leaders, perhaps more than things right’. ever, are looking to IT to deliver increasing value to their organisation at the lowest possible cost. Business briefing series: 20 issues on IT as a strategic partner 6
  7. 7. Structure Operational efficiency The paper is divided into five topic areas. Together There are some important trends and developments these determine the contribution which IT makes to which continue to contribute to efficiency. It is possible the value of the business: that these technologies, when approached in the right way, may also contribute as much to agility and Strategic alignment innovation as they do to cost reduction. An organisation needs governance and planning processes which ensure that business leaders are Throughout the paper, the 20 issues are discussed aware of new technologies and trends, and are able in terms of both opportunity and risk, and their to determine which IT investments are right for the potential as enablers of efficiency, enablers of organisation. Strategic alignment considers the differentiation, or both. processes and structures needed to ensure the business strategy is properly informed of technology possibilities, How to use this guide and that IT investment is appropriately targeted. To enhance the practicality of the paper, each section begins with a short checklist. At the back of the paper Information management these checklists are consolidated onto a single page for The shift from transaction efficiency to exploiting the quick reference. information available to the organisation to improve business performance is a common theme. Information management has emerged as a discipline in its own Jargon buster right, in recognition of its potential to add value to The discipline of IT is notorious for specialised the organisation. terminology, jargon, acronyms and abbreviations. IT effectiveness Throughout the paper we have included ‘jargon Business leaders need to consider the potential of new buster’ boxes which pick out some of the more commonly used abbreviations and specialised technologies such as social media and collaboration terminology and provide a brief explanation. tools and how organisations can take advantage of them. There is also a glossary on page 27. These new technologies have the ability to transform how organisations operate, but they also bring new risks in relation to data security and confidentiality. Agility and innovation A number of new offerings in IT are gaining popularity due to their ability to support a more flexible and responsive business model, and indeed to enable innovation in the form of new business models. Business value of IT Information Agility and Operational IT effectiveness management innovation efficiency Strategic alignment Business briefing series: 20 issues on IT as a strategic partner 7
  8. 8. Strategic alignment Strategic alignment of IT is a well-established business requirement, but with new technologies emerging the role of IT in the organisation is changing and new approaches are needed. Traditionally, the concept of IT alignment has been that when IT is strategically aligned with the business strategy the IT capabilities of the organisation are optimised to support the business operations which implement the strategy. However, IT is increasingly moving into the ‘front office’, so that technology strategy and business strategy are inextricably linked. Different processes and governance are needed so that both business strategy and IT strategy can be developed in tandem, effective IT governance can be achieved, and IT investment and value can be systematically managed. Ckecklist Can we describe our organisation’s technology strategy simply and succinctly? Has our board considered ongoing IT training for the directors? Are IT supply and demand balanced for value? What role does IT have in creating value in our organisation? What is the nature/form of current IT capabilities? How do current IT capabilities compare to business needs, competitor capabilities and the overall market? Where is IT creating or not creating value in our organisation? What are the risks and benefits associated with reducing IT spend? 1. Business-IT alignment business planning, and executive involvement in Although simple in theory, aligning IT strategy with determining investment priorities across increasingly business strategy remains a test for many organisations. blurred boundaries between the business and IT. However, as the role of IT expands and technology To grapple with IT’s inherently complex nature and rapid becomes more pervasive, the traditional idea of a pace of change, both quantitatively and qualitatively, sequential strategy process whereby IT strategy is business leaders need access to meaningful information developed to enable a previously developed business that allows them to effectively perform their duties. strategy is already superseded. Both need to be They need to determine whether IT strategy is aligned developed simultaneously, each informing the other of within the framework of the organisation’s long-term demands and possibilities. strategic plan, to assess its risks, to monitor its In a world of online customer self-service, technology implementation, and to measure IT performance. It was moves from supporting the delivery of customer service not until the last decade that IT was generally considered to being the primary delivery channel for customer a strategic issue. Today, IT supports areas that fall service. Business strategy and technology strategy are squarely in the domain of director diligence, monitoring therefore becoming so interwoven as to be inseparable. company strategy development, risk, compliance and controls, operations, and globalisation. More directors Many of the technology innovations discussed in this are warming to the idea that IT is a board-level issue. paper have the potential to deliver cost efficiencies or to enable the organisation to differentiate and improve its Adequate information regarding IT and IT strategy competitive position. Without clarity of purpose in the will be increasingly needed at senior levels to support combined business and IT strategies, the risk is that the the organisation’s overall strategy. It will also enable true potential is missed and either the wrong outcome organisations to exploit opportunities to improve is delivered or none at all. product value, increase market share, mitigate risk, and vastly improve the efficiency of operations – all primary Alignment of IT with the business therefore requires shareholder concerns. a new perspective on the processes of strategic and Business briefing series: 20 issues on IT as a strategic partner 8
