UNIVERSITY OF WEST LONDON

CTI, Assessment 2
Exploring Business and IT Strategy – Brighter Futures

redacted
1/3/2014

Module CP70028E
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Contents
TASK 1 – COST REDUCTION AND BUSINESS INTEGRATION ..................................................................... 3
Report for Brighter Futures’ Board – Market Options in Cloud Computing ........................................... 3
Introduction – The Significance of Cloud Computing.......................................................................... 3
Cloud for Brighter Futures – Partial Outsourcing ................................................................................ 3
Three Core Approaches to Cloud Computing.................................................................................. 4
Cloud Computing Market Providers .................................................................................................... 4
The Big Players – The Usual Suspects .............................................................................................. 4
Smaller Organisations Offer Personal Service ................................................................................. 5
Choices and Options for Brighter Futures ........................................................................................... 5
Recommendations .................................................................................................................................. 6
Strengths and Weaknesses of SAP .......................................................................................................... 7
ERP Sounds Amazing ........................................................................................................................... 7
Is It Appropriate for Brighter Futures and Other SMEs? ..................................................................... 7
Size Is Important – Or Is It? ............................................................................................................. 7
SAP Wants Organisations like Brighter Futures .............................................................................. 7
SAP Advantages and Disadvantages.................................................................................................... 8
Summary and Recommendations ..................................................................................................... 10
TASK 2 – IT ARCHITECTURAL NEEDS ...................................................................................................... 11
Architecture vs. Infrastructure .............................................................................................................. 11
Architecture is an Outworking of Strategy ............................................................................................ 11
Strategic Issues That Shape BF’s IT Decisions ....................................................................................... 12
Applications are Key to Architectural Decisions................................................................................ 12
Risk Must Not Be Risky ...................................................................................................................... 13
Summary and Recommendations ......................................................................................................... 14
TASK 3 – A HYBRID PROJECT ................................................................................................................. 15
Introduction........................................................................................................................................... 15
Pilot Projects are Low Risk .................................................................................................................... 15
Core Elements of Project Definition ...................................................................................................... 15
Further Issues for BF to Consider .......................................................................................................... 16
People ................................................................................................................................................ 16
Process .............................................................................................................................................. 17
Technology ........................................................................................................................................ 17
Summary and Conclusion ...................................................................................................................... 18

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References ............................................................................................................................................. 19

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TASK 1 – COST REDUCTION AND

BUSINESS INTEGRATION
Report for Brighter Futures’ Board – Market Options in Cloud
Computing
Introduction – The Significance of Cloud Computing
In a report in 2011, Gartner Group’s Ben Pring described the Cloud as the ‘phrase du jour’ (Pring, et
al., 2011). In the same year TMCnet’s Web Editor Carrie Schmelkin stated that, ‘terms such as cloud
hosting, cloud communications and cloud storage have become ubiquitous’1. From 2008 onwards,
academic references to Cloud Computing were appearing regularly and a 2009 editorial of the Oxford
Bioinformatics Journal (Bateman & Wood, 2009) discussed the ‘Cloud’ as if everyone understood it.
Nevertheless, there is no doubt that five years ago most of us involved with business IT at any level
rarely referred to the ‘cloud’ yet now it is arguably the single hottest topic in the commercial IT
world. In July 2013 Byron Deeter, former McKinsey Consultant, tech entrepreneur and now a partner
in investment firm Bessemer venture Partners, stated the following in his corporate blog:

The Cloud Computing Industry hit a massive milestone this month, one that is likely to send
shock waves throughout the software and technology industries. The top public cloud
computing companies are now worth a combined market total of more than $100 billion …
With 30 large public companies collectively representing more than $100 billion in market
capitalization and $12.5 billion in estimated 2013 revenue, the cloud computing industry has
officially come of age.2

It may be in his interests to ‘big up’ such firms as investment opportunities, but the fact remains that
the raw data confirms Cloud Computing as a significant issue in the world of IT and one that no
organisation can afford to ignore. Previously, a presentation was given that explained the basic
concepts of cloud computing to the board of Brighter Futures so this report assumes at least some
level of understanding is already in place (and some basic technical IT knowledge) and considers the
reality for Brighter Futures were it to proactively embrace such technologies.

Cloud for Brighter Futures – Partial Outsourcing

Cloud Computing (CC) allows users to access computational resources on an as-needed, on-demand
basis, across a network infrastructure, usually (but not necessarily) the web. Private clouds are
typically the domain of large commercial organisations, government bodies, etc. and this report will
not concern itself with those but instead will assume BF’s interests are solely in the use of more
affordable, web-based cloud services, more typically known as ‘public cloud’.

1
http://it.tmcnet.com/channels/cloud-computing/articles/172772-what-cloud-computing.htm, accessed
01/01/14
2
http://www.bvp.com/blog/bvp-cloud-computing-index-crosses-100-billion-market-milestone, accessed
01/01/14
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CC may be likened to a form of outsourcing. In a traditional outsourcing environment, the client

organisation will pay an outsource provider to handle their IT needs, perhaps taking over the
management of the client’s data centre, network infrastructure, desktop estate and support services.
In the CC world, some of these same elements are handled by a third party organisation but the
infrastructure used by the client is shared with other organisations as well. Hence, for example, the
client does not pay for its own servers. Instead it pays for its share of server usage on a pro-rata
basis. The provider owns, manages and maintains the servers, load-balancers, installed software,
backup process, etc. and charges the client accordingly.

