The IT Investment Framework

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The IT Investment Framework

Source: http://sloanreview.mit.edu/article/beyond-the-business-case-new-approaches-to-it-investment/ The case describes how Cheryl Smith plans to introduce process improvements and bring about a radical transformation in IT by aligning IT with the business objectives, changing the governance structure, setting up back up data centers and introducing 24*7 support. All these transformations would help Westjet improved processes, increase in revenue and productivity and continual customer satisfaction DIMENSIONS OF BUSINESS STRATEGY

ANSWER 1
Smith realized that a change in the governance model of IT was necessary in order to align IT with the business goals and to address operational issues. Also she realized that there would be resistance to this change from senior management as well as the seniors.
After appointment as a CIO Smith first needed to do an assessment whether WestJet had the necessary technologies, expertise, processes, and procedures and operating structure and solid systems.
Despite IBM’s recommendation to have a PMO, Smith suggested that be put on hold as she felt they are in need of an IT re-organization.
BENCHMARKING AND ASSESSMENT:She brought in two benchmarking and performance experts who performed a comparative study with similar sized companies and determined the appropriate level of budget and resources, which she compared to WestJet current cost and resource skill level. The results revealed that Westjet had the correct number of employees and while there were a large number of technically skilled employees, there was a skill mismatch that exited in Westjet. The operations and procedures were considered at half industry standard.

GOVERNANCE MODEL(BUSINESS AND IT INTEGRATION):Smith recognized that the IT structure was according to the conventional functions, developers, project managers, business analysts were all groups among themselves where each member could be considered as all purpose. The structure resulted in various challenges like lack of transparency, accountability, visibility and induced competition amongst business executives for resources. The chaos and confusion turned out to be a mystery at its best and a black hole at its worst. Smith realized this needed to be realigned and re-assigned people based on business units who were dedicated to a particular application. These were supported by a common infrastructure team which included support functions(operations, telecommunications, IT support etc). This structure required no extra resources. In order to align IT with the business, the governance model needed to establish strong linkages with the business units.

LACK OF PRIORTIZATION: Because the business could not prioritize, everything took longer than expected. Smith asked all the business VPs to present their projects. If it made it to the IT budget then it could go ahead. In this way they prioritized projects.

BACK-UP DATA CENTER &24*7 SUPPORT: The other 2 concerns were to have a back-up IT data center and to have a 24*7 IT support staff and not overburden the existing staff. The other concerns were standardization of processes to deal with system outages, root cause analysis, opening and reporting, project coordination and response time monitoring. Smith proposed establishing a redundant data center in Toronto, which had a different weather pattern, data center and power grid. In addition 24 hour IT support team was proposed. This would eliminate or reduce downtime ,ensure business continuity and data recovery

DIFFERENCIATION STRATEGY,GAME CHANGER: Smith realized that for growth they needed a differentiation strategy for customer satisfaction through websites or mobile apps, flexible call centers and cash based frequent guest program which would serve as a game changer.

CHALLENGES FACED TO GAIN APPROVAL: Smith realized in order to implement the change, it would require a radical transformation of the IT organization and to convey the business
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