  9. 9. Americas Decisive external factors influencing IT decision-making (excl. USA) Asia-Pacific EMEA Grand total Cost reduction initiatives 89% 10% 15% 13% New technologies 99% 17% 13% 13% Internal restructuring or business process re-engineering 7% 11% 12% 11% Request for more automation 69% 6% 13% 11% Regulatory obligations 99% 10% 9% 9% Mergers and acquisitions 11% 2% 8% 8% New management 11% 7% 7% 8% Changes in own portfolio 12% 5% 7% 7% New risks 69% 11% 6% 7% Technology price fluctuations 13% 7% 3% 6% Changing competition 4% 6% 4% 4% ISO certification 2% 8% 2% 3% Other 4% 1% 1% 1% Grand total 100% 100% 100% 100% Source: 2009 Survey on IT-Business Balance (Deloitte). 2. IT governance of the organisation. Managing IT means addressing The question of business-IT alignment and the role of conflicting goals: strategic planning process, discussed in Issue 1, should • Balancing lower costs and increased quality of service form part of an overall IT governance framework. The • Balancing increased agility and lower risk. essence of IT governance is bringing the right people to the table to have the right conversation about the Faced with these challenges, several questions can be right places to spend IT dollars. IT governance involves raised which point to the effectiveness of IT governance: balancing IT’s potential contribution against other • Is IT established as a driving force for business projects? opportunities and available resources. In practice this • How are the responsibilities shared between IT means involvement of business leaders in decision- and the business? making and management of various facets of IT, not • How formalised are the relationships between IT just strategic planning. and the business? • How is IT managing the demands of the business? • How is the business involved in IT investments? IT governance • How are the IT financials shared with the business? The IT governance Institute defines IT governance as ‘an integral part of enterprise governance’ that Properly enacted, IT governance will not only reduce the ‘consists of the leadership, the organisational risk that IT investment is sub-optimal for an organisation, structures and the processes that ensure that the organisation’s IT sustains and extends the also provide the basis for managing performance in organisation’s strategies and objectives‘. the delivery of IT projects and services. Whether the strategic intent is primarily to use technology to improve efficiency or to differentiate product or customer service, Management, however, does not always see the the IT governance framework is the cornerstone of added value of IT governance to the overall success effective IT investment and IT service delivery. Business briefing series: 20 issues on IT as a strategic partner 9
  10. 10. Strategic alignment (continued) 3. IT investment and IT value processing can reasonably be treated as a corporate The efficiency dimension of IT (automation, faster investment, yet IT systems which are used for internal execution at a lower cost) is still an important element functions and to support business unit revenue- of the value of IT. However, the operational efficiency generating operations create a more complex made possible by integrated systems is beginning to be management challenge. Adoption of new technologies taken for granted. The enabling technology which drives in support of revenue growth and customer service process efficiency, primarily enterprise resource planning necessarily moves IT into the ‘front office’ of more and (ERP), is now mature and well established in all sectors, more organisations. IT mangement discipline which are ranging from large enterprises to the upper ends of the well established in technology-intensive industries, such small-to-medium market. as banking, are therefore becoming increasingly relevant across all sectors. With the possibilities of new technologies, the emphasis is increasingly on IT to deliver on dimensions which are Traditionally the cause-and-effect relationship between more directly related to business value and competitive IT spending and business results has not been well edge, through: understood. The discipline of IT value management enables business leaders to clarify IT expenditure and • Better products and services assets contribution to tangible business output. • Higher customer satisfaction In the absence of effective practices for directing • Go-to-market advantage IT investment and tracking value, organisations run the • Growth and profitability. risk of eroding competitive advantage by failing to exploit As IT becomes embedded in revenue-generating opportunities or respond to risks. Equally, it is nearly customer service operations, traditional models of IT impossible to measure the value contribution of IT or funding, value attribution, and lines of accountability to gauge whether an IT strategy is successful and what and responsibility are being superseded. For example, impact it has had on business results. IT systems which support back-office transaction Kevin Daly CEO, Maxxess Systems director, Danka Business Systems, PLC and iteris ‘The value of IT Ito the extent it is realised) it is impact on business performance metrics. Unless and until IT impacts true business parameters. It is providing no strategic value. While IT investments cannot be isolated from other changes going on in the business environment. It is usually a valid assumption that major IT initiatives will (if they are successful) have meaningful impacts on at least some traditional business efficiency, effectiveness, control or compliance metrics.’ William A. Etherington Chair, Canadian Imperial Bank of Commerce, Director, Celestica and MDS ‘We do regular reviews of capital projects that are mostly IT investments. Whenever, we have had project misses (schedule and/or budget), we have revisited the process to review IT strategy and operations. Our current plan calls for annual IT strategy updates, regular project reviews with ‘watch-list projects’ highlighted and connections to IT strategy included in regular strategy and operations reviews by the business unit leaders.’ Susan Wand Director, Altera Corp, Avanex Corp, and Nektar Therapeutics ‘A company that puts all of its resources into its core business and uses IT as a kind of a necessary part of business, but does not want to spend an extra penny if it can help it. In some respects its penny-wise and pound-foolish, because it will end up with a lot of cobbled-up systems and processes that wind up costing more.’ Source: 2009 Survey on IT-Business Balance (Deloitte) Business briefing series: 20 issues on IT as a strategic partner 10
