MBA548-IT Management and Innovation Report 2 Managing IS for Business and Sustainability Value Fall- 2019 Points: 100 Deadline: Sunday, Dec 11, 2019, 11:59pm. D2L Assignment folder ========================================== For our class, you will conduct a research project examining IT and IT-enabled innovation management issues surrounding a focal company. We will break this project into two reports. The first report will examine issues relevant to the first half of the class (first six topics), and is due halfway through the semester. The second report will examine issues relevant to the second half of the class (the remaining six topics). First, you will need to choose a company for your research project. Since you will need access to data on the company’s business operation and performance, it is recommended that you choose a publicly traded company for your study, which will allow you to get access to the companies’ multiple reports, including annual reports, financial statements, Global Reporting Initiatives reports, etc. for your research. I have the assignment sheets for both reports available on D2L. Please take a look at both assignment sheets to have an idea of what you will need to do for your research project. This will help you in identifying the focal company for your research. Please feel free to contact the professor if you have questions in choosing a company for your project. ========================================== Report 2 requirements: For the second report, you will examine the focal company’s IS management strategy. The questions below tie directly to topics 7 to 12. Task: Use knowledge and materials we have covered this semester to write a report (around 2000 words, not including reference list) to assess a company’s current IT/IS management strategy and recommend a way forward for the company with IT/IS. The targeted audience of your report is the general business audience. For your research, you could examine the company’s publicly available information (website, last 3 years of annual reports, 10-K reports, Global Reporting Initiative (GRI) reports etc.). You could search these reports using the search terms such as IT, Information Technology, Information Systems, etc. The report MUST include the following sections, each section will address the questions listed below: 1) Current IT/IS infrastructure and strategic plan (Topic 7): (10 points) · What is the company’s IT strategic vision? Generally, what is your perception of the company’s view of IS/IT in enabling its business operation and competition? E.g. Does IS/IT play a more supporting role? Or does IS/IT play a more strategic driving role? Does the company see IT as a competitive necessity, or a competitive advantage? · Examine the companies’ report to find some examples of IT-enabled initiatives. Discuss how they are related to the companies’ overarching IT vision. 2) IT/IS budget, IT-enabled initiatives, and IT Impacts (Topic 8): (15 po.

1. MBA548-IT Management and Innovation
Report 2
Managing IS for Business and Sustainability Value
Fall- 2019
Points: 100
Deadline: Sunday, Dec 11, 2019, 11:59pm. D2L Assignment
folder
==========================================
For our class, you will conduct a research project examining IT
and IT-enabled innovation management issues surrounding a
focal company. We will break this project into two reports. The
first report will examine issues relevant to the first half of the
class (first six topics), and is due halfway through the semester.
The second report will examine issues relevant to the second
half of the class (the remaining six topics).
First, you will need to choose a company for your research
project. Since you will need access to data on the company’s
business operation and performance, it is recommended that you
choose a publicly traded company for your study, which will
allow you to get access to the companies’ multiple reports,
including annual reports, financial statements, Global Reporting
Initiatives reports, etc. for your research.
I have the assignment sheets for both reports available on D2L.
Please take a look at both assignment sheets to have an idea of
what you will need to do for your research project. This will
help you in identifying the focal company for your research.
Please feel free to contact the professor if you have questions in
choosing a company for your project.
==========================================

2. Report 2 requirements:
For the second report, you will examine the focal company’s IS
management strategy. The questions below tie directly to topics
7 to 12.
Task: Use knowledge and materials we have covered this
semester to write a report (around 2000 words, not including
reference list) to assess a company’s current IT/IS management
strategy and recommend a way forward for the company with
IT/IS. The targeted audience of your report is the general
business audience.
For your research, you could examine the company’s publicly
available information (website, last 3 years of annual reports,
10-K reports, Global Reporting Initiative (GRI) reports etc.).
You could search these reports using the search terms such as
IT, Information Technology, Information Systems, etc.
The report MUST include the following sections, each section
will address the questions listed below:
1) Current IT/IS infrastructure and strategic plan (Topic 7): (10
points)
· What is the company’s IT strategic vision? Generally, what is
your perception of the company’s view of IS/IT in enabling its
business operation and competition? E.g. Does IS/IT play a
more supporting role? Or does IS/IT play a more strategic
driving role? Does the company see IT as a competitive
necessity, or a competitive advantage?
· Examine the companies’ report to find some examples of IT-
enabled initiatives. Discuss how they are related to the
companies’ overarching IT vision.
2) IT/IS budget, IT-enabled initiatives, and IT Impacts (Topic