For Brighter Futures this, quite literally, means the possibility of not having to bother any more with
running a data centre, managing backups, software maintenance and updates, license purchases and
much of the daily operational activity of an IT department. In a drive to lower its cost base, as well as
increase the flexibility of its IT provision to support remote working and technology-based services
delivery, BF should consider CC as possibly being a significant opportunity for the organisation and its
future success. As Schmelkin summarises so well, it offers reduced costs, scalability, remote access,
disaster relief, increase storage, more mobility and high automation (Ibid).

Three Core Approaches to Cloud Computing

There is not the space in this report to go into to many details of the different CC options available
but they may be summarised as the following three options (Wooley, 2011):

1. Infrastructure-as-a-service, where customers are allocated computing resources in order to

run virtual machines consisting of operating systems and applications (Chudnov, 2010);
2. Platform-as-a-service, where the customer is allowed to write applications that run on the
service provider’s specific environment, such as the GoogleApps engine (Vaquero, et al.,
2008);
3. Software-as-a-service, where the customer accesses software applications that run over the
internet, such as Google Docs (Hayes, 2008).

Although it has not been analysed in detail it is likely that option 1 will remain the most relevant for
BF. Option 2 may have some benefits for BF if they wish to develop and run their own specific new
applications but this has not been mentioned in any of the research so far. Option 3 will always
remain a useful possibility but requires little in the way of specialist infrastructure and hence the
remainder of this report will focus on how BF may embrace CC infrastructure-as-a-service (option 1).

Cloud Computing Market Providers

The heart of a CC provider is a datacentre. For the more professional and credible CC providers these
datacentres will conform to the latest and best industry standards in security, both physical and
virtual. They will be ISO27001-accredited and their HR department will be an ‘Investor in People’.
They will be able to offer highly scalable solutions to their clients, adding servers, software licenses,
disk space as necessary, will provide full backups of all data and have detailed, tested disaster
recovery procedures so as to enable them to offer 99.99% availability to their customers.

The Big Players – The Usual Suspects

Defining exactly who is the ‘biggest’ in CC is problematic as different organisations offer different
services and it depends exactly what one means by ‘biggest’ but one of the most significant globally
is Amazon Web Services (AWS). Unsurprisingly, any organisation with significant global server

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networks has the potential to offer high-performance CC services and hence Google is probably not
far behind AWS and, arguably, catching up fast. Microsoft should never be discounted and other
industry giants like IBM and HP all have the infrastructure and credibility to offer high quality,
competitively-priced cloud services in addition to everything else they already do.

Smaller Organisations Offer Personal Service

However, this does not prevent smaller, more specialised organisations from competing and,
sometimes, offering a more personalised service. Rackspace is one such organisation. This Texas-
based company specialises in application hosting and although it claims its technical infrastructure is
as good as any in the world, it has made a strategic choice to differentiate itself by focusing on
customer service, even going as far as trademarking the phrase ‘Fanatical Support®’3. In the UK
Rackspace Ltd. employs around 900 staff and owns (or rents) four datacentres. It has been listed by
multiple publications as one of the best places to work45.

Another smaller example is Eduserv. Eduserv is a UK, not-for-profit organisation that specialises in IT
services to support the ‘public good’, listing its core sectors as government, charities, education,
health and research6. Eduserv maintains two data centres (with each capable of taking on the entire
load of the other) and conforms to the major standards required around physical and virtual security,
quality standards, audits and people management.

Choices and Options for Brighter Futures

The information made available so far in this assignment does not include any insight into the
specific applications that BF uses currently or may wish to do so going forward. Hence any
recommendations made in this report are necessarily generic. One output of this author’s
recommendations in assignment 1 was an IT audit which would include a list of applications in use.
This audit needs to be analysed alongside the broader consulting report to determine what
applications and IT services may appropriately be placed in the cloud. This is the first choice BF must
make.

Beyond that it should consider what it wants from a CC provider. Does it want nothing more than a
technology supplier with necessary certain standards in place? Or does it in fact want a supplier that
can help it make the right decisions both now and in the future? This is where the consulting
capabilities of such organisations become significant. CC is still relatively new and many
organisations, just like BF, need help understanding how to get value from it. The more ethical and
professional organisations will help BF understand what they should and should not put into the
cloud and assist them with building a cloud-based strategy. This may be a far better-value
proposition than even a discounted study from McKinsey, as the CC providers want BF’s business.

For example, Eduserv’s position as a not-for-profit organisation is as follows:

‘Our mission is to help public good organisations make best use of IT. We believe that we are
uniquely positioned to do so. Not only do we understand the IT problems that not-for-profits
have to deal with, we’ve been solving them for over 15 years. It’s why we've worked

3
http://www.rackspace.co.uk/about-us, accessed 01/01/14
4
http://www.rackspace.co.uk/awards/sunday-times-100-best-companies-work-awards, accessed 01/01/14
5
http://money.cnn.com/magazines/fortune/best-companies/2013/snapshots/34.html, accessed 01/01/14
6
http://eduserv.org.uk/about, accessed 01/01/14
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successfully across government, education and research, health and charity sectors. It’s why
we have a reputation for delivering practical and cost-effective solutions that make a big
difference. To do this, we work closely with our customers to develop services that will meet
their specific needs, whether this is upgrading technology platforms or implementing cloud-
based systems.’7

Compare this with the IBM cloud and its website where, under the title, “Cloud is powering business
growth” they offer:

