Simulation Essay on a Business Process and IT Service Model
Enrique Silva, PhD Student; Yves Chaix, Consultant on e-Government [email protected]; [email protected] Industrial Information and Control Systems
Royal Institute of Technology (KTH) SE-100 44 Sweden
Abstract One of the main concerns of IT governance is IT’s delivery of value to the business, which is driven by strategic business and IT alignment (SBITA). How to operationally assess the SBITA remains a great challenge for the CIO. This paper treats this problem, taking as a reference, the Henderson and Venkatraman strategic alignment model and expanding from it, a new process perspective of the business and IT governance alignment. There are two main contributions presented in this paper: first, a proposal of a business process and IT service model for assessing the business and IT governance alignment; and second, an illustrative simulation essay on a “business process and IT service model” for identifying and measuring the level of alignment between the business and IT governance, by using the simulation tool called Adoit.
1. Introduction Studies have shown that misalignment, or a lack of alignment, between business and IT strategies is one of the main reasons why enterprises fail to exploit the full potential of their IT investments. Some organizations that have accomplished a high degree of alignment are often associated with better business efficiency and IT Service effectiveness performance. See Figure 1. As a consequence, strategic business and IT alignment (SBITA) has consistently been one of the top concerns of the CIO and CEO for many years. For academics and IT practitioners, the key question - how to accomplish strategic alignment between business and IT in the complex and dynamic environment of the real world - remains a great unanswered challenge for the CIO and CEO [2] [18] [21]. The problem of operationally identify, measure, improve and maintain the alignment level between business and IT governance has become increasingly important for the CIO and CEO. Nevertheless, the topic still lacks good
decision-making support at the top-management level (i.e. CIO and CEO level) [2] [18]. For effective assessment of business and IT governance alignment, enterprises need to assess how well they are currently performing and be able to identify where and how improvements can be made. This applies to the performance of both the business processes and IT processes (IT Services)1. The interactions of IT processes, business processes and IT resources over time can result in a large number of scenarios and outcomes that the author proposes to evaluate by running a process simulation (PS) essay on business process and IT service model. For instance, one of the elements for implementing effective IT governance is performance drivers which provide indicators on how IT governance is achieving: system downtime, throughput and response time, cost-efficiency of IT processes or services (costs vs deliverables), utilization of IT infrastructure, staff productivity, availability of IT services, service level agreements, documents, etc [17] [18]. This paper presents the importance of applying the process simulation for assessing business and IT governance alignment (BITGA) as a sub-topic of SBITA and taking the Henderson and Venkatraman strategic alignment model (SAM) as a base. It is introduced a new business process and IT service model perspective of the business and IT governance alignment [6]. Another contribution of this paper is the application of the process simulation, as a cost-effective method, for identifying and measuring the level of alignment between the business and IT governance, by formulating an illustrative example of a “business process and IT service model”. It is used Adoit2, as the simulation tool.
1 A Service is a logical grouping of functionality that is made
available through the combination and specific configuration of hardware and software.
2 A model based management tool for IT Services and Architectures. BOC Information System GmbH. www.boc-eu.com
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Although IT business value and SBITA are often analyzed as separate CIO concerns, it is argued that organizations (public or private) must have a service level agreement (SLA) between business processes and IT services, as an important mean for assessing alignment and, as a decision-making tool, for improving management of the business and IT governance alignment [24].
Figure 1: Iterative Relationship between SBITA, IT Business Value and Business and IT Key Performance Indicators (adapted from Tallon, 1998).
2. Outline The next section presents the paper research background defining SBITA, business and IT governance alignment (BITGA), and business process and IT service alignment view. Section 4 explains the importance of applying the process simulation for assessing BITGA, and presents an illustrative example of a business process and IT service model. The summary section 5 presents the paper’s relevant results and contributions. The main references are presented in section 6.
