IT STRATEGY
4/16/2016
Assignment 5
Goals are met by successfully navigating the challenges presented
along the path to the goal. Information Technology is looking to
develop a plan to solve these challenges for the businesses to allow
the organization to reach their goals.
IT Strategy
Table of Contents
INTRODUCTION ............................................................................................................. 0
1. REQUIREMENTS AND ISSUE MANAGEMENT SYSTEMS........................................... 1
The Case Study ................................................................................................................................. 1
Scrum Impact on Relationships ........................................................................................................ 1
Making Scrum Successful ................................................................................................................. 1
Scrum Management Tracking Systems .......................................................................................... 2
2. DEALING WITH RISK................................................................................................ 3
The Case Study ................................................................................................................................. 3
Importance of Global Approach to Risk Management ............................................................. 3
Organizational Impact ..................................................................................................................... 3
Competitive Impact........................................................................................................................... 4
3. OUTSOURCING ....................................................................................................... 4
The Case Study ................................................................................................................................. 4
Why Outsource ................................................................................................................................. 4
Relationship Building ........................................................................................................................ 4
Determining What to Outsource .................................................................................................... 5
Service Level Agreements (SLA)..................................................................................................... 5
4. OFFSHORING .......................................................................................................... 6
The Case Study ................................................................................................................................. 6
Relationship Building in an Offshore Model ................................................................................ 6
Building a Successful Offshore Model .......................................................................................... 6
Using IT to Bring Teams Together ................................................................................................... 7
CONCLUSION ................................................................................................................. 7
REFERENCES ................................................................................................................... 8
APPENDIX A ................................................................................................................ 10
Kanban Board Examples .............................................................................................................. 10
Waterfall Model ............................................................................................................................ 10
Table of Figures
Figure 1:SCRUM ............................................................................................................................................................. 1
Figure 2:TFS DASHBOARD ............................................................................................................................................ 2
Figure 3:RISK AND IMPACT .......................................................................................................................................... 3
Figure 4:SLA .................................................................................................................................................................... 5
Figure 5:RISKS AND STRATEGY................................................................................................................................... 6
INTRODUCTION
Businesses often rely on Information Technology to develop the strategies to reach their goals. When
developing a strategy, the first step is to define the goal(s) the strategy will help achieve. This goal is
defined through the creation of requirements. Once the requirements are defined the team needs to
determine how the requirements will be completed and what systems will be used to track these
requirements. The requirements will need to be refined and then developed. Risks and issues which
arise through development will need to be dealt with. Companies are often taking on risks but they
should be calculated risks with strategies for managing them. Coming up with these strategies is a place
where IT can help develop solutions. Outsourcing and offshoring are two strategies businesses have to
gain talent which can be leveraged to help the organization achieve their goals. However, both of these
options have their own set of risks and rewards that should be analyzed before choosing either of these
strategies. The common bond between all of these strategies is they all have impacts on relationships and
trust which have to be managed to achieve successful outcomes.
“Take calculated risks. That is quite different from being rash”
George S. Patton – US 4 Star General WWII
“Ironically, in a changing world, playing it safe is one of the riskiest things you can
do.”
Reid Hoffman – Cofounder of LinkedIn
IT Strategy
1. REQUIREMENTS AND ISSUE MANAGEMENT SYSTEMS
The Case Study
Shaw Industries was presented with the challenge of improving the relationship between IT and the
business. Shaw industries decided to use Scrum as their development methodology to help improve these
relationships. In Shaw’s case the business IT would meet for a 4-8-hour planning meeting and then jointly
determine which projects could provide the best value for the company. The sprints would last 30 days
and at the end of the sprit the business would review the progress. The process of Scrum forces the
group to come up with tasks for the sprint and requires the teams to get back together sooner than a
waterfall project would.
Scrum Impact on Relationships
Scrum can result in positive results for
relationships and trust. Scrum forces the team
and business to meet often, which will naturally
foster trusting relationships. Scrum focuses on
people and interactions as opposed to process
and tools. (AgileManifesto, n.d.) At the
beginning of each sprint the team and the
business work to create the list of stories called
the product backlog, which is stories to be
worked on in the upcoming sprint. The continual
FIGURE 1:SCRUM
interaction between the stakeholder’s and the
team at the end of each sprint fits Shaw’s plan to improve these relationships. Scrum breaks down the
wall between the technical and business side allowing teams to work together for a common goal. (scrum
methodology, n.d.) The quick turnaround on the product allows the business stakeholders to provide
feedback that can then be incorporated into the next sprint. In the historical waterfall model teams would
work until the entire product was built with little interaction between the technical and business owners
after the requirements were gathered. (Comparing Traditional Systems Analysis and Design with Agile
Methodologies, n.d.) (SEE APPENDIX FOR WATERFALL DIAGRAM) The short cycles of the scrum method
bring the business and technical sides together to build workable pieces of the product every sprint
instead of waiting “a year and a half” as Shaw did previously with the waterfall method.
