Configuration and Information Technology Portfolio Management Discussion

Directions: Answer should be in short essay, read the content given and answer the question. For each of the questions below, provide an answer of 80 – 100 words using complete sentences. (No bullet statements). Each question is worth 10 points.

Scoring Rubric for each Question: 5 – Answers the question and does so accurately, 3 – Shows an overall understanding of the subject, 2 – Uses correct spelling and grammar, and follows the requested answer format

Chapter 14 – IT Configuration and IT Portfolio Management

In the first part of this chapter the author lists and defines the four elements of IT configuration management. Imagine that one of your job duties is to keep track of all the company laptop computers that are signed-out to various employees. Summarize how you would apply each of the four elements to the job of tracking the location of the laptop computers, their status, and who has them.

Content: IT CONFIGURATION MANAGEMENT CONCEPTS

There are multiple hardware, software, and IT infrastructure components in any enterprise IT system, ranging from a database server with attached terminals serving a small business unit to a large, corporate-wide set of IT operations serving worldwide facilities. Some of these are interconnected, while others are freestanding but separate from the others. An enterprise’s IT configuration is much more than just a list of installed software components and hardware devices. Configuration records must keep track of such matters as interface connections, component version identifications, installed features, and all other matters that describe these IT configuration elements or items in their installed states.

We first encountered IT configuration management concepts in Chapter 6 on ITIL and IT Service Management Forum concepts. There, IT configuration management was only one element of a series of ITIL’s best practices. This chapter looks a bit deeper into IT configuration management tools and processes and will emphasize why IT configuration management is an important component of good IT governance processes.

While there is no one standard definition of an IT configuration management system and a Web search will provide multiple variations as well, the U.S.-based standards-setting technical organization, the IEEE, is a good source for such a definition. Once known as the Institute for Electrical and Electronic Engineering, it is currently referenced by just its initials and is popularly called the “I-Triple-E.” Not even its Web site, at www.ieee.org, mentions the organization’s original full name. The IEEE defines IT configuration management as an enterprise or IT organization process containing the following elements:

• Identification. An IT configuration management process includes a strong identification scheme; reflects the structure of all IT resources; and identifies their components, revision history, and their type, making them unique and accessible in some form.
• Control. The IT configuration management system should control the release of all products and changes to the configuration resources throughout their life cycle by having controls in place that ensure consistent IT component resources via the creation of baseline products.
• Status accounting. An IT configuration management system should record and report on the status of all configuration components and change requests, while gathering vital statistics about these components in configuration products.
• Audit and review. An IT configuration management review process should be in place to validate the completeness of all configuration items and to maintain their consistency among the related configuration components by ensuring that these products are a well-defined collection of components.

The paragraphs following will discuss these elements of IT configuration management and a CMS in greater detail. In order to achieve effective IT configuration management, an enterprise and its IT function should (1) have processes in place to uniquely identify all of the hardware, software, and infrastructure components that are part of their IT resources; (2) have controls in place to keep track of all changes or revisions to these configuration components; (3) maintain a configuration management reporting system such that the IT function, general management, and financial resources understand the present status of an enterprise’s IT resources; and (4) monitor and manage the status of these IT resources to determine that they are current and cost-effective.

Effective IT configuration management is much more than just controlling IT program versions through a single, all-inclusive CMDB, and may even include other related resources at one facility, such as the headquarters IT function. IT configuration management processes should encompass the total enterprise, including any facility where there will be a need to communicate or share data and information.