3. Paper Research Background
3.1 Strategic Business and IT Alignment For anyone interested in managing the strategic alignment problem in an organization, it is of utmost importance to have a clear picture of what alignment is and how it can be concretely defined and assessed. In general, it is conceived that SBITA has to do with the degree of congruence or harmony between the IT strategy and IT infrastructure and the business strategy and organizational infrastructure [6]. Despite the fact that alignment is an issue of utmost importance, no consensus among academics and practitioners can be found on what alignment is, how it should be defined or measured in the organization, or what measures should be taken to maintain and improve it [2] [18]. The author had proposed a theory diagram for SBITA (TD-SBITA) in order to categorize and define the topic of alignment more stringently given its current knowledge base. The prioritized TD-SBITA thus shows in percentage form the level of importance of different key alignment
topics or properties presented by the relevant information sources reviewed. See Figure 2. In this framework, it is introduced a new business and IT service process perspective, in order to operationally assess the level of alignment between business and IT governance.
Figure 2: Example of a Prioritized Theory Diagram Based on SAM (adapted from Silva, 2006).
3.2 Business and IT Governance Alignment Model As an analogue model to the SAM, this paper proposes a strategy and operational integration alignment model with the main purpose of evaluating the level of alignment between the business and IT governance. See Figure 3. According to the authors, the most appropriate definitions of IT governance (ITG), taking into account the purposes of this paper, are the following:
1) “IT governance is the organizational capacity exercised by the board, executive management and IT management to control the formulation and implementation of IT strategy and in this way ensure the fusion of business and IT” [3].
2) “IT governance is a board or senior management responsibility in relation to IT to ensure that:
• IT is aligned with the business strategy: i.e., delivers the functionality and services.
• These IT-related services and functionality are delivered at the maximum economical value or in the most efficient manner. In other words, resources are used responsibly.” ITGI3[23].
ITG faces the dual demand of 1) contributing to present business operations and performance, and 2) transforming and positioning IT for meeting future business challenges. ITG is both, internally and externally oriented, spanning both present and future time frames. Therefore, one of the key challenges of ITG is how to simultaneously perform and transform IT in order to meet the present and future demands of the business and the business’ customers in a satisfying manner [22].
3 IT Governance Institute, 2000.
Assessment of IT Business Value
Business and IT Key Performance
Indicators
Strategic Business and IT Alignment
feedback
feedback
Business and IT Strategic Alignment
Strategic Fit Functional Integration
Strategic Integration Operational Integration Strategic IT Fit Strategic Business Fit
12.89% 16.58% 30.05% 40.48%
29.47% 70.53%
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The model in Figure 3 presents one of the perspectives or viewpoints for identifying and measuring the alignment level between the Business and IT governance by means of a more operationalized Business and IT Process Model, including the key performance indicators (KPI)4 for each type of process. One of the advantages of the presented perspective is that it could be developed in a top-down or bottom-up way, depending on the needed level of details or availability of information in the enterprise. If it is possible to find and estimate the level of alignment in the process level, then it is also possible to say something important and reliable about the level of alignment at the strategic level.
Figure 3: Conceptual Model for Assessing the BITGA A number of benefits are associated with business and IT process alignment model when the objective is to
4 KPI (key performance indicator) is a vital and measurable result to
track the efficiency, effectiveness, and/or predictability of a process.
