Business Impact Case Assessment (Essay Sample)

Essay Questions and Business Impact Case Assessment
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Essay Questions and Business Impact Case Assessment
Q1. Define and explain the purpose of setting both functional and fiscal IT procurement and provisioning budgets.
Functional IT Budget
A functional IT budget illustrates the expenditure with regard to the way an IT organization operates. Specifically, it identified what will be spent on the IT operations in a company and the amount of money that will be channelled into strategic investments (McKeen & Smith, 2018). It is worth noting that the operations budget is usually fixed as it mostly includes the operating expenses and the organization’s projected revenues. In addition, it also has the biggest percentage of the expenditure for a company. In most cases, the figures in this budget are informed by an organization's historical performance. However, it is still necessary for the IT managers to evaluate the details and justify the expenditure. There remains a perception that IT organizations are fundamentally cost centers. For this reason, getting approval of the budget tends to be challenging and encompasses an ongoing exercise of establishing relationships with other stakeholders and informing them to avoid cost-cutting (McKeen & Smith, 2018). After the budget of the IT department has been established, the next step is to allocate it to the other departments within an organization. This is again a challenge since other business units may resent the allocations as they feel that they do not have control over them. For companies that have a business model where IT operations are centralized, then the professionals working in the department have an opportunity of reducing the expenses over time. This is because they are able to introduce different mechanisms such as streamlining hard and software that cut the costs. On the other hand, companies that feature a decentralized IT operations budget make it difficult for IT managers to implement such cost-reduction strategies.
Another significant purpose of a functional IT budget is that funds can be allocated to strategic investments where new projects are identified and their expenses are justified. There are many different ways in which a company can do this. While the conventional method involves running IT organizations parallel to the structure, this has changed. Today, with the increasing integration of technology and systems in companies, there is recognition of the cross-business costs of new IT projects and the significance of high expenditures to address such aspects. For this reason, companies now appreciate new developments that impact the entire organization and are doing away with the fixed allocations concept.
Fiscal IT Budget
A fiscal IT budget is one in which the CFO uses to implement the fiscal strategy of an organization. It also includes the financial reports that are given to the shareholders as well as the authorities. Professionals in an organization usually perceive it as a translation of the functional IT budget. From the perspective of an IT manager, it is one of the things that they should address before the budget is approved. For some organizations, it is challenging to determine the capital funding and it has to be justified through integrating other financial criteria. There are companies that require that the expenditure in IT be prioritized against other expenses. This tends to be challenging, but IT managers still have to know how to speak the language of finance for approval. There are many instances where IT professionals fail in this area as a majority of them do not understand the more profound drivers of fiscal strategy such as investor value beyond the strategic investments. Consequently, IT managers should be in a position to explain what the budget will do for the company in monetary terms.
Q2. Purchasing decisions of IT systems require strong relationships between Business departments and IT departments. Identify and briefly explain the 5 building blocks that we explored in this course that lead to a solid relationship foundation.
In any organization, strong relationships do not just happen. Instead, it involves investing in establishing these relationships over time. Consequently, five building blocks help to create strong relationships between other departments and IT. The first aspect is competence that involves business knowledge, expertise, financial awareness and execution. Primarily, the IT staff should understand the business context in which they work and this includes understanding the goals, objectives, constraints, and vision of the organization. As they work in the company, they should be able to consider and work in a way that any other business member would participate to make the organization successful. Besides, they should be in a position to apply their understanding of the business model to assist the company in determining the best way IT can contribute to its positive performance. Besides, they should have the expertise that helps in various business situations, critical financial awareness, and the skills that help them to operationalize the organization's vision.
The second aspect comprises credibility which is “the belief that others can be counted on to do what they say they will do” (McKeen & Smith, 2018, p. 43). This can be achieved in many distinct ways. The recommended approach involves keeping agreements and acting with integrity and honesty. Also, the IT staff should try to communicate frequently and in an open way. They should inform other departments about their progress and achievements in a clear way and using a language that other professionals can understand.
The third building block is interpersonal interaction which fosters a mutual understanding of interests and expectations. Interpersonal interaction should be deployed in a professional way which implies that the IT personnel should adhere to the set standard of an organization, show etiquette, and make the right choices for the organization. Also, a person's attitude should demonstrate that they care about doing the job to perfection. It is also important that the IT staff should avoid technical communication as this acts as a barrier to fruitful interactions.
The fourth dimension involves trust which is built through effective interpersonal interactions that demonstrate that a person will get the job done. Another vital concept involves effective governance that ought to be designed to build common business goals and facilitate effective decision-making. Trust is a key component that leads to better performance and also helps to create relationships that result in success. It is achieved through consistency, effective communication, and showing the willingness to take on challenges.
The final building block is value. For years, many people have thought of IT as a cost center. In the organization, the IT staff should demonstrate they bring value to the organization through innovation and problem-solving. The IT department is vital to an organization as it helps other business units to work more efficiently and in some cases, it can help to develop new products and services. IT can even assist the organization to tap into new markets and this should be illustrated.
Q3. Illustrate and briefly explain the Peel the Onion/Put the Onion Back Together effect in delivering value over time as a result of new IT investments.
A few decades ago, the value of IT was simply seen in the sense that with the right technology in an organization, there will be financial advantages. However, there have been problems with this simplistic approach and this necessitates “peeling the onion” to understand the true value of IT. Most organizations have different understandings of value as some see it as the return on investment (ROI) whereas others measure it by a composite of key performance indicators. It is now increasingly recognized that IT alone cannot deliver superior performance in an organization. It is also necessary to consider the interaction of people, information, and technology that delivers value. Consequently, IT value is delivered as a result of the combination of different IT practices with the organization's skills that facilitating the management of information and people's behaviours and beliefs that result in actual value for an organization. in the past, the IT staff has been solely responsible for delivering value. In contrast, contemporary organizations are