3. 8): (15 points)
· Do you find any information about the company’s IS/IT
budget during the last year in its financial statements? If so,
how much was spent on IT? What does that account for (e.g.
security protection, technical infrastructure operation and
maintenance, strategic IT-enabled initiatives, IT-enabled
sustainability initiatives, etc.)? If you could not find relevant
information, provide your explanation why the company does
not report such information.
· How does/should the company measure its IS/IT investment
expenditure? given that investment in technical IT is only part
of IS investment.
· Discuss some IT-enabled business initiatives that are
discussed in the company’s reports (e.g. annual report) that you
find interesting and critical to the company’s success in one or
multiple ways (e.g. security, competitive advantage, financial
performance, sustainability performance).
· How did the company assess/discuss the impacts of such
initiatives on its business performance and competitiveness?
Discuss any information you found. If you could not find
relevant information then you could suggest approaches for the
company to take to accomplish the task. For example, are there
objective business performance measures that could be used for
assessment? or does the company need to rely on other
qualitative measures? etc.
3) IT/IS and Sustainability (Topic 9): (15 points)
· Examine the companies GRI reports, besides other reports
examined in Topic 8 questions. Discuss some IT-enabled
sustainability business initiatives that are discussed in the
company’s reports that you find interesting (e.g. which quadrant
of the Integrated Sustainability Framework they are in, in which
way do the initiatives improve the company’s sustainability
performance, etc.)
· From your research, what is your assessment of the role of IT
in driving the company’s sustainability strategy and action?

4. (e.g. Does IT/IS play a leading role, or a more minor supporting
role? Does the company’s IS and Sustainability strategy focus
mostly on Green IT, or Green IS, or Sustainable IS?)
4) IT/IS implementation (Topic 10): (10 points)
· Among the IS/IT-enabled business/sustainability initiatives
that you examined in earlier questions, how many percent are
developed in-house, how many percent are acquired? Discuss
any information you could find.
· Pick one or two sample initiatives, discuss challenges the
company might face in implementing them, and any information
you could find on how the company implemented them.
5) IT/IS governance (Topic 11): (10 points)
· Discuss any information you could find regarding how IS/IT is
governed within the company (e.g. How IS/IT budget allocation
decisions are made, if the CIO/CIO is part of the top
management team, who the CIO/CTO reports to, any
information on IS/IT-related committees, etc.).
6) Security and Privacy (Topic 12): (10 points)
· Discuss information you find about the company’s security
and privacy policies.
7) Final Assessment and Recommendation: (20 points)
· Based on your own assessment, how effective/innovative is the
company in using IS/IT to enhance its business performance for
financial, social, and environmental values? Based on your
research, suggest a few actionable strategic actions that the
company should adopt in terms of IS/IT investments and IT-
enabled business initiatives to optimize the potential
contribution of IS/IT to the company’s future success.
Report format: Your report is expected to be professionally
formatted with an appropriate report title, appropriate titles for
sections of the report, and a reference list of sources cited in the
report (any reference format style is acceptable as long as it is
consistently applied across the report). (10 points)
The targeted audience of the report would be general business
audience, thus it is important that the report is written in a

5. language that general business audience could understand.
Once you have finished the report, make sure to post it to D2L
Assignment folder before deadline.
3
Managing of IS for Business and Sustainable Value
Table of Contents
Executive Summary2
1. Introduction3
2.1 IT evolution in automotive industry affecting
competitiveness and success of Volkswagen3
2.2 Recent technological trends having impact on automotive
industry4
3.1 IT budget of Volkswagen5
3.2 Measuring IS investment expenditure of Volkswagen6
3.3 Ways to evaluate IS investments and IT initiatives of
business performance6
3.4 IT governance of Volkswagen7
4. Judgment regarding efficiency and innovation of using IT/IS
to enhance business performance and overall business strategy
by Volkswagen8
5. Some actionable strategic actions for Volkswagen in terms of
IT investment9
6. Conclusion9
References10
Executive Summary
Information system (IS) has become an integral part of a
business, particularly for large business having operation in