operationalize the BITGA. First, processes are likely to yield greater insights into where the organization is misaligned or aligned, helping to identify and mitigate bottlenecks in a dynamic relationship between IT and business processes. When BITGA is evaluated at the top level in an organization, the CIO and CEO might simply know that their organization has certain level of alignment, but would not have enough granularity of information to find the causes and effects of the alignment level. Second, if a process model is developed, the strategic level could be operationalized and represented as a set of business and IT processes (IT services), which at the same time are composed of a set of inputs, activities and sub-processes. Finally, the identification of a set of key performance indicators, resources, cycle time, etc. for each of the core business and IT processes (IT services) facilitates a more detailed evaluation of the level of alignment over time. Process models have another advantage over other type of models because processes work over time and produce some type of output. It is possible to measure the cycle times, costs, outputs, efficiency, effectiveness, quality and customer satisfaction associated with processes by using a process simulation technique. In process modeling, a process object allows several sub-processes and activities to be represented in multiple levels of detail. For a process model, an analyst will initially focus on what activities are performed in the process (functional perspective), such as receiving an IT service order, forwarding it to the maintenance area and so on. The next step may be to investigate the sequence that these activities follow and how they are performed, and then develop a graphic picture of the process (behavioral perspective). Finally, the analyst may study where these activities take place and which resources (human, tools, electronic, etc) are used [19] [25]. For example, purchasing or product development can be modeled as hierarchical processes, with the actual process behaviors defined at lower levels. For instance, the process model allows an analyst to: determine any bottlenecks or wasted effort, devise revisions to the process to correct performance or security problems, select process designs that give the best results, provide cost justification to planned alternatives and establish performance targets in the new process implementation. In the presented process model, the analyst should select a list of business processes and IT services with their respective groups of key performance indicators, which could be, for example, time, costs and resources. The described procedure is an indicative and flexible one,
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which could be used by the CIO or CEO depending on their concrete situation, priorities, information availability and level of process documentation. The next step in this analysis procedure is the establishment of the desired reference values of the KPI (those considered good values for the company or selected from the credible literature) at the possible level of details for such selected business processes and IT services. To assure a good level of credibility in this selection procedure, the list of IT services and their corresponding KPI (ITS-KPI) can be selected from the COBIT5 or ITIL6 frameworks and the list of business processes and their corresponding KPI (B-KPI) are selected from the well known and specific business literature in accordance with the specific organization or business case. The total number of B-KPI and ITS-KPI and the multiple possible combinations of them, could be very high and the relationship analysis extremely complex to be managed by the CIO or CEO without using an appropriate assessment method. This situation justifies the use of the process simulation as a scenario-based technique which allows the representation of KPI, business processes, IT services, people, and technology in a dynamic alignment model. By applying simulation will be possible to answer the “what if” questions and it will facilitate the decision-making process at any level of details in the BITGA model. See Figure 3. The simulation essays at KPI level allow the analyst to find the proper measures for estimating a partial or a total level of alignment between business and IT process governance, going from the bottom to the top level in the analysis procedure. By doing performance measurement, the analyst can identify potential areas of improvement. Through a collaborative approach, IT managers and staff can see why change is needed and some of the areas for change. These map the systems into the processes as well as business factors. They can assist the analyst in determining which IT services are causing the most negative/positive impacts on the business processes. Additionally, they can aid in determining the technology gaps and holes as well as technology issues. See Figure 3.
3.3 Business Process and IT Service Alignment View (BP-ITS) This paper introduces the business process and IT service alignment view as an operational strategy for identifying and measuring the level of alignment between the business and IT governance.
The foundation of the BP-ITS view is the ITIL standard of IT service quality that customers should demand and providers should seek to supply. The ITIL has achieved increasing sophistication around the delivery of IT services within the organization. IT governance actively supports IT services delivery as a critical set of IT processes and a component of the technology foundation for business. The value derived from IT today is based on the assurance that business efficiency and effectiveness performance improves continuously, is measurable and can be delivered at acceptable levels [24]. The IT Service is defined as a logical grouping of functionality that is made available through the combination and specific configuration of hardware and software. An IT service has three main components or elements: people, IT and processes. See Figure 4.