  11. 11. Information management Effective business management requires accurate, reliable and current information insights into operations, supply and sales. There are high expectations for any organisation to make effective use of insights which can be gleaned from the mass of data generated by transaction systems. The focus for IT continues to evolve from improving transaction efficiency to improving decision support. Ckecklist Are we lacking high-quality financial and management information? Do we struggle to obtain meaningful information across business domains? Do we have problems with availability, consistency and accuracy of management information? Are sales operations held back because of lack of insight into customers? Do we have accurate and current information about supplier performance? Do we know how much we spend on what and with whom? Do we know what we need to know about our customers? 4. Management reporting and analytics Management reporting provides support for strategic Most organisations today recognise the importance and operational decision-making and is increasingly of improved information management, some simply recognised as an often-untapped source of competitive need to demonstrate they can deliver financial reports advantage. Management reporting of this kind, which that are timely and accurate, while others need to bring collates information to inform decision-making rather consistency to a jumble of IT systems garnered through than verify past performance, produces actionable acquisitions. Management reporting and data analytics information. This type of reporting and analysis is are emerging as two strategically important aspects of typically described as business intelligence (BI). new approaches to information management. An effective BI strategy clarifies the link between information and business performance, focusing business leaders on the key data required to run Business Intelligence (BI) the organisation. The world of business intelligence comes with its Through a successful BI initiative, an organisation can: own set of technology concepts and language. Commonly used BI terminology includes: • Extract integrated decision-support data from business transactions • Data warehouse • Datamart • Identify profitable customers, reduce costs, and identify profitable products, services and trends • Data repository • Cubes • Provide an environment which helps in refining or building business processes • Online analytical processing (OLAP). • Provide users with a platform to run customised reports on the fly (ad hoc analysis) • Eliminate reporting inertia • Integrate multiple data sources to provide a single version of truth • Track internal and operational performance within the organisation. Business briefing series: 20 issues on IT as a strategic partner 11
  12. 12. Information management (continued) Technology Decisions and actions Data architecture Vision and strategy Business Governance Intelligence Business drivers Organisation Business planning Business process Before any organisation can realise the benefits of a Although BI solutions will reduce the effort required to BI solution, business leaders first need to define the produce actionable reports, the primary potential is to business questions they are trying to answer. BI solutions contribute to competitive positioning. The BI strategy will then enable users to quickly adapt to new business should include a broad set of processes, technologies, requirements and evolving sources of information. and stakeholders for collecting, integrating, accessing, and analysing information for the purpose of helping organisations make better business decisions. Enterprise Information Management Analytics are a key tool in managing any organisation, (EIM) and by providing granular insights into the business • Information governance they can play a powerful role in both cost reduction • Enterprise data management and differentiation. For example, market positioning • Enterprise content management can be fine-tuned through greater understanding of • Data warehousing the customer population, supply-side cost reduction • Business performance management can be driven through more strategic sourcing and • Data quality management procurement, and customer experience can be improved These are the various IT disciplines involved in through improved order fulfilment and customer service. producing the high-quality information needed Specifically, the type of information management for an effective executive dashboard. systems required by organisations to satisfy their demands and strategic goals are: • Executive dashboards that deliver integrated information • Enhanced tools for data quality, data management and integration. Business briefing series: 20 issues on IT as a strategic partner 12
  13. 13. Example of a dashboard Potential problems by product and city Proportion of volume by country Long Beach Dusseldorf USA 63% Glasgow Mumbai Beijing Tokyo Kyoto Europe 6% Lima Xian Goa Product India 9% AK Clothing Japan, Korea 3% ET Sportswear L&P SportsRBack China 19% Jackson Pan Big Mama Berina Skopje kleding Berinaou We Wear Clothes Average uptime 0% 100% Ship time by city Product volume of top five cities Beijing 54% Goa Glasgow 9% Tokyo Mumbai Mumbai 4% Long Beach Tokyo 18% Xian Lima Beijing Glasgow Long Beach 15% Kyoto Dusseldorf 0 6 10 0 6 10 Large orders Small orders Business briefing series: 20 issues on IT as a strategic partner 13
  14. 14. IT effectiveness Is IT enabling the organisation to take advantage of the potential of new technologies? Is the business aware of the potential of new technologies and planning how to exploit them? The use of multi-media, mobile computing, social media and collaboration platforms is poised for explosive growth with the deployment of the National Broadband Network. ‘Doing the right things’ in the world of IT is no longer solely about efficient processing of transactions. The new technologies have the potential to be truly disruptive and transformative to all spheres of business, the public sector and not-for-profits. Business leaders need to understand the opportunities and threats that these technologies may present. Ckecklist Are we ‘doing the right thing’ and ‘doing things right’ with our IT? Do we have a strategy for how we manage social media? Do we have a strategy to use social media and collaboration tools for competitive advantage? Do we have a strategy for mobile workforce? Is there clarity about how we decide where to target our IT investment? 