 Speed - Use cloud computing to innovate fast. Quickly build cloud applications. Tap into pay-
for-use global cloud infrastructure
 Empowerment - Give users the software they need. Free developers to focus on apps. Enable
IT to become a service provider.
 Economics - Save time with self-service cloud. Buy just what you need. Get to market faster.
Shift CAPEX to OPEX. Increase utilisation.8

No-one reasonably doubts IBM’s capability to deliver in the cloud and, as they say elsewhere on their
site, their cloud powers 270,000 more websites than AWS, but BF needs to consider what type of
organisation it wants to do business with and what it needs right now. It could engage with the likes
of IBM or AWS, world leaders in cloud computing provision, obtain a world-class service and be a
very small customer of a very large organisation that does far more than just cloud computing. It
could engage with someone like Rackspace, a specialist cloud provider with a UK subsidiary, an
unbeatable technical infrastructure and data centres that backs up the backups to bank-level
standards in former nuclear attack-proof bunkers! Or it could engage with a smaller, less aggressive
organisation such as Eduserv, still with full backup capability, scalable infrastructure, experienced
people and accredited and secure data centres but without the international reach and world-class
referenceability of the big players.

Recommendations
BF is still in a state of flux, both strategically and operationally, and should not be drawn into
committing itself too quickly to a particular provider. Instead it should engage cautiously with
multiple organisations, get their advice and input and only then start to embrace the cloud and all it
can offer. The large multinationals could offer BF useful services. They have the expertise to help BF
make the most of CC and have more than enough technical capability. But, as already stated, they
do many things and have a wide range of massive customers and to them BF is always going to be of
almost zero value; a tiny dot on their vast landscape of client. The specialists like Rackspace make
more sense for BF but, again, BF will only ever be a tiny client of theirs and their USP may not be
suited to BF’s needs. For example, Rackspace’s Application Deployment web pages have the word
‘Quickly’ in bold at the top of the page and the first benefit listed is, like IBM’s, all about speed of
deployment.

BF is still moving slowly and speed is not particularly important. Getting it right in a costed, analytical
manner is exactly what BF need and hence a smaller organisation with BF’s best interest at heart and

7
http://eduserv.org.uk/about/not-for-profit, accessed 01/01/14
8
http://www.ibm.com/cloud-computing/uk/en/#seeFacts, accessed 01/01/14
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an approach based on partnership will be a far better match for BF’s needs and aspirations. Hence
this consultant recommends that BF engage with Eduserv and others like it such as TechImpact,
Cloud4Good or PremierIT, all organisations specialising in CC for the non-profit sector.

Strengths and Weaknesses of SAP

ERP Sounds Amazing
SAP, as well as other ERP solutions from the likes of Oracle, sounds fantastic on paper. After all, it
aims to integrate an entire business operation, including personnel, finance, manufacturing,
warehousing, point-of-sale and others (Johnson, et al., 2005) and SAP makes huge claims about its
capabilities and value it can bring. Sometimes, such claims may be valid. For example, India’s Bharat
Petroleum, facing deregulation and partial privatisation, spent two years (and many millions of
dollars) implementing SAP across its entire organisation of 200 administrative sites, covering finance,
personnel, quality management, maintenance, plant management and sales. In the year after
completion, Bharat Petroleum achieved 24% sales growth and SAP itself rated it as in the top quartile
of SAP ERP implementations (Teltumbde, et al., 2002).

Is It Appropriate for Brighter Futures and Other SMEs?

However, in any list of global top ten IT failures, around half are usually ERP implementations and
this highlights the dangers associated with implementing such complex systems. BF is a ‘small’
organisation by the standards of SAP’s customer base, and received wisdom in the IT world (of which
this author has been a part for 25 years) is that ERP systems are for large, complex organisations with
a huge mess of different systems and an inability to integrate them effectively and efficiently. Hence
BF and other businesses of this size are not typically considered to be well positioned to benefit from
SAP. This section of the assignment therefore considers if this is necessarily correct and attempts to
identify if there is a case for a BF-sized organisation to embrace SAP.

Size Is Important – Or Is It?

By 1980, around 40% of companies with revenues greater than $1 billion annually had installed ERP
software (Markus & Tanis, 2000). Given that, ‘ERPs were designed to help large companies manage
the fragmentation of information stored in hundreds of individual desktop, department and business
unit computers across the organisation (Pearlson & Saunders, 2006), one must immediately wonder
if a small organisation such as BF is a suitable candidate for implementing ERP. The high cost and
complexity of ERP systems has meant that until recently only medium-large companies could afford
the software, consultants and implementation costs that often total many millions of dollars (Bocij,
et al., 2008). However, seven years ago the Financial Times’ Stephen Pritchard made the point that
Oracle and SAP were targeting small to medium size organisations as the greatest driver of their
future growth (Stephen Pritchard, 2006, FT.com site, cited in Bocij, et al., 2008). Pritchard further
explained that in June 2006 SAP booked its 10,000th customer for its Business One package for
smaller companies.