Figure 4: IT Infrastructure Library (ITIL) [24]. The service model consists of a combination of those IT services the customers need and are willing to pay for (direct services), along with those needed by the organization to provide direct services to the customers (indirect services). Each of the service models should have associated a tree diagram to systematically map out increasing levels of detail for related goals, tasks, and IT services, a resource and a cost model [20]. The service model provides a framework for the development of metrics, against which the business processes are rated. This documents a clear understanding for both the customer and supplier of expectation levels in key business areas. When the service model is taken to the next step, a tier support level document is developed that shows not only what services are provided by the
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organization, but also outlines all the services required by the customers and shows the service provider for each service. Business manager as a customer of IT services wants the most cost-effective solution that best meets his requirements regardless of who delivers them. IT provider of services wants to maximize customer satisfaction by optimizing the level of service and optimizing cost. As a result, there is an ever increasing need for applications and associated infrastructure to be up and available when the customer requires them, and to keep the critical supply of information flowing. It is for this reason that the business needs to have the delivery of its IT services organized and resourced to meet the current business requirements, and at the same time be flexible enough to be able to change with the same frequency and velocity that business does. This is the operational perspective the author is proposing in the business and IT service alignment view. Since services do not exist in a static state, the logical flow of the services is the model that must be addressed if the BP-ITS view is to be successfully executed. Linking all enterprise activities, especially services, to a single or complex business process provides a very powerful synergistic effect. The logical linkage of services and business processes takes the form of a flow of processes that begins with the request for service and is fulfilled in a complete cycle of service delivery, validation of completion, completeness, quality, and an examination for service improvement opportunities. This very simplified process flow represents a logical sequence of events that occur when a service is requested and is delivered to the business process. The ability to link the activities that comprise services to the business enterprise horizontally, vertically, and logically, will directly affect the value the enterprise will derive from their investment in IT. The value of the services IT provides is derived from the user´s perception and may not have a clear relationship with cost. The bottom line on the subject of value is that building credibility by delivering quality services repeatedly will ensure the IT organization is creating enterprise level value. The BP-ITS view proposes the relationship between business processes and IT services described above must be formalized by means of a service level agreement (SLA), which is part of the ITIL standard. See Figure 4. In constructing the service model, an understanding of what the customer expects to be delivered will be negotiated, agreed to, and ultimately documented in a SLA. A key element of the SLA is defining the measures
that will determine satisfaction of the agreement’s terms. In fact, there may be layer of metrics that are not visible to the user, but support an overall measure of success. The metrics must not only be constructed to measure the success relative to a specific service and system’s SLA, it must also be supportive of the overall business need that the IT service is supporting/enabling. An initial step in establishing a set of metrics to measure and actually ensure success is to determine the level of service that must be provided by the functional service offering. Each service offering should have some method of being measured. Once the level of services for the system to be supported has been determined, a specific set of metrics can be established for the functional service to be offered. Service level agreements (SLAs) are the most effective way to identify and measure the level of alignment between business and IT governance, i.e. what expectations are and what will be delivered to meet those expectations. An SLA should be in place before a business application is run in the production data center. It will detail the administrative services, supporting configurations (hardware and software), and supporting practices necessary to meet the application’s business requirements. Achieving success should not be a one-time or periodic milestone to be checked off the proverbial to-do list, but a dynamic, ongoing effort. In constructing an alignment model CIO and CEO must realize that the target is always moving and adjustments must be made accordingly. Regular reviews of SLA, internal processes, staff skills, expertise, and leverageable technology will be required. See Figure 4 [20]. According to Harris Kern, et al., [20] the objective of the SLA is to define a framework for managing the quality and quantity of delivered services, in the face of changing business needs and user requirements, at a price the business is able to afford. Specifically, this document intends to: • Synchronize IT services with the business needs of
the customers • Set the correct level of services expectations and
responsibilities for both IT and the customer • Enable IT to be an effective and flexible partner to
the business unit, aiding rapid response to the changing business environment
• Enable IT to plan for the delivery of required services at the lowest cost to the customer
• Enable IT to maintain quality and visibility of the services that they can provide, and thus demonstrate value for money.
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As it was described above, the SLA is a mean, among others, that can be used in order to formalize the relationship between the business processes and IT services. Taking the generated metrics as a quantitative and qualitative source of information, then it is possible to develop a bottom up assessment of the business and IT governance alignment, going from the bottom to the top. As another tool for assessing the relationship between business processes and IT services, the author has proposed in a previous paper, the balance scorecard for business and for IT. See Figure 3 and 4.