Making Scrum Successful
Planning in scrum requires careful understanding of the consequences of not following traditional planning
activities. In order to be successful in scrum teams have to understand the consequences of failing to plan.
(Module 5, n.d.) In order to make up for the lack of planning the team mitigates this risk during the
execution phase by having more oversight. (Module 5, n.d.) Business owners will see that scrum allows the
team to be constantly innovating which will build confidence in the teams efforts. (4 Ways IT Can Inspire
Business Confidence, 2015) There are several tools to provide stakeholders a view into the scrum team’s
progress.
1
IT Strategy
Scrum Management Tracking Systems
The Scrum approach focuses on individuals and
interactions over processes and tools but there
are quite a few different tools out there to use
for Scrum. One example is Team Foundation
Server (TFS) Scrum Template. TFS allows
teams to track their backlog of stories, current
sprint stories and progress being made.
(Batatt, 2013) TFS also provides tracking for
defects or issues that occur during the
development cycle. Most tools feature a
Burndown chart which demonstrates the work
progression over the course of the sprint. The
burndown chart is normally a line graph that
starts in the top left and gradually works down
FIGURE 2:TFS DASHBOARD
to the bottom right signifying the work the
team has completed during the course of the sprint. The other major piece of a Scrum tracking system is
a Kanban board. This board allows the team to move the work across the board through statuses until it
is implemented. There are tools such as TFS, VersionOne, IBM Rational Team Concert, Jira, HP Agile
Manager and many other systems which will allow companies visibility into the scrum project work. These
tools are used primarily to provide a tool to communicate the team’s progress to whoever would want a
view into their work. These types of tools help build trust between the business and IT because they
demonstrate the work being accomplished by IT.
2
IT Strategy
2. DEALING WITH RISK
The Case Study
Flowserve an international leader in supplying pumps, valves, seals and other services around the world
and they decided it was essential to simplify their IT structure. This program to simplify their IT structure
had a very HIGH impact for the business and was also had a HIGH likelihood to fail if the risks were not
managed properly. Flowserve took a collaborative approach to mitigate these risks. The changes to
simplify their IT structure were necessitated by operational and regulatory pressure. The plan was to
update IT processes, establish common infrastructure, implement a global help desk, and remove
contrasting ERP systems. In order for this program to be successful it is going to require strong
leadership, solid relationships and huge emphasis on risk management to be effective.
Impor tance of Global Approach to Risk Management
Flowserve being an international company has risk contingent on the
regulations of the countries where the business is located. Flowserve
was facing regulatory pressure and the pressures would be
different depending on the locations where the business was
operating. One example of the differences is the US has regulations
like FTC and Sarbanes-Oxley while the European Union has the EU
Data Privacy Directive. (Modle 4, n.d.) These different regulatory
bodies and rules require different risk management processes. It is
important that as Flowserve builds out their new IT landscape they
analyze data to help manage their risk. With so many different
regulatory pressures internationally on the business, the new
analytics systems make it easier than ever to provide executives with
the intelligence needed to make decisions. (Olavsrud, 2016) Since
FIGURE 3:RISK AND IMPACT
there is so many countries affected it is important that people raise
risks up to the top so they can be managed as they arise. The countries global footprint made it essential
that they build relationships across the organization to help mitigate the risks of this endeavor.
Organizational Impact
Collaboration and communication are the best ways to eliminate organizational risk and build trust.
Flowserve appears to have done a good job of identifying the risks at the onset of the project during
preliminary analysis. (Module 5, n.d.) One risk would be that the project fails because the project does
not get the importance across the enterprise for which it deserves. Flowserve made an organizational
decision to treat this project as more than just an IT project. Management raised the significance of the
project to the enterprise level which helped mitigate the risk that the project would not get the attention it
needed. This is important because the risk of failure on this project reaches much further into the
tentacles of the business than the IT department. There was an organizational risk of employees not
buying in because of existing relationship issues but this was effectively mitigated by bringing everyone
together. (Info Systems and Analysis - Module 2, n.d.) Flowserve recognized that if they did not get buy
in from their divisional representatives the project could fail. Mitigating this risk by getting everyone’s
input should help build trust within the organization for the strategy decided.