5. Customer responsiveness This business need, moves the emphasis of IT from As consumer lifestyles and tastes continue to diversify process and transaction efficiency within siloed business in society, organisations are facing greater challenges operations to technology support for cross-functional to acquire, grow and retain the right customers. For the customer management processes. In practice, this organisation, ‘customer experience management’ aims means being able to deliver to business users current, to deliver a consistent experience, specific to individual accurate and relevant information at the right time and needs, across all touch points and through all phases of place. For example, sales data is demanded at an ever the customer lifecycle. more granular level of analysis, overlaid by an increasing number of perspectives to support concepts such as customer touch point management and closed-loop Closed-loop marketing marketing management. Measures the results of online marketing and Successful online businesses such as Google, Amazon communication initiatives by tracking the and Apple’s iTunes store provide examples of leading response of targeted groups. The results of practice in these disciplines. All these online businesses responses such as track customer behaviour and use this information to • Completed surveys enhance the customer experience and maximise the • Promotion code redemptions value from the customer. Examples include Amazon’s • Purchase/browsing behaviour ‘customers who bought this product also bought ...’ and • Email response rates iTunes’ ‘just for you’ suggestions. • External blogs The innovations of the successful online retail • Comments posted on corporate blogs organisations are now being adopted in other sectors. • Social media (Twitter, Facebook, tagging, ratings) This requires investment in IT solutions comprising varying combinations of: are added to a database for tracking and evaluation to improve future marketing decisions. • Online (web) applications • Data warehouses • Business intelligence solutions • Mobile applications • Systems integration. Business briefing series: 20 issues on IT as a strategic partner 14
  15. 15. 6. Collaboration technologies At the same time, these technologies need to be The various collaboration tools available in the market deployed with due regard for the inherent risks to allow organisations to share key business data and ideas privacy, confidentiality and brand damage, which can with employees, partners and customers. This results arise from the inadvertent or malicious disclosure in improved efficiency, effectiveness and innovation. of inappropriate company information and opinions. The scope for exploiting these technologies continues Whereas in the past an individual’s views – good or to grow and with the advent of Software as a Service bad – would be unlikely to reach beyond their immediate (SaaS) solutions (see Issue 13) comes the ability to acquaintances, they can now reach hundreds of deploy them rapidly. thousands in a short period, in the form of blogs, tweets and videos. Organisations therefore need to review Collaboration technologies can therefore enable groups security and privacy policies and update them to address within the enterprise and across organisations to rapidly the new range of risks which come with these new come together, work collaboratively on a project or technologies (see Issue 9). shared interest, and then disband. Examples include: • Project workspaces where different organisations 8. Wireless and mobile computing can work together, for example, architects, planners, With recent enhancements in hardware devices and financiers, lawyers and engineers involved in a network capacity, mobile computing is becoming an construction project important strategic businesses enabler that delivers • Innovation and knowledge management zones productivity and innovative customer experience. • Workspaces for dispersed groups who share a It allows the workforce to be connected to business common interest (‘communities of interest’) to operations regardless of locality, resulting in increased exchange ideas, information and knowledge productivity. • Cross-organisation and cross-border collaboration, The combination of hardware devices, broadband for example, virtual R&D teams. networks and new applications is also changing the Collaboration technologies can therefore be exploited way customers interact with business at different both as enablers of efficiency (streamlining group phases of the customer experience cycle. Branchless processes) and as enablers of competitive advantage banking is an example of a new business’s model. This (supporting teamwork, innovation and customer service has been made possible through increased network delivery across organisational boundaries). bandwidth and reliability, a critical mass being reached in public adoption of online and mobile computing, and 7. Social media confidence in the security of online transactions. Retail banking may be at the forefront of technology-mediated Social media is pervasive in mainstream society and has customer service, but the same technologies are already started to infiltrate the workplace. Although a enabling the advent of customer self-service in sectors large number of organisations have already implemented as diverse as retail, health and policing. some form of social media, most have not realised the full benefits that can be potentially delivered. These From a more defensive standpoint, organisations include increasing employee productivity, operational should also consider the possibility that, if innovation efficiencies, fostering creativity and innovation, and in the use of mobile technologies is not driven by enhancing customer and prospective relationships. the organisation itself, third parties may seize the opportunity. For example, the iPhone application The technologies classed as social media are often seen store contains many applications which have been as being just that. However, organisations are finding developed and launched by independent entrepreneurs, that innovative use can be made of these technologies representing varying degrees of risk and lost opportunity to change the way in which traditional business activities to the relevant organisations. are done. Examples range from using podcasts for internal communications and training to using messaging technologies such as Twitter to build communities of interest, capture ideas and support innovation. Business briefing series: 20 issues on IT as a strategic partner 15