4. The Process Simulation Essay
4.1 The Importance of Applying Process Simulation for Assessing Business and IT Governance Alignment
Simulation is a means for experimenting with a detailed process model of business and IT governance alignment, to determine how the organization will respond to changes in its structure, environment, technology or any other strategic decision. Process Simulation allows for experimenting with a process model of BITGA to better understand business and IT processes (IT services, operations, functions, resource use, costs, cycle time, etc) to improve performance, solve bottlenecks, minimize risk, evaluate performance, increase productivity and quality of services. ‘Process simulation, by definition, allows for experimenting with a model of the system to better understand processes, with the goal of improving performance. The strength of simulation is that it allows the following aspects to be evaluated, redesigned and measured: a) customer satisfaction with the new process or system; b) resource utilization in the new process or system; c) processes, in order to streamline them; d) time, in order to minimize it’ [5]. One of the main objectives of process modeling and simulation in the field of alignment is to bridge the communication gap between the CEO and CIO by using shared process models, IT service model, and methods as a means for understanding and aligning business and IT governance. Process Simulation allows representation of business processes, IT services, people and technology in a dynamic model and consists mainly of four steps: building a model, running the model, analyzing the performance measurements, and evaluating cost-effective alternative scenarios. It mimics the operations of the enterprise and can accurately account for the realities of modern IT and business processes such as variability, uncertainty and resources interdependencies [17] [18].
It has already been shown in previews sections of this paper that information technology can have a large impact on business processes, and that predicting what effects changes to the information technology infrastructure will have on the organization as a whole can be difficult. IT should be viewed as more than an automating or mechanizing force, rather as an enabler of fundamental changes in the way business is done. Process Simulation would appear to be the ideal tool to assist with this kind of problem. Such a broad perspective has a profound effect on the approach presented in this paper in relation to the BITGA. For instance, the interactions of resources with processes, business KPI and KPI for IT services over time result in a large number of scenarios and outcomes that it is impossible to comprehend and evaluate without the simulation technique. By using Process Simulation, statistical reports about the Activities, Entities, Cycle Time, Costs, and Resources of an organization can be generated. These statistics can be used to determine where any of the defined processes need to be improved and what changes are necessary for evaluating different management policies and each set of alternatives. For example, in the case of business and IT governance alignment, PS allows the evaluation of the governance maturity level in an organization [17].
4.2 The Business and IT Service Model Example
This paper presents one of the operational business process and IT service alignment view. The ultimate goal of this approach is to identify and measure the level of alignment between the business and IT governance by using process simulation technique. One of the advantages of the presented approach is that it could be developed in a top down or bottom-up way, depending on the needed level of details or availability of information and data in the organization. The illustrative example of a conceptual business and IT service model is presented in Figure 3, and the practical model is presented in Figure 5. The selected IT process from COBIT framework is: manage problems and incidents (sub-processes of the key process called change management in the ITIL framework). The KPI for this process could be: time, cost of services and resource utilization percentage. For the presented example in figure 5 there were defined the following KPI: time interval for detection, time interval for answer, time interval to repair, time interval for recovery and time in good condition [3] [24].
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The selected key business process from the business literature is: sale process. The KPI for this process are: inventory verification time and invoice elaboration time. The similar KPI could be defined for costs and resource utilization percentage. See Figure 5. Let’s assume that there is a signed SLA between CEO and CIO, as well as a reference numerical value for each of the defined IT and business KPI in the presented example. After that, it is possible to generate different types of scenarios by correlating the B-KPI and ITS-KPI. In this example, it is assumed that the KPI of IT processes are playing the role of the independent variable and the KPI of business processes are the dependent variables. The correlation analysis between many different IT-KPI and B-KPI could generate multiple types of correlation (cause and effect) and alignment scenarios. Some of the possible scenarios are: what if it is decreased cycle time or cost of an IT service? What if it is increased resource utilization in an IT service? What if it is introduced a new IT service? What if IT service stop working?
Figure 5: An illustrative example of correlation between business processes and IT services with their respective KPI. After calculating the level of correlations between the different perspectives, it is possible to calculate the level of alignment between the KPI, IT and business processes and IT and business governance. The procedure presented is repeated for the rest of the perspectives and after that it is necessary to calculate the total level of alignment between the IT and business processes or between IT and business governance. This is only an indicative and illustrative calculation procedure because the presented approach is not considering a standard recipe for doing these calculations.