3
IT Strategy
Competitive Impact
Flowserve was faced with the challenge of helping the business respond to operational and regulatory
challenges, which if not solved could weaken their competitive position. Flowserve was planning to
consolidate and eliminate many of their systems to increase the operating efficiency. Some of the
potential technical risks were avoided by having engineers and sales representatives embedded into the
process during the planning phase so they could help steer the business towards the decisions which had
the least technical risk. (Info Systems and Analysis - Module 2, n.d.) In order to get a good understanding
of what the business needs were, IT was going to have to work closely with the business to ensure that the
application integration was done properly. Limiting the rework that IT has to do should help build trust
from both sides in the collaborative approach. Having this communication ensures IT develops the
architecture and business workflows correctly to position the company on a competitive trajectory.
3. OUTSOURCING
The Case Study
Centene will be using a third party to host their Hyperion module. Many companies outsource various
extents of their IT systems. Using a third party to host parts of the application structure can make for
some additional challenges with implementing a new system. In Centene’s case they had trouble setting
up their technical environment and this could have been complicated by having a third party hosting the
product. These risks can be mitigated through a good working relationship and establishing service level
agreements between both IT groups.
Why Outsource
Outsourcing is done to some extent by lots of companies and there are various factors that can drive a
business to outsource all or parts of their Information Technology operations. Some of the reasons for
outsourcing include reducing cost, focusing on core, improve quality, increase speed to market, fostering
innovation and conserving capital. (Module 5, n.d.) The common theme throughout IT strategy is the
importance of relationship building and trust. These tenants of relationships and trust are the same even
when outsourcing to a different company.
Relationship Building
Outsourcing different parts of an IT solution is a fairly common practice but it has many pitfalls and relies
on a solid relationship from both parties. One important factor is that the vendor does not use change
control as a method to get back money which was lost in their contract negotiation. (Overby, 2012)
Communicating more openly from the onset will eliminate the need to have financial changes during the
course of the relationship. Building a foundation of trust relies on solid SLA processes in place to support
the partnership. In order to start the relationship out on the right foot there are important factors a
company needs to determine for what to outsource based on their competitive and operational needs.
4
IT Strategy
Determining What to Outsource
Many functional parts of IT make sense to be outsourced so that the business can focus on its core
offerings. One example of this is Netflix who outsources much of their IT infrastructure demands to
Amazon Web Services. Netflix outsourcing their infrastructure to Amazon Web Services allows them to
focus on their core business model which is content delivery. Outsourcing these services to Amazon also
allows them to deploy much faster and increase their speed to market. (Netflix Case Study, n.d.) The
move allowed Netflix to expand video services to more than 130 additional countries. (Loten, 2016)
Some companies look to outsource whole functional IT groups. If companies like Centene look to outsource
all of their IT, this is done with the expectation of reducing operating costs. (Computer Services Inc, 2016)
Companies have to be contingent of the pitfalls of outsourcing their IT operations. It can be difficult to
be innovative with your IT strategy if it is outsourced. (Why Companies Have Stopped Outsourcing IT,
2016) There is also potential risk of trade secrets being stolen by the outsourcing vendor. Recently a
software company Tata Consultancy Ltd. was found guilty of stealing intellectual property from Epic,
creator of hospital management software and Tata was fined 940 million dollars. (Chakraborty, 2016)
If companies decide to outsource they need to make sure they have security limits on what the vendors
have access to and clear auditing procedures to protect their intellectual property. In order to establish a
trust between the company and the outsource provider it is important to have a framework of rules to
build that trust upon.
Service Level Agreements (SLA)
Service Level Agreements (SLA) are an agreement that ensure
vendors meet their agreed upon requirements. SLA’s should be
built out with service level guarantees such as percentage of
availability and response time. (Module 5, n.d.) When building
these agreements, it is important to understand the complexities
and degree of change necessary to fulfill the agreement.
(Overby, 2012) For example, if Centene requires more
redundant infrastructure, additional security or more support
staffing at the third party vendor this should be listed in the
agreement within the security/reliability requirements. (Overby,
2012) Other items which should be included in the SLA for
security and reliability include backup power, firewalls and
security update schedules. (Module 5, n.d.) Another important
item to have specified in the agreement are the problem
response guarantees and remedies in case the provider fails to
FIGURE 4:SLA
meet their guarantees in the agreement. (Module 5, n.d.) Finally
the SLA should also list the manner in which the SLA will be monitored. This monitoring should include how
payment will occur if the SLA is violated and how this enforcement would take place. One way to enforce
these SLA’s is to have the requirements in XML so that tools can read the SLA for automated enforcement
of the agreement. (Module 5, n.d.) SLA’s are the framework for which trust is built upon in an outsourcing
relationship.
