Thursday, December 29, 2011

E-Business IT Governance and Business Rational

Governance is a multifaceted activity requiring the efficient and effective uses of resources to achieve desired aims. In e-business IT Governance it is the ability to manage IT, develop strategies, and create systems that are relevant to business operations and customers who interface with an organisation. IT Governance involves building a professional IT capability that is able to offer a business strategic advantages. The professional IT executive needs to work closely with business executives to determine how IT can add value. The value contribution of IT can be determined by considering facets of global e-business IT Governance such as:
    Develop an IT strategy, and undertake critical strategic and operational reviews. Strategy formulation requires an imagination to use IT capability to build better relationships with partners, customers and employees. 
  • Develop and manage the distributed IT/IS systems, e-crm and e-technology infrastructures. 

  • Ensure that business-critical projects are completed. 

  • Define methods, tools, and processes. 

  • Define best practices. 

  • Manage application development. 

  • Manage outsourced providers and multi-site procurement policies. 

  • Ensure effective IT services delivery strategy to business segments that lead to internal productivity gains. 

  • Develop key performance indicators. 

  • Critically review current organisation structures and capability and implement cost savings to improve efficiency and effectiveness. 


Underlying all the above activities is the aim of meeting operating needs of a company. Any IT Governance mechanism should be rooted in business logic. For global companies with e-business aspirations, three segments of business need to be considered: marketing, human factors, and business-to-business relations. In terms of marketing, a company needs to consider how its e-business strategy supports its overall mission and communications objectives. It needs to develop a one-to-one marketing strategy over the Internet for customers and the extranet business partners. It needs to determine how to relate digitally with its customers. In terms of human factors, a company needs to assess how its customers will respond to digitised interaction. E-crm strategies need to be customer-focused and, as explained in the following section, appropriate customer-organisation interaction models need to be developed. This may require developing easy-to-use interfaces for customers who are simply interested in purchasing items or services. Finally, in terms of business-to-business, a company will need to assess how to develop the interaction between itself and its business partners and suppliers.

Most e-business models tend to overlook the customer as an integral aspect of an e-business. E-business IT Governance needs to be customer-centric. The customer is regarded as an operational aspect of e-business in the framework presented later. No physical boundaries exist between a business and its partners, suppliers or investors, or between a business and its customers in an e-business. Business processes that deliver a product or service now extend virtually to the customer. Dell, the personal computer manufacturer, produces customised products through its corporate portal, linking its operational process directly to the customer. Thus both suppliers and business partners, and critically, customers, now become operational issues in e-business enterprises and e-business IT Governance. Business processes that link directly to customer requirements mean that IT Governance too needs to consider the company's customer in its systems development approaches and strategies. Amazon.com and Yahoo! are examples of companies that operate beyond notions of business transformation; they are truly networked organisations that are superimposed on transient physical and organisational structures. The role of IT Governance in such organisations is beyond the simple management of the IT tool. It involves ensuring the very economic viability of a company.
Some Radical Re-Directions in E-Business IT GovernanceThe e-business IT Governance framework elaborated in the following section is built on radical re-directions from traditional IT Governance. E-business is the integration of economic, business and technology aspects of business activity. The scope of e-business IT Governance is not now simply inward IT management but outward relations, covering business partners, suppliers, and critically, customers. Traditional IT Governance focused on the technology and its application to business operations, whereas e-business IT Governance is intertwined with business and economic management, with suppliers, business partners and customers. In e-business, IT Governance has thus moved onto a different plane, requiring fundamental re-directions discussed below that need to be considered for effective global e-business IT Governance. 

Traditional IT Governance's modus operandi is planning. In global e-business IT Governance it is necessary to consider both planned e-business IT and emergent requirements. Modern organisations cannot be viewed solely as planned and directed entities. Organisational life is about 'being in the process' and not only about definable structures, especially when considering the virtuality of organisation structures. There is evidence that organisation structure is dynamic. In terms of IS development, research reveals that developers need to consider the emergent information and knowledge needs of the organisation (Baskerville, Travis, & Truex, 1992) in such organic structures. Similarly, strategies should be free to appear at any time and in any place in the organisation. There is a 'messy process of informal learning' through which strategies may be formulated. Planning itself needs to be of the rolling wave kind to cater for uncertainty and, possibly, contractual work in systems development.