SAP Wants Organisations like Brighter Futures

Some confusion genuinely surrounds the capability of SAP to provide value-for-money systems for
smaller organisations. SAP clearly believes it can and issued a press release in July 2013 stating that

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it had signed up its 40,000th customer of Business One9. SAP itself says that its Business One solution
is for, ‘Small businesses that want to fully integrate their end-to-end business and grow’, and ‘Have
outgrown packaged accounting-only software and need to replace multiple, non-integrated
applications’10. They claim implementation time is typically 2-4 weeks but can be as little as three
days and state that pricing starts as low as $7,000 for one user, including software licensing and
implementation which, as stated at the start of this task element, all sounds great. However, there
are two key issues for BF and similarly sized organisations to consider:

1. Do they actually need/will they benefit from the use of SAP? In other words, this question is
considering whether or not the actual functionality offered by SAP is any real use. Do you
actually need to tightly integrate your HR system to your payroll system? ERP systems’
strengths have always been in the manufacturing and logistics sectors so if you are a service
organisation that does not make anything is there really enough functional value available
from SAP to make it worthwhile or are you quite happy continuing to run Sage, MS Office
applications and an Access database to track your customer base?
2. Will it actually be affordable or value-for-money? This relates closely to the question above
but considers the hard commercial issues. SAP may start cheap but that is like saying a BMW
is the same price as a Ford. It might be, but by the time you have added all the optional
extras that you need to bring it up to spec and make it actually useful it is substantially more
expensive. Having said that, to continue the car analogy, the BMW will be a better long term
investment so perhaps it is not such bad value after all. Therefore, a detailed cost-benefit
analysis needs carrying out for any organisation considering SAP to see what it would really
cost and how much it would actually save the organisation over several years.

The second point cannot be answered with any credibility in this assignment as every organisation is
different and we do not have anything like enough information about size, types of application,
number of users and actual SAP costs to be able to give a valid opinion on BF-sized companies.
Hence we will concentrate on the first question and SAPs broader strengths and weaknesses.

SAP Advantages and Disadvantages

Critiques of SAP and its advantages and disadvantages abound and are all over the Internet. Self-
appointed gurus who hate SAP will always do what they can to discredit the German software giant,
whereas ERP fans will cite SAP and Oracle as two of the greatest software companies ever and tell all
who will listen that ERP solutions are the digital nirvana for every company; a form of magic black
box that will solve any organisation’s technological ills. Of course the truth is somewhere in between
and what follows is therefore an attempt at a summary of strengths and weaknesses, advantages
and disadvantages of ERP systems in general (and they can be entirely applied equally to SAP as a
specific supplier) as it may be applied to smaller organisations such as Brighter Futures.

1. Relationship: ERP systems usually require long term relationships with the software vendor
because there is a continuing need to modify and update these complex systems to match
the changing needs of the organisation. High cost of initial implementation and necessary
changes to business processes to match the software structure mean that organisations

9
http://www.prnewswire.com/news-releases/newsbyte-sap-business-one-application-reaches-40000-
customers-with-4g-identity-solutions-pvt-ltd-217517591.html, accessed 02/01/14
10
http://www.sap.com/solution/sme/software/erp/compare.html, accessed 02/01/14
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cannot afford to change again in a hurry so, once you have engaged with SAP, you are stuck
with them for the foreseeable future (Pearlson & Saunders, 2006). However, this may be
viewed as a positive as well as there is a certain security in having a deep, long-term
relationship with a trusted supplier and, once implemented, this can help to deliver stability
and consistency across the organisation’s operations for many years;
2. Transaction-driven focus: ERP solutions are heavily ‘transaction-driven’ and integrating
that into an organisation’s workflow (Basu & Kumar, 2002) can be highly problematic,
requiring major internal restructuring of almost every aspect of the organisation. Again, as
with the first point above, once the implementation has been achieved and bedded in, this
can benefit organisations, keeping their functional structure focused on driving sales and
achieving maximum transactional throughput. This, however, may not suit an organisation
whose prime concern is quality of service, flexibility with its clients and building trust rather
than just turning over more sales;
3. Centralised data and control: ERP solutions can support the effective use of organisational
databases (Pearlson & Saunders, 2006), centralise decision-making and help to standardise
procedures across a distributed organisation. However, such databases need hosting and
supporting (often at considerable cost) and one negative of centralisation is decreased
flexibility. Sometimes smaller organisations pride themselves on their flexibility and the
decentralisation of decisions. Typically, centralisation is seen as ‘old school’ commercial
practice and the 21st century organisation should be far more flexible. In 1988 a Harvard
Business Review (HBR) article described the ‘Networked Organisation’ - a new type of
organisation emerging as a result of the proliferation of technology - stating that ‘Rigid
hierarchies are replaced by formal and informal communication networks that connect all
parts of the company … [This type of organisational structure] is well known for its flexibility
and adaptiveness’ (Applegate, et al., 1988). ERP solutions, by their very prescriptive,
transactional and process-driven nature, will tend to increase rigidity, rules and hierarchies,
thus reducing flexibility and adaptiveness.

There is a further important point to be made here. Meta Group’s DeBoever and Buchanan
developed guidelines for planning adaptable IT architecture and infrastructure and make the
point that organisations should plan for applications and systems that are ‘independent and
loosely coupled rather than monolithic‘ (DeBoever & Buchanan, 1997). Whatever value SAP
modules may bring, they are most certainly not ‘independent and loosely coupled’ and this
further underlines the reduction in adaptability and flexibility that would be enforced by the
use of SAP.

4. Cost: This paper has already hinted that costs of ERP systems are typically considerable.
While SAP may quote some very low prices for its basic Business One package, it ignores
completely the internal cost to the organisation to make necessary changes to allow it to
gain any benefit from the system. For example, records held in multiple databases,
spreadsheets and simple CRM systems may need converting into one single form. Someone
has to be responsible for converting, consolidating and entering the information that was
formerly held in multiple locations and resolving such issues often requires fundamental
redesign of internal business processes to accommodate the needs of the new ERP system
(Pearlson & Saunders, 2006). So the real number that matters is Total Cost of Ownership
(TCO) and to understand that we must consider the famous Meta Group study of 2002.