5
IT Strategy
4. OFFSHORING
The Case Study
The case study doesn’t specifically describe an offshoring situation but Flowserve could be using offshore
IT to build out their planned global help desk capabilities. Since many help desks are offshored today
we will assume that Flowserve will also offshore the operations of the help desk as well as the
development. The global help desk would be a good candidate for offshoring because it would allow
Flowserve’s IT to focus on solving the core issues which require IT solutions such as setting up a single ERP
system. The help desk solution would also be a project that could be built without any IT intellectual
property revealed to the offshoring group.
Relationship Building in an Offshore Model
Building strong trusting relationships is important
with an offshore team. Management should
create an environment where everyone is
comfortable contributing positive as well as
negative feedback. (Loza, 2008) Strong
communication channels will help the offshore
resources to contact the onshore resources and
solve challenges quicker. For example, let’s
assume Flowserve has Business Analysts (BA)
who gathered the requirements so the offshore
team could develop the software for the global
help desk. It is highly important that the
offshore resources who are building and testing
the software have open lines of communication
with the BA’s who gathered the requirements.
(Campbell, n.d.) Resources on both sides of the
model need to be able to have a strong
communication plan for the offshore relationship
FIGURE 5:RISKS AND STRATEGY
to be productive and trusting. Each group of
resources needs to be cognizant of the other groups’ cultural differences and training can help resources
better understand their cultural differences. One way to improve the relationship and increase trust is to
bring the offshore resources onshore for a training period. Bringing a resource onshore for a time period
helps the offshore team member ramp up knowledge as well as establish trusting relationships with the
onshore team members. (My Recipe For Successful Offshore Agile Team Management, 2015)
Building a Successful Offshore Model
Building a successful offshore model relies on managing the associated risks. From the onset it is
important that the choice of an offshore partner is the best fit for the company. Companies need to find
the best fit for their offshore partner based on political and regulatory issues in the area where the
company wants to outsource. In the selection process it is important to examine the political, privacy
regulations and trade secret laws of the countries which offshoring could occur. (Offshore Outsourcing of
Data Services by Insured Institutions and Associated Consumer Privacy Risks, 2004) The right partner
would need to be located in a stable country that has laws and regulations which protect the company’s
6
IT Strategy
interests. The second step is to choose projects for the offshore team that can have security controls
placed around them so that intellectual property (IP) theft is not an issue. (Module 5, n.d.) Choosing the
global help desk project should help Flowserve accomplish this task because we are assuming that this
solution does not have any IP tied to its development. Another common risk is teams working in different
time zones who may not be working during the same time of the day. This risk can be avoided by picking
a partner whose workforce will be working overlap with the onshore team. (Overby, 7 Tips to Offshore
Agile Development, 2012) If overlap is not possible the teams may have to accept the risk and it could
be a productivity drain to lose time due to the delayed communication. Technology should also be able
to play a big role in solving some of these communication and training challenges we encounter in
offshoring.
Using IT to Bring Teams Together
Flowserve should bring the onshore and offshore teams together through the use of technology. Video
conferencing software is one way to keep communications channels open. Video conferencing also
reduces travel costs and increases training capabilities. (IT services firm uses communications solution to
boost its competitive advantage, n.d.) Collaboration tools such as Skype for Business or Intercall can be
essential to training by allowing screen share of virtual events and other collaboration tools. (The Power
of Continuous Access, n.d.) Instant messenger is another tool that helps facilitate communications and
makes sending textual conversations quicker than an email thread. (My Recipe For Successful Offshore
Agile Team Management, 2015) Teams should also take advantage of Knowledge Management
Systems(KMS) and tools such as SharePoint which allow document sharing/management.
CONCLUSION
Once the business has a goal defined, IT develops strategies to achieve the goal. Relationships and trust
play a large role in the strategy chosen. In the end any strategy is only effective if the goal is met and it
is up to the people involved to put the work in necessary to reach the goal. The strategy should give the
people the tools necessary to implement the plan. Information technology is always a balancing act
between innovation and risk management. Success depends on how well the IT strategy straddles that
line between innovation and risk management while building the trusting relationships required to push
the organization past their goal.
7
IT Strategy
REFERENCES
(n.d.). Retrieved from https://healmyscm.wordpress.com/2015/05/27/find-tfs-2013-kanban-boardcolumns/
4 Ways IT Can Inspire Business Confidence. (2015, 5 6). Retrieved from informationweek.com:
http://www.informationweek.com/big-data/big-data-analytics/4-ways-it-can-inspire-businessconfidence/a/d-id/1320292
AgileManifesto. (n.d.). Retrieved from AgileManifesto: http://agilemanifesto.org/
Batatt, S. (2013, 3). Team Foundation Server - Agile Project Management using TFS 2012. Retrieved from
https://msdn.microsoft.com/en-us/magazine/dn189203.aspx
Campbell, B. (n.d.). Real World Offshore Development Practices. Retrieved from web.mit.edu:
http://web.mit.edu/outsourcing/class2/Real_World_Offshore_Development_Campbell.pdf
Chakraborty, S. (2016, 4 17). Tata Consultancy to Appeal Verdict in Infringement Case. Retrieved from
Bloomberg.com: http://www.bloomberg.com/news/articles/2016-04-17/tata-consultancy-toappeal-against-verdict-in-infringement-case
Comparing Traditional Systems Analysis and Design with Agile Methodologies. (n.d.). Retrieved from
http://www.umsl.edu/~hugheyd/is6840/waterfall.html
Computer Services Inc. (2016). IT Outsourcing: The Reasons, Risks and Rewards. Retrieved from
http://www.corpcomputerservices.com/articles/outsourcing-reasons
Info Systems and Analysis - Module 2. (n.d.).
IT services firm uses communications solution to boost its competitive advantage. (n.d.). Retrieved from
Microsoft: https://customers.microsoft.com/Pages/CustomerStory.aspx?recid=21647
Loten, A. (2016, 2 11). Netflix Shifts All IT to Amazon's Public Cloud. Retrieved from wsj.com:
http://blogs.wsj.com/cio/2016/02/11/netflix-shifts-all-it-to-amazons-public-cloud/?mg=id-wsj
Loza, J. (2008, 8 12). 10 things you should know about working with an offshore team. Retrieved from
techrepublic.com: http://www.techrepublic.com/blog/10-things/10-things-you-should-knowabout-working-with-an-offshore-team/
Modle 4. (n.d.). Retrieved from https://learn.bu.edu/bbcswebdav/pid-4078559-dt-content-rid13837535_1/courses/16sprgmetcs782_ol/module4/allpages.htm
Module 5. (n.d.). Retrieved from https://learn.bu.edu/bbcswebdav/pid-4078560-dt-content-rid13837569_1/courses/16sprgmetcs782_ol/module5/allpages.htm
My Recipe For Successful Offshore Agile Team Management. (2015, 3 19). Retrieved from intersog.com:
http://intersog.com/blog/agility-team-management/my-recipe-for-successful-offshore-agileteam-management/
Netflix Case Study. (n.d.). Retrieved from Amazon Web Services: https://aws.amazon.com/solutions/casestudies/netflix/
8
IT Strategy
Offshore Outsourcing of Data Services by Insured Institutions and Associated Consumer Privacy Risks.
(2004, 7). Retrieved from FDIC: https://www.fdic.gov/regulations/examinations/offshore/
Olavsrud, T. (2016, 4 16). How risk management leads to increased profit margins. Retrieved from cio.com:
http://www.cio.com/article/2910231/risk-management/how-risk-management-leads-toincreased-profit-margins.html
Overby, S. (2012, 10 26). 5 Ways to Build Better IT Outsourcing Relationships. Retrieved from CIO.com:
http://www.cio.com/article/2390857/outsourcing/5-ways-to-build-better-it-outsourcingrelationships.html
Overby, S. (2012, 10 1). 7 Tips to Offshore Agile Development. Retrieved from cio.com:
http://www.cio.com/article/2391721/outsourcing/7-tips-to-offshore-agile-development.html
scrum methodology. (n.d.). Retrieved from http://scrummethodology.com/: http://scrummethodology.com/
The Power of Continuous Access. (n.d.). Retrieved from Westuc.com:
https://www.westuc.com/whitepapers/power-continuous-access
Why Companies Have Stopped Outsourcing IT. (2016, 10 14). Retrieved from
http://blogs.wsj.com/experts/2015/10/14/why-companies-have-stopped-outsourcing-it/
9
IT Strategy
APPENDIX A
Kanban Board Examples
Waterfall Model
FIGURE 6:WATERFALL (COMPARING TRADITIONAL SYSTEMS ANALYSIS AND DESIGN WITH AGILE METHODOLOGIES, N.D.)
10