  16. 16. IT effectiveness (continued) 9. Data security, confidentiality and privacy 10. Business reporting (XBRL) The data security landscape today is very different Extensible Business Reporting Language (XBRL) is a from that of 20 or even 10 years ago, and it continues language for the electronic communication of business to evolve rapidly. Today, more people than ever have and financial data that is increasingly being used around access to sensitive data and use it in their daily work. At the world. It provides key benefits in the preparation, the same time, the role of the physical boundaries of the analysis and communication of business information in workplace in safeguarding security and confidentiality the form of cost savings, greater efficiency, improved are diminishing as workforces become increasingly accuracy and increased comparability in the delivery mobile. The boundary between personal IT and work of information to all parties in the financial reporting IT is also blurring as mobile devices are used for both supply chain. professional and personal activities. XBRL is an extension of the web-based XML (Extensible A comprehensive approach which reduces Markup Language) and can ‘tag’ financial data, allowing exposure to critical risks and potential damage comparison by analysts across industries and reporting to brand should consider: periods. XBRL is an open-standards-based reporting • Privacy and data protection strategy system being built to accommodate the electronic preparation and exchange of business reports around • Building an organisation-wide inventory and classification map of personal data the world. • Policies and procedures Regulators in many capital markets, such as Singapore • Training and awareness and the United States, have introduced mandatory XBRL-formatted financial reporting, with the UK and • Data retention Canada currently allowing voluntary filing. A key • Compliance with law enforcement requests challenge for regulators is to prescribe a ‘taxonomy’ • Building privacy controls into IT projects or a uniform listing of account captions that is neither • Varied international compliance requirements and too narrow to allow meaningful reporting nor too broad cross-border data transfers to reduce comparability. • Audit and monitoring programs for ongoing data The Standard Business Reporting (SBR) program is protection compliance. a federal government initiative aimed at reducing the In the context of social media and collaboration reporting burden for business by removing duplications technologies, the securing of ‘data’ must be seen to across multiple agencies and jurisdictions. To achieve include not just traditional ‘hard data’ such as financial its outcomes, SBR is utilising a reporting taxonomy records but also multimedia content, comment in emails standard based on XBRL. and online forums, and shared content created in online SBR is expected to achieve substantial reductions in collaboration workspaces. time and effort spent preparing, lodging and correcting In some cases, breach of sensitive data can cost in-scope financial reporting forms. SBR aims to simplify an organisation millions of dollars for not only the financial reporting requirements by: immediate indemnity of data loss, but also the potential • Removing unnecessary and duplicated information lost revenue due to their deteriorated reputation and trust and increasing consistency and wording among forms undermining the value of the brand. • Enabling automatic pre-filling of government forms through accounting/record-keeping software Physical security of data, particularly on mobile devices such as laptops and smartphones, is a particular • Introducing a single system that will enable automatic challenge, with a number of high-profile incidents sending of reporting information electronically to of data loss having received international coverage. participating agencies with a single sign on. However, safeguarding sensitive data is more than just disabling USB devices or monitoring outgoing emails. Organisations need to take a holistic approach to identifying the potential risks and threats and putting appropriate mitigating controls in place. Business briefing series: 20 issues on IT as a strategic partner 16
  17. 17. Agility and innovation Many of the new technologies enable organisations to get instant access to ‘off-the-shelf’ packages and online services, improving their ability to respond to change. However, organisations generally pay a premium for these services and there are risks involved which need to be managed and considered for each of these opportunities. Ckecklist Does the pace of change in our IT inhibit our ability to change the business? Do IT projects take too long? Does IT volunteer solutions which take the organisation forward? Do we have a large, disparate collection of legacy applications? 11. IT agility 12. Cloud computing Competitive advantage relies in part upon an Cloud computing refers to a collection of IT capabilities organisation’s ability to react quickly to various changes that are provided over the internet and which customers in customer preferences, market trends, consumer buy as a service. For example, instead of buying a demands, etc. While businesses are typically able storage server and installing it in a private data centre, to keep up with the pace of change, traditional IT customers buy access to storage hosted by the supplier departments often fail to respond to changes at the in a remote location. same pace. A disciplined IT function fills this gap between business and technology by building the capacity to react to ‘The Cloud’ change in a timely, accurate and consistent manner. Cloud computing is a collection of IT facilities A number of new technologies and approaches accessed via the internet, including software, application development platforms and servers to delivering IT services hold out the possibility of and storages. Because the physical location of the overcoming some of the traditional obstacles to IT systems is not relevant, they are said to be in providing more flexible and adaptable IT services. ‘the cloud’. The cloud is basically another name for the internet. Well-known examples include In practice, translating this potential into business Google Gmail, Microsoft’s Azure platform for advantage requires the IT function to adopt a application development, and Amazon’s data combination of technology standards and approaches, storage and server services. and a suite of leading practice processes. The strategic intent behind the adoption of these technologies needs to be clearly articulated so the IT function can be In contrast to the traditional ‘buy-to-own, implement organised accordingly. on-premise’ IT, which requires major capital investment, Technology solutions such as those highlighted below long implementation time and significant maintenance are insufficient in isolation. To realise the full potential costs, cloud computing holds out the promise of of these solutions, the IT function needs to embed a lower capital investment, potentially higher return on service culture, and pragmatically apply leading process investment, and greater flexibility in IT operations. frameworks (such as the IT Infrastructure Library, ITIL). The greater flexibility arises from the ability to rapidly In doing so, it must be recognised that the ‘internal’ IT ‘switch on’ and ‘switch off’ additional IT capacity and processes of service delivery are actually intermediate services almost instantly. For the organisation, this steps in broader end-to-end business processes. can translate into reduced time to market and greater operational agility. So while there may be a tendency to Business briefing series: 20 issues on IT as a strategic partner 17