IS development needs to be re-scoped to include customers, business partners, and suppliers. For e-business, IS development is not simply an 'internal' problem as in traditional IT Governance. In e-business it extends outside the organisation to include business partners and suppliers, but most critically it needs to include customers. Pure e-business organisation is directly linked to its customers through the Internet. Its business processes and operations are driven by this direct interface. As the interface is enabled by IT, its development and the development of associated systems needs to involve all interfaces. Thus the very problem of systems development extends outside the organisation.

Consequently, e-business IT Governance is about developing new interfaces to fundamentally change the way in which an organisation interacts with its customers, partners and suppliers. The new interfaces are between:
    Customer — organisation 
  • Partner — organisation 

  • Supplier — organisation 


These interfaces are vital for the viability of a company and pose a new problem for global IT Governance. The problem is how to design efficient business processes that extend to interfaces as well as the interface itself. In some virtual organisation forms the customer is a co-producer of the goods or services; for example, where the buyer of cars or personal computers can customise the requirement for a product online. For the customer-organisation interface, one aspect of the problem is how to design interfaces that cater for cultural diversity to be found globally. These interfaces cover both process issues and its fused IT. The customer-organisation interface should be monitored to extract vital business intelligence from customers.

There are various reasons why all systems requirements cannot be known in advance to facilitate detailed IT plans and development. The users may not know what is required, or if they do they may not be able to explain or express the problem in terms that are readily understandable and can be modelled. Therefore global e-business IT Governance needs to develop local information and Knowledge Management tools. Global businesses will need to devise and implement varying marketing strategies for local needs. Web-based marketing systems require incorporating customising or tailoring tools to allow different product promotions or application tailoring (Wolfgang et al., 1998).

Historically, the level of sophistication of tools in a society reflects its intelligent activity. It is not possible to achieve an objective without some kind of tools or devised method. A tool is a 'wholly constructed expression of both knowledge and values' (Groth, 1999). Interestingly, there has been a paucity of tools in IS given its pervasiveness in organisations and, during the last decade, in society generally. E-business tools contribute to organisation structure, its effectiveness and efficiency. Tool building that facilitates the collective experiences of individuals leads to the design of better and effective tools, as it leads to the design of sophisticated and precise tools that solve the problem at hand.

Traditional technology has not had an all-encompassing effect on organisation structure and communication. Traditional IT Governance has not had to deal with questions of organisation structure, except with the notion of business transformation. E-business IT Governance by necessity has to consider the all-encompassing effect that the new networking digital technologies have on organisation. Internet and web technologies enable organising virtually. Policies need to be developed to enable organising virtually, as well as:


    Developing and enable virtual structures, which by definition will change; 
  • Ensuring economic viability, not simple business 'fit'; 

  • Developing solutions that are valid at corporate and business unit levels. 


E-business IT Governance is more complex than the traditional alignment of IT with business or deriving business opportunity from IT. It is about integrating IT into the very business, referred to here as fusing IT with business. An e-business should be regarded as an open-ended organisational network. The notion of open systems (Flood & Jackson, 1991) may be one way of conceptualising such an entity. Another way to think about open-ended organisational networks is as 'webs' (Patel, 2001a). The empirically founded web concept is proposed as a conceptual tool to develop applications better suited for business organisations dealing in information and knowledge with emergent needs. It is consistent with the major content of e-business technology, namely information and knowledge processing, and with the plank of information and knowledge ontology within the proposed framework.

Develop ontologies of information and knowledge that are not simple data/information processing algorithms. A significant aspect of e-business IT Governance that is different from traditional IT Governance concerns business intelligence and models of customers. E-business solutions require intricate models of customer behaviour. The various applications need to be integrated to provide a unified view of customers.

Two other radical considerations are cross-organisational IS development teams and reconceptualising time and space in a virtual e-business organisation. Lee (1999) describes temporal changes of export related work in companies using EDI and how IS create temporal symmetry. International businesses have given rise to global and virtual software development teams. These teams are composed of North American and European corporations and companies from the Indian subcontinent. The management of virtual software development teams is a new challenge for e-business IT Governance. 

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