Strategic IT Planning WS 2013/14

Final Report Project 2: IT Outsourcing Company

Team Members:

Ravi Kiran Khareedi, Rakesh Murthy,

Santosh Kumar Rajaguru, Daniel Senf,

Akash Suman

Table of Contents

1. INTRODUCTION ................................................................................................................................ 3

2. PROJECT DESCRIPTION ..................................................................................................................... 3 2A. PROBLEM DEFINITION ............................................................................................................................. 3 2B. TASK DESCRIPTION .................................................................................................................................. 3 2C. COBIT .................................................................................................................................................. 4 2D. INFORMATION TECHNOLOGY INFRASTRUCTURE LIBRARY (ITIL) ....................................................................... 4

3. GOALS AND OBJECTIVES: .................................................................................................................. 5 3A. BUSINESS GOALS .................................................................................................................................... 5 3B. IT GOALS AND PROCESSES ........................................................................................................................ 5 3C. CRITICAL SUCCESS FACTORS ...................................................................................................................... 7

4. BUSINESS ARCHITECTURE ................................................................................................................. 8 4A. PROJECT PLAN ....................................................................................................................................... 8 4B. ORGANIZATION CHART ............................................................................................................................ 8 4C. VALUE CHAIN DIAGRAM ........................................................................................................................... 9 4D. PROCESS CHAIN DIAGRAMS (SERVICE SUPPORT AND SERVICE DELIVERY) ........................................................ 10 4E. SWOT ............................................................................................................................................... 16 4F. RISK MANAGEMENT MATRIX FRAMEWORK ............................................................................................... 17

5. IT ARCHITECTURE ........................................................................................................................... 19 5A. IT MASTER PLAN .................................................................................................................................. 19 5B. APPLICATION ARCHITECTURE .................................................................................................................. 19 5C. BALANCE SCORE CARD ........................................................................................................................... 21 5D. IT ROAD MAP ...................................................................................................................................... 21 5E. MILESTONES ........................................................................................................................................ 23

6. CONCLUSION .................................................................................................................................. 24

1. Introduction

In order to achieve Business goals of a company, Strategy plays as one of the most important key role. Building proper strategy is key to success in reaching business goals. As IT Consultant Company, our job is to build and deliver strategy to our clients based on their business goals they want to achieve.

2. Project Description

2a. Problem Definition

The company offers IT outsourcing services. The company has different industrial customers in European countries especially in the logistics business. The business strategy of the next five years is focused on the development of a software and IT-service production unit (software development and offshore services) in Asia (India, Malaysia).

As a general ambition the company wants to cut IT production costs by at least 25% within the next 3 years. The company owns a subsidiary in India, where 60 people are working. According to the future business plan the company wants to employ about 800 new staff members and tries also to expand activities to other Asian countries. Within the next 5 years high investments will be done in this area.

The overall integration of the development and service processes in regarded as a key success factor to reach the objectives. The task of your team is to plan the IT strategy to match the business development plans.

2b. Task Description

The task of the project team is to develop a strategic IT plan for the client company. This plan includes an IT target structure, and IT strategy, a strategy implementation in form of roadmap and the plan of tactical steps.

2c. COBIT

Control Objectives for Information and related Technology (COBIT) provides good practices across a domain and process framework and presents activities in a manageable and logical structure. They are strongly focused more on control, less on execution. These practices will help optimize IT-enabled investments, ensure service delivery and provide a measure against which to judge when things do go wrong. In this project we use COBIT to align business goals to IT goals. Business Goals are mapped to business processes and these business processes are mapped to IT processes using COBIT. This is a very necessary and important task to meet the clients objectives.

2d. Information Technology Infrastructure Library (ITIL)

ITIL is a set of practices for IT service management (ITSM) that focuses on aligning IT services with the needs of business. ITIL describes processes, procedures, tasks and checklists that are not organization-specific, used by an organization for establishing integration with the organization's strategy, delivering value and maintaining a minimum level of competency. It allows the organization to establish a baseline from which it can plan, implement and measure. It is used to demonstrate compliance and to measure improvement.

The tasks of ITIL:

ITIL describes a systematic, professional procedure for the management of IT services. The library emphatically puts the emphasis on the importance of meeting the corporate requirements from the commercial aspect.

The necessary prerequisite for this is the unconditional willingness to accept change in respect of a customer and a service-orientated approach. In many companies this requires a change in the existing behavioral culture.

The aim, with the help of ITIL, is to also create a clear world of definitions in the service management area and to consequently simplify the communication.