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Christopher Koch points out in CIO Magazine that the study accounted for hardware,
software, professional services and internal staff costs as well as initial installation and the
two year period that followed, when an organisation feels the real costs of maintaining,
upgrading and optimizing the system. 63 companies were surveyed, including small, medium
and large companies in a range of industries, and the average TCO was $15M (the highest
was $300M and lowest was $400,000). Meta (now owned by Gartner) produced one
frightening statistic suggesting that ERP is expensive no matter what type of company is
using it: The TCO for a single full-time user over that period was a staggering $53,320 (and
that was in 2002). More recently, in 2007 the Aberdeen Group surveyed in excess of 1,680
manufacturing companies of all sizes. One finding was that a company with less than $50
million in revenue should expect to pay an average of $384,295 in total ERP costs11.

5. Risk: Recent history is littered with examples of failed ERP implementations involving eye-
watering commercial losses, court cases and, in many cases, bankruptcy. Computerworld’s
now very old ‘Top Ten Corporate Information Technology Failures’ summary, compiled in the
1990s with the help of PriceWaterHouse Coopers and others, lists an SAP ERP
implementation for FoxMeyer resulting in driving the client into bankruptcy and it then suing
SAP and its consulting partner for $1B in damages, an SAP ERP implementation at W. W.
Grainger costing $9M and losing Grainger $19M in sales and $23M in profits, a 12% fall in
Hershey’s sales in the quarter following the implementation of their SAP system and a $20M
lawsuit and bankruptcy of Tri-Valley, a massive farming co-operative, following a total failure
of their Oracle ERP implementation12. These examples demonstrate just how tricky and
dangerous it can be to implement ERP systems and, although these are all large scale
catastrophes, such issues can and do occur with smaller companies. For the individual
worker who loses their job as a result it is no less catastrophic.

Summary and Recommendations

In reality, the growth of ERP systems has gone hand in hand with the development of business
process re-engineering (BPR) because quite simply, to get real value from ERP, organisations usually
need to go through a substantial BPR exercise at the same time. This is radical change and Gary
Hamel argues that, in principle at least, radical change will generate more wealth than incremental
change (Hamel, 2001). However, it is also often argued (and circumstantial evidence appears to
corroborate this) that radical change is risky, can mean jettisoning the past and has no place in the
daily running of well-established firms (Pearlson & Saunders, 2006). As with many high risk, high
reward scenarios, the benefits can appear seductively attractive but, particularly for small
organisations like BF where cash flow is crucial, long term disruption to their business is intolerable
and where faithfully looking after customers remains a critical part of the organisation’s identity,
adopting an SAP system is at best highly questionable. When one couples in the uncertainty about
whether they would gain any real value from the closer integration between applications that SAP
offers, it appears that on balance BF-sized organisations should view SAP with a healthy scepticism
and, in this author’s opinion, choose to avoid until, and unless, their business strategy clearly
warrants its use.

11
http://www.cio.com/article/40323/ERP_Definition_and_Solutions?page=3#cost, accessed 02/01/14
12
http://www.computerworld.com/computerworld/records/images/pdf/44NfailChart.pdf, accessed 02/01/14
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TASK 2 – IT ARCHITECTURAL NEEDS

Architecture vs. Infrastructure
IT architecture can be defined in many different ways but at heart it is similar to the architecture of a
building – it is a design, a blueprint or a model of how the IT will look and work once built. An
architect designing a house will probably develop several levels of architectural models or drawings,
ranging from high level concepts through to detailed engineering specifications defining a specific
mix of concrete, exact thickness and dimensions of steel beams to be used, etc. So it is with IT
architecture where an organisation’s IT can be described on one level as ‘client-server’ but on
another be represented by detailed drawings mapping individual machines, network connections,
routers and printers, all using a detailed, prescriptive software specification.

The term ‘architecture’ is often used interchangeably with ‘infrastructure’ as both Pearlson &
Saunders (2006) and Ward & Peppard (2002) point out. If there is a difference it is that the former is
conceptual (a high level design concept) and the latter defines the practical specifics down to
individual component level.

Architecture is an Outworking of Strategy

The IS/IT architecture is also a supporting model for the IS Strategy (Ward & Peppard, 2002). It was
established in the first assignment that the Business Strategy Triangle (Pearlson & Saunders, 2012)
considers the three strategic facets of an organisation – business strategy, organisational strategy
and information systems strategy – as being in a permanent tension with each other. Successful
organisations will carefully balance their overall business strategy with organisational strategy and IS
strategy (decisions regarding applications, hardware, support processes, suppliers, etc.). Implicit in
this model is the understanding that if one of these is out of balance with the others then the
organisation strategically disintegrates, leading to failure on any number of levels. What is also
crucial is that the business strategy should drive the other strategies and not the other way around.

So, logically, if IT architecture is developed from IT strategy, and if IT strategy is driven by overall
business strategy then there is a direct link between the strategy of the organisation and IT
architectural design. This presents this author with a problem. Brighter Futures’ overall strategy is
being challenged. As stated in Assignment 1, BF is in a state of flux with a huge range of external
forces acting on it and forcing change on every aspect of the strategy triangle at once. Its core
business strategy is still being challenged and updated, in an unstable equilibrium. With such
uncertainty about business strategy it is impossible to develop strong recommendations about its
future IT architecture. What we can do, however, is identify principles that can be applied whatever
the architecture becomes and also define best practice to be followed and rules to be adhered to as
far as possible.