We introduced IT configuration management practices that are part of ITIL in Chapter 6. ITIL best practices cover a wide set of areas, and expanded attention should be given to their guidance for IT configuration management. The sections following in this chapter provide further guidance on establishing IT configuration processes. Exhibit 14.1 describes this CMS concept and the need for IT configuration controls. The chart shows enterprise business systems users in its outer ring, where all need to develop relationships and connections with each other and through their systems resources. These systems users are concerned with the following IT configuration issues:

EXHIBIT 14.1 IT Configuration Management System Concepts

• IT asset controls. Differing user groups and IT functions may purchase and install slightly different versions of software and other tools. Sometimes the differences are generally minor such that an overseas unit will have a slightly different version because of language differences. However, the way the software interprets commands and interacts with other-language versions may differ. How an enterprise and its operating units purchase and install software and other IT assets may raise configuration issues.
• Incident management. The first goal of the incident management process is to restore normal service operation as quickly as possible and to minimize the impact on business operations, thus ensuring that the best possible levels of service quality and availability are maintained. However, “emergency” incident correction activities may miss configuration connections with other units, causing overall longer-run problems.
• IT problem management. ITIL defines a problem as a condition often identified as a result of multiple incidents that exhibit common symptoms. When multiple systems or user groups encounter the same IT problem, there is a need to get to the root causes of the problem and identify a solution. In a large, complex IT environment, this can become a major configuration problem.
• Overall IT governance issues. Chapters in this book have covered a wide range of governance issues, including IT security policies, project management issues, benchmarking metrics, and others. These all should be implemented and managed consistently across an enterprise to ensure consistent and effective configuration management.
• IT capacity management. An enterprise needs to install and implement the right levels and loads of IT resources. Processing service needs and volumes need to be monitored and adjusted across all enterprise IT resources.
• Service level agreements (SLAs). Introduced with IT governance issues discussed in Chapter 17, SLAs are informal agreements that an IT function makes both with its user communities as well as with outside vendors. In its simplest fashion, an IT function will develop an SLA with the controller’s department, where the accounting users promise to deliver all month-end close general ledger system transactions according to an agreed schedule and IT promises to complete and deliver the monthly close reports by a certain date. However, when various user departments and IT facilities all have a need for their own SLAs, there can be CMS problems.

The concept here is that we must think of IT configuration management as a series of often separate but interrelated concepts (see Exhibit 14.1). This is particularly important today where we have moved away from the centralized mainframe of past years and have installed many formats and types of IT resources in the typical multi-unit, multilocation enterprise. While a classic IT function should establish standards over its own as well as headquarters’ IT systems and processes, configuration controls can become lost in our world of wireless systems connected to a cloud system.

Chapter 15 – Application Systems Implementations and IT Governance

In the last part of this chapter the author talks about an ERP system. Summarize what an ERP system is, how a company acquires one, and why they need to have one.

Content: ENTERPRISE RESOURCE PLANNING AND IT GOVERNANCE PROCESSES

Typically employing a comprehensive database as an information repository, ERP systems integrate internal and external management information across an entire enterprise, embracing their finance/accounting, manufacturing when appropriate, sales and service, customer relationship management, and so on. ERP systems are complex databases that automate this activity through an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. The goal of ERP is to improve and streamline internal business processes, which typically requires reengineering of current business processes.

We can think of the functions of an ERP system through the process of manufacturing where some product part needs to be designed, resources ordered to build the part, part costing and marketing processes established for the part, material orders placed, and production started, and then the entire stream of production and operational processes for receiving a customer order, shipping, and billing for the item. These processes and others involve a series of separate but interrelated activities that were once managed by a series of separate IT applications such as receiving, inventory control, production scheduling, shipping, accounts receivable, and more. An ERP system ties together all of these activities and more into a tightly linked series of database functions.

An ERP system attempts to integrate all departments and functions across a company onto a single computer system that can serve all its different departments’ particular needs. This can be a tall order to build a single software program that serves the needs of people in finance as well as the people in human resources and in the warehouse. Prior to ERP, each of those departments typically would have its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software system that runs off a single database, allowing the various departments to easily share information and communicate with each other. That integrated approach can have a tremendous payback if companies install the software correctly.

There are many ways to describe an ERP system, but Exhibit 15.5 shows basic accounting data flows for an enterprise business, including purchase orders, accounts payable, and other typical business systems processes that would be part of an ERP system. These are the elements of the systems requirements to build a manufacturing part, described previously, and were traditionally separate systems processes with key data and transaction files for each as well as links to other key applications, such as the general ledger system. While this exhibit shows a series of manufacturing distribution processes, such as traditional accounts receivable and accounts payable functions, a complete ERP application for an enterprise would include a much larger array of systems, such as marketing and human resources. They would all be tied together through common data descriptions and links.

