New CIO at John Smith Corporation

Part – A.

JohnSmith Corporation (JSC) is a very large global corporation with presence in over 100 countries. It
has presence in some 10 sectors with the main sector accounting for 38% of its revenue and 45% of
profits.

In early 2002, it had a decentralised IT organisation – at the Sector level i.e. each sector had its own
IT infrastructure and dedicated CIOs responsible for all aspects of IT. Only e-mail and a very small
number of common websites were handled by the Corporate IT function. Most of the critical
applications used in the sectors were homegrown or heavily customised off the shelf packages. The
premise for this approach was that each business sector should have the freedom to compete and
grow in its markets and should be able to rapidly adapt to market opportunities and competition.

The CEO who took charge in late 1990's had initiated a program to consolidate and integrate various
functions such as IT, HR, Finance, Legal, Safety , Govt Relations etc with the aim of realising
synergies and standardisation across the enterprise.

In 2002 , a new CIO ( Mr.Mark) was hired from another very large corporation that had gone through
a similar consolidation of IT function. His mandate was to consolidate and standardise the IT
function without disruption and , at the same time, provide the sectors the agility they needed to
compete and grow. His task was to get major part of this process completed in 4 years. In his
previous assignment , Mark had used 2 large Indian IT Outsourcing companies in the IT Consolidation
Program.

Questions :

1. Identify the key risks the CIO faces.

2. Draw up a risk management plan.
3. You are part of the Business Development team of the IT Outsourcing Company. Based on
the limited information above, draw up a roadmap for achieving Mark's task. Justify your
recommendation(s).

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Part –B

The CEO formulated the corporate strategy in late 2002. A key part of it was growth through
acquisition and disposal of non-strategic businesses/Country operations. The Company grew three
fold in Size (Sales Turnover) in 2 years i.e. by late 2004. The CEO had justified the acquisitions based
on a large synergy savings ( net of Integration costs) and greater competitive strengths. It brought a
variety of new IT infrastructure, systems and many more IT People, many of whom cherished the
autonomy in managing their own IT systems.

The process of acquisition brought some new country operations into JSC's business . Several of
these were low cost countries with poorer Communication and Physical Infrastructure. IT Cost per
person in these countries was about 22% of the cost in the US or UK. These countries also were the
ones where high business growth was expected over the next 10 years. While the western markets
were expected to grow at about 2% p.a., the new markets were expected to grow at about 10% p.a..

Around the same time as the acquisitions, US regulations ( such as Sorbans-Oxley and regulations
related to Safety , taxation, bribery/ethics ) came into force. Some of these regulations applied to
all parts of the world, not just the US.

The CFO has asked the CIO to incorporate the above into the IT Program and come up with key
recommendations and requests .

Question :

What should be the key elements of the IT Program ?

Identify the key IT risks and develop a Risk Management plan.