  18. 18. Agility and innovation (continued) see cloud computing in terms of cost management, and As with all new technologies, there are potential pitfalls rebalancing capex vs opex, the real potential of cloud to avoid and issues to manage. When assessing the computing lies in the competitive advantage of a more SaaS approach, business leaders need to consider agile IT capability. how adaptable the service is to specific business requirements, and the upgrade path of the service Cloud computing is still an evolving paradigm. Its provider, who is juggling the competing demands definitions, underlying technologies, issues, risks and of many customers. Services hosted offshore may benefits continue to be refined in spirited debate. The complicate what are perceived to be ‘common’ business cloud computing industry represents a large ecosystem rules in jurisdictional areas such as tax and payroll. of many models, vendors and market niches. Additionally, there may be different local regulations While there are potential benefits to cloud computing, regarding access to data kept on shore, for example the the move to this approach requires consideration of US government has higher access to data than does serious issues such as: the Australian government. • Where will our data be physically stored? Does it SaaS offerings which are not truly multi-tenant may also matter if it is offshore? prove to not actually be a more economical option than • How secure will our IT systems and data be? a traditional in-house implementation. Finally, the change If offshore, are there geopolitical risks to consider? management challenge of transitioning people to a new • What degree of disaster recovery and business application and new ways of working is undiminished, continuity assurance will we have? whether SaaS or in-house. Indeed, for the IT department • Will the service provider prove to be as flexible SaaS raises new challenges as the emphasis on skills and responsive as we need? shifts from deeply technical to supplier management. A thorough assessment of these issues and a sound 13. Software as a Service business case therefore need to be established prior Software as a Service (SaaS), where an organisation to undertaking the SaaS option. pays fees for the use of hosted business software, is an increasingly popular approach to delivering 14. Business rules management IT functionality, applications and end-to-end In an environment where market demand changes business processes. rapidly, Business Rules Management (BRM) need to Cloud computing (see Issue 12) is in many ways an be updated in a timely manner. Traditionally, changing example of SaaS hosted on the internet, with similar business requirements has required the re-engineering of potential benefits. These include a much-reduced IT applications to support evolving business operations. implementation time (the application is already there The slow process of software redevelopment can put waiting to be used), reduced or zero capital outlay, a brake on the responsiveness of the organisation. This and avoidance of the need for in-house IT support is a particular issue for organisations whose operations and applications expertise. are subject to intricate rules and requirements, such as governmental regulations, configurable products and differential pricing. Multi-tenant The basic idea of SaaS is that many customers share the same implementation of the application, Rules engine and the economies of scale achieved by the SaaS A rules engine is a specialised piece of software provider flow through to benefit the customers. which ‘plugs into’ other applications and allows This model of many organisations sharing the complex business logic rules to be modelled same application is known as ‘multi-tenant’. without the need for traditional coding of the rules into the software. Changing the way an application works is then a matter of resetting the rules instead of laborious recoding of the software. Business briefing series: 20 issues on IT as a strategic partner 18
  19. 19. BRM is an approach to building IT applications which However, achieving these business results in practice significantly reduces the time needed to modify IT requires more than simply implementing new solutions. The approach requires the use of a BRM technologies or rebuilding existing applications. Business software application, typically an ‘off-the-shelf’ package process change is also needed to take advantage of a called a rules engine. Given the sophistication of these more flexible and responsive IT function. Therefore, the packages they can attract significant licensing fees, but organisation needs to be able to define what it would do equally can deliver significant long-term value and return with the increased flexibility of its IT systems. on investment. 15. Service oriented architecture Service oriented architecture (SOA) pronounced ‘so-ah’, is a concept which is essentially simple but rapidly devolves into highly technical terminology and arcane disciplines. The majority of ‘off-the-shelf’ software packages are moving or have moved to a SOA structure, therefore the normal cycle of upgrade and replacement of applications means that many IT shops (and hence organisations) are incrementally moving to SOA almost by default. Service oriented architecture ‘SOA’ SOA is the name given to the practice of building applications from re-usable building blocks. These chunks, or services, can in theory be rapidly re-arranged to create new applications much more rapidly than with traditional ‘monolithic’ systems. Indeed some of these building blocks do not even have to run on IT platforms within the organisation, they can be accessed as services over the internet. From an IT perspective, SOA reduces the effort required to develop and enhance applications and therefore reduces the cost of these activities. The main promise of SOA, however, is not in reducing IT costs but in improving the ability of IT to respond rapidly to changing business requirements. Greater responsiveness from the IT department should in turn enable greater flexibility for the business, such as the ability to bring new products to market more rapidly, particularly in cases where product or service delivery is mediated by technology. Business briefing series: 20 issues on IT as a strategic partner 19