Adopting ITIL can offer users a huge range of benefits that include:

Improved IT services

Reduced costs

Improved customer satisfaction through a more professional approach to service delivery

Improved productivity

Improved use of skills and experience

Improved delivery of third party service.

3. Goals and Objectives:

3a. Business Goals

According to the in 2 b. Task Description mentioned business development plans; the supporting Business Goals have to be found. The following list shows the supporting Business Goals for the project.

4. Improve customer orientation and service, 6. Establish service continuity and availability, 8. Achieve cost optimization of service delivery, 10. Improve and maintain business process functionality, 11. Lower process costs, 14. Manage business change, 15. Improve and maintain operational and staff productivity, 17. Acquire and maintain skilled and motivated people.

3b. IT Goals and Processes

Using COBIT the before presented Business Goals can be mapped to IT Goals and afterwards also to IT Processes. The IT Goals and IT Processes will help to find every needed project for the strategy implementation and the list of needed projects. The following lists show all identified IT Goals and IT Processes.

IT Goals:

1. Respond to business requirements in alignment with the business strategy. 3. Ensure satisfaction of end users with service offerings and service levels. 5. Create IT agility. 6. Define how business functional and control requirements are translated in effective and

efficient automated solutions. 7. Acquire and maintain integrated and standardized application systems. 8. Acquire and maintain an integrated and standardized IT infrastructure. 9. Acquire and maintain IT skills that respond to the IT strategy. 10. Ensure mutual satisfaction of third-party relationships. 11. Ensure seamless integration of applications into business processes. 13. Ensure proper use and performance of the applications and technology solutions. 15. Optimize the IT infrastructure, resources and capabilities. 16. Reduce solution and service delivery defects and rework. 22. Ensure minimum business impact in the event of an IT service disruption or change. 23. Make sure that IT services are available as required. 24. Improve ITs cost-efficiency and its contribution to business profitability. 28. Ensure that IT demonstrates cost-efficient service quality, continuous improvement and

readiness for future change.

IT Processes:

PO1 Define a strategic IT plan. PO2 Define the information architecture. PO3 Determine Technological Direction PO4 Define the IT processes, organization and relationships. PO5 Manage the IT investment. PO6 Communicate Management Aims and Direction PO7 Manage IT human resources. PO8 Manage quality. PO10 Manage projects. AI1 Identify automated solutions. AI2 Acquire and Maintain Application Software AI3 Acquire and Maintain Technology Infrastructure AI4 Enable operation and use. AI5 Procure IT Resources AI6 Manage changes. AI7 Install and accredit solutions and changes. DS1 Define and manage service levels. DS2 Manage third-party services. DS3 Manage performance and capacity. DS4 Ensure continuous service. DS6 Identify and allocate costs. DS7 Educate and train users. DS8 Manage service desk and incidents. DS9 Manage the Configuration DS10 Manage problems. DS12 Manage the physical environment. DS13 Manage operations. ME1 Monitor and evaluate IT performance. ME4 Provide IT governance.

3c. Critical Success Factors

The Critical Success Factors are factors, which have to be taken into account while developing the IT strategy. They support the business plan objectives dramatically. The impact of every single Critical Success Factor on a business plan objective is different. So it is required, that the importance and also the priority of a Critical Success Factor for a business plan objective is calculated. The overall importance measures the importance of the Critical Success Factor for the IT Strategy. The following table shows this calculation for this particular project.

Objective

CSF

Cost Reduction

by 25% Importance Factor Weight Hire 800

Employees Importance Factor Weight Sum

Integration Effect medium

3 5 15 Effect medium

3 5 15 30

Standardized Model

Effect medium

3 4 12 Effect medium

3 4 12 24

Skilled Persons

Effect medium

3 5 15 Effect medium

3 5 15 30

Structured on Business Process for entire Organization

Effect medium

3 3 9 Effect

medium 3 3 9 18

Figure 3c: Critical Success Factor

4. Business Architecture

4a. Project Plan

The project plan provides an overview over the project, done by the project team. It contains the done activities and the time schedule. For the project plan see the additional material.

4b. Organization Chart

An organization chart shows the structure of the organization and the relationship between the various departments. At first, let us focus on the organization of the company. Figure shows the organization chart.

Figure 4b: Organization Chart

The company is controlled and managed by CEO, CFO, and Board of directors who is in the top of the structure. The organization is mainly divided five departments namely, Service Unit, Delivery Unit, Sales Department, Human Resource Department and Finance Department.