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Strategic Issues That Shape BF’s IT Decisions

To develop these principles and rules we will first consider the strategic issues affecting BF’s future
and evaluate how they shape IT decisions. These issues below are derived from the discussions in
the first assignment.

 Issue 1 – Maintain flexibility: Given that BF is indeed still very much working out its future
direction and business strategy, any decisions taken about IT must deliberately design
flexibility into the architecture;
 Issue 2 – Reduction in cost: BF needs to save money and reduce its operational, day-to-day
expenditure as far as is reasonably possible. It is also not ‘cash-rich’ so even if expensive IT
investment were to have a solid, long-term business case, it is unlikely that it would be viable
for BF. Instead, shorter-term IT decisions that save money now will be attractive to the
board;
 Issue 3 – Commoditisation of service: It has been recognised that BF needs to move its
delivery model to make much better use of digital channels and reduce its dependency on
face-to-face service delivery. This will be done by a commoditisation of its services as far as
possible, simplified, structured component pricing and development of online-based
products and services, so the IT architecture needs to be able to support this increased move
towards online channels for communicating with and delivering to clients;
 Issue 4 – Distributed working: As a part of its reduction in cost base BF is moving to
smaller office premises. In addition it has recognised that commercial pressures require it to
expand into new markets and develop a new, small-contract sales model. All of this has led
to a realisation that they need to support a distributed workforce based from home offices
and client sites. Hence the IT architecture must support and enable efficient and reliable
remote working.
 Issue 5 – Protect investment: If the technical audit suggested in the first assignment had
actually been carried out it would have identified any applications (and associated hardware)
used by BF. It is possible that some of these would have been developed or customised in-
house or they may be recently acquired licenses for relatively expensive software (such as a
new CRM system). IT architecture decisions going forward need to protect the investment
made in such systems, as far as is possible to do so, and allow the value to be gained from
them even as the organisation moves across to new solutions and a different way of working.

In summary, the architecture to support BF’s new requirements must allow it to keep its strategic
options open as far as possible, continue to drive down costs, help BF deliver commoditised, digital
solutions and support remote working while protecting any specific existing IT investments that are
still delivering value.

Applications are Key to Architectural Decisions

Another way of considering BF’s architectural needs is to focus specifically on application
requirements. A way of segmenting application portfolios for organisations was presented in the
Harvard Business Review by Harvard University’s F. Warren McFarlan (McFarlan, 1984) way back in
1984 and further developed by other academics (Sullivan, 1985), (Hirschheim, et al., 1988) as well as
being actively used by Boston Consulting Group in much of its material on the subject. The matrix,
shown below, splits the application portfolio into four key areas. The business is most dependent on
those on the left to help it reach its potential and achieve its maximum performance. Those on the
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top, on the other hand, help it contribute more to strategic business goals but also represent a higher

risk.

An IT architecture for BF that supports its new requirements must protect existing key operational
applications in use right now and on which it is highly dependent but must also allow it to move
forward into use of strategic IT choices that will help it grow into its new business strategy (note: the
details of that are not yet certain). Higher risk applications are to the right of the matrix and are
largely undefined but may include those that support digital delivery. A further important issue is
that of decentralisation. The top quarters represent a more decentralised approach (Hirschheim, et
al., 1988) and this may be significant for BF as it seeks to develop a new strategy to deal with the
external pressures placed upon it and discussed in Assignment 1.

Risk Must Not Be Risky

BF cannot afford to take a high risk strategy on any level. It is cash-constrained and has entered a
period of uncertainty in a fast-changing competitive landscape. It must therefore maintain flexibility.
To make fundamental decisions at this stage that commit it to a specific course of long-term action
and on-going expenditure is too risky and, in this author’s opinion, at the moment unnecessary.
Instead, it needs to take small steps, testing the water with tame and supportive clients (see next
task). It should continue to gain value from its ‘Key Operational’ applications, whatever hardware
environment they run on and, for now at least, avoid substantive changes to them unless essential.
It should consider its ‘Strategic’ IT options but not go too far in committing itself and its resources as
yet. It should continue to use ‘Support’ applications where relevant but avoid investment in anything
non-essential and maintain an open mind on ‘High Potential’ concepts which may, in the long run,
support fundamental change in BF, but at this stage are likely to be too risky.

In addition, all of this must be considered in the light of hardware and infrastructure. There is
unlikely to be spare cash to invest in a lot of new ‘kit’ and low-risk solutions should be sought where
possible. The Internet provides a very low cost comms environment and risk can be kept low as long
as basic security protocols are established and enforced. Clearly there is a risk of remote individuals
having poor connections so a relationship with a credible ISP (such as Claranet) reduces risk here.
Allowing individual users to choose their own hardware and software is inherently risky so
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standardisation in these areas is also recommended, as long as large additional costs are not
incurred.

Summary and Recommendations

To repeat the strategic issues, BF’s new requirements must allow it to keep its strategic options open
as far as possible (top row of grid - which means maintaining flexibility and avoiding undue
centralisation and rigid hierarchies/processes ), continue to drive down costs (which means using
free/cheap s/w where possible and avoiding expensive hardware infrastructures), help BF deliver
commoditised, digital solutions (this requires web-based channel exploitation and remote support)
and support remote working (again, this leads to a web-based approach where possible) while
protecting any specific existing IT investments that are still delivering value (bottom row of grid –
maintain existing systems but ensure it is worthwhile doing so).

If one considers the component issues of h/w, s/w, network and data (Pearlson & Saunders, 2006)
and then combines them with the characteristics of four popular architectures (Ibid) it becomes
readily apparent that the most relevant architectural model for BF right now is the ‘Peer-to-Peer’
model. It supports data sharing across networked computers without being overly ‘server-
dominant’, communications can be established across the Internet (i.e. very cheap), it is moderately
scalable and is likely to fulfil BF’s needs for the foreseeable future. If BF has critical applications that
are not easily capable of being integrated to the Web then it will have problems with this approach
but we have no evidence to suggest this is the case. It will need to establish basic rules for security
and a core application portfolio on every worker’s PC to ensure consistency of file types and ease of
data sharing but that is simple to establish through a centralised IT policy framework that can be
applied to employment contracts for all manner of staff. Further work is needed to establish the
details of the current and future application portfolio, with a keen eye on maintaining the balance
between flexibility, risk, short-term cost and long-term value, and this will have an impact on exactly
how the architecture is implemented.

Overall, BF must continue to adapt to new working conditions (contract, remote, etc.) and digital
service delivery, yet maintain the quality of customer service it is known for. This surely means
exploiting standard internet technologies, perhaps using Google Docs for its office tools, Skype for
telephony and the Cloud for data sharing. The architecture must be able to support ongoing
technological advances and adapt to emerging technologies (Pearlson & Saunders, 2006) but it is
likely that most such technological advances will make use of the web in some way shape or form. All
of this sits broadly within the ‘peer-to-peer’ architectural framework and this, then, is the
architectural model BF should follow.

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TASK 3 – A HYBRID PROJECT

Introduction
The first assignment established the need for strategic change in BF’s business model and discussed
the external pressures on the business. This second assignment has already discussed possible
technological approaches to supporting the BF of the future and it is clear that BF needs to move
more of its service delivery onto digital channels while at the same time maintaining face-to-face
delivery where appropriate. There appears to be considerable uncertainty about how this would
work, what would be the impact on BF and how clients (both individuals and organisations) would
benefit. Hence, further work is needed before substantive and permanent decisions are made.

Pilot Projects are Low Risk

This author has in excess of 25 years’ experience in delivering IT solutions. A common approach in
industry is to ‘pilot’ a concept or an idea first, to explore the possible ramifications for the
organisation and its stakeholders. In a pilot implementation, an IT system will be ‘trialled in a limited
area before it is deployed more extensively’ (Bocij, et al., 2008). This is a relatively low risk approach
that does not overly commit the organisation to this as a permanent and irreversible course of action
and allows it to try out different approaches and analyse relative strengths and weaknesses.

Such trials are always run as ‘projects’. There is a very simple reason for this. As stated in the Project
Management Body of Knowledge Guide (PMBOK® Guide) a project is ‘a temporary endeavour
undertaken to create a unique product or service’ (Project Management Institute, Inc., 2004) or as
one text puts it, it is time bounded, scope limited and resource constrained (Schwalbe, 2004). In
other words, projects by definition do not last for ever, have a finite amount of resource allocated to
them and have a specific set of goals and objectives. Any IT pilot initiative should clearly have a
defined set of goals and objectives to do with testing a concept, validating an approach and checking
that the solution is viable. It will be time constrained as an organisation may set a period of, say,
three months for the trial and no such initiative is ever going to be free to cost an infinite amount. In
practice budgets will be allocated so finance and other resources (such as people time or hardware)
will be available but only within certain limits.

Core Elements of Project Definition

Hence such a pilot project for BF must first be defined by the triple constraint of timescales, scope
(goals and objectives) and available resources, particularly budgets. In establishing such a project a
number of essential additional elements must also be defined and communicated to the relevant
parts of the organisation. As Schwalbe says, ‘After top management decides on which projects to
pursue, it is important to let the rest of the organisation know … management needs to create and
distribute documentation to authorise project initiation’ (Schwalbe, 2004). Typically these elements
form a Project Definition Document (PID), also known in PMBOK® as a ‘Project Charter’.

In practice, to establish a pilot project to investigate and test the validity of a hybrid service delivery
model BF will need to first appoint two key individuals – a project manager and a project sponsor. It

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is not the intention of this submission to go into these roles in detail as there is not the space to do
so and the following semester’s module on Project Management will allow for further exploration of
these roles but, in brief, the sponsor will be a senior manager (possibly the MD in this case)
authorising the project and releasing budget and other resources. The project manager will be the
individual who is responsible on a day-to-day basis for actually delivering the project from start to
finish and beyond.

Typically, in this author’s experience, and as document by other project experts (Martin & Tate,
1998), the project manager develops the PID and the sponsor validates it before distribution but in
some instances the sponsor may be more directly involved in writing it. Whoever produces it the
development of some core elements within this document form a crucial initial stage in the
establishing of a pilot for BF to deliver hybrid solutions and these elements broadly form the who,
what, when, where, why and how (taken from Hill, T; slide deck for Project Management lectures,
Roehampton University, 2007) of the project, being (Schwalbe, 2004):

 Project title, sponsor and date of authorisation

 Project time boundaries (start and finish dates)
 Outline budgetary and other resource information
 Brief description of the project objectives and context
 Summary of planned approach to achieve those objectives
 Project team roles and responsibilities matrix
 Stakeholder summary

It should be readily apparent to the reader that such a document, once produced and signed off by
the sponsor, becomes a reference point for all further activity and a powerful tool to enable the
project manager to obtain the help and resources he or she requires from others in the organisation.

Further Issues for BF to Consider

As well as these basic elements that help define the nature of any project, BF should consider the
specific issues it will face when trialling a hybrid solution and a good, simple model for doing this is to
consider People, Process and Technology (PPT) (Barker, 2007).

People
BF must consider who, as well as the sponsor and project manager, will be involved with the pilot.
This requires identification of more than just internal support staff (already documented in brief in
the roles & responsibilities matrix in the PID). This is a pilot to investigate service delivery to clients
so suitable client individuals and organisations should be identified as soon as possible. To minimise
risk and maximise learning benefits these people and organisations should be predisposed towards
BF. They should be very positive and supportive of BF and its overall goals and objectives and, as far
as possible, should be supportive in principle of a move towards hybrid delivery. They will need
briefing about the project and will need to agree to act as test subject who will give structured
feedback and constructive criticism. It is quite normal to offer such clients some form of reward such
as reduced fees or even free services in return for their help. This gets around problems of clients
being frustrated and dissatisfied if the pilot proves inadequate for them. Typically, in a service
organisation, senior client managers will be asked to identify possible such candidates within their

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account management portfolio and the final choices will be those who, as well as being supportive in
principle, are likely to be ‘typical’ reference example users for the services being piloted. If they can
also be sufficiently credible as to make good case studies for marketing purposes in the future then
that is a further benefit.

A further point to make about the ‘people’ element is directly to do with service delivery. The old BF
model is very people-centric and this pilot will investigate less people-dependent ways of delivering
service. That means that those inside BF who have always prided themselves on personal service
delivery and have built strong bonds with their client-base may be seriously disenfranchised by such
a project. They potentially fall into a category of stakeholder that wants the project to fail. It would
be tempting to sideline them and keep them away for the project but that jus creates resentment
and opposition. One way to limit such issues is to involve them intimately as full, expert members of
the project team so that they have insight into the business issues and also feel valued. After all,
their experience should be considered important because they have helped build BF’s service
reputation and their understanding is needed to help ensure any new hybrid model does not throw
that away.

Process
At the start of the project the exact business processes will be unclear as they have to be designed,
trialled and modified. However, for this BF hybrid pilot, a review of existing processes used to deliver
services in the existing manner should be carried out early in the project lifecycle and then used as
the basis for further modifications. In other words, the least risky starting point for the development
of the hybrid processes is to take existing processes and attempt to replicate them using new
technology. For example, if a client previously telephoned a specific advisor or account manager to
ask for a face-to-face appointment, this same process can be replicated digitally by using email to set
up a Skype™-based discussion. These digitally-enabled versions of established processes can then be
reviewed (with client and BF staff input) to see if they can be improved, simplified and modified to
enhance the experience for the client and gain further efficiencies for BF.

Technology
Clearly this pilot project involves trialling new technology or at least new ways of using technology
already in place. The project team should decide as soon as possible what limitations they are going
to place on technology usage. For example they may wish to deliver all services to the client entirely
through standard web browsers. Alternatively there may be a case for developing some form of
downloadable application that a client must download and install before being able to interact with
BF (a little like downloading and installing Skype™). Any decisions on technology usage will be
constrained by budget limitations but also (to refer back to the strategy triangle again) by overall
organisational strategic choices. This will be guided by the project sponsor who, if not the MD, must
be someone who has a deep understanding of the overall organisational and business strategy. To
help translate the business strategy into IS strategy and make technology decisions for the pilot a
subject matter expert is required, fulfilling the Belbin team-role of ‘specialist’ (van Dierendonck &
Groen, 2011) in the context of a modern project team. It is therefore necessary for BF to identify
such a specialist as soon as possible and get them involved with helping to shape the early stage
design of the project. Alternatively, the existing BF CIO and his/her team may be able to take on this
role but only if they can think outside of their existing BF-centric paradigm.

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There is a fourth element that can be added to PPT to make it PPTE, by including ‘environment’. This
has been considered at a high level in multiple ways in the first assignment and further consideration
will not be given here, except to say that in reality the project team will need to bear a range of
external environmental factors in mind throughout the lifecycle of the project. If not, and given that
the environment can change during the project, there is a danger that the project may start out
being fit for purpose but may drift away from the changing needs of the clients.

Summary and Conclusion

The establishing of a pilot project to explore the issues around hybrid service delivery is a low risk
way forward for BF. For the project to be genuinely valuable it must have a board level sponsor fully
committed to the project and a trusted project manager with the ability to build an effective project
team as well as engage successfully with ‘tame’ clients. Potential opponents from the ‘old’-style BF
service should be included in the project and encouraged to give their advice and guidance.
Specialists should be identified who can help the team consider the art of the possible when it comes
to use of digital channels and clients should be carefully chosen to give the team constructive
feedback throughout. Although there is not the space available to discuss in detail here, one eye
should be kept on the next stage throughout the pilot. The intention of a pilot is to establish that
something works on a small scale before rolling it out to a larger group. This pilot will therefore be
started with every intention that it establishes a new framework for service deliver that will be rolled
out across BF’s client base. So there is no point in building elements into the pilot that could never
be replicated on a larger scale because of cost, complexity or issues of control, etc. Finally, the
project team will need to consider the change process needed to move the whole organisation from
pilot to full roll-out and beyond. That is a non-trivial task and whilst there are multiple models
available to help map and control such a change the biggest issue is always one of people
management so particularly careful attention should be paid to people issues for the duration of the
pilot.

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13
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