Role of Best Practices Approach in Controlling IT Planning Essay
Role of Best Practices Approach in Controlling IT Planning
With the rapid change we have nowadays, organizations need more than just traditional ways, methods, and approaches to continue and to succeed in the competition. The need for rethinking and reinventing new management or business best practices for IT was a result for this rapid change in business and the evolved new role of IT in business. This research paper aims at giving an answer to whether the best practices approach is an effective means of controlling the implementation of IT plans or not.
There are two ways to answer this question either to prove that best practices approach is an effective means of controlling the implementation of IT plans or to prove that other traditional approaches (without best practices) failed to be effective means of controlling the implementation of IT plans. The methodology to answer the question in this research paper is to analyze both scenarios in the second section “situation analysis”.
The research paper consists of three sections: introduction, situation analysis for both scenarios with or without best practices, and conclusion. This research paper will focus on the ‘Best Practice’ whether it is a technique, methodology, formula, or procedures that has shown results better than those achieved using other known traditional means.
Meaning that there is a condition and this condition is that it has proven to be successful. First of all research did prove that there is a positive relationship between IT and business performance and growth (Brynjolfsson, E. , 2003; Brynjolfsson, E. & Hitt, L. M. , 2000; Mitra, S. , 2005; Bardhan, I. & Krishnan, V. & Lin, S. , 2004; Zhu, K. , 2004) Due to the transformed role of IT in last years, Business needs to have an aligned IT strategy that could manage the change and completely support business goals and requirements to create the required environment to compete in the new world. The challenge now is how to run IT like a business not as before separated and isolated from business.
So in order to run IT like a business, IT should first of all have a strategic plan within the business strategic plan itself and not separated from it and to have tools and methods to guarantee the success of these plans. Managers and CIOs need to control the implementation of IT plans in order to maximize the value of IT according to business goals and requirements and to avoid and minimize risks or even to reduce costs. II- Situation Analysis This section analyzes the two scenarios of IT management whether using solutions and systems without any best practice or using them with the help of best practices.
Because planning, implementation and control are functions of management in general, this section will focus on IT management in both scenarios to identify exactly whether the best practices approach is an effective approach to control implementation of IT plans or not. Scenarios of IT management First Scenario (Without best practices) First Scenario (With best practices) 1. Systems and solutions are not enough to deliver value 2. Traditional methods failed to control IT plans (costs or time) 1. Best practices proved to be effective 2. Successful companies adopted best practices
Figure (1): Scenarios of IT management To analyze the first scenario whether it succeeded or failed, this section will shade the light on some studies concerning using traditional methods in managing and planning for IT. Research showed that IT systems and solutions are not enough to deliver a real value for business and that companies do not just buy and plug in computers, communication networks or software solutions and wait for results. Researches showed that big percentage IT projects failed to deliver the required business value. For example, according to Saloojee, R.
(2006) “traditional methods of developing business strategies have failed to take full advantage of IT”. Also, the survey conducted by Shpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007) for more than 500 senior business and technology executives worldwide showed that there is a real gap between IT and business. Figure 1 shows results of the survey. Companies in the trap even failed to deliver results on time or on budget and “spent 13% more than the average company on IT posted 14% lower revenue growth on average over the three years. ” (p. 52)
Figure (1): alignment survey results conducted by David Shpilberg et al (2007) Source: adopted from “David Shpilberg et al (2007), Avoiding the Alignment Trap in IT” Another research showed that traditional methods failed in controlling IT and that traditional financial methods and measurements failed to measure business value of IT. According to Burg, W. D. & Singleton, T. W. (2005), current approaches to measure IT value fails to work successfully (p. 3). That’s why early researches couldn’t find tangible value of IT and researchers assumed that IT value is hidden or intangible and hard to be measured (Kumar, R.
L. , 2004, p. 11), because these researchers tried to measure IT using traditional financial methods. Also, according to Symons, C. (2006), “traditional financial methods such as simple ROI or other financial are not good enough and this could be because they are applied inconsistently and in isolation beside other reasons such as: (1) inability to account for the intangible benefits, (2) future opportunities aren’t taken into considerations in them, (3) they fail to incorporate risk. ” (p. 3)
Now moving to the second scenario, this section will shade the light on some studies that have proved that best practices is an effective approach to manage, plan for IT and control implementation. By analyzing the successful companies surveyed in Shpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007), these companies focused on effectiveness by adopting some best practices such as strategic IT business alignment, portfolio management. These successful companies managed to reduce costs, overcome complexity, effectively source IT staffing and software and create start-to-finish accountability connected to business results.
The most successful companies (7% of respondents) who said that their IT organizations were both highly aligned with business strategy and highly effective in delivering what was asked of them, “recorded a compound annual growth rate over three years 35% higher than the survey average” (p. 53) Also, according to Brynjolfsson, E. (2003), “IT makes little direct contribution to the overall performance of a company or the economy until it’s combined or coupled with complementary investments in work practices, human capital, and organizational restructuring”. The sample he built his results upon was more than 300 companies.
Brynjolfsson, E. (2003) discussed a new dimension for best practices -that he called it the “Digital Organization”- where best practices are not implemented only for the IT department but form a cluster of business practices taking into consideration that “a few of them are directly related to the implementation of the technology itself”. Another interesting conclusion mentioned by Brynjolfsson, E. (2003), that “not all companies succeeded in implementing best practices but the ones who are usually productive managed to overcome the costs required for the adjustment.
” The cluster of business practices -he referred to- or the ‘digital organization’ that have led to more valuable output for companies than their competitors and increased productivity includes: “(1) automation of tasks, (2) skilled labor, (3) decentralization of decision making, (4) improving the information flow across the organization, (5) adopting performance-based incentives programs, (6) more emphasis on the effectiveness of training and recruiting, and having employee and customer satisfaction” Pastore, R. and Ware, L. C.
(2004) made a “How to run IT like a business” survey for more than 100 IT executives to come up with IT best practices. They picked successful companies with excellent IT reputations. Figure (2) shows top 10 most utilized best practices. Figure (2) Top 10 most utilized best practices Source: Pastore, R. and Ware, L. C. (2004) Symons, C. (2006) noticed that “successful organizations observe some best practices such as: having an active IT steering committee, implementing portfolio management, and using a standard IT value methodology” (p.
2). He showed that the success factor is to have a joint accountability between both IT and business executives. (P. 2) Symons, C. (2005) also added the optimization dimension to the management practices such as IT portfolio management because optimization has led to the maximum benefit. Meaning companies should take into consideration a set of constraints such as “(1) techniques for investment, (2) resource planning, (3) decision making, and (4) measurement and communication” (p. 8). Tallon, P. P. & Kraemer, K. L.
& Gurbaxani, V. (2001) after surveying 304 business executives worldwide, they conducted a study using these data and found that “management practices such as (1) strategic alignment and (2) IT investment evaluation contribute to higher perceived level of IT business value”. (p. 1) They also suggested “when firms make greater use of implementation review, they could get higher value. ” (p. 25) III- Conclusion After analyzing the current situation and knowing that there are two scenarios for IT management, planning, and control.
Concerning the first scenario (using systems, solutions, and traditional methods without best practices), research showed that this scenario failed to manage IT, plan for IT, and control implementation of IT plans. Whereas in the second scenario (adopting some of the best practices), companies and firms succeeded in managing IT, strategically planning for IT, and controlling the implementation of IT plans in order to maximize IT value for the business, reduce costs, and avoid or minimize the risk.
All studies showed that successful companies are the companies that adopted best practices not only in the IT department or IT projects but also for the whole organization. On the contrary companies that didn’t adopt best practices and used others means failed to deliver a higher value of IT. The first success factor is to strategically align IT to business and strategically plan for IT within the business strategy taking into consideration the right framework for IT governance or management and use an IT portfolio management taking into consideration the optimization factor.
And to have a joint accountability between both IT and business executives. References Bardhan, I. & Krishnan, V. & Lin, S. (2004). A Model to Measure the Business Value of Information Technology: The case of project and information work. Retrieved April 23, 2008 from http://rady. ucsd. edu/faculty/directory/krishnan/docs/valueIT. pdf Brynjolfsson, E. (2003). The IT Productivity GAP. MIT. Retrieved April 23, 2008 from http://digital. mit. edu/erik/Optimize/pr_roi. html Brynjolfsson, E. & Hitt, L. M. (2000). Beyond Computation: Information technology, organizational transformation and business performance.
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