The ITIL processes for Service Delivery and Support are implemented by the Service and Delivery Unit.

The software development is in Asia which provides offshore services to its clients.

The main branch of the Human Resource department is in Europe which monitors and guides the activities of its subsidiaries in Asia.

4c. Value Chain Diagram

Value chain diagrams describe the processes, which add value to the company. The diagram below depicts the value chain of our organization.

Figure 4b: Value Chain Diagram.

These are primary and secondary processes defined. The Service Management and Delivery management processes are responsible for the ITIL process implementation in the company.

ServiceManagement

IncidentManagement

DeliveryManagement

SalesManagement

Service Desk

AvailabilityManagement

ProblemManagement

ChangeManagement

ReleaseManagement

Sales Planning

DemandManagement

Results &Reporting

4d. Process Chain Diagrams (Service support and Service Delivery)

For an IT outsourcing company, providing proper services to their customers plays an important role to achieve success. Since, our client is an IT Outsourcing Company providing services to their customers, defining a proper service support process is very much necessary. To ensure our clients customers have an access to appropriate services to support their business goals, we suggest following the following service support management structure:

Figure 4d: Service Support Management Processes.

However, with respect to our clients business objective, its neccesary to define Service desk process, Incident Management Process and Problem Management process.

Service Desk Process

Service desk is a first point of contact between our client (i.e.IT Out-Sourcing Company) and their clients. Service desk extends a wide range of services to the application users. Along with handling Incidents and problems, it also provides interface to other process like change requests, Service level Management and configuration management. Figure 4d (a) shows proposed service desk process.

Service process goes like this:

1. Customer calls with a problem 2. Service desk employee reviews the problem and if possible guides user in resolving the problem

and close the issue. 3. However, if he cannot resolve the problem, he raises it as an incident and identifies and assigns

the issue to L2/L3 teams, who can solve the problem. 4. Once, the problem is solved service desk will confirm with the user and closes the issue.

Since, most of our clients customers are located in Europe; we would recommend this process to be set up in our clients European offices.

ServiceManagement

Service Desk IncidentManagement

ProblemManagement

Change and ReleaseManagement

Figure 4d (a): Service Desk Process.

Incident Management Process

This process should have an interface with the service desk. The main goal of this process is to restore the normal service operation as soon as possible and minimize the adverse impact on business operations of our clients customers. This result of this process should not breach Service Level Agreement. An incident is customers problem delegated to Level 2 / Level 3 teams by service desk. To handle the delegated Incident following Incident management process is proposed and shown in figure 4d (b).

Incident process goes like this:

1. Incident is received by respective team from service desk via interface. 2. Incident is then assigned to a problem resolving specialist. 3. Specialists resolve the incident and request service desk employee to confirm with customer,

whether problem is solved and requests for closing the issue. 4. However, if specialists identify any change is required in the applications which a customer is

using. Then, specialist defines a project to implement change and delegate it to a problem management teams.

Customer orUser calls with

Problem

Service DeskEmployee Accessand review issue

Guides the User withresolving steps

Closes the issue

SD Employeeraise new

Incident Record

Identifies and assignthe issue to Resolver

L2/L3 group

Link the issue toexisting issue

Service desk toIncident Management

teams

Confirm with user

5. Implementing such changes could reduce the number of incidents occurring in the applications which a customer is using. Since, this process has to maintain SLA and result in solving customers problem as soon as possible. This process also needs to be setup in our clients (i.e. Outsourcing company) European office unit.

Figure 4d (b): Incident Management process.

Problem Management Process

The main goal of this process is to minimize the impacts of Incidents and problems on the customers business and prevent the recurrence of Incidents. To achieve this goal, this process will try to identify the root cause of incidents and initiate proper actions to improve or correct the situations. Problem Management process solves problem in response to one or more incidents or it involves in identifying and solving the known errors before incidents occur again. Hence, for our client to provide their customer a better service, we are proposing the Problem management process as shown in figure 4d (c).

Service Desk toIncident Management

Teams

Service Desk Identifyand transfer issue torespective resolving

L2/L3 team

Incident is assignedto Specialist

Specialist checks andfix the issue

Incident closurerequest to service

desk

Identify any changesrequired Define a project to

implement therequired Changes

Project Delegated toProblem managementteam( Development

Team)

Problem Management Process goes like this:

1. Recurring problems are defined assigned to problem management team by the Incident Management teams.

2. Problem is then assigned to a specialist and is reviewed. Once reviewed, the problem is prioritized and investigated for root cause.