EXHIBIT 15.5 ERP System Example Configuration

The senior manager might wonder why it takes so long to get customer complaint data from the product returns system. Other staff members may grouse that they have to reenter similar transactions into different but related applications. A common combined database—an ERP system—often appears to be the easy solution. However, the implementation of an ERP system into an enterprise is no small step. Even with the best of conditions, such a system will take considerable amounts of enterprise time and resources, with the active participation of key managers, IT staff, and even other stakeholders who have interests or concerns.

From an IT governance perspective, there are some key points to consider when implementing an ERP database for an enterprise:

• Define ERP objectives and requirements. This is a relatively new IT systems concept; there is much published hype about what a comprehensive ERP database might accomplish. However, based on their knowledge of what a comprehensive ERP database might accomplish, project initiators should develop strong objectives and requirements for a new ERP implementation project.
• Build a cross-functional project team. An ERP database is more than just a new IT system but will involve many members of an enterprise. A cross-functional team of IT and members of the user community should be appointed to lead the upcoming ERP project.
• Recognize the costs and time requirements to implement ERP. For a single-unit enterprise with 25 to 1,000 employees, a smaller ERP database software package can cost up to $250,000, while for a larger multi-unit enterprise with up to 5,000 users, the basic ERP software may cost up to $2 million. An enterprise should develop realistic expectations of the time requirements for this level of project and assume that such a major IT project will require at least one year.
• Select an ERP software product. There are a large number of vendors offering ERP software, with major providers such as SAP, Oracle, and Microsoft, as well as less familiar vendors such as Epicor. To avoid an endless stream of vendor meetings and glossy promotional materials, the selections team should stand firm on their defined requirements and budget objectives as well as the enterprise’s current software environment. Any viable ERP software vendor should be able to supply a representative test version of their ERP product.
• Apply formal project management techniques to the ERP implementation. Chapter 16 outlines formal project and program planning techniques. Since an ERP is a major undertaking, an enterprise should develop and follow formal project planning methodologies for a major ERP endeavor.
• Establish a test database for the ERP and begin phased implementation. Once it is up and running, the enterprise ERP application will impact a large number of regular applications. However, care should be given to launching a phased implementation on an application-by-application basis, using the test database in the earlier stages of the project.
• Provide extensive user training. The new ERP application may involve new transaction formats and other sometimes small but subtle systems changes. As part of the project plan and as a responsibility for the ERP implementation team members, there should be a strong user training program.
• Establish project budgets and closely monitor ERP system costs. Beyond the license fees for the selected database software, an ERP project can be an expensive undertaking for an enterprise. Project team members as well as others involved with the effort should be required to log their hours as well as charging any direct expenses to the ERP project. These charged expenses should be closely monitored and questioned when appropriate, however. As a really fundamental IT governance concern, it can sometimes be a problem when staff members charge their hours to a project even though they are not really performing direct project activities.
• Establish an exit strategy, if necessary. A well-planned and well-executed ERP implementation can yield some major tangible and intangible advantages to an enterprise, but things can sometimes go wrong. For example, some of the ERP database vendor’s software features may not quite work as promised or expected, there may be technical problems with systems interfaces, or any of a host of other potential problems. As the old expression goes, rather than throwing good money after bad, the ERP team should develop an exit strategy to gracefully end project efforts and return to normal IT and business operations.

Despite the previous cautionary comments, a successful ERP implementation can bring some strong tangible and intangible benefits to an enterprise, as outlined in Exhibit 15.6. An ERP implementation can be a major project for an enterprise that can yield many benefits. Just as we have discussed the importance of strong IT governance processes in SDLC processes as well as for RAD work, these issues are extremely important when launching an ERP database for an enterprise.

Chapter 16 – IT Governance Issues: Project and Program Management

In the last part of this chapter the author talks about a program management office (PMO). Summarize what a PMO is, why a company needs one, and what functions it performs.