Another example of how to generate scenarios consists of selecting a key IT service process, as the change management, which is kind of link between service delivery and service support management according to ITIL framework. See Figure 4 and 6. [24]. Change management ensures that the IT organization uses standard methods and procedures for handling all production environment changes in order to minimize the impact of change-related problems on service quality. This process logs all significant changes to the enterprise environment, coordinates change-related work orders, prioritizes change requests, authorizes production changes, schedules resources, and assesses the risk and impact of all changes to the IT environment. Given the scope of this process, it is easy to see why it interacts with every other process in the ITIL framework. As processes are performed, they inevitably impact the IT environment. Change management is the single IT process that regulates these changes and, as a result, plays a vital role in reducing infrastructure instability. See Figure 4 and 6. The following activities are part of change management: • Request for Change (RFC) processing • Impact assessment • Change approval • Scheduling and coordinating changes • Coordinating recovery from change failures • Managing urgent change Experiments are designed to determine the effects of changing the input configuration on one or more output statistics. A scenario is a specification of the input configuration, i.e. the input values used for a single simulation run. Scenarios can be created one at a time or en masse. Sometimes the objective of an experiment is to find the best system configuration from a number of configurations. A very important aspect of the process simulation approach is Scenario Analysis. This is what allows the assessment of What-If scenarios. Adoit provides functionality for comparing metrics from multiple scenarios in a statistically sound way. Scenario analysis is a statistical analysis of model output for a given performance measure under different sets of input data. A simple dynamic process model contains a very large number of possible situations when it is executed. Experiments are designed to determine the effects of changing the input configuration on one or more output statistics. A scenario is a specification of the input configuration, i.e. the input values used for a single simulation run. Scenarios can be created one at a time or en masse.
ITS: Managment Problems and Incidents BP: Sale process
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Scenario analysis is a technique that has proved consistently effective for dealing with strategic uncertainty in numerous companies in diverse industries. Rather than determining a single correct view of the future and the implicit strategic response, scenario planning embraces uncertainty and devises a range of views of an uncertain future. Preparing for each scenario in a timely, cost-effective manner and developing the appropriate strategy, procedures and infrastructure provide the necessary link between scenario planning, business reengineering, and Information Systems Investment Evaluation [5]. Scenario A: How to determine the total cost of an IT service: Identifying, allocating, and charging for services are a critical element in the overall communication package. Other factors, such as hours of operation (24x7x365) and help desk and system response time (level of service) must be taken into consideration when developing the correlation. Once the number of hours required is determined for each service, a standard loaded cost-per resource type can be applied to determine the staffing cost. Staffing costs can then be added to infrastructure costs such as hardware, software, network, maintenance, and facilities to arrive at a total cost of services [20]. Scenario B: Users must understand how to receive the services they desire and what level of responsiveness should be expected. A central source to initiate request for services is necessary to ensure that all requests are recorded, responded to by the appropriate service provider, and tracked to completion (call center). The service menu described earlier should describe the availability of the service, whether it is available on a 7x24x365 basis, or only during business hours five days a week, and how to expect it to be delivered [20]. Based on the analysis, for example, of the cycle-time and resource-utilization reports, it is possible to determine the bottleneck activities, the capacity of the resources, costs, etc. So, changing parameters in the model to see how it affects performance for measuring efficiency can test a what-if scenario. It is very simple to change the number of resources or costs. Then the simulation can be run again, the new model saved, reports generated, and statistics compared. Then it is possible to compare results and see the potential process improvements and the costs associated with the what-if scenario. For example, adding one more resource could imply reducing cycle time by 10% and reducing waiting time by 15%. Scenario C: Many IT organizations focus their IT service model initiative on improving change management because they are struggling with, for example, serious
production problems caused by unplanned changes. In many cases, these organizations do not have a fully realized change management process, or personnel may not be following a process that is in place. A high percentage of reported incidents can sometimes be tracked to a few unscheduled or improperly executed changes. Without a solid change management process, the IT environment cannot be stabilized, and IT cannot make any serious commitments to service levels. See Figure 6. Some of the key reports that could be generated by process simulation are: a) Entity-Count and Cycle-Time Reports: From this type of statistical report it is possible to obtain, for example, the following numerical results: 527 entities were generated over the 48-hour simulation period. Of that total, 500 were processed and shipped; 27 were still in process at the end of the simulation period. The cycle-time statistics are reported in terms of hours. For example, on average, it took about 59.22 minutes to process an entity, even though the average cycle-time was approximately one hour; b) Resource-Utilization Reports: The resource state reports indicate the percentage of the time that staff was busy. To illustrate by a numerical example, it is possible to obtain the following statistics: resource #1 was busy 92.43% of the time. This means that “entity A” waited in queue for service. Resources #2 and #3 were used 75.77% and 80.91% of the time, respectively. This means that staffing of these positions was adequate. The utilization of resource #4 was 50%, meaning that this resource is available to perform administrative tasks. The same analysis could be developed on the basis of Activity, Entity, and Resource Cost Reports: capacity-based costing and absorption-based costing calculation, and resource and activity cost evaluation.
5. Summary Strategic business and IT alignment is an essential piece in the effective exploitation of IT investments in an enterprise. It implies the need for both a clearer conceptual definition and operational implementation of the alignment theories. By using process simulation, the evaluation of business and IT governance alignment can be either qualitative or quantitative. However, the best evaluations employ a combination of both qualitative and quantitative information that compare and contrast converging and possibly conflicting evidence. The most effective evaluations occur when goals and objectives are explicitly stated, are measurable and are agreed to by all parties involved. Evaluation should be considered an integral part of the project development process and be considered in
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each phase: strategy formulation, detailed planning, system design, system implementation, data collection, data analysis and reporting of results. The process simulation introduces a new way of thinking, merging business and information technology into a single activity. Instead of managers posing problems for technologists to solve by creating new applications, the two groups work together to create business process descriptions of the organization. The presented process perspective for evaluating BITGA provides a solid yet flexible structure for which alternative governance solutions can be proposed and evaluated. The process simulation can be used to guide the business and IT governance alignment evaluation as a decision-making tool by identifying which organizational capabilities to be supported by the technology are more crucial to the firm’s performance in a particular competitive environment. By utilizing the process simulation, it is possible to view current business or IT activities and procedures, and describe the activities and procedures involved and the information flows in and out. Once the business and IT processes are visualized, it is possible to explore alternatives (“what if” scenarios) that may improve performance measures for those processes. The process simulation and the SLA document could be essential tools for the CIO and CEO to make “the best” decisions; to visualize how business and IT services might behave, to measure its performance and to test “what if” scenarios in a computer model. As a general conclusion, it was confirmed that the use of the process modeling and simulation approach could offers some advantages to the CIO and CEO in making decisions related to evaluating performance measures, defining an IT investment strategy, and selecting the optimal scenario for business and IT governance alignment. An illustrative numerical example is presented, showing a possible way to implement the proposed approach. It is of crucial importance to develop all possible perspectives for evaluating the level of alignment between business and IT governance in order to have a complete picture about the total level of alignment between them, and to assure the credibility of measuring results.
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[18] Silva, E. and Plazaola, L. (2006) ‘Strategic Business and IT Alignment, A Prioritized Theory Diagram’, to be published in proceedings of PICMET06, Istambul, Turkey.
[19] Scholz-Reiter, B. et al (1999) Process Modeling, Berlin: Springer Verlag Heidelberg.
[20] Tardugno A., “IT Services: Cost, Metrics, Benchmarking and Marketing”, Harris Kern’s Enterprise Computing Institute, PHH, 2000.
[21] Tallon, P. et al (1998) ‘A Process-oriented Assessment of the Alignment of Information Systems and Business Strategy: Implications for IT Business Value’, Conference Proceedings, The Association for Information Systems Americas Conference, Baltimore, Maryland, USA.
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[23] http://www.isaca.org [24] http://www.tso.co.uk/ITIL [25] Weill, P. and Ross, J. (2004) IT Governance, How Top Performers
Manage IT Decisions Rights for Superior Results, Boston, Massachusetts, USA: HBS Press.
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