ITPI Methodology Version 1.0 Final

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KPMG LLPInformation Technology Performance

Improvement Methodology

DRAFT VERSION 1.0

CONFIDENTIAL

kpmgKPMG LLP


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August 13, 2010Table of Contents

1. PROJECT INITIATION....................................................................................1

2. IT ASSESSMENT..................................................................................1

1. PROJECT INITIATION........................................................................1

3. REPORTING........................................................................................1

1.1 Obtain approval to proceed with ITPI project...................................3

1.2 Understand/re-confirm key issues, scope and focus..........................4

1.3 Agree project details & establish communications plan....................7

1.4 Prepare work plan..............................................................................8

1.5 Project Kick-Off.................................................................................9

2. IT ASSESSMENT........................................................................................ 10

2. IT ASSESSMENT ...............................................................................10

3. REPORTING......................................................................................10

1. PROJECT INITIATION.....................................................................10

2.1 Prepare Data Collection Package...................................................13

2.1.1 Develop general information / Documentation request................16

2.1.2 Select survey topics to be included in data collection...................19

2.1.3 Compile hardcopies of data collection templates into a binder tobe given to the client...............................................................................21

2.1.4 Identify client contacts and confirm availability for meetings......23

2.2 Perform benchmarking & financial analysis...................................24

2.2.1Familiarize client with data collection approach & deadlines......26

2.2.2 Collect benchmarking data...........................................................27

2.2.3 Compile results and benchmark client data against.....................30

peer group and/or other standards as appropriate...............................30

2.2.4 Discuss initial benchmark results with client................................332.2.5 Make any adjustments resulting from review process...................34

2.3 Business and IT Strategy Alignment.................................................35

2.3.1 Establish understanding of client industry....................................36

2.3.2 Establish understanding of client's business ................................37

strategies...............................................................................................37

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2.3.3 Establish overview understanding of current IT environment,

roles, products and services...................................................................40

2.3.4 Establish understanding of long term IT plans.............................41

(1-3 years).............................................................................................412.3.5 Identify gaps between business plan and IT plan..........................42

2.3.6 Evaluate existing mechanisms for embedding IT .........................43

into the strategic planning process on an on-going..............................43

basis.......................................................................................................43

2.3.7 Conduct Strategic Alignment workshop........................................44

2.3.8 Document results of procedures and workshop............................45

2.4 Prioritization Process.......................................................................46

2.4.1 Review and document "as is" work initiation and prioritizationprocesses................................................................................................48

2.4.2 Evaluate procedures to develop business cases............................51

2.4.3 Determine if IT resources are invested in work which is of thehighest business value to the company...................................................54

2.5 IT Organization and Governance.....................................................57

2.5.1 Confirm IT Organization and Governance...................................58

documentation is current & accurate....................................................58

2.5.2 Establish understanding of current IT organization.....................59

and governance structure......................................................................59

2.5.3 Compare and contrast current IT organization and.....................61

governance structure with similar organizations..................................61

2.5.4 Determine how current IT organization and ................................64

governance processes are perceived by ...............................................64

management outside and within IT function.........................................64

2.5.5 Create "straw-man" of alternative IT organizations andgovernance structures documenting pros and cons of each alternative

................................................................................................................672.5.6 Discuss various alternatives with key personnel...........................68

2.5.7 Determine if alternatives different than current............................69

environment will be recommended. If so, obtain..................................69

stakeholder "buy-in"..............................................................................69

2.6 Sourcing Decisions...........................................................................70

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2.6.1 Review and document "as is" process for making sourcing

decisions.................................................................................................71

2.6.2 Review activities currently outsourced and determine whetheralternatives exist.....................................................................................72

2.6.3 Review activities currently in-sourced and determine whether

alternatives exist.....................................................................................74

2.6.4 Evaluate core metrics for in-sourcing or outsourcing..................75

2.7 Applications.....................................................................................76

2.7.1 Establish understanding of application inventory and application

acquisition and/or development and maintenance activities................79

2.7.2 Review application inventory/assessment forms with client.........82

2.7.3 Distribute inventory/assessment form to application managers...83

2.7.4 Evaluate measures that client uses to monitor effectiveness ofapplications............................................................................................84

2.7.5 Collect application inventory forms completed by client and

validate information...............................................................................87

2.7.6 Based on feedback from inventory forms, identify client personnelwho should receive FQ/TQ/SQ survey and distribute electronically....88

2.7.7 Compile and analyze results of FQ/TQ/SQ forms.........................89

2.7.8 Determine if interviews are appropriate and conduct follow-up

interviews based on FQ/TQ/SQ responses.............................................902.7.9 Determine if application technology, tools and methods are

appropriate for current and future needs...............................................91

2.7.10 Summarize results, identify improvements and ..........................94

prepare application assessment charts as ...........................................94

appropriate...........................................................................................94

2.8 Technology Infrastructure................................................................95

2.8.1 Confirm Infrastructure documentation is current &.....................98

accurate.................................................................................................98

2.8.2 Establish an understanding of the client's Technology

Infrastructure including Networks/Security, Mainframe & Midrange,

and End User Computing environments..............................................101

2.8.3 Establish an understanding of the client's approach to information

security including logical access, monitoring, availability and

environmental/physical controls..........................................................103

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2.8.4 Combine understanding of infrastructure and security controls

with benchmarking data obtained previously to gain holistic view of

environment..........................................................................................105

2.8.5 Analyze current environment, activities and planned initiatives;

identify strengths, weaknesses and future challenges..........................107

2.8.6 Document understanding of environment and results of analysis..............................................................................................................108

2.9 Customer and User Satisfaction.....................................................109

2.9.1 Review customer satisfaction and IT user satisfaction survey

templates with appropriate client personnel........................................112

2.9.2 Customize survey samples for client environment as appropriate

..............................................................................................................115

2.9.3 Distribute surveys electronically.................................................1162.9.4 Collect completed surveys from client personnel and validate

results...................................................................................................117

2.9.5 Compile results of customer/user satisfaction surveys and

benchmark against relevant peer group and/or other standards asappropriate...........................................................................................118

2.10 IT Management Practices.............................................................119

2.10.1 Identify metrics currently used by IT to measure performance.121

2.10.2 Gather information about IT management practices by reviewing

available documentation and conducting interviews and workshops as

appropriate...........................................................................................122

2.10.3 Document an understanding of current procedures, standards

and controls used to manage IT resources..........................................125

2.10.4 Assess current IT Management practices and identify strengths

and opportunities for improvement.....................................................126

2.10.5 Summarize conclusions about strengths and opportunities for

improvement to IT Management Practices and validate with

appropriate client management............................................................129

2.11 Culture..........................................................................................130

2.11.1 Gather and document information about the client's culture....131

2.11.2 Assess client's culture, identify strengths and opportunities forimprovement.........................................................................................134

2.12 Synthesize Results and Develop Preliminary Reports..................135

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2.12.1 Synthesize conclusions .............................................................135

2.12.2 Develop draft of synthesized report...........................................137

3. REPORTING ....................................................................................138

2.FUTURE STATE...............................................................................138

1.CURRENT STATE.............................................................................138

3.ROADMAP........................................................................................138

3.1 Perform Interim Reporting.............................................................139

3.2 Perform Final Reporting................................................................141

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2.IT ASSESSMENT3. REPORTING1. PROJECT

INITIATION

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1. Project Initiation

.