  20. 20. Operational efficiency Many organisations have significant IT infrastructure, and it is therefore important that these assets are used efficiently and effectively. Additionally, organisations need to ensure they protect these assets and have procedures for managing if the IT system is lost. Ckecklist Is our IT spend appropriate to our IT strategy? Does our IT strategy contribute to ‘greening’ our operations? What is our strategy for sourcing IT services? Do we have multiple pockets of IT capabilities that could be consolidated? 16. Green IT Clear objectives and strategies are essential in order As the amount of electricity consumed by computer to establish a win-win situation with the vendors. and network devices is significant, IT can play a key role Organisations should have a clear understanding of in reducing energy consumption. Despite the strong the business value and intent of an outsourcing or arguments around climate change, little has been done multi-sourcing strategy. A key part of this strategic in a practical sense due to organisation’s failure to view is a clear definition of the skills and capabilities make the link between green IT and the bottom-line. which need to be retained in-house, and the functions, Organisations need to consider green IT initiatives from structure and governance of the ‘retained organisation’. an economic standpoint. As an alternative to outsourced service provision, Equipment manufacturers are placing significant and as a means of focusing on core competencies, emphasis on energy consumption in the new organisations with large critical mass are looking generations of PCs, servers and other equipment. to consolidate low-value/non-strategic activities Additionally, a variety of strategies can be deployed to into a shared service capability. The evolution of improve the energy efficiency of IT operations, including: new IT capabilities, such as virtualisation, greater standardisation of core technologies and the ever- • Datacentre consolidation expanding functionality of enterprise resource • Datacentre modernisation planning (ERP) packages, can enable a single • Server virtualisation (see Issue 18) IT function to support a broader range of business • Cloud computing and SaaS (see Issues 12 and 13) functions and operations. • Infrastructure modernisation. By re-engineering the business process and modernising systems, organisations are continuing to adopt the 17. IT sourcing shared service model for IT functions. Traditionally, large outsourcing contracts, representing a As with outsourcing or multi-sourcing, one of the key substantial proportion of IT spend, are usually renewed success factors in adopting a shared services model every five to seven years. More recently, however, many is to define the functions and structure of the retained organisations are looking to renegotiate agreements organisation, and the processes and governance which before contracts are due to expire. Many are moving control how these functions interact with the shared from large outsourcing contracts with a single vendor services body. to a ‘multi-source’ strategy, sourcing IT services from a number of vendors. Business briefing series: 20 issues on IT as a strategic partner 20
  21. 21. 18. Virtualisation 19. Systems security Research has shown that as little as 20% of an average Cyberspace, which began as an electronic add-on to server’s capacity is actually used, representing real waste other domains such as land and sea commerce, is today in terms of capital investment and energy efficiency. a domain unto itself. Cyber-culture is growing more rapidly than cyber-security due to the accelerated growth of internet-enabled devices and machinery, and thus Virtual machine everything that depends on cyberspace is at risk. Private The logical server is created by sub-dividing a data, intellectual property, cyber-infrastructure, and even single physical server into multiple operating units. military and national security can all be compromised Special software is run on the physical server by deliberate attacks, inadvertent security lapses, and which partitions it in a way transparent to the user. For each user, their own virtual machine (or ‘vm’) the vulnerabilities of a relatively immature, unregulated appears to be a completely stand-alone, separate global internet. So although the discipline of systems server. Virtualisation underpins the ability of service security is not a new one, the challenges continue to providers to provide cloud computing services to evolve and the associated risks become more extensive multiple consumers. as new technologies become widely used. Security strategies and operations should include, Server virtualisation is the practice of dividing up a for example: single physical server into a number of logical servers, • Monitoring processes covering areas such as anti- to optimise the usage of the machine’s available malware, intrusion detection, security information and capacity. This enables an IT function to consolidate event management (SIEM) and threat management multiple physical servers onto a single physical device. • Response activities covering areas such as incident Cost saving benefits are realised in the areas of hardware management, disaster recovery (see Issue 20), crisis purchases, server maintenance efforts, electricity/cooling management, e-discovery and IT forensics requirements and the gain in server administration • Prevention activities including processes around productivity. IT becomes more responsive to changing secure email, firewalls, network segregation, data business requirements because fulfilling the need for a leakage prevention and cryptography. new server becomes a case of ‘switching on’ a new virtual machine rather than procuring and installing a new box. 20. Disaster recovery Disaster recovery, or operational resiliency, is a critical Typically these issues have a longer time to benefit component of successful business management. than other types of IT investments which directly Experience shows that typically more than 50% of impact business initiatives. For virtualisation initiatives businesses without an effective disaster recovery to be successful, business leaders need to focus on plan will ultimately fail following a major disruption. developing clear objectives, strategy and business While this is not a new issue, the need to ensure cases with comprehensive benefit realisation plans. continuity of service has never been greater, due to more organisations operating 24/7 and an increasing dependence on technology to conduct business. Increasing stakeholder and regulatory expectations demand an approach that ensures equal consideration is given to managing the immediate and longer-term outcomes of incidents affecting people, processes, systems or events external to the organisation. Disaster recovery consists of three elements: • IT disaster recovery • Business continuity management • Crisis management. Business briefing series: 20 issues on IT as a strategic partner 21