Content: THE PROGRAM MANAGEMENT OFFICE (PMO), A STRONG GOVERNANCE RESOURCE

As discussed previously, a program is a senior-level project that serves as a vehicle to manage and supervise other, subordinate projects. This concept got started in IT, where for years IT departments struggled to deliver projects on time and within budget. A solution was to rein in projects more closely through the establishment of program management offices (PMOs) as a way to boost IT efficiency, cut costs, and improve on project delivery in terms of time and budget. What has worked for IT projects can work equally well for all projects in an enterprise.

The PMO may provide standards, an approval authority for all projects, or even project management skills from the staff of certified project management professionals. A PMO function can instill much-needed project management discipline in IT departments and all other groups involved with project management. PMOs can help by providing the structure needed to both standardize project management practices and facilitate project portfolio management, as well as determine methodologies for repeatable processes. The Sarbanes-Oxley Act—which requires companies to disclose investments, such as large projects, that may affect a company’s operating performance—is also a driver, since it forces companies to keep a closer watch on project expenses and progress.

There are two basic models of PMOs: One acts in a consulting capacity, providing project managers in business units with training, guidance, and best practices; the other is a centralized version, with project managers on staff who are loaned out to business units to work on projects. How a PMO is organized and staffed depends on myriad organizational factors, including targeted goals, traditional strengths, and cultural imperatives. When deployed in line with an IT organization’s culture, a PMO can help the enterprise to deliver strategic projects that satisfy both the internal and external customers. Over time, a PMO should be able to provide savings to the enterprise by enabling better resource management, reducing project failures, and supporting those projects that offer the biggest payback.

PMOs are usually administrative functions supporting IT management and can vary in terms of their size, structure, and responsibilities. They provide project management guidance to project managers in business units and often function in the following support areas:

• Project management process/methodology. Whether the enterprise IT function uses PMBOK or PRINCE2, the PMO can provide guidance to develop and implement consistent and standardized project management processes.
• Project management training. This is often an effective area where the PMO can conduct project-related training programs or collect requirements for an outside company.
• Home for project managers. With the PMO as a central source for project management knowledge and support, it can maintain a centralized office from which project managers are loaned out when a designated project ends.
• Internal consulting and mentoring. With a goal to promote project management excellence, the PMO can advise other employees about best practices with an emphasis on PMBOK.
• Project management software tools. Project management tools can be selected and maintained for use by all project participants. Many software tools are available to support project management activities. A PMO can act as a clearinghouse on the use of these tools.
• Portfolio management. Establish a staff of program managers who can manage multiple related projects, such as infrastructure technologies, desktop applications, and so on, and allocate resources accordingly.

There may different approaches for an organization to manage a PMO function, but a centralized approach, typically marked by hands-on control over projects, often is most effective at organizations where the PMO regularly interacts with senior executives and has the power to cancel and prioritize projects. Using well-defined project management methodologies, the PMO often works with business units on every aspect of project management—from defining initial requirements to post-implementation audits. Maintaining consistent processes across the organization enables an organization to break down projects into manageable components and thereby minimize failures.

The responsibilities of PMOs range widely, from providing a clearinghouse of project management best practices to conducting formal portfolio management reviews. A PMO’s oversight need not be limited to just project development and may include the coordination and tracking of both projects and services. Coming up with a PMO that works for any given organization is an exercise in both customization and patience. When it comes to establishing a PMO, there are limited roadmaps to follow, benchmarks to shoot for, or metrics against which to measure. The most effective PMOs are those that reap improvements over time and continuously push the organization to improve on its performance.

Chapter 17 – Service Level Agreements, itSMF, Val IT and Maximizing IT Investments

At the end of this chapter the author introduces Val IT. Summarize what Val IT is and why a company needs to do it.

Content : VAL IT: ENHANCING THE VALUE OF IT INVESTMENTS

All enterprises, large or small, exist to deliver value to their stakeholders. These enterprises face a critical challenge in ensuring that they realize value from their increasingly large-scale and complex investments in IT resources. The IT Governance Institute (ITGI), first introduced in Chapter 5, has released a set of best practices materials called Val IT¹ to help enterprises address this challenge and realize value from these IT-related investments.