Purpose

The project initiation phase is where the engagement begins to take shape. During thisphase, the engagement team defines the scope of the engagement, agrees on theapproach to be taken with the client, and develops a detailed work plan to meet the timeand budget constraints of the engagement.

Client Value

The direct value of completing this phase is finishing preparations to kick off anengagement that will address a clients substantive needs in a timely manner. Whencompleting Phase 1, KPMGs primary objective is to obtain an understanding of theorganizations present and projected environment so that we are able to appropriatelydefine the project scope to accomplish the clients goals and meet its expectationsthrough the engagement effort. Specific objectives include:

Design the initial engagement work program and obtain agreement on the scope,objectives, and subsequent phases and activities that will be performed;

Properly set and manage the sponsor(s) and others' expectations.

Summary of Deliverables

The deliverables of Phase 1: Project Initiation:

Engagement letter: a document signed by KPMG and the client, which articulatesthe scope, objectives, assumptions, project plan, billing arrangements, and termsand conditions for an engagement.

Work plan: definition of the team of professionals that will perform anengagement and the activities they will complete to produce a set of agreed-upondeliverables for a client.

Engagement kickoff: a meeting between KPMG engagement team members andclient stakeholders, where an engagement is discussed, questions are answered,logistical arrangements are finalized, and initial activities are begun.

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1.1Obtain approval

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Agree projectdetails

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Ongoing engagement monitoring and administration: a set of procedures foradministering an engagement, following KPMG engagement managementpolicies.

Phase 1 Activities

The activities in Phase 1 are:

Activity 1.1: Obtain approval to proceed with ITPI project

Activity 1.2: Understand/re-confirm key issues, scope and focus

Activity 1.3: Agree project details and establish communication plan

Activity 1.4: Prepare work plan

Activity 1.5: Project Kick-Off



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1.1 Obtain approval to proceed with ITPI projectDescription Input Output Guidelines Tasks Tools

Description

Approval is obtained from the client to begin the project in the form of their signing andreturning a copy of the engagement letter.

Input

Client understanding

Preliminary engagement scope and approach

Output

Delivery of an engagement letter to the client.

Signed engagement letter returned from client

Guidelines

This section provides high-level guidance on submitting an engagement letter and client /engagement acceptance procedures. Each of these is a detailed topic and is addressed inmore detail in other KPMG guidance including, in the US, the Risk Management Manual andthe Opportunity Management System.

All engagement letters must be signed by a KPMG Partner who is responsible for ensuringthat the engagement letter complies with applicable KPMG policies and professionalstandards, including a check for any conflicts of interest that may exist.

In the USA client and engagement acceptance procedures are automated using the Kriskapplication and opportunity administration using the Opportunity Management System.

Tasks

1.1.1 Perform client acceptance procedures (krisk)1.1.2 Perform engagement acceptance procedures (krisk)1.1.3 Perform all required opportunity administrative procedures (OMS)1.1.4 Submit engagement letter and obtain client approval

Tools and Templates

Sample Engagement Letter

Kworld Professional Practice Guidance(http://www.kworld.kpmg.com/usdpp/assurance/home.htm)

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1.2 Understand/re-confirm key issues, scope and focusDescription Input Output Guidelines Tasks Tools



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1.2 Understand/re-confirm key issues, scope and focus

Description

Understanding / confirming the requirements for an initiative involves confirming the scope ofthe engagement (developed in Activity 1.1) with the key client contacts that we will be workingwith and for. More often than not, the approach will be valid. However, sometimes events,issues, or a change in stakeholders can affect the approach. Possible disruptions include:significant changes in management, personnel, labor relations, operating goals, or technologyassets within the client organization; unexpected developments in the clients industry or itsmix of compliance requirements; disruptive technologies, and environmental conditions.Chances of something invalidating the approach will increase, if the time between agreementwith the client on an approach and initiation of on the fieldwork is too long.

The initial approach is usually developed with high-level knowledge of the clientsenvironment. For instance, when KPMG initiates a project with a new client, the engagementteam typically does not gain a detailed understanding of the clients management, culture andoperations, until after kickoff meetings are conducted and initial walkthroughs are completed.As a result, the approach designed during the project initiation phase may not be sufficientlygranular. Practitioners can overcome limitations by expanding the details of the approach, ifnecessary, after reviewing appropriate materials provided by the client and consulting withstakeholders.

Where scope changes do occur, a new engagement letter signed by the client will be required.As in task 1.1 all engagement letters must be signed by a KPMG Partner who is responsiblefor ensuring that the engagement letter complies with applicable KPMG and professionalstandards and policies.

Input

Engagement letter

Output

Amended engagement letter (if necessary)

Guidelines

Validating and or amending the engagement letter is only required where changes haveoccurred since the original was written, in most cases this will not be necessary.

Tasks

1.1.1 Agree and confirm project sponsor(s)1.2.2 Confirm key business and IS issues1.2.3 Collect organizational data (both hard and soft) from client, KPMG and external

sources1.2.4 Analyze the key issues and understand underlying problems1.2.5 Identify/form ITPI team1.2.6 Agree Scope, objectives, and deliverables

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1.2 Understand/re-confirm key issues, scope and focus



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1.3 Agree project details & establish communications planDescription Input Output Guidelines Tasks Tools

Description

Project details need to be communicated to client and KPMG staff including a plan forcommunications between the project team and client staff.

Input

Engagement letter

Client contact list

Output

Agreed project team assignments

Communications schedule and plan Identification of milestones and critical dates

Guidelines

On a small project with relatively few KPMG staff and few client stakeholders an informalapproach will be appropriate. Where the engagement team is larger and or many client staffare involved at different levels then a formal communication plan will be required.

Tasks

1.3.1Agree and confirm project activities/ tasks, participation, budgets, timescales

and deliverables1.3.2 Assign project team tasks and responsibilities

1.3.3Agree the format of status reports with the client to ensure that all required ordesired information is provided.

1.3.4 Determine if routine meetings need to be held, and if so, who the attendees should beas well as the timing of such meetings

1.3.5 Assign specific communication tasks to engagement team members (informal statusreports, schedule of meetings, communication of project progress and issues)

Tools and Templates

N/A



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1.4 Prepare work planDescription Input Output Guidelines Tasks Tools

Description

Preparing a work plan focuses on providing the project team (both KPMG and client staff) withthe work to be performed which involves translating the proposed scope and approach into aset of structured activities that will lead to an intended set of deliverables. A work plan takesinto consideration the work breakdown structure, milestones, critical dates, and resourcerequirements.