  22. 22. Operational efficiency (continued) Organisations should have a clearly defined strategy and action plans encompassing all three. Disasters are normally divided into three categories: 1. Natural (electrical storms, earthquakes, landslides, fire, flood, pandemic) 2. Human – accidental and intentional (terrorism, cyber attacks, rioting, protests, tampering, information disclosure, fire, theft) 3. Accidental/technical (structural damage to building, system failures, loss of utilities, fuel shortage). Some disasters (eg. fire) may fall under more than one category. Organisations should consider how these types of disasters can affect key IT infrastructure and services, for example, datacenters, backup tapes, internet access, telephone services including mobile phones, and access to PCs and office space in the event of disaster which affects an entire office. This assessment is typically undertaken as a business impact analysis, followed by development of a recovery strategy for each critical service/application identified in the impact analysis. Given the rapidly evolving deployment and use of technologies, which move rapidly from ‘optional’ to ‘business critical’, a key challenge is to keep the disaster recovery plan current and relevant. Organisations therefore need to ensure not only that a disaster recovery plan is in place, but also that a regular review and refresh cycle is executed which keeps the business impact analysis and the recovery strategies up to date and reflective of actual technology usage across the organisation. Business briefing series: 20 issues on IT as a strategic partner 22
  23. 23. Conclusion The coming decade presents considerable challenges As technologies can be used to enable different for business leaders seeking to exploit IT and new business outcomes depending on emphasis and intent, technology innovations. The use of the internet continues business leaders need to understand the potential to be extended in new and unexpected ways. Whereas advantages – and risks – of these new technologies to in the past the main focus of IT investment has primarily their organisation, and decide how they want to exploit been on seeking efficiency gains through automation them. This strategic intent needs to be implemented to and streamlining of processes, many of the new ensure the potential of technology is actually delivered. technology developments could be used either to enable For example, the adoption of cloud computing will further efficiency gains or to achieve some form of not make an organisation more responsive unless it is differentiation advantage. Many of the new technologies accompanied by changes to business processes as part can help organisations differentiate themselves from of a detailed strategy and implementation plan. Both their competitors in areas such as supplier relationships, the organisation and its IT function need clarity around customer service, and attracting and retaining talent. the purpose (eg. efficiency or differentiation) behind For example: adopting particular technologies or approaches. The • Recent technology innovations in the social sphere are strategic planning processes should ensure that the being adopted by organisations. They are being used potential benefits and risks of disruptive technologies to rethink the way businesses operate, whether in are an input to the business strategy, not a follow-on terms of the mobile workforce or external interactions consideration. Business leaders therefore need to adopt with suppliers and customers leading practice strategy and governance approaches • Trends in IT continue to emphasise the importance to make effective decisions on directing and targeting of unlocking the value of data produced by IT strategic IT investment. transaction systems, and to recognise and manage the information assets of the organisation, in order to gain insight into operations and customers • Innovations which may appear highly technical and only of concern to the IT department actually hold the potential to support a more agile and responsive business, with reduced time-to-market for new products and more flexible customer service. Business briefing series: 20 issues on IT as a strategic partner 23
  24. 24. Resources and further information Links IT Governance Institute www.itgi.org National Broadband network www.nbn.gov.au Standard Business Reporting www.sbr.gov.au XBRL www.xbrl.org/au The Institute of Chartered accountants www.charteredaccountants.com.au in Australia Deloitte CIO services www.deloitte.com/view/en_AU/au/services/cio/index.htm Deloitte technology consulting www.deloitte.com/view/en_AU/au/services/consulting/technology/index.htm References Deloitte, 2009 2009 Survey on IT-business balance Shaping the relationship between business and IT for the future Business briefing series: 20 issues on IT as a strategic partner 24
  25. 25. Top 20 technology issues checklist Use the prompts below to identify the issues most relevant to you and your organisation. Strategic alignment Yes No Can we describe our organisation’s technology strategy simply and succinctly? Has our board considered ongoing IT training for the directors? Are IT supply and demand balanced for value? What role does IT have in creating value in our organisation? What is the nature/form of current IT capabilities? How do current IT capabilities compare to business needs, competitors and the overall market? Where is IT creating or not creating value in our organisation? What are the risks and benefits associated with reducing IT spend? Information management Yes No Are we lacking high-quality financial and management information? Do we struggle to obtain meaningful information across business domains? Do we have problems with availability, consistency and accuracy of management information? Are sales operations held back because of lack of insight into customers? Do we have accurate and current information about supplier performance? Do we know how much we spend on what and with whom? Do we know what we need to know about our customers? IT effectiveness Yes No Are we ‘doing the right thing’ and ‘doing things right’ with our IT? Do we have a strategy for how we manage social media? Do we have a strategy to use social media and collaboration tools for competitive advantage? Do we have a strategy for mobile workforce? Is there clarity about how we decide where to target our IT investment? Agility and innovation Yes No Does the pace of change in our IT inhibit our ability to change the business? Do IT projects take too long? Does IT volunteer solutions which take the organisation forward? Do we have a large disparate collection of legacy applications? Operational efficiency Yes No Is our IT spend appropriate to our IT strategy? Does our IT strategy contribute to ‘greening’ our operations? What is our strategy for sourcing IT services? Do we have multiple pockets of IT capabilities that could be consolidated?
  26. 26. Business briefing series: 20 issues on new technology 26

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