Val IT attempts to address IT management and governance problems faced by management at all levels. IT technologies and practices are always changing and adapting to new business practices. Enterprises frequently invest in new and revised systems and procedures with little additional planning or study, soon to find that their new initiative does not work as well as promised or requires a much larger investment than anticipated. We frequently encounter this situation when, for example, an enterprise chief financial officer is frustrated by some shortcoming in the enterprise’s financial systems, personally sees a potential better solution at a vendor-sponsored trade show, and then encourages the IT function to adopt that solution. With such pressure from a member of senior management but little detailed investigation beyond that, enterprises sometimes embark on new IT investments at significant cost and without really getting much value from those investments. Val IT is a best practices governance framework that is closely aligned with the Control Objectives for Information and related Technology (COBIT) framework (discussed in Chapter 5). COBIT consists of a set of guiding principles and a number of recommended IT-related processes that conform to those principles and key management practices. Val IT encompasses a comprehensive set of research activities, publications, and auxiliary services supporting the core Val IT framework, as illustrated in Exhibit 17.3. Although COBIT sets good practices for the means of contributing to the process of value creation, Val IT defines good practices for the ends, by providing enterprises with the structure they require to measure, monitor, and optimize the realization of business value from their investments in IT.

EXHIBIT 17.3 Val IT Framework

Many enterprises today, regardless of their size, revenue, industry, region, or business activity, make large-scale investments in IT systems and related information technology resources. However, in far too many cases, this IT value simply is not realized. For example, a 2007 survey by the IT research firm Gartner found that 20 percent of all expenditures on IT are wasted²—a finding that represents, on a global basis, an annual destruction of value totaling about $600 billion. Similarly, a 2009 survey of Fortune 1000 chief information officers by Goldman Sachs found that, on average, 40 percent of all IT spending brought no return to the enterprise.³ The point here is that many enterprises do not measure the value of or assess their ongoing IT investments. This is a significant loss from an IT governance perspective.

The ITGI’s Val IT materials⁴ provide guidance for assessing the value of IT investments. Creating IT-enabled values, however, is not easy. Most enterprises commonly exhibit one or more of the following symptoms, which have been summarized adapted from the published Val IT guidance materials:

• Problems in delivering technical capabilities. Many enterprises have IT functions that are not mature enough to effectively and efficiently deliver the technology capabilities needed to both support business operations and enable business change. This challenge highlights the need to improve IT governance and management processes either before or in conjunction with the introduction of value management practices.
• Limited or no understanding of IT expenditures. Senior enterprise managers frequently do not have a sufficiently transparent view of their IT expenditures and IT-enabled investments across all IT services, assets, and other resources. Often decision makers can only estimate how much they are investing in IT, what benefits they are gaining for the expense, and what the full business rationale for the commitment might be. Expenditures frequently are sourced from many different uncoordinated budgets, resulting in significant duplication and conflict in demand for resources. In addition and all too often, management does not focus on IT costs and pricing issues in its IT application budgeting reviews.
• Business abdication of decision making to the IT function. When the roles, responsibilities, and accountabilities of an enterprise’s IT function are unclear, IT functions tend to usurp the driver’s seat, determining which IT-enabled business investments should be pursued, prioritizing these based on the IT function’s limited insights, and inappropriately relieving the business of its responsibility in defining and defending the business rationale used to justify every single IT-enabled investment decision.
• Communication gaps between the IT function and the business. Close collaboration between IT operations and other business functions is crucial to IT value creation. When such a partnership is absent, communication suffers, inefficiencies mount, synergies fail to emerge, and the work environment tends to devolve into a culture of blame. In some cases, the IT function is too often relegated to the role of a follower instead of innovator, and is engaged in investment proposals too late in the decision-making process to contribute significant value. In other cases, the IT function is blamed for not delivering value from IT-enabled investments—value that only other business functions, in partnership with the IT function, can deli
  

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