3. If root cause is identified, then, Implementation of code is done to fix the problem. 4. New code is tested and new version of application is created. 5. New version of software is now delegated to change and release management team.

This is a long process and hence time consuming. This process need produce its result on priority. Hence, this process can be setup in any location by our client. However, with respect to our clients business objectives, we as a consultant will suggest our client to setup this process in Asian countries.

Figure 4d (c): Problem Management process.

Problem defined byIncident Management

teams

New project to fixdefined Problem is

initiated

Review the project if there isalready project going on for

newly arrived problem

Problem assigned tospecialist andreviewed

Problem isprioritised

Investigate andDiagnose Problem

Root causeidentified

Implement Code toFix the problem

Create a new versionsoftware

Problem Managementto Change and

Release Management

Test the code

Delegate the Changeto Change and

Release...

Service delivery Process

This depicts the detailed process flow of Delivery unit. This is described by an Event Driven Process Chain, where state is responsible for allowing the activity to move further. This modeling is achieved by Aris framework.

Our client is an IT-Outsourcing company. Hence, the service delivery unit should adhere to the IT Infrastructure library standards (ITIL). This unit supports the business functions such as problem Management, Release Management.

When recurring occurrences of the identical errors should be categorized and rectified by this business function. As this delivery process will consume the inputs from the incident management function and will provide the bug free product, it contains the processes as follows.

The figure below describes the design phase. This gathers the information and defines the scope of the requirement.

Figure 4d(d): Delivery Process figure 1

Informationcollection

requirementcollected.

System RequirementCheck

Scope Defining

Scope defined

PriortizeRequirements

Business Analyst

Project Manager andTechnical Leads

Not Feasible

The below figure consists of the designing of business requirements and functional requirements. On completion of the design of the requirements it moves to implementation phase.

Figure 4d(e): Delivery Process figure 2

After implementing the requirements, it should be checked. According to, Release management business function the release of the current version should be working fine according to other functionalities.

Figure 4d(f): Delivery Process figure 3

Functionalrequirements not

covered

High Level designing

High leveldesigningcompleted

Low level designing

Low level DesignCompleted

Implementation

Businessrequirements not

covered

Passed

Implementation

Unit Testing

Bug detected Bug Free

Integration Testing

MetRequirementssatisifaction

Not meetingrequirements

System andAcceptance Testing

Not Passed

Deployment

These above activities will help to achieve the business functionality, by which our client can achieve the business goals.

4e. SWOT

Definition: - SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

Strength:

One of the top companies of Service provider in Europe Focused management towards increase of market share Quick response team in Incident management for both Asian/European customers More focus on Process Delivery Functionality Strong reputation in international market Strong and detailed organization structure

Weakness:

Training New staff according to Asia/European Norms Time Taking in Adapting European customers needs and requirements Lack of efficient communication among various departments Huge workload in Response management team on Asia/European team

Opportunities:

Expanding Business in Asian Countries Providing solutions to wider group of customers around the globe Acquiring new Investors Providing Services as per market demands Improvement in process by adoption of new frameworks Integration of various process flows Adoption of new technologies

Threats:

Competing in Asian Market with similar service providers Changing Trends and Customer Service Demands Confliction of Laws Changing Government regulatory policies One of the most competitive sectors Fluctuations in international stocks

Figure 4e: SWOT Analysis.

4f. Risk Management Matrix Framework

Definition: - It is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

Framework is just a standard model stating our approach to Risk Management. Whereas the Matrix shows identified risk along with their Impact level.

Explanation for Matrix

Factors

1. Establishing New Development Unit 2. Closing of German Development unit 3. Recruiting New Employees 4. Service level Agreement 5. Foreign Policies 6. Investor/Stakeholders Involvement

Risk

1. While Establishing New development unit the risk is of Infrastructure i) How well the office environment is going to be. ii) Finding suitable location iii) power supply iv) electronic equipments (Computers, Internet, Communication Links)

2. Closing of German development unit would result in Workload Dissipation i) Huge amount of workload would be on European client side which cannot be transferred to

Asian client side for quick processing & response. Hence it has to be there. 3. Recruiting is not a big issue as for an outsourcing company as because a lot of manpower are

available not much qualification is needed. 4. In Some cases candidates want to be permanent some want to leave after a while so company

approach would be hiring on contract basis. 5. Very few policies contradict within a business of overseas. If it occurs alternative design are

available to overcome it. 6. Investors sometimes dont appreciate the idea or the strategy & want to alter it. In such case take

them into confidence by showing better previous result

Verdict:-

In Totality 1st, 3rd, 4th points are at low risk 2nd point is at high risk and rest is at medium risk.

Hence a minimum risk approach is established.

Figure 4f: Risk Analysis

5. IT Architecture

5a. IT Master Plan

IT Master plan is developed as the part of the IT Architecture. IT describes which process is implemented by which organizational unit and which application. We have to come up with the suitable applications to implements our processes.

The chart below shows the IT Master plan of the organization.

PROCESSES

OR

GA

NIS

AT

ION

AL

U

NIT

Sales Planning People

Management Payroll Service

Management Delivery

Management

Sales SAP ERP Operations

HR ERP HCM

Finance ERP Financials

Service & Delivery

BMC Remedy ARSXLink

BMC Remedy ARSXLink

We have mainly used the SAP ERP modules and BMC Remedy Suite.

SAP ERP Operations handles the Sales and Service related processes within the company. SAP Human Capital Management (SAP HCM) takes care of the Human Resource Activities like Recruiting, Talent Management and end user maintenance. SAP Finance handles all the accounts, travel management and cash flow related processes. BMC Remedy is a support and system maintenance suite, which provides extensive set of features for IT Service Management. The ITIL processes are implemented by BMC Remedy. The interface between the BMC Solution and SAP ERP modules is provided by ARSXLink. This is a standardized interface and certified by both SAP and BMC.

5b. Application Architecture

According to the outsourcing point of view, we have used Service oriented architectural design. This will use the BMC ITIL suite and Enterprise resource planning (ERP), which will support the business process in IT level. This BMC application will provide a common platform for the services, which are led by the delivery and support business functions. The Enterprise Service Bus will be used to connect the applications to the processes. It also validates the flow of data from the back end to the application layer. We have used the ARSXLink, Action Request Systems and all XML (SOAP) compatible systems, for exchange data between BMC, ERP and management systems. This provides quick end to end process through effective integration. This platform provides exchange of business data between services as well as with in services. It provides bi-directional and synchronous data exchange with the applications.

The above figure depicts the processes of respective organizational units which are relevant for the current phase. This can be further extendable for the subsequent phases.

This section describes the architecture which we have used in our architectural design.

Figure: Application Architecture

5c. Balance Score Card

5d. IT Road Map

IT Road Map shows various applications that have to be deployed according to the timeline. Figure 5d shows our proposed roadmap to our client (i.e. Outsourcing Company). Since our clients business objective is long term objectives, timeline of the roadmap is from 2014 till 2019. The applications are deployed with respect to business objectives and priority of deployment of the respective application.

IT Road Map is explained as below:

1. As one of the major business objectives of our client is to expand the business to Asian countries, first priority is to setup a Human Resource Unit in the region where they are planning to expand. And hence, SAP Human Capital Management (SAP HCM) which takes care of the Human Resource Activities like Recruiting, Talent Management and end user maintenance has to be deployed at first place.

2. Once the HR unit is established, we have all the necessary resources to carry out our clients services to their customers and thus need to setup Service and Delivery unit. Hence, SAP Solution Manager which provides extensive set of features for IT Service Management has to be deployed.

3. As the normal functioning of Service and delivery unit progress. Sales unit has to be setup to bring more and more customers towards or clients company. Hence, SAP ERP Operation application is deployed. This SAP application will helps our client to carry out their sales and services process.

4. Once all the above units mentioned are deployed, Finance unit has to be setup. SAP ERP Finance that handles all the accounts, travel management and cash flow related processes of our client is deployed.

Figure 5d: IT Road Map

5e. Milestones

While working on the project, not every milestone was done in time. To provide a rough overview over the progress of the project, a milestone analysis is used.

Figure 5e: Milestones

6. Conclusion

Consultant Perspective:

We have successfully developed an IT strategy to achieve the business goals of the organization. Firstly we have come up with the future landscape of business architecture which includes the organization chart, value chain and the process chain. The business architecture is developed using the ITIL framework which defines the processes for Service support and delivery. Then we have come up with the IT Architecture using SOA approach which includes all the application modules and the order in which it has to be implemented. We have identified the risks involved in implementing this strategy and defined the balance score card to which is a performance measurement tool. Student Perspective: We have successfully developed an IT Strategy for a fictive company by understanding the concepts of Strategic IT planning and experiencing the view of a Strategic IT consultant. Along with the mentioned benefits, we gained exposure by working in a team of international students.