6. more than one location with numerous business segment and
subsidiaries. Volkswagen is German automaker which produces
autos since 1937 and sells the products nationally and
internationally. The company belongs to automotive industry
which is featured by rapid technological changes. Efficient,
flexible, sustained and durability are the areas which are the
focus of changes here in terms of increase in efficiency of fuel
usage, speed, safety and soundness are the root reasons why
new brands or new version of existing products are introduced
in this industry. Predictive technology, automatic beam control,
backup cameras, smart home integration, autonomous driving,
GPS tracking, car to car communication and networking,
versatile crush control, cars as a servicing, automatic liftgates
and biometric seat technologies are the technological trends
affecting the automotive industry significantly.
Annual report of Volkswagen has been searched but no evidence
is found in any of the published sources regarding the
preparation and compliance of IT budget by the company. But it
incurs a significant amount of resources on information system
each year and there is no doubt that the company prepares at
least a semi-structured budget to expend the resources on IT
although it remains undisclosed. Return on investment and cost
savings are the two widely used quantitative measures while
speed of communication, business collaboration, time taken to
make decision, quickness in information extraction, time
reduced to serve customer with demanded information and
effectiveness of internal communication are some qualitative
measures to be used to measure IS investment.
Volkswagen has a formal ethical code of conduct, Protected
Customer program and performs regular basis IT audit to ensure
better IT governance. Overall business objective of Volkswagen
is meet by IT system in terms of financial and social perspective
not environmental and thereby formal structured IT budget
compliance and environmental focus is suggested here.
1. Introduction
The systematic collection, classification, sorting, storing and

7. communication of information on different functional and
strategic areas of a business is known as information system
(IS). Information system of an organization consists of a
number of components like hardware, software, network,
storage and so on. Technologies used in information system for
smooth operation is known as information technology (IT)
which is a part of information system. This assignment intends
to study the IT evolution affecting competitiveness and success
of automotive industry to which Volkswagen belongs to, recent
technological trends in the industry, compliance of IT budget at
Volkswagen, measurement and evolution of IT investments and
governance to enhance business performance along with some
examples. These topics will be covered from the perspective of
Volkswagen which is German automaker founded in 1937 by
Labor Front of German headquartered in Wolfsburg
(Volkswagen, 2019).
2.1 IT evolution in automotive industry affecting
competitiveness and success of Volkswagen
Rapid change is the key feature of automotive industry where
each and every year a number of new auto brands are introduced
because existing brands lose appeal within a very short time
(Becker, 2014). Efficient, flexible, sustained and durability are
the areas which are the focus of changes here. For example,
increase in efficiency of fuel usage, speed, safety and soundness
are the root reasons why new brands or new version of existing
products are introduced in this industry (Becker, 2014).
Considering this, automakers including Volkswagen are keen to
innovate their autos and this requires a significant amount of
resources to be employed on research and development. Without
evolution or introduction of new and innovative technology,
automotive industry will surely suffer to attract the customers
and retain the industry attractiveness (Becker, 2014). The
industry has seen very quick changes over the time. According
automotive industry expert Becker (2014), this industry is
featured by self-driving and innovative designs and features,
parking feature, energy savings, Wi-Fi, interactive computer

8. systems, night-vision assist, 360-degree cameras, collision
protective technology, and attention assistance.
These features are directly linked to technological innovation.
For example, customers are nowadays demanding and preferring
energy efficient autos due to rise in fuel cost and other issues.
All the automakers try to concentrate here and make innovation.
Electric car is the output of such a concentration which saves
the fuel cost. Similarly, the demand for collision protective
autos result in more and more research and development on how
to avoid it and offer a safe and secure journey (Katare, 2019).
Therefore, the focus of Volkswagen needs to be on innovation
and addition of new features demanded by customers in its autos
that will enhance competitive advantage leading to success. The
technological innovation should in the area of energy savings,
flexibility, parking, durability, safety, model, internet and
entertainment facilities (Katare, 2019).
2.2 Recent technological trends having impact on automotive
industry
Automotive industry has undergone and seen many
technological trends in recent years which are impacting the
success of the firms belonging to this industry. Predictive
technology such as artificial intelligence and machine learning
are the first trend which demands for algorithms to set up and
run autos and fix-up problems without human assistance (Dayal,
2019). Automatic beam control is another trend which demands
for mechanized control of headlights and high-beam in
correlation with traffic movement (Dayal, 2019). Backup
cameras, smart home integration are two other trends in
technological arena which forces automakers to include high
resolution camera and technology to integrate smart home while
driving. Self-driven auto is another most influential trend which
means driving a car without driver just by the camera, sensors.
Scanners and other technologies. This trend changes and will
change the industry a lot.
GPS tracking, car to car communication and networking,
versatile crush control, cars as a servicing, automatic liftgates

9. and biometric seat technologies are the other technological
trends occurring here which are affecting the industry
significantly. For example, there is a high concern among the
passengers regarding the identity, motive and mental condition
of the driver while driving because an abnormal and drunk
driver is most likely to have an accident because of his mental
unrest and disorder (Dayal, 2019). Therefore, passengers want
to be sure about the identify of driver before and during the
driving. Automakers are helping here by introducing biometric
seat technology, GPS technology and other means which in turn
affect the whole industry to be more updated, innovative and
customer friendly then those offered by competitors.3.1 IT
budget of Volkswagen
Allocation of resources to acquire, operate, and maintain
information systems and technology of an organization to meet
the organizationally set IT objective is known as IT budget
which is similar to operational budget to achieve operational
objective of a business (Laudon and Laudon, 2015). The
quantity, quality and timing of the resources to ensure proper
functioning of the IT ecosystem is outlined in the budget which
makes it easy to implement and maintain an effective and
efficient IT system by an organization.
Annual report of Volkswagen has been searched regarding the
allocation of resources on IT or IS. The company has been
expanding its IT investment and investment to develop its
information systems to connect all the business segments and
units over the world. The company has a core focus on cloud-
based long-term sustained viable IT system that leads to
business development along with investment in continuous
product development and innovation (Annual report, 2018). But
no evidence is found in any of the published sources regarding
the preparation and compliance of IT budget of the company.
Being a technology company, it incurs a significant amount of
resources on information system each year and there is no doubt
that the company prepares at least a semi-formal budget to
expend the resources on IT although it remains undisclosed.

10. The company needs to focus on development and maintenance
of its information system for its success. It has operation in
many countries of the world including US, China, Brazil,
Kenya, South Africa, Spain, Malaysia, Russia, Mexico, India
and other countries with the help of a number of subsidiaries. A
centralized communication network is maintained among them
which needs to be protected from external threat, updated to
meet the business needs and developed technical infrastructural
facilities and automotive functionalities of the system (Reuters,
2019). IT expenditure and investment are made in these areas by
Volkswagen.
3.2 Measuring IS investment expenditure of Volkswagen
As the investment on IT is significant, so it is significant to
know the outcome of such an investment which is done by
measure of IT investment that tries to measure the effectiveness
and rationale of IT investment. Moreover, IT budget is approved
by non-technical and non-IT executives whom the IT officer
needs to convince to get the budget approved and thereby it also
important for IT officer to know the outcome of IT investment
and expenditure so that he or she can convince the boss for
further budget to develop and update the system for better
functionalities (Laudon and Laudon, 2015). There are some
qualitative and quantitative measures to assist IT officer in this
regard. Return on investment and cost savings are the two
widely used quantitative measures that can be used by
Volkswagen Chief Information Officer (CIO) to ensure outcome
are achieved compared to investment in IT. Besides these, speed
of communication, business collaboration, time taken to make
decision, quickness in information extraction, time reduced to
serve customer with demanded information and effectiveness of
internal communication are some qualitative measures to be
used by CIO of Volkswagen to measure IS investment (Laudon

11. and Laudon, 2015).
3.3 Ways to evaluate IS investments and IT initiatives of
business performance
Information regarding IT budget is not available for
Volkswagen which makes it difficult to measure the IT
investment and its outcomes by means of quantitative measures.
However, some sort of assumptions can be made here in case of
qualitative measures. For example, the effectiveness accuracy,
and timeliness of the information provided by the information
system can be measure of the IT investment. Time taken to
connect with suppliers and customers, subsidiaries and other
stakeholders as well as the ease of getting the accurate
information by the system can be another measure. The update
record of sales of each brand autos, price, trade receivables,
payables, cost incurred, trend of these variables over the time
are also provided by the information system and accordingly
time, accuracy and understandable reports provided by the
system can be the measure of IT investment for Volkswagen
(Laudon and Laudon, 2015). Here measures should be focused
on the area of financial, competitive advantage and strategic
benefits. Financial benefits are easy to measure by means of
quantitative assessment. But competitive advantage and
strategic benefits need to be measured by qualitative
assessment.3.4 IT governance of Volkswagen
IT governance is a significant aspect for any sort of
organization to protect its information system from external
attract and leak of competitively sensitive business information
by any other means. The practice of proper management,
maintenance, budgeting, performance measurement, assessment
of effectiveness and efficiency of information system to meet
business objectives is known as IT governance (Lindros, 2017).
It includes the way to prepare, approve, manage and control IT
budget also.
Volkswagen has a formal ethical code of conduct which states
the expected behavior of its employees in terms of safety,
soundness and security of the information handled by them and

12. fair treatment of all issues protecting misrepresentation, fraud
and wastage of organizational resources (Annual report, 2018).
But there is no separate IT governance manual for the company
as far it is known from the published sources. Corporate and
ethical code of conduct include a part regarding the IT
governance in terms of management of information. The
company has a focus on safeguarding data and IT system,
protect customers from cyber-attacks. It has a separate
Protected Customer program which monitors, investigates and
handles the issues regarding the safety and security of customer
database (Annual report, 2019). This system and IT system of
the company are audited at a regular interval to ensure
transparency, accountability, fairness and accuracy of the
people involved in the system and the system itself (Annual
report, 2018).
The IT system of Volkswagen is headed by a Chief Information
Officer who is authorized to ensure the overall management and
control of the IT system and he is directly bound to report to the
board of directors and CEO for his functions and budget
allocation system is not known publicly. But it can be assumed
that may be budget is approved by chief financial officer but
controlled and expensed by the information officer. There
should have a more focused and clear governance regarding
information system who is authorized and to who he is bound to
report for overall IT related functions.
4. Judgment regarding efficiency and innovation of using IT/IS
to enhance business performance and overall business strategy
by Volkswagen
The judgement needs to be made in two ways, efficiency and
innovation, for the three areas of performance which are
financial, social and environmental performance that are linked
to the overall performance of the business. Financial
performance is the most important aspect related to the overall
objective of Volkswagen. In absence of precise IT budget and

13. expenditure of Volkswagen, it is not possible to concretely
mesmerize the overall effectiveness of the IT system of
Volkswagen. If theoretical explanation made by the company in
annual report is assumed to be sufficient appropriate disclose,
then it can be said that Volkswagen has serious concern and
concentration towards the management of its information
system that supports business objective achievement as said in
the annual report (2019). Net profit of the company goes on
year by year which can be used as the proxy of outcome of IT
investment as IT investment is also increasing over the years.
Thus, overall effectiveness of IT system of Volkswagen can be
assumed to be moderately effective to support financial
objective in absence of reliable information.
Social perspective of IS is ensured when it fulfills the overall
objectives and demand of the social stakeholders. Volkswagen
has some social responsibilities which involves customers,
suppliers, employees, media, communities and other social
groups. Whether interest of these groups is served by the system
or not defines the effectiveness of IT system. Volkswagen has
separate Protected Customer program, a part of the corporate
governance and ethical code of conducts cover the safety,
security and protection of customers, suppliers and employees.
This implies that IT system of Volkswagen is appropriate in
meeting social objectives.
IT system effectiveness is also measured from environmental
perspective. Volkswagen had accused by US government in
violation of Clean Air Act in USA in 2015 which states that the
company had intentionally controlled its emissions of NOx
during the laboratory test which in reality emits more than 40
times NOx. This scandal can be taken here as an example that
IT system of the company was not fair at least in the area of
environmental perspective (BBCm 2019). However, this scandal
leads to a robust initiative taken by the company to meet its
environmental objectives of long-term sustainable development
and viable fuel-efficient auto production.5. Some actionable
strategic actions for Volkswagen in terms of IT investment

14. IT budget is an emerging but useful tool for organization. This
becomes much more important for technology-based firm like
Volkswagen. Whether the company prepares and follows IT
budget is not publicly disclosed. Some external sources disclose
variant amount of IT investment in different years by
Volkswagen which contradicts with the assumption of IT budget
preparation and supports the random IT investment. If the
company doesn’t really follow any IT budget, then firstly the
company is suggested to prepare and apply it from the next
periods.
Secondly, Volkswagen is suggested to appraise IT investment at
a regular interval to ensure that the investment was right
yielding the expected benefits in terms of financial, social and
environmental objectives. Moreover, it will help the company to
learn from previous mistakes regarding the issue of IT
investment that will help in further improvement. Thirdly, there
are a number of trends identified here which are affecting the
automotive industry. Volkswagen needs to consider these trends
and innovate itself in these areas to make the market position
competitively attractive and secure the long-term success. Final
recommendation is regarding the objective of IT system of the
company from environmental perspective. The company has less
focus on environmental perspective of its IT system and this
area should be considered careful to avoid regulatory burden
and protest of environmentalist in future.
6. Conclusion
Volkswagen belongs to automotive industry which is shaped by
raid technological changes. Security, safety, autonomous
driving, artificial and machine intelligence, camera record,
protection from collision, efficiency in fuel usage, and so many
technological trends are going on in this industry where
Volkswagen needs to focus to enhance competitiveness and
success likelihood. Available public sources said that the
company follows no structured IT budget. Overall measurement
of IT investment can be assessed by both qualitative and
quantitative tools like return on investment, cost savings,

15. reduced time, accurate and timely information provided by the
system. IT governance of the system should be more focused.
Overall business objective of Volkswagen is meet by IT system
in terms of financial and social perspective not environmental
and thereby formal structured IT budget compliance and
environmental focus is suggested here.
References
BBC News. (2019). Volkswagen: The scandal explained.
[online] Available at: https://www.bbc.com/news/business-
34324772 [Accessed 25 Apr. 2019].
Becker, S. (2014). 10 Awesome New Features in the Auto
Industry. [online] Motorbiscuit.com. Available at:
https://www.motorbiscuit.com/autos/10-awesome-new-features-
in-the-auto-industry/ [Accessed 25 Apr. 2019].
Dayal, P. (2019). Top 11 Tech Trends and
Solution
s in the Automobile Industry. [online] Newgenapps.com.
Available at: https://www.newgenapps.com/blog/tech-trends-
solutions-in-automobile-industry [Accessed 25 Apr. 2019].
Katare, L. (2019). 6 Major Automotive Industry Trends That
May Surprise You. [online] Blog.marketresearch.com. Available
at: https://blog.marketresearch.com/6-major-automotive-
industry-trends-that-may-surprise-you [Accessed 25 Apr. 2019].
Lindros. K., (2019), what is IT governance? A formal way to
align IT & business strategy, [online] Retrieved from
<https://www.cio.com/article/2438931/governance/governanceit
-governance-definition-and-solutions.html>

16. Loundon, K. C., &Laundon, J. P. (2013). Management
Information System. McGraw Hill
Reuters. (2019). Volkswagen to invest $4 billion to build digital
businesses, software. [online] Available at:
https://www.reuters.com/article/us-volkswagen-software-
investments/volkswagen-to-invest-4-billion-to-build-digital-
businesses-software-idUSKCN1L80VA [Accessed 25 Apr.
2019].
Volkswagen. (2019). Volkswagen Group: History. [online]
Available at: https://www.volkswagenag.com/en/group.html
[Accessed 25 Apr. 2019].
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