chapter iv problem analysisthesis.binus.ac.id/asli/bab4/bab4_06-19.pdf · internal value chain and...

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CHAPTER IV PROBLEM ANALYSIS 4.1. Business Profile The objective of PT Sampoerna Telekomunikasi Indonesia (STI) is to become low cost telecommunication provider. The company will serve mostly rural subscriber not accessible by other telecommunication provider. The company must operate as efficiently as possible in order to achieve this objective. IT is perceived as strategic tools to operate efficiently. 4.1.1. Current Internal Environment Currently STI has two (2) major applications in use that is real time billing application and customer care applications. The service that STI offers to its subscribers is voice, SMS and Internet. The subscriber of STI is divided in three (3) categories: individual, corporate and wartel/warsel. Each category has a different business rules applied to it. 29

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Page 1: CHAPTER IV PROBLEM ANALYSISthesis.binus.ac.id/Asli/Bab4/bab4_06-19.pdf · Internal Value chain and relationship ... STI External value chain 4.2. Analysis 4.2.1. Business Model

CHAPTER IV

PROBLEM ANALYSIS

4.1. Business Profile

The objective of PT Sampoerna Telekomunikasi Indonesia (STI) is to become low

cost telecommunication provider. The company will serve mostly rural subscriber not

accessible by other telecommunication provider. The company must operate as

efficiently as possible in order to achieve this objective. IT is perceived as strategic

tools to operate efficiently.

4.1.1. Current Internal Environment

Currently STI has two (2) major applications in use that is real time billing

application and customer care applications. The service that STI offers to its

subscribers is voice, SMS and Internet. The subscriber of STI is divided in three (3)

categories: individual, corporate and wartel/warsel. Each category has a different

business rules applied to it.

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STI is supported by an internal IT group. The charter of the internal IT group is:

The Information Technology Group is responsible for the development,

deployment and management of all world class Information Technology

solutions within the company. These solutions should be delivered on

time, in budget and within the service targets laid out in the relevant

Service Level Agreements

4.1.2. Market Competition

There are currently 7 telecommunication operators in Indonesia. They are Telkom

(including Telkom PSTN, Telkomsel, and Telkom Flexi), Indosat (including

Satelindo, IM3 and StarOne), Excelcom, LippoTel, Mobile 8, Bakri Telecom (Esia)

and CAC. Four of the operators are publicly listed company on Jakarta Stock

Exchange, they are Telkom, Indosat, Excelcom and Bakrie Telecom. Two of the

operators are also publicly listed on New York Stock Exchange, that is Telkom and

Indosat. Information on financial or number of subscriber from these publicly listed

companies is easier to collects. Majority market share of telecommunication

subscriber in Indonesia is owned by Telkom and Indosat.

Periodically, these operators (even the non publicly listed operator) are publishing

their information on media.

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Table 4.1. Number of Subscriber and ARPU

ARPU (in thousand rupiah)

(2004/12)

Operator Service Type Subscriber (in

thousand)

(2005/04) Prepaid Postpaid

Telkom Fixed 8200 n/a n/a

Telkomsel Mobile 18500 95 125

Telkom Flexi Fixed 1800 128

Indosat Mobile 12500 92 104

StarOne Fixed 115 60

Excelcomindo Mobile 5000 94 105

LippoTel Mobile 100 71

Mobile 8 Mobile 500 100

Esia Fixed 250 84

CAC Mobile 0

ARPU or Average Revenue per User is an indicator of gross revenue of

telecommunication operator. ARPU is calculated on a monthly basis. ARPU is

usually different between prepaid (pra-bayar) and postpaid (pasca-bayar) subscriber.

Composition of subscriber is usually 90% prepaid and 10% postpaid for each

operator.

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4.1.3. Current Mobile Technology

Technology used by each competitor is as follows,

Table 4.2. Telecommunication Technology

Operator Technology Frequency

(MHz)

Service Type

Telkom PSTN Fixed

Telkomsel GSM, GPRS, EDGE 900/1800 Mobile

Telkom Flexi CDMA2000/EVDO 800/1900 Fixed Wireless Access

Indosat GSM, GPRS 900/1800 Mobile

StarOne CDMA2000 800/1900 Fixed Wireless Access

Excelcomindo GSM, GPRS 900 Mobile

LippoTel GSM 1800 Mobile

Mobile 8 AMPS, CDMA1,

CDMA2000/EVDO

800 Mobile

Esia CDMA2000 800 Fixed Wireless Access

CAC WCDMA 2100 Mobile

4.1.4. Internal Value chain and relationship

According to value chain (figure 4.1), competitive advantage could be achieve by

increasing the value of individual value chain activity or reconfiguring value chain.

Included in the value chain are:

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1. Inbound logistics

2. Operations

3. Outbound logistics

4. Sales and marketing

5. Servicing

6. Support activities infrastructure

7. Human resource management

8. Product and technology development

9. Procurement

Figure 4.1. Value Chain

Detailed value chain activities are:

1. Inbound logistics

1. Receiving inventory for sale

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2. Receiving network asset

3. Quality control

2. Operations

1. Customer service

2. Service assurance

3. Technology infrastructure

4. Billing

3. Outbound logistics

1. Distribution

2. Return inventory

3. Invoicing

4. Sales and marketing

1. Promotion

2. Sales analysis

3. Market research

5. Servicing

1. Warranty

2. Maintenance

6. Support activities infrastructure

1. Legal

2. Accounting

3. Financial management

7. Human resource management

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1. Personnel

2. Payroll

3. Recruitment

4. Training

5. Manpower training

8. Product and technology development

1. Developing service

2. Research and Development

9. Procurement

1. Supplier Management

2. Funding

3. Subcontracting

4.1.5. External Value Chain Analysis

STI receives inventories fro sale from manufacturer. These inventories include:

1. Handset CDMA2000 1x at 450MHz, with accessories

2. Starter pack (RUIM cards)

3. Top-up voucher (scratch cards)

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These inventories are then sold to subscriber, either directly from STI’s front shop or

through dealer / agent. The external value chain of STI could be seen on figure 4.2.

Manufacturer STI Dealer / Agent Customer

Value and Demand Information

Cost and Supply Information

Figure 4.2. STI External value chain

4.2. Analysis

4.2.1. Business Model

ETOM is categorized into 3 major categories:

1. Strategy, Infrastructure & Product

2. Operations

3. Enterprise Management

Each of these categories has sub-categories and can be drilled down to several layers.

Each ETOM item describes a business process that must be provided by an operator

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in order to operate effectively. Each of ETOM item is translated into business process,

and depending on the complexity of the business process, a tool might be required to

support the execution of that particular business process. The role of IT in supporting

the adoption of ETOM in the organization is by providing tool.

ETOM level 0 or CEO view provides the following

Strategy, Infrastructure & Product Operations

Market, Product & Customer

Service

Resource (Application, Computing and Network)

Supplier / Partner

Customer

Suppliers and Partners

Enterprise Management

Shareholders Other StakeholdersEmployees

Figure 4.3. The eTOM Level 0 View

Case study in implementation of ETOM for Global IT architecture provides the

following mapping,

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Figure 4.4. eTOM mapping in Vodafone

Hence, adoption of ETOM would require STI to provide the following business

process and possibly its tools

Table 4.3. Mapping of eTOM to STI

1. Market/Sales, Product and Customer 1.1. Sales & Marketing 1.2. