An Emerging Strategy for E-Business IT Governance

Nandish V. Patel
Brunel University, UK

Copyright 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Abstract

A critical aspect of global e-business information technology (IT) governance is ensuring that it is integrated and that it enables economic viability of a company. Poorly thought through purposes will result in poor IT Governance. The aim is to improve IT Governance and business efficiency and effectiveness. A framework for global e-business IT Governance is developed. It is based on fundamental re-directions in global e-business IT Governance thinking and it applies to companies that seek to integrate Internet, intranet and WWW technologies into their business activities in some form of an e-business model. Such integration is termed the fusion of IT and business into an e-business. The framework explains and elaborates e-business strategies for coping with emergent organisations and planned aspects of IT. The basic premise of the proposed framework is that organisation, especially virtual organisation, is both planned and emergent, diverging from the dominant premise of central control in IT Governance.


Introduction

In essence, e-business information technology (IT) governance addresses how to design and implement effective organisations by creating flexible IT and information systems (IS) structures and processes. IT Governance in a global context has to cater for intensive competition, cultural diversity, and various fluctuating economic conditions. A static model of IT Governance and organisation cannot adequately address these issues.

The prime aim of IT Governance is to contribute to business activity in terms of lower costs, satisfied customers and better quality products or service provided by a company. Governance assumes accountability, making improving the channels of accountability an important feature of IT Governance, especially accounting for return on investment. Many problems need to be addressed by the IT function: weak planning, rapid business and environmental change, and management involvement are some. The emergent process of IT Governance reveals that managers need to understand that they are neither all-powerful nor powerless to effect change. Rather, they are in partial control of emerging processes that result in new organisational designs. They need to consider the importance of global business management, cultural diversity, ethics and advanced production and information technologies as the boundaries between the Internet and customer strategy continue to merge. Some fundamental re-directions in e-business IT Governance strategy thinking are considered and a framework for global e-business IT Governance and organisational design as both a planned and an emergent process is proposed.

Management strategies are concerned with reaching a specific destination, and in particular with how to reach the destination. Company strategies are unique and difficult to differentiate from a specific company's values, goals and mission. Organisations cannot expect to extrapolate or borrow a strategy from another company. What works strategically for one company may not have the same impact on another organisation. Similarly, e-business IT Governance is affected by an organisation's unique culture and working practices, and should reflect its own goals and ambitions. The proposed framework is not a prescriptive IT Governance package that can be replicated across all organisations or even for all time in a particular organisation. Its purpose is to enable decision-makers to take a holistic and alternative view of IT Governance and to enable them to find their own appropriate mechanisms for devising an IT Governance strategy that fits their particular organisation. This approach is based on the increasing literature on emergent organisations and its corresponding effect on IS development and IT Governance (Pawson et al., 1995; Truex et al., 1999; Patel, 1999). Some authors state that IS development in IT Governance is possible without formal methods (Baskerville, 1992). The proposed framework for global e-business IT Governance supposes that the problem is one of recognising and accommodating emergent activity rather than focusing purely on planned rational governance.

The chapter is organised around the central problem that addresses global e-business IT Governance as combined planned governance with emergent needs. Whilst planning is a vital aspect of IT Governance, the pace of economic change nationally and internationally quickly makes plans outdated. Business needs for IT and IS tend to emerge as a result of organisational and economic factors; thus e-business models, as discussed in the following section, need to encompass emergent activity. The business rationale for e-business requires a broader scope for IT Governance, taking into account both IT and business issues. The e-business IT Governance framework itself is built on radical re-directions from traditional IT Governance, discussed in the section on radical re-directions. The framework section details activities that need to be continuously carried out to ensure plans are relevant to business needs and account for emergent needs. A critical aspect of e-business IT is the development of organisational interfaces, which traditional IT Governance has not had to deal with. These interfaces, for example between customer and organisation or business partner and organisation, are vital for the success of e-business IT Governance. The conclusion reached is that global e-business IT Governance should be regarded both as a systematic and organic approach to IT resource management.


E Business Models

A distinction between e-commerce and e-business is necessary to appreciate the magnitude of change in the business and operational activities that e-business has created for IT Governance. It may be argued that e-commerce is the use of IT to support business activity. E-commerce equals business plus technology that is limited in scope to transaction-based information flows; for example, EDI. E-business, in contrast, is the complex fusion of IT and business activity that necessitates the governance of IT to consider for the first time the economic aspects of the business. The very economic survival of an e-business company rests on the efficacy of IT and the successful integration of internal and external business processes. E-business equals business plus technology, plus economics, as it brings about a new facet of the economy, namely the e-business economy. The new economics of e-business cover, for example, supply chain management, customer relationship management, and human resources. This new link of IT with economics and the need for business organisations to be agile means that rather than a hard-wired e-business strategy (simple planning and implementation) companies require re-wireable business agility (organic IT Governance and flexible systems) (Allen & Boynton, 1990). This is possible with networked organisations that exist as virtual structures, but only if the corresponding IT Governance strategy is equally flexible.

Global e-business IT Governance cannot be accomplished with the traditional models of aligning IT strategy with business strategy. Earl (1999) succinctly sums up the evolution of IT strategy making by formulating three problems. The first is the perennial problem of aligning business strategy with IT strategy. The second is the periodic problem of securing business opportunity that IT strategy may pose. The third is the paradigm problem of integration, which he calls 'information business strategy'. The new e-business models as defined by Timmers (1999) address the third problem and are a fusion of IT and business activity that make economic viability of a company the central concern of IT Governance. The fundamental difference between the new e-business models and the traditional view of aligning IT support or even transforming business (Venkatraman, 1991) is that in the new fused e-businesses, IT is integrated into business activity. Integration is such that the boundary between pure business activity and pure IT support is nonexistent. It is thus described as a fusion of business activity and IT that has resulted in unprecedented organisation structures that themselves require a radically different governance and which call for a radical rethinking in IT Governance. The question of managing such novel organisation structures is the single most critical issue that strategists and organisational theorists have to resolve.

An important aspect of emergence is business networks or alliances. Models of business competition that stress efficient use of resources by a firm to differentiate itself from its rivals have given way to models of co-optition (Henderson, 1990). Short and Venkatraman (1992) discuss business networks and their value to companies. They show how both business processes and business networks need to be redesigned in co-optition models. Consequently, computer networks, especially the Internet and the World Wide Web, have become central to IT Governance. Companies use intranets to support work and distribute information, and commercial-off-the-shelf packages like Lotus Notes need to be managed to avoid problems and cease the opportunities they afford to manage knowledge, for example.

Global IT Governance and IS design in these new organisation structures are inextricably tied with scaling. Scaling is the ability to support larger organisation structures. During the industrial revolution, the need for organisation meant that the craftsman's skills were split into design and subsequent production to enable scaling. Specialists in design and planning addressed the problem of organisation (Groth, 1999). Organisation itself becomes a form of problem solving. Global e-business IT Governance in essence is about scaling. E-business solutions implementations require scale and a global perspective developed through a careful analysis of business rationale. For global companies, IT Governance is concerned with design and planning the application of IT organisation-wide. And yet, it is also concerned with meeting variable and local needs of subsidiary companies and divisions.

We have come a full circle in the 21st century and returned to the reincarnated craftsman — the knowledge worker — in the e-business organisation. Unlike the single craftsman with his craftshop, the knowledge worker has to work in a team and across a distributed organisation. Like the craftsman, the knowledge worker has to specialise, often to very high levels of granularity, but unlike the craftsman, the knowledge worker has to communicate and coordinate within a team and across an organisation, increasingly now across a virtual organisation in many global companies. The medium and mode of this communication is now largely IS, making its design a critical aspect of organisation design and IT Governance itself, and in improvements in effectiveness and internal productivity gains.

Emergent and predicted information and knowledge is communicated and shared in organisations. Available technologies that reflect emergence have given rise to alternative organisational structures (Berners-Lee, 1999) largely based on intranets and extranets, different ways of supporting business processes, and novel ways of working. The new e-business organisational forms are based on information and knowledge assets and seek to facilitate knowledge creation. Deferred system's design (DSD) can be an integral aspect of these new organisations (Patel, 1999), because it seeks to design tools that enable organising virtually and defers IS design decisions to employees to mitigate risk. DSD has the potential to address the problem of emergent information needs as part of balanced IT Governance, balanced between planned activity and emergent needs.


E Business IT Governance and Business Rational

Governance is a multifaceted activity requiring the efficient and effective uses of resources to achieve desired aims. In e-business IT Governance it is the ability to manage IT, develop strategies, and create systems that are relevant to business operations and customers who interface with an organisation. IT Governance involves building a professional IT capability that is able to offer a business strategic advantages. The professional IT executive needs to work closely with business executives to determine how IT can add value. The value contribution of IT can be determined by considering facets of global e-business IT Governance such as:

  • Develop an IT strategy, and undertake critical strategic and operational reviews. Strategy formulation requires an imagination to use IT capability to build better relationships with partners, customers and employees.
  • Develop and manage the distributed IT/IS systems, e-crm and e-technology infrastructures.
  • Ensure that business-critical projects are completed.
  • Define methods, tools, and processes.
  • Define best practices.
  • Manage application development.
  • Manage outsourced providers and multi-site procurement policies.
  • Ensure effective IT services delivery strategy to business segments that lead to internal productivity gains.
  • Develop key performance indicators.
  • Critically review current organisation structures and capability and implement cost savings to improve efficiency and effectiveness.

Underlying all the above activities is the aim of meeting operating needs of a company. Any IT Governance mechanism should be rooted in business logic. For global companies with e-business aspirations, three segments of business need to be considered: marketing, human factors, and business-to-business relations. In terms of marketing, a company needs to consider how its e-business strategy supports its overall mission and communications objectives. It needs to develop a one-to-one marketing strategy over the Internet for customers and the extranet business partners. It needs to determine how to relate digitally with its customers. In terms of human factors, a company needs to assess how its customers will respond to digitised interaction. E-crm strategies need to be customer-focused and, as explained in the following section, appropriate customer-organisation interaction models need to be developed. This may require developing easy-to-use interfaces for customers who are simply interested in purchasing items or services. Finally, in terms of business-to-business, a company will need to assess how to develop the interaction between itself and its business partners and suppliers.

Most e-business models tend to overlook the customer as an integral aspect of an e-business. E-business IT Governance needs to be customer-centric. The customer is regarded as an operational aspect of e-business in the framework presented later. No physical boundaries exist between a business and its partners, suppliers or investors, or between a business and its customers in an e-business. Business processes that deliver a product or service now extend virtually to the customer. Dell, the personal computer manufacturer, produces customised products through its corporate portal, linking its operational process directly to the customer. Thus both suppliers and business partners, and critically, customers, now become operational issues in e-business enterprises and e-business IT Governance. Business processes that link directly to customer requirements mean that IT Governance too needs to consider the company's customer in its systems development approaches and strategies. Amazon.com and Yahoo! are examples of companies that operate beyond notions of business transformation; they are truly networked organisations that are superimposed on transient physical and organisational structures. The role of IT Governance in such organisations is beyond the simple management of the IT tool. It involves ensuring the very economic viability of a company.

Some Radical Re Directions in E Business IT Governance

The e-business IT Governance framework elaborated in the following section is built on radical re-directions from traditional IT Governance. E-business is the integration of economic, business and technology aspects of business activity. The scope of e-business IT Governance is not now simply inward IT management but outward relations, covering business partners, suppliers, and critically, customers. Traditional IT Governance focused on the technology and its application to business operations, whereas e-business IT Governance is intertwined with business and economic management, with suppliers, business partners and customers. In e-business, IT Governance has thus moved onto a different plane, requiring fundamental re-directions discussed below that need to be considered for effective global e-business IT Governance.

Traditional IT Governance's modus operandi is planning. In global e-business IT Governance it is necessary to consider both planned e-business IT and emergent requirements. Modern organisations cannot be viewed solely as planned and directed entities. Organisational life is about 'being in the process' and not only about definable structures, especially when considering the virtuality of organisation structures. There is evidence that organisation structure is dynamic. In terms of IS development, research reveals that developers need to consider the emergent information and knowledge needs of the organisation (Baskerville, Travis, & Truex, 1992) in such organic structures. Similarly, strategies should be free to appear at any time and in any place in the organisation. There is a 'messy process of informal learning' through which strategies may be formulated. Planning itself needs to be of the rolling wave kind to cater for uncertainty and, possibly, contractual work in systems development.

IS development needs to be re-scoped to include customers, business partners, and suppliers. For e-business, IS development is not simply an 'internal' problem as in traditional IT Governance. In e-business it extends outside the organisation to include business partners and suppliers, but most critically it needs to include customers. Pure e-business organisation is directly linked to its customers through the Internet. Its business processes and operations are driven by this direct interface. As the interface is enabled by IT, its development and the development of associated systems needs to involve all interfaces. Thus the very problem of systems development extends outside the organisation.

Consequently, e-business IT Governance is about developing new interfaces to fundamentally change the way in which an organisation interacts with its customers, partners and suppliers. The new interfaces are between:

  • Customer — organisation
  • Partner — organisation
  • Supplier — organisation

These interfaces are vital for the viability of a company and pose a new problem for global IT Governance. The problem is how to design efficient business processes that extend to interfaces as well as the interface itself. In some virtual organisation forms the customer is a co-producer of the goods or services; for example, where the buyer of cars or personal computers can customise the requirement for a product online. For the customer-organisation interface, one aspect of the problem is how to design interfaces that cater for cultural diversity to be found globally. These interfaces cover both process issues and its fused IT. The customer-organisation interface should be monitored to extract vital business intelligence from customers.

There are various reasons why all systems requirements cannot be known in advance to facilitate detailed IT plans and development. The users may not know what is required, or if they do they may not be able to explain or express the problem in terms that are readily understandable and can be modelled. Therefore global e-business IT Governance needs to develop local information and Knowledge Management tools. Global businesses will need to devise and implement varying marketing strategies for local needs. Web-based marketing systems require incorporating customising or tailoring tools to allow different product promotions or application tailoring (Wolfgang et al., 1998).

Historically, the level of sophistication of tools in a society reflects its intelligent activity. It is not possible to achieve an objective without some kind of tools or devised method. A tool is a 'wholly constructed expression of both knowledge and values' (Groth, 1999). Interestingly, there has been a paucity of tools in IS given its pervasiveness in organisations and, during the last decade, in society generally. E-business tools contribute to organisation structure, its effectiveness and efficiency. Tool building that facilitates the collective experiences of individuals leads to the design of better and effective tools, as it leads to the design of sophisticated and precise tools that solve the problem at hand.

Traditional technology has not had an all-encompassing effect on organisation structure and communication. Traditional IT Governance has not had to deal with questions of organisation structure, except with the notion of business transformation. E-business IT Governance by necessity has to consider the all-encompassing effect that the new networking digital technologies have on organisation. Internet and web technologies enable organising virtually. Policies need to be developed to enable organising virtually, as well as:

  • Developing and enable virtual structures, which by definition will change;
  • Ensuring economic viability, not simple business 'fit';
  • Developing solutions that are valid at corporate and business unit levels.

E-business IT Governance is more complex than the traditional alignment of IT with business or deriving business opportunity from IT. It is about integrating IT into the very business, referred to here as fusing IT with business. An e-business should be regarded as an open-ended organisational network. The notion of open systems (Flood & Jackson, 1991) may be one way of conceptualising such an entity. Another way to think about open-ended organisational networks is as 'webs' (Patel, 2001a). The empirically founded web concept is proposed as a conceptual tool to develop applications better suited for business organisations dealing in information and knowledge with emergent needs. It is consistent with the major content of e-business technology, namely information and knowledge processing, and with the plank of information and knowledge ontology within the proposed framework.

Develop ontologies of information and knowledge that are not simple data/information processing algorithms. A significant aspect of e-business IT Governance that is different from traditional IT Governance concerns business intelligence and models of customers. E-business solutions require intricate models of customer behaviour. The various applications need to be integrated to provide a unified view of customers.

Two other radical considerations are cross-organisational IS development teams and reconceptualising time and space in a virtual e-business organisation. Lee (1999) describes temporal changes of export related work in companies using EDI and how IS create temporal symmetry. International businesses have given rise to global and virtual software development teams. These teams are composed of North American and European corporations and companies from the Indian subcontinent. The management of virtual software development teams is a new challenge for e-business IT Governance.


A Framework for Planned and Emergent IT Governance

The proposed framework incorporates the above points and recognises that the organisational changes being brought about by e-business technology are profound in that they have radically altered our centuries-old views of companies. For the first time in the history of computing and its application to business, the customer is a vital consideration in e-business strategy and planning. The digital link into homes now makes the customer a critical aspect of business operation planning and management, which necessarily now includes IT planning and management. As discussed in the previous section, the inclusion of the customer into business operations requires developing models of customers' interaction thorough electronic interfaces with the organisation.

IT Governance consists of designing the governance structures and then implementing and managing them. Critically, it also involves being open to unexpected requirements or emergent information or system needs. This is illustrated in the case presented in the section titled "Planned and Emergent IT Governance in Action". In its broader sense, governance concerns the development of IT in an organisation, its procurement, and its application to business activity. But, as discussed above, e-business IT Governance is more than the simple application of IT to business activity. It is the complex fusion of IT with business activity, business partners, suppliers and customers, and critically it is equally as important as corporate governance.

What model of IT Governance is effective in this environment: planned use of IT, Just do it (JDI) or the emergence model? Planned use of IT is necessary for the known aspects of organisational life, for example, a known merger of companies, and caters for corporate, interdepartmental and company-wide systems. JDI is the empowerment of users to develop systems, made possible with web technologies and caters for local, individual and group needs. The emergent aspects arise in the context of the previous two, and take the form of the unexpected from the point of view of IT planners. Whilst strategic planning can be systematized and governance structures elaborated, their actual implementation is done in real organisational contexts where the unplanned event will necessarily emerge or where the poverty of the plan itself will become evident. The framework contains all three elements, especially given the recent literature on emergent organisations discussed earlier. Emergence and JDI cannot prevail because there will always be a need for corporate level application development, which the IT department can develop.

The essential activities for global e-business IT Governance in the framework encompasses the radical redirections discussed earlier. The inclusion of the customer (3) in IS development is critical in e-businesses (numbers in brackets refer to the list below). In particular, empirical models of customer-organisation interaction that cover process and operational issues need to be developed. The issue of planned versus emergent IT Governance is covered (1,2,6,7). E-business is highly volatile, both technologically and economically. Such a dynamic environment cannot be catered for in e-business IT Governance solely through planned achievement of goals; it also requires mechanisms to respond to unforeseen, opportunistic and emergent events. The essential activities for global e-business IT Governance are:

  1. Determine business purpose and strategy to define e-business model. Consider which aspects of the business will be digitised and how the IT strategy will add value to the business. Build top level and local channels of governance accountability.
  2. Determine the virtual structure of the organisation; allow for emergent forms and virtual working.
  3. Develop customer-organisation interface and interaction models. It is critical to understand how customers, business partners and suppliers interact with the e-business through the business process (digital) interfaces. Developing interaction models will provide such an understanding.
  4. Develop customer-organisation systems. This requires taking the radical step of involving customers in systems design decisions. In the past, 'users' were excluded from design decisions but were eventually included when developers realised that systems would be more acceptable if users had a say in their design. Similarly, there is a need to include organisational interfaces such as customers in the e-business design process.
  5. Determine what IS concepts to incorporate. An e-business model can incorporate concepts such as information management, Knowledge Management and decision support. This will ensure that integrated solutions are provided.
  6. Determine the scope for IT outsourcing and the role of consultants. Criteria need to be decided for retaining consultants, and adequate contract and servicing details need to be decided for IT service providers.
  7. Determine which business activity, business process, and business relations to digitise - supplier relations, customer relations, and employee relations. A corollary question concerns how to determine what to digitise. Develop plans for legacy and back-end systems integration with e-business solutions. All digital aspects of the business cannot be predetermined. Some will arise in the course of business activities, and will need ongoing development.
  8. Retain flexibility in IT Governance to allow for emergent aspects of e-business strategy. View design as a process, not as a discrete event in time.
  9. Determine technology-centric ways of working. We know that technology is changing the way work is done. IT Governance has to recognise this fact, and include organisational and work-study in its planning process. This is especially the case with e-business technology planning.
  10. Evaluate and procure appropriate e-business technology to enable one through six above.

Each of the above activities needs further elaboration. The verbs that describe the activities should be read as in the present continuous tense, for example 'determining business purpose and strategy….' The activities need to be ongoing to enable the capture of emergent events and opportunities. These activities were partially evident in the example case in the section, "Planned and Emergent IT Governance in Action". The company engaged in activities six, seven, nine and 10, which reflect the planned aspects of IT Governance. It did not consider the emergent aspects that eventually defined its IT/IS infrastructure. For example, activity eight requires planners and systems developers to view design as a process, not as a discrete event or project in time. The company had viewed design as an event in time and treated it as a project to be undertaken by a consultant. The approach led to the demise of the project and wasted monetary expenditure. But the 'process' of design continued, as the company continued to introduce IT/IS by learning from its mistakes.

IS Concepts

The development of the IS field, particularly its interdisciplinary development, has resulted in certain concepts that may be regarded as defining modern business activity. These are integral e-business concepts. The interdisciplinary development of IS has resulted in notions of business operation and organisation, that in turn need to be incorporated into the new e-business models. Table 1 is a list with short descriptions of IS concepts that need to be incorporated into e-business models. The realisation of these concepts in business is a major function of IT Governance.

Table 1: Relevance of IS Concepts to E-Business IT Governance

IS Concept

Description

Relation to e-business IT Governance

Data

Facts about organisational transactions

Needs to be integrated and available across the intranet or extranet.

Information

Data that is processed to enable decision-making

This information is not limited solely for internal consumption (executives, planners, problem-solvers), but is to be made available to customers to make informed buying decisions, and to suppliers and business partners.

Knowledge

Knowledge is about ideals to achieve customer satisfaction, product quality, etc.

Disseminate it widely throughout the organisation and enable its creation.

Networked or Virtual organizations

IT enabled organising

Networks are the essence of e-business. The form and content of networks determine business viability.

Selecting appropriate technology to incorporate IS concepts is a significant aspect of the framework (Dijkstra, 1968). For example, if a company wants to manage its customer knowledge effectively, it will need intranet database technologies.


Emergent Forms of IT Governance

The dominant view of systems development is mechanistic. Jackson states: "To develop software is to build a MACHINE, simply by describing it" (Lee, 1999, p. 1). Such a view is true of mechanical devices, but not of social software that supports and augments human social action. Schuler (1994) defines social computing as software that serves as an intermediary or a focus for a social relation. E-business IT Governance is concerned with the design and development of such social software. Social software has a direct influence on human behaviour; particularly the action humans take in social relations, like business relations such as partners, suppliers and customers.

Most IS design activity happens in projects, and some during the enhancement maintenance phase. Traditional IT Governance makes use of projects to develop systems. E-business systems have been developed using the business project framework, as it affords resource management and goal achievement. However, project-based IS design activity does not deal adequately with a number of issues. Emergent requirements, creeping scope, organisational and business impact on the project are all issues that trouble a project. Yet they are the very essence of IS design activity and that needs to be addressed in emergent organisations. Projects restrict software development to professional developers, but there is a need for 'users' to develop systems for local needs (Patel, 2001a).

The 'software crisis' itself can be viewed as a manifestation of postmodernism. We require a new approach that is distributed and sensitive to context. The era of planned releases of systems projects is past, and business organisations have to extend the functionality of systems over short periods and at low costs in response to various organisational and economic competitive factors, especially in an e-business. Attempts at planning completely all systems requirements in projects have proved unachievable with the usual picture of cost overruns and failed delivery times (Ewusi-Mensah, 1997). New alternative models like the distributed model of open source code development are emerging.

It is difficult for e-business IT Governance to remain centrally controlled through mechanisms such as project-based development. Table 2 is a sketched categorisation of historical approaches to managing systems development. It charts the move from software development as an 'art' through 'engineering' to the present day 'open source code' conception. The business demands on software are complex and methodologico-project frameworks seem unable to cope. Amethodological decentralised models, like the ones used to develop the Internet, web, and Linux seem to be successful. Global e-business IT Governance requires such a distributed and decentralised model for developing e-business systems.

Table 2: Historical Phases of IT Governance and Development Approaches

Systems Conception and Development Method

Systems Rational & Development Focus (Individual, Coordinated, Central or Distributed) (Aspects of IT Governance)

Reference

Programming as an Art

The practice of programming was originally considered an 'art'. Individual.

Circa 1950s

Structured Programming

Emphasis on how software is partitioned and structured. Reflective developers. Individual.

Goto statement, Dijkstra (1968)

Software Engineering

Apply traditional engineering tools to the 'software crisis'. Coordinated.

NATO Science Committee (Oct. 1968)

Project M anagement

Reflective developers in a business project. Central.

Grindley (1986)

Fourth Generation Languages

Action developers. Local.

Grindley (1986)

Packaged Software (COTS)

Reflective developers and action developers. Central.

Brincklin (2000)

Open Source Code

Reflective developers but in a community of practice (not project bound). Distributed.

Halloween Document (2001)


Planned and Emergent IT Governance in Action

The value of the proposed framework for management action is illustrated briefly with a case in this section. The case is of a contract supplier of toiletries and pharmaceuticals liquids. In five years a strategic vision became blurred and threatened to send the company's finances into a black hole. The introduction of IT and IS was nontrivial as the company discovered its cost. This case describes the unexpected long introduction, over five years, of IT into the company. It demonstrates the complexities and high costs of realising a global strategic information system.

The company wanted to improve its supply chain management and its associated information. Its high overheads, relative to its competitors, led to a decline in its market share. It wanted to use IT to make its supply chain efficient and automate the information associated with the supply chain. The management believed that IT would help them make their supply chain operations into 'real-time'. This was required because of the increasingly complex processes involved in delivering products to customers on time.

The company introduced its strategic IS in 1997. It was to 'compute' complex planning and scheduling scenarios across some 500-plus Shop Keeping Units. Purchasing was struggling to manage the component range; Material Requirements Planning would enable them to control requirements more systematically. It was sourced from a company that already had a wide customer base, which provided the management with confidence to purchase the software. They were also confident in the consultant who was to install the system into the company.

The supply chain information system was installed in 1997 and failed to deliver the benefits expected. The company abandoned it in 1999. They relaunched a tailored version of it in 2002 with the same objectives as in 1997. The company has lost five years of real progress in IT/IS usage. Five years later, the chairman of the company admitted that it had vastly underestimated the costs associated with introducing IT/IS and that they are still suffering the consequences today. Fortunately, the company's cost management was robust for it to 'enjoy good margins', which enabled it to survive 'whereas lesser companies may have gone to the wall'.

The company is a successful example of the value that IT/IS could add to its operations and help it gain competitive advantage. What went wrong? Why did its strategic plans fail? The case illustrates that plans alone were not sufficient. Although the company had not deployed formal strategic IT/IS planning tools such as portfolio analysis, it had a clear vision and plan to introduce IT/IS into its operations. As the production manager observed, planning alone could not account for the complex and emerging environment in which the IT/IS was introduced. The initial introduction and subsequent reintroduction is a case of an emerging strategy for e-business IT Governance.


Customers Organisation Interface and Emergent Organisation

The past application of IT has seen the automation, support, and re-design (re-engineering) and transformation of business activities. IT Governance became progressively complex through these phases of IT application to business. The current move is towards new 'models' of e-business. The new e-business models require strategy formulation and careful IT Governance through prescribed methods, for example, IT Balanced Scorecard (Van Grembergen, 2000), but there are also fundamental aspects of e-business that IT Governance needs to consider that prescribed methods cannot cover.

Corporate design, information and knowledge are intertwined. Information and knowledge are a prime element of organisation design, and e-business technology has enabled the complex integration of all three in e-business models such as e-shop, e-mall or third-party marketplace (Timmers, 1999). Organisation theorists assert that information processing and coordination of work tasks are central features of an organisation (Gailbraith, 1977; Minzberg, 1979; Groth, 1999). Following the history of industrial design, the premise in IT Governance and IS development is that computer-based information processing requires central design. The use of IT for information processing makes central IT Governance and designs an invalid proposition in the 21st century organisation.

The various interfaces between a company and its customers, partners and employees need to be both functionally relevant and easy to use. Certain interfaces such as customers cannot be trained to use e-business IT systems. The design of these interfaces is critical to the success of an e-business. The new e-business organisation requires a multidisciplinary team to deliver relevant and effective solutions. Designers, creatives, psychologists and developers all can contribute to the novel e-business systems. IT Governance and design need to be local and in actual-time (when it is required). So modern information processing in organisation requires an amethodological or distributed governance too. In methodological approaches the analysis, design, and implementation of IS solutions to organisational problems are separated and controlled centrally. An amethodological approach proposed by Patel (1999), deferred system's design (DSD), enables organisations to delay design decision making to mitigate risk, and permit procedural, operational or policy problems to be resolved locally. E-business systems in banking incorporate DSD (Theotokis et al., 1997) to allow emergent and tailorable information processing needs to be facilitated locally.

The System s Environment

A system that is not impacted highly by the environment remains constant. Its architecture and functionality remain stable with minor changes because the human or organisational force for change is nil or minimal. It is difficult to find examples of such systems in e-business systems. A system that has a high environmental impact on it, for example a web-based marketing system, needs to constantly change. The forces for change are high and constant on such systems. In general, e-business systems are of the latter type.

The complexity of a customised order processing system such as for personal computers or cars or an electronic bidding system such as for auctions increases with the degree of their embeddedness in the environment. Generally, such e-business systems have a high correlation with the organisational (and economic) environment in which they function. Figure 1 is an organisation environment impact analysis of e-business systems that need to cater for organisational emergence. When the correlation with the environment is high, e-business systems need to be developed using DSD, as shown in the top right quadrant. Over time, environment impact on systems requires most systems to move clockwise from the bottom left quadrant to the top right quadrant.

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Figure 1: Organisation Environment Impact Analysis

Emergent ways of IT Governance do not seek to specify fixed systems architecture, so that the future use of IS and its flexibility can be accommodated. Information and knowledge systems that are built on emergent principles such as DSD would be capable of accommodating the complexity of organisational phenomena and change increasingly evident in an e-business economy.

Information and knowledge ontologies are not an aspect of current IT Governance, especially that concerned with aligning IT with business strategy. This aspect is critical given the inclusion of the customer in the operations of the business. E-business companies will have to develop deeper understandings of their products, customers, and partners through better information and knowledge creation, sharing and analysis in a shifting environment.


Conclusion

E-business IT Governance has been conceptualised as encompassing both systematic planned activities and organic emergent needs to ensure successful e-business applications development. E-business models need to cater for emergent requirements and regard suppliers, business partners, and especially customers as integral. Global e-business governance needs a radically different perspective on IS development, organisation interfaces, organisation structures, and ontologies of information and knowledge. The radical alternative theme is to understand the technological, managerial and organisational (including interfaces) influences that both define e-business and its eventual success.

The framework proposes various activities in IT Governance that can cater for the new challenges of global e-business IT Governance. The development of electronic supply chains, networks, and customer-facing practices are vital but the question of measuring the success of these developments has yet to be resolved. It is an interesting research question, especially in organisations that permit emergent activity and appropriate IT responses to it, both corporate and local.

Planning is a vital aspect of IT Governance, but the pace of economic change nationally and internationally quickly makes plans outdated. Business needs for IT and IS tend to emerge as a result of organisational and economic factors; thus e-business models need to encompass emergent activity. The business rationale for e-business requires a broader scope for IT Governance, taking into account both IT and business issues. Organisations need to implement activities that need to be continuously carried out to ensure plans are relevant to business needs and account for emergent needs. A critical aspect of e-business IT is the development of organisational interfaces, which traditional IT Governance has not had to deal with. These interfaces are vital for the success of e-business. Global e-business IT Governance should be regarded both as a systematic and organic approach to IT resource management.


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Strategies for Information Technology Governance
Strategies for Information Technology Governance
ISBN: 1591402840
EAN: 2147483647
Year: 2002
Pages: 182
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