Input

Engagement letter

Contact list

Output

Work plan

Guidelines

The work plan may have slightly different sections and/or be structure differently than theengagement letter or the methodology work breakdown structure. This is because severalsections of the WBS in one meeting/workshop at different locations.

Tasks

1.4.1 Prepare/distribute Management Briefing Agenda1.4.2 Conduct Management Briefing1.4.3 Conduct follow-up interviews with management, if necessary1.4.4 Prepare/distribute kick-off meeting agenda

Tools and Templates

Interviews work-paper guide



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1.5 Project Kick-OffDescription Input Output Guidelines Tasks Tools

Description

Kicking-off the project involves holding a meeting with stakeholders, at which time theobjectives, timetable, and work plan will be reviewed and the effort formally launched. Thismeeting provides a setting for establishing uniform expectations among stakeholders from theKPMG engagement team, the client, and other relevant third parties. Furthermore, themeeting gives the engagement team an opportunity to address and resolve any issues relatingto the engagement before work is started. Finally, the meeting provides a forum for answeringquestions from stakeholders that if, left unanswered, could negatively affect the productivityand effectiveness of the engagement

Input

Engagement letter Work plan

Output

Meeting Agenda

Admin arrangements

Monitoring schedule of the engagementand status updates for the client

Guidelines

The number, location and level of clients staff will dictate how this task should be performed.

Often some form of kick-off meeting will start each client site visit, and in a large project keystakeholders may be included in a formal kick off workshop. On a smaller project a meetingbetween the KPMG lead and one or two members of client staff may be adequate.

Tasks

1.5.1 Conduct Kick-Off Meeting1.5.2 Make administrative arrangements required1.5.3 Provide any initial training necessary1.5.4 Set up project monitoring/management system

Tools and Templates

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2. IT ASSESSMENT 3. REPORTING1. PROJECTINITIATION

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2. IT Assessment

.

The scope of the proposed engagement is to complete an assessment of the InformationTechnology (IT) infrastructure, organization and support processes. KPMG deploys ateam of professionals to gain first-hand knowledge of the IT environment. The teamgathers data and insights through observations, interviews, workshops, and diagnostictools primarily at specific client locations. The information gathered through this efforthelps provide a basis for pinpointing opportunities for improvement.

IT Assessment phase focuses on both analyzing key performance metrics and

understanding their business and IT strategies. This allows us to provide feedbackrelated to measured performance risk and controls associated with the followingindicators:

Business/IT Strategic Alignment

Financial Analysis

IT Organization and Governance

Prioritization

Sourcing Decisions

Applications

Technology Infrastructure

Customer and User Satisfaction IT Skills and Competencies

IT Management Practices s

Culture

These indicators or metrics are then compared to benchmarking data purchased from TheGartner Group.

After the client data is compared to industry data, a KPMG-developed Balanced Scorecard

framework is developed to help management determine the business performance drivers. Theuse of the Balanced Scorecard presents various perspectives of how the use of InformationTechnology may be measured and can becomes part of managements continuous improvementprocess rather than a one-time event.

The four perspectives of the scorecard are:

Business contribution



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Internal processes and operations

Customer satisfaction

Organization learning

Phase 2 Activities address numerous focus areas or views of IT. Each focus area hasits own unique string of tasks (or activity). The primary focus areas addressed are:

Perform Benchmark and Financial Analysis

Business and IT Strategy Alignment

Prioritization Process

IT Organization and Governance

Sourcing Decisions

Applications Technology Infrastructure

Customer and User Satisfaction

IT Skills and Competencies

IT Management Practices

Culture

Technology Infrastructure incorporates many topics including: data center, server, andnetwork operations; PC and Help Desk support; and security. Each of these topics may,

at one time, have been considered a separate focus area. They are consolidated intoone activity for the sake of simplicity. Future versions of the methodology may breakthese into separate activities.

The activities in Phase 2 are:

Activity 2.1: Prepare Data Collection Package

Activity 2.2: Perform Benchmark ad Financial Analysis

Activity 2.3: Business and IT Strategy Alignment

Activity 2.4: Prioritization Process

Activity 2.5: IT Organization and Governance

Activity 2.6: Sourcing Decisions

Activity 2.7: Applications

Activity 2.8: Technology Infrastructure

Activity 2.9: Customer and User Satisfaction



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Activity 2.10: IT Management Practices

Activity 2.11: Culture

Activity 2.12: Synthesize Results and Develop Preliminary Reports



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2.1 Prepare Data Collection PackageDescription Input Output Guidelines Tasks Tools



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2.1 Prepare Data Collection Package

Description

Objective: Present client with data collection package for their completion

Assemble surveys (both standard and samples of these that are to be customized) for theengagement, develop documentation requests, select and schedule interviewees and selectand schedule workshop invitees. Also, agree on distribution lists of satisfaction surveys (e.g.)all email accounts will receive survey), agree on which applications client will gather data forinventory.

Input

Engagement Letter

Documentation from planning discussions with client personnel

Output

Documentation Request List

Application Inventory Forms

Customized User Satisfaction Survey Forms

Customized Customer Satisfaction Survey Forms

Initial Interview Schedule

Initial Workshop Schedule

Initial List of Interviewees

Initial List of Workshop Attendees

Guidelines

In an ITPI engagement, it is very important to define which information is to be collected at thebeginning of the engagement. Because ITPI depends heavily on the use of surveys, there areonly limited opportunities to reconfirm or expand on the answers that clients provide. Also,because surveys are completed by client personnel, it is important to explain the datacollection process to them and to communicate definitions, objectives and deadlines forresponses. In order to explain how surveys are to be completed, the surveys themselvesmust be stable early in the engagement process. Three of the forms that clients are asked tocomplete are standardized (ex. Gartner Surveys, Financial Benchmark Surveys and

FQ/TQ/SQ forms) four are customized for each engagement (Customer/User satisfactionsurveys).

Tasks

2.1.1 Develop general information / Documentation request list2.1.2 Select survey topics to be included in benchmarking2.1.3 Compile hard copies of data collection templates into a binder to be given to client2.1.4 Identify client contacts and confirm availability for meetings



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2.1 Prepare Data Collection Package



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2.1.1 Develop general information / Documentation requestDescription Input Output Guidelines Steps Tools



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2.1.1 Develop general information / Documentation request



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2.1.2 Select survey topics to be included in data collectionDescription Input Output Guidelines Steps Tools



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2.1.2 Select survey topics to be included in data collection

Description

Select the set of standard surveys that will be used on this particular ITPI engagement

Input

Engagement Letter

Documentation of planning discussions with client personnel

Gartner Benchmark Surveys

Financial Benchmark Surveys

Application Inventory

FQ/TQ/SQ Forms

Output

All standardized survey forms to be used on this engagement (these will be included in theSurvey and Documentation Binder (notebook) which will be presented to, and reviewedwith, client personnel)

Guidelines

Although some survey forms are not customized for different engagements, the engagementteam still needs to determine which topics will be addressed for particular clients this isessentially an all or some decision. This task relates to those survey forms that are notcustomized for engagements. Gartner data gathering forms cannot be customized for

instance, because Gartner requires the benchmarking data to be provided in a very specificformat. In fact, clients will even need to map some of their accounting data into a chart ofaccounts used by Gartner so that the data used for benchmarking will provide validcomparisons. Gartner provides benchmarking data (and associated data gathering forms) forthe following functions:

Data Center

Midrange

Help Desk

End User Computing

Voice Network and Technology

Wide Area Network

Applications

Similarly, ITPI practitioners do not customize Financial Benchmark data gathering, theApplication Inventory or FQ/TQ/SQ forms. Consistency allows practitioners to compareorganizations and draw valid conclusions.

Steps



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2.1.2 Select survey topics to be included in data collection

2.1.3 Compile hardcopies of data collection templates into a binderto be given to the client

Description Input Output Guidelines Steps Tools

Description

Assemble a binder filled with the data collection templates and any other appropriatedocuments to be given to the client.

Input

Documentation Request List (developed in task 2.1.1)

List of surveys to be included in the engagement (developed in task 2.1.2)

Output

Survey & Documentation Binder (notebook)

Guidelines

This task is a basic procedural step to provide the client with a comprehensive hard copy setof all the data collection documents that will be used for the engagement. This is a useful toolto communicate to the client what KPMG is doing during the engagement and can serve as aconsolidated reference.

Steps

Assemble the data collection documents selected and/or developed in earlier tasks (2.1.1and 2.2.2) and include them in the Survey Binder which will be the basis for orientationsessions with the client

Tools and Templates

N/A



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2.1.4 Identify client contacts and confirm availability for meetingsDescription Input Output Guidelines Steps Tools

Description

Identify client contacts and confirm availability for meetings

Input

Engagement Letter

Documentation of planning discussions with client personnel

Documentation Request List (developed in task 2.1.1)

List of surveys to be included in the engagement (developed in task 2.1.2)

Output

Client Contact listing with contact information Initial interview schedules

Initial workshop schedules

Guidelines

Client contacts must have the experience and knowledge to provide accurate and insightfulinformation. In addition, it is important to include appropriate senior managementrepresentatives to ensure that the results of our procedures will be credible even thoughsometimes those individuals may not have the information we require). Finally, if possible, it isimportant to include those individuals who have the authority and the political capital toimplement the ITRO recommendations and observations so that the client will realize the

greatest possible benefit from our engagement.

Steps

Identify appropriate client contacts for surveys, interviews and workshops,

Develop a listing of proposed client contacts including contact information (telephonenumber, email address, physical address, etc.)

Confirm that contacts identified are available for the activity required (i.e. to completesurveys, meet for interviews and/or participate in workshops). If contacts are notavailable, request that they delegate to other client personnel or explore the possibility ofrescheduling data gathering activities

Solidify the interview and workshop timings and develop initial schedules for each

Tools and Templates

N/A



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2.2 Perform benchmarking & financial analysis

Description

Objective: Answer the question Is IT making effective and efficient use of technology today?(Calculate and interpret measures/benchmarks for data center, EUC, and network. Providefinancial analysis of IT spending (capital and expense))

The focus of this activity is to compare both cost and performance of the clients ITorganization to others. The comparison covers: IT Financials, Applications, Data Centers,End User Computing (Distributed Computing and Helpdesks) and Networks. The analysisshows the relative efficiency of the clients IT organization when compared with other firms ofsimilar size/configuration. This information leads to recommendations about how to addressthe shortcomings shown by the analysis. More specifically:

IT Financials benchmarking addresses the financial aspects of IT resources (technology,FTEs/personnel, other) and IT activities (development, maintenance, production).

Data Center benchmarking covers human resources, technology inventory (includingmainframes and mid range), data center service levels (e.g. technical services support,operations support, direct operations, outsourced facilities, disaster recovery plans) anddata center facilities (e.g. processors utilization, storage space utilization, on-lineworkload).

End User Computing benchmarking covers costs, workloads and quality related to supportand operations of end users. This includes aspects of distributed computing environments(e.g. client servers) as well as cost and workload aspects of helpdesks.

Networks benchmarking covers cost and workload aspects of both voice and datanetworks.

Input

Data collection forms to be filled out by appropriate management personnel/departments

Output

Completed data collection forms for IT Financials, Applications, Data Centers, End UserComputing (Distributed Computing and Helpdesks) and Networks

Guidelines

While there are several data collection activities happening concurrently, the term

benchmarking only applies to those activities that will ultimately make comparisons todatabase averages, a peer group, or other standards or guidelines. In the case of theBenchmark Survey forms, the comparison will be made to an external peer group of ITorganizations. The benchmarking in this case is financial in nature. For quality andperformance comparisons, much of this data can be compared to standards developedthrough the use of applications inventory or user satisfaction survey results (see the individualsurveys or survey examples). Customer satisfaction is not typically benchmarked, as it issubjective. Further financial measures can be collected using the IT Financials template andcompared to industry measures using an external source of data such as the 200x ITSpending and Staffing Survey published by the Gartner Group.



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2.2 Perform benchmarking & financial analysis

2.2.1Familiarize client with data collection approach & deadlines


Description

Familiarize client personnel with the data collection approach, specifically the instructions forthe survey forms, and communicate the need to respond in a timely manner

Input

Survey & Documentation Binder (notebook)

Client Contact listing with contact information

Initial interview schedules


Output

Guidelines

For an ITPI engagement to run smoothly and for clients to receive the greatest benefit for theirinvestment in time and money, client personnel must complete the survey forms accuratelyand in a timely manner. If the clients fail to complete the forms correctly, the resultinganalyses will be invalid. If clients fail to provide documentation and survey information in atimely manner, the engagement will drag on increasing costs and potentially damaging theclients perception of our performance. (Client management should be informed immediately iftheir personnel are not responding in a timely manner because they tend to be skeptical ifinformed after the fact.)

Steps

Familiarize the client with the approach and survey form instructions (clients may beprovided with copies of the Survey & Documentation binder which can form the basis ofthe presentation)

Review interview, workshop and survey response, and data collection deadlines with clientpersonnel. Emphasize the need for quick and accurate responses. Give client personnelanother opportunity to escalate conflicts and scheduling concerns.

Give client personnel contact information so that questions and concerns can becommunicated to the engagement team.

Tools and Templates

N/A



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2.2.2 Collect benchmarking dataDescription Input Output Guidelines Steps Tools



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2.2.2 Collect benchmarking data

Description

Distribute the benchmarking surveys electronically, monitor receipt of responses andcoordinate retention of response data

Input

Survey Binder

Client Contact listing with contact information

Initial interview schedules


Output

Completed Survey forms Listing of responses/non-responses

Guidelines

Several tasks precede actually gathering benchmarking data:

Standard survey forms to be used must be selected and assembled and distributed (Task2.1.2 & 2.1.3)

Client personnel must be taught how to complete the surveys and how to interpret surveyinstructions (Task 2.2.1)

The importance of timely responses must be communicated (Task 2.2.1)

Once the predecessor tasks have been completed, the engagement team should quicklybegin the data gathering process. Quick action is beneficial because instructions aboutcompleting the surveys will still be fresh in the clients mind. Also, the shared understandingsand agreements reached during planning meetings with project sponsors will still be clear.

In addition to acting quickly, once predecessor tasks have been completed, engagement teammembers should also prepare for tasks to be performed after the completed surveys havebeen received. The engagement team members should contact the BenchmarkingCoordinator and inform him or her of when to expect to receive survey data. TheBenchmarking Coordinator will, in turn, inform Gartner group personnel so that they canprepare to receive the data gathering templates and perform the benchmarking tasks.

To distribute surveys, the usual procedure is to distribute electronic copies to the identifiedclient contacts via electronic mail. Manual forms should only be used in the most unusualcircumstances and the additional labor that manual data collection causes should be reflectedin the cost of the engagement. Engagement team members should carefully maintain logs ofwho received surveys and who has responded. Follow-up messages and reminders shouldbe sent periodically. If the deadlines for completion are exceeded, the engagement teamshould contact the delinquent individuals and be prepared to escalate the issue to clientproject sponsors if necessary



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2.2.2 Collect benchmarking data



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2.2.3 Compile results and benchmark client data againstpeer group and/or other standards as appropriate




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Description

When all survey data has been gathered, compile data and perform benchmarking

Input

Completed Surveys

Output

Benchmarking results

Questions or issues identified during compilation and analyses

Guidelines

Once the completed surveys have been received, actual benchmarking can begin. ForGartner surveys, this involves sending data gathering forms to the Benchmarking Coordinator,KPMGs point of contact. The Benchmarking Coordinator will review data collection forms forcompleteness and send completed forms to IT Benchmarking vendor (Gartner) and willreceive benchmarking results back from the Gartner group.

For financial metrics, data compilation and benchmarking is performed by the engagementteam. The financial data provided by the client is used to calculate financial ratios and tobenchmark a variety of ratios and metrics to industry norms and peer group companies. (Beaware that a peer group may be selected in various ways and not simply along industry lines.)

Summary metrics are available from current years IT Spending and Staffing Survey resultspublished by Gartner Group or other source.

Finally, the results of Gartner and Financial benchmarking are assembled and analyzed.

Steps

Send Gartner data gathering forms to the Benchmarking Coordinator

Using financial benchmarking data, calculate financial ratios and perform industry andpeer group comparisons

Receive results of Gartner benchmarking (usually less than 5 working days afterbenchmarking coordinator has submitted the data)

Review results of benchmarking and identify unusual results and apparent strengths andweaknesses.

Tools and Templates

IT Financials WP guide

IT Benchmark WP guide



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2.2.4 Discuss initial benchmark results with clientDescription Input Output Guidelines Steps Tools

Description

Discuss initial benchmark results with client to communicate initial impressions and to identifyanomalies and situations which might require data gathering to be revised.

Input

Draft benchmarking results

Questions or issues identified during compilation and analyses

Output

Summary of initial impressions from benchmarking

Identification of unusual results Identification of areas where data gathering needs to be re-performed

Guidelines

Although ITPI engagements involve qualitative data collection that is just as important asquantitative data collection, it is important to communicate the initial benchmarking results toappropriate client contacts. Communicating initial impressions allows the engagement teamto explore unusual benchmarking results, and in some cases determine if some of the datagathering contained errors or omissions and might need to be revised. Other benefits of earlycommunication with the client include: establishing client buy-in, detection/correction oferrors, explanation of apparent but not actual anomalies, focusing later activities on high-

value/high-risk areas, etc.

Steps

Present initial impressions from benchmarking to client

Present areas of concerns and/or unusual results to client

Determine if and where data gathering needs to be re-performed

Identify areas of focus for future engagement activities

Establish agreement and buy-in for areas of concern and focus

Tools and Templates

N/A



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2.2.5 Make any adjustments resulting from review processDescription Input Output Guidelines Steps Tools

Description

Make any adjustments to benchmarking results resulting from revised or more complete data.Make any adjustments to results based on client feedback

Input

Draft Benchmarking results

Output

Finalized Benchmarking Results

Identification of opportunities for improvement

Guidelines

Once an understanding of the benchmarking results is established, the engagement team can,in conjunction with the client team, decide how to make improvements. These results typicallyform the Internal Perspective of the Balanced Score Card for IT. This is an essential step infinalizing the benchmarking results and gaining buy-in prior to reviewing the results with theCIO or the CIOs boss.

Steps

Gain agreement with client regarding revised benchmarking results

Suggest and discuss opportunities for improvement

Tools and Templates

N/A



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2.3 Business and IT Strategy AlignmentDescription Input Output Guidelines Tasks Tools

Description

Objective: Answer the question: What is the overall assessment of current IT plans andactivities? (Business to IT, IT to business, and/or integrated across businesses.)

The purpose of this activity is to examine whether the client has aligned the overall IT plan totheir business strategies.

Input

Interviews with key company leadership

Strategic Alignment workshop information

Output

Evaluated business plans, IT strategic plans, and associated activities

Strategic Alignment workshop information

Guidelines

In general, the KPMG engagement team is trying to ascertain whether IT is working on theright things, from a business perspective. Specifically, KPMG will assist in the clientsalignment between Business and IT by answering the following:

Can the use of IT lower business operating costs?

Can IT open up new lines of business, new products or services, or new delivery channels(new revenues)?

Can IT consolidate onto a common infrastructure and lower costs?

Tasks

2.3.1 Establish understanding of client industry2.3.2 Establish understanding of client's business strategies2.3.3 Establish overview understanding of current IT environment, roles, and services2.3.4 Establish understanding of long term IT plans (1-3 years)2.3.5 Identify gaps between business plan and IT plan2.3.6 Evaluate existing mechanisms for embedding IT into the strategic planning process on

an on-going basis2.3.7 Conduct Strategic Alignment workshop

2.3.8 Document results of procedures and workshop

Tools and Templates

Business plan example



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2.3.1 Establish understanding of client industryDescription Input Output Guidelines Steps Tools

Description

Characteristics of the client industry cover internal and external factors, possibly motivatingdemand for professional services. They include a clients industry trends, its business model,profitability, size, location(s), technology assets, compliance requirements, buying patterns,and relationships with other professional services, consulting, vendor, and outsourcingcompanies.

Input

Understanding gained through meetings with client management and other personnel

Research services available through Kworld (go to www.kworld.kpmg.com after logginginto the KPMG domain)

Business analysis reports available through the Assurance and Advisory Services Center

Industry segment business models and other information available on the AssuranceSource CDs

Output

Key notes summary of industry understanding.

Guidelines

Completion leg needs summary industry understands of this task will result in anunderstanding of an industry to deliver an approach that will facilitate productive meetings

Steps

Review inputs and alternative sources of information to gather an impression of the clientsindustry

Interview executives to gain their input on what the clients industry looks like

Develop schematic or descriptive profiles of the clients industry

Confirm the accuracy of the profiles with client stakeholders

Tools and Templates

Assurance Source CDs

Kworld



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2.3.2 Establish understanding of client's businessstrategies




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Description

Understanding a clients business model involves comprehending how a business competes(i.e., its mission); how it makes money or achieves desirable return on resources expended inthe case of non-profit entities (i.e., its vision); and what core competencies lead to theproduction and delivery of goods or services.

Input


Business plans, mission statements, statement of business goals and objectives, etc.

Industry segment business models and other information available on the AssuranceSource CDs

Output

An understanding of the clients business strategy

An overview of the client's environment and their position therein, including:o Industry trends and issues

o Key competitors

o Markets the client is operating in and the type of customers they target

o Any strategic alliances, partnerships, joint ventures

o Other major external influences such as regulators, competition etc

o An overview of the client's opinion on their past performance, their

environment, and their competitive position

Guidelines

Gaining a baseline understanding of a client's business strategy is an essential step for asuccessful engagement. An understanding of a client's strategy will help the practitioner toensure that advice and deliverables support the client's objectives.

Some questions do answer during this activity include:

Does the client have a business plan?

Have they shared the business plan with IT?

How much detail does it have with regards to IT?

Steps

Review inputs and alternative sources of information to gather an impression of the clientsbusiness strategy

Interview executives to gain their input on what the business strategy looks like

Develop schematic or descriptive profiles of the business model. This should includecompetitors, industry trends, core competencies, critical success factors, and KeyPerformance Indicators

Confirm the accuracy of the profiles with client stakeholdersRAS ITPI Methodology Page 38Version 1.0


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2.3.3 Establish overview understanding of current IT environment,roles, products and services


Description

The purpose of this task is to review the information technology environment and develop anunderstanding of how a client has designed its information systems function. IT services maybe centralized or distributed, each present challenges in managing IT.

Input

IT Policies and procedures

Technology architectural diagrams

IT organization charts


Output

Completion of this task will result in a basic understanding of the structure of a clientscurrent information technology environment

Guidelines

An understanding of a client's IT environment will help the practitioner to ensure that adviceand deliverables support the client's objectives. We want to determine if the clientsInformation Technology department demonstrates characteristics of excellence?

Steps

Gain an understanding of a clients information technology organization from reviewingrequested documents

Interview the clients Chief Information Officer and IT Managers to confirm thecompleteness and accuracy of the engagement teams understanding of the informationtechnology organizations structure

Document chain of command within and across a clients technology services functions

Document the centralization or decentralization of management across a clientsorganizational units

Update or prepare an organizational chart for a clients information technology services

Validate the organizational chart with key client stakeholders

Tools and Templates

N/A



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2.3.4 Establish understanding of long term IT plans(1-3 years)


Description

An IT plan should be in place which takes into consideration the strategic managementprocess, corporate and internal strategies, growth and change initiatives; and analyzing thesensitivity of IT planning to information risk management needs of the organization

Input

Discussions with top level management and key IT personnel

Obtain IT planning documentation (if any exists)

Output

Understanding of the clients long term IT plans (if they exist)

Gap analysis of client IT plan. Does it contain correct components?

Guidelines

During the review we want to consider the extent to which IT operations have the flexibility andpro-activeness required to support the organization. Further we should evaluate their ability tomeet service level objectives including performance, scalability, flexibility, availability andexecution.

Steps

Review documentation provided by the client and gain a preliminary understanding of ITplanning practices

Interview executives to confirm understanding and explore the alignment of the IT planningprocess with business planning practices

Identify and explore breakdowns in the IT planning process or its alignment with businessplanning practices in order to articulate lessons learned.

Prepare an analysis of alignment between IT planning and strategic managementpractices.

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2.3.5 Identify gaps between business plan and IT planDescription Input Output Guidelines Steps Tools

Description

The purpose of this task is to identify gaps (if any) that exist between the clients business andIT strategy. The understood role/scope of IT as an enabler will help concentrate an effort ondownstream activities in the IT strategy development program.

Input

Data gathered from Tasks 2.3.2, 2.3.3, and 2.3.4

Understanding gained through meetings with client management and IT personnel

Output

A profile of the disparity (if any) between clients business and IT plan

An updated IT Plan with gaps filled in

Guidelines

Identify whether or not the technology vision of IT is shared across all functions of thebusiness to enable business process linkage across organizational functions.

The purpose of this task is to understand how well existing IT is aligned to the business. Theeffectiveness of the IT strategy and the extent of IT to the business can be assessed byexamining:

IT investment match with business priorities (through IT Financial Analysis)

Extent of IT support to business requirements and priorities (through measurement ofService Level Requirements and/or user satisfaction)

Steps

Using data collected through interviews and from business and IT plans, identify existinggaps

Communicate existing gaps to client. These gaps should be used to determine the scopeof improvement possible.

Tools and Templates




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2.3.6 Evaluate existing mechanisms for embedding ITinto the strategic planning process on an on-goingbasis


Description

This task evaluates the existence of methods for incorporating IT into the clients strategicplan.

Input

Business plan

IT plan

Interviews with key personnel

Output

Understanding of the existing mechanisms for integrating IT into the strategic planningprocess

Guidelines

Identify whether or not each business unit incorporates what it wants from IT over the planninghorizon into its own planning process and what business problem IT may help solve.

Some questions do answer during this activity include:

Is the strategic business plan shared with IT?

How much detail does the clients strategic planning process have with regards to IT? Does the IT plan clearly show relevance to the strategic business plan

Has IT been effective in the past at delivering benefits identified by the business unit? Whyor why not?

Steps

Use data collected through Tasks 2.3.2 2.3.5 to formulate a profile of the degree inwhich IT is incorporated into the strategic planning process.

Prepare suggestions based on findings

Communicate suggestions to client

Tools and Templates




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2.3.7 Conduct Strategic Alignment workshopDescription Input Output Guidelines Steps Tools

Description

Perform Strategic Alignment workshop with appropriate senior level personnel (both IT, andnon-IT) to further gauge the degree of alignment between the business and IT.

Input

Interviews that will identify appropriate personnel to include in workshop

IT Financial Results showing spending breakdown by department or business unit

Output

Understanding of business and IT alignment

Guidelines

The Strategic Alignment workshop should engage in answering the following questions:How is IT viewed from an investment perspective?How are investment decisions and funding related to IT achieved?What does IT strive for in terms of implementing new technologies?What is the relationship between IT and the business?What is the dominant service philosophy?What is the approach for IT development?What type performance measures (KPIs) are used to assess the IT organization?What type of correlation exists between IT performance and business results?

How flexible is resource allocation?

Steps

Identify participants to include in workshop

Conduct workshop

Document critical findings

Communicate critical findings to client

Tools and Templates

N/A



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2.3.8 Document results of procedures and workshopDescription Input Output Guidelines Steps Tools

Description

Data collected from the various techniques (interviews, workshops, etc) of obtaining businessand IT alignment information should be documented. This will be useful in developing the finalrecommendation.

Input

Business/IT alignment data gathered in tasks 2.3.2 2.3.7

Output

Documented results of findings in tasks 2.3.2 2.3.7

Guidelines

Steps

Assemble all data gathered

Document all data compiled and highlight significant findings

Communicate significant findings to client

Tools and Templates



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2.4 Prioritization ProcessDescription Input Output Guidelines Tasks Tools

Description

Objective:Answer the question: How does the company ensure that IT resources areinvested in work which is of the highest business value to the company? (MIS vs. non-MIS;within MIS, etc.)

Evaluate the process for proposing, evaluating, approving and prioritizing Projects

Input

Interviews/workshops with key personnel from IT and user departments

Interviews of senior management in and outside IT, including CEO

Any business cases prepared for applications. ERP, or infrastructure initiatives.

Output

Evaluated prioritization and work initiation processes

Guidelines

Project evaluation and prioritization processes work to allocate an organizations resources,financial and otherwise. These activities can be complex as they may combine, budgeting,cost/benefit analysis, net-present-value (NPV) calculations, Return on Investment (ROI)

calculations, knowledge of corporate and IT strategies, technical feasibility, functionalrequirements definition, infrastructure requirements, etc.

Project evaluations are complicated by the fact that knowledge about the relevant issues mayreside in several different corporate functions. The skills required to perform the financialanalysis component of a project evaluation traditionally reside in the finance or accountingfunctions. Understanding of strategic plans usually resides with very senior leadership and isroutinely regarded as too sensitive to share with the functional units that are expected tosupport those strategies. Even understanding of technical issues which traditionally resideswithin the IT function is often divided between those who are familiar with applicationfunctionality and those who understand infrastructure components (network, operating system,etc.)

Although processes for proposing, evaluating, approving and prioritizing Projects can bedifficult and complex, they can also be managed, and if a process is well managed it can beprocessed and approved. This activity focuses on determining if the client applies asystematic, rigorous and consistent approach to allocating their corporate resources toProjects. We begin by gaining an understanding of the existing process in task 2.4.1. Thenext step is to focus on the formal aspects of developing a business case, (i.e. the stepsfollowed to ensure that a particular Project makes business sense). Finally, we combine ourunderstanding of the current processes and business case development activity with a review



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2.4 Prioritization Processof the current and proposed portfolio of Projects to determine if IT resources are beinginvested appropriately. We summarize our analysis, validate our conclusions and makerecommendations regarding opportunities for improvement.

Tasks

2.4.1Review and document "as is" work initiation and prioritization processes2.4.2Evaluate client procedures to develop business cases2.4.3Determine if IT resources are invested in work which is of the highest businessvalue to the company (ROI analysis)

Tools and Templates

Prioritization example



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2.4.1 Review and document "as is" work initiation and prioritizationprocesses




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Description

Review and document current (as is) procedures for proposing, evaluating, approving andprioritizing Projects

Input

Documentation of policies, procedures and specific examples provided by client

Client Contact listing with contact information (output from Task 2.2.2)

Interview schedules (output from Task 2.2.2)

Output

Summary documentation of as is prioritization process Preliminary Improvement Opportunities (quick hits)

Guidelines

Establishing an understanding of the current procedures for proposing, evaluating, approvingand prioritizing Projects is a necessary first step in assessing performance and identifyingopportunities for improvement. KPMG personnel should gain an understanding of the processfor pursuing IT initiatives from inception to final delivery. KPMG personnel should develop anunderstanding of these processes that includes, but is not limited to, the following areas:n Formality versus Informality Provides insight into the degree of systematic analysis, the

role of political influence, use of formal metrics and post implementation review to

determine if original goals were met and if estimates were consistent with actual results.n Standard Estimating Guidelines Allows apples to apples comparisons. One of the

simplest ways to make one alternative appear more attractive than another, is to applydifferent assumptions to very similar situations. Assumptions regarding hardware costs,programmer productivity, discount rates, weighted average cost of capital, internal rate ofreturn, hurdle rates, etc. should all be standardized. Standard estimating guidelines allowalternative projects to be compared as directly and fairly as possible

n Consideration ofBoth Business and Technical Requirements Allows identification ofcommon causes of project failure. Projects routinely fail, or have difficulty, becausebusiness requirements and technical capabilities are considered in isolation. Anexaggerated focus on business requirements can result in scope creep and investment inbells and whistles which may be convenient but are not necessary or cost justified. An

exaggerated focus on technical requirements can result in highly efficient systems whichdo not meet users needs.

n Coordination Between Stakeholders Provides insights into how well the interests ofdifferent constituencies are represented. Projects, especially large projects, can impactmany different groups and departments. The practical steps, and formal guidelines, thatan organization has in place to assess the impact of projects on various groups provide ameasure of how well the organization gains user buy-in and may also be an indication ofhow good the organization is at capturing synergies provided by IT systems.



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2.4.2 Evaluate procedures to develop business casesDescription Input Output Guidelines Steps Tools



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2.4.2 Evaluate procedures to develop business cases

Description

Evaluate procedures followed to develop business cases

Input

Summary documentation of as is prioritization process

Preliminary Improvement Opportunities (quick hits)

Results of benchmarking analyses

Documentation of policies, procedures and specific examples provided by client



Output

Documentation of current procedures for developing business cases

Preliminary Improvement Opportunities (quick hits) for business case development

Guidelines

This task may be regarded as a drill down on certain aspects of the procedures forproposing, evaluating, approving and prioritizing Projects. This task focuses on formalconsideration and analysis of financial metrics as the basis for justifying or rejecting particularproposed projects. The formality and rigor of business case development flows through toother aspects of project consideration discussed in task 2.4.1. Rigorous and formalizedbusiness case development can promote good decisions (accepting project with appropriate

ROIs) and can minimize certain behaviors (e.g. pursuing pet projects) that might lead torisky or inappropriate decisions.

The reasons that we choose to focus on business case development are twofold:(1) The purpose the vast majority of business investments is to generate a positive

return on investment (increase revenue or decrease costs net of taxes and otherconsiderations). The business case for a project does, or should, reflect the analysisand consideration of the return on the clients investment.

(2) The costs and benefits of Projects are notoriously difficult to capture. Manyorganizations justify particular investments based on vague assertions of strategicnecessity or competitive pressures. However, the ultimate benefit of such projectsshould be reflected in improved financial results. Once again such information is, or

should be, reflected in a business case.

There are times when it is appropriate for an organization to pursue a project which may nothave an quantifiable positive return on investment. There are also situations where the cost ofquantifying the benefits of a project exceed the benefits obtained (i.e. excessive informationcosts). However, the business case for such projects should reflect why a decision toproceed is appropriate despite quantifiable indications to the contrary. The business caseshould highlight such decisions (rather than concealing them) so that senior management isaware of, and supportive of, such initiatives.



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2.4.2 Evaluate procedures to develop business cases



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2.4.3 Determine if IT resources are invested in work which is of thehighest business value to the company




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Description

Determine if IT resources are being invested appropriately

Input

Comprehensive understanding of business and IT alignment ( developed in Task 2.3.7)

Summary documentation of as is prioritization process (developed in Task 2.4.1)

Preliminary Improvement Opportunities (quick hits) for prioritization process (developedin Task 2.4.1)

Documentation of current procedures for developing business cases (developed in Task2.4.2)

Preliminary Improvement Opportunities (quick hits) for business case development

(developed in Task 2.4.2)

Output

Summary of observations and improvement opportunities

Identification of particular projects and plans that may not be appropriate

Guidelines

This task consists of summarizing the results of the previous two tasks (2.4.1 and 2.4.2) andvalidating conclusions and recommendations with the client. In addition, an analysis of theclients current and planned project portfolio is performed and the appropriateness of such

investments is considered. While simple to describe, this activity is extremely challenging.Critiquing projects that have already been approved can be an extremely political andsensitive process. Conclusions must be supportable, and recommendations to clients mustbe discussed with appropriate client contacts before being presented to a wider and/or moresenior audience.

Steps

Obtain and review a listing of the clients recent, current and planned project portfolio

Obtain and review business cases for significant projects and review them forcompleteness, compliance with standards, consistency in estimates and application offinancial requirements (hurdle rates for ROI, etc.)

Conclude as to the appropriateness of the clients current and planned project portfolioand identify specific projects than should be accelerated, delayed or reconsidered

Validate conclusions regarding the project portfolio with appropriate client personnel

Review and analyze prioritization process documentation and identify opportunities forimprovement

Combine prioritization process opportunities for improvement and quick hits and validatewith appropriate client personnel

Review and analyze business case development process documentation and identifyopportunities for improvement



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2.5 IT Organization and GovernanceDescription Input Output Guidelines Tasks Tools

Description

Objective: Answer the question: Which organizational structure is required to meet changingbusiness and technology environments?

Determine the appropriateness of the shape and structure, business interface, and resourceprofile for the IT organization, and assesses the overall maturity of IT governing and controlrules, and practices (including methodologies and policy standards). Also includes the informalcommunication flows, spheres of influence and decision-making networks.

Market dynamics and organizational growth result in a continuing demand from the businessfor new technology enabled solutions. This pressure results in a constantly evolving business

and IT architecture. In order to effectively service these needs, it is important to develop a pro-active framework that ensures IT-business alignment, identifies new IT enabled opportunities,manages the risks and co-ordinates overall the IT activities.

Input

Interviews of senior management in and outside of IT, including CEO

Output

Evaluated organization and governance processes

Guidelines

Tasks

2.5.1Confirm IT Organization and Governance documentation is current & accurate2.5.2Establish understanding of current IT organization and governance structure2.5.3Compare and contrast current IT organization and governance structure withthose of similar or relevant organizations2.5.4Determine how current IT organization and governance processes areperceived by

management outside and within IT function

2.5.5Create "straw-man" of alternative IT organizations and governance structuresdocumenting pros and cons of each alternative2.5.6Discuss various alternatives with key personnel

2.5.7 Determine if alternatives different than current environment will be recommended.

Tools and Templates



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2.5.1 Confirm IT Organization and Governancedocumentation is current & accurate


Description

Confirm that IT Organization and Governance documentation is current and accurate

Input

Documentation provided by client including policies, procedures and organizational charts



Output

Current documentation

Guidelines

This task is very simple and procedural in nature. Clients will routinely provide documentationwhich may not be current and/or may not reflect the procedures that are actually followed. It isimportant to ensure that documentation is current and accurate before investing effort inanalyzing the contents of such documentation. If documentation provided by the client is notaccurate, updated documentation should be provided by the client. If the client cannot providesuch documentation, it may be appropriate for KPMG personnel to obtain an understanding ofIT Organization and Governance by other means (interviews, observations, etc.) however, theadditional cost and effort should be discussed with the client and reflected in the fees for the

engagement.

Steps

Confirm with appropriate client contacts that the documentation provided is current andaccurate

If documentation is not current and accurate, obtain updated documentation

If current and accurate documentation is not available, request that client develop suchdocumentation or obtain approval to gain information through alternative means (ensurethat any increases in engagement costs are communicated to engagement manager andapproved by client sponsor)

Tools and Templates

N/A



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2.5.2 Establish understanding of current IT organizationand governance structure


Description

Establish understanding of current IT organization and governance structure

Input

Documentation provided by client including policies, procedures and organizational charts



Output

Summary of understanding of current IT organization and governance structure Preliminary Improvement Opportunities (quick hits) for IT organization and governance

structure

Guidelines

This task consists of establishing an understanding of the organization of the IT function,reporting relationships, roles & responsibilities and assignment of tasks and duties. Thisknowledge is essential for assessing the governance structure and for proposing alternativestructures. It is also important to determine if the IT function reports to an appropriately highlevel in the organization. More traditional organizations may regard IT activity as a purelysupport function and fail to recognize the strategic benefits that IT can provide. It is also

important to understand how IT is aligned to support business units. Close associationbetween business units and application support groups can result in improved coordinationand superior internal customer satisfaction. However, centralization of certain IT functions canlead to very significant cost savings. This different factors should be balanced in theorganization structure of the IT function.

Steps

Review documentation relating to the IT organization and governance structure

Interview appropriate client personnel IT organization and governance structure

Based on review of documentation and interviews with client personnel document asummary of the IT organization and governance structure

Identify strengths, weaknesses and opportunities for improvement relating to ITorganization and governance structure

Identify preliminary improvement opportunities

Tools and Templates

N/A



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2.5.2 Establish understanding of current IT organizationand governance structure



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2.5.3 Compare and contrast current IT organization andgovernance structure with similar organizations




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2.5.3 Compare and contrast current IT organization andgovernance structure with similar organizations

Description

Compare and contrast current IT organization and governance structure with those of similaror relevant organizations

Input

Summary of understanding of current IT organization and governance structure

Preliminary Improvement Opportunities (quick hits) for IT organization and governancestructure

Output

Documentation of unique characteristics of clients IT organization Documentation of industry or function specific organizational characteristics

Preliminary identification of alternative organizational structures

Guidelines

Comparing and contrasting the organization of the clients IT functions is reasonablystraightforward. The structure of the organization is examined and significant characteristicsare identified. These characteristics are compared to those of similar organizations or tothose of organizations which might be dissimilar but relevant. For example, a manufacturingorganization which might traditionally be production driven could use comparisons toconsumer products organizations in an effort to become more closely aligned with their

customer base.

Issues to be considered include, but are not limited to, the following:

Level of Reporting In the past, IT often reported through finance and accountingfunctions to Senior Management. This was due to the fact that finance and accountingapplications were usually some of the first functions to become automated. It was alsocommon to have IT as a component of an operations function which handledinfrastructure, facilities, etc., once again, effectively a support activity. Today, IT should bereviewed as a strategic enabler. In order to realize the strategic benefits that IT canprovide, it is generally best for the IT function to report to a C-Level executive.

Assignment of Routine Functions There are certain basic IT activi

Documents

ITPI Methodology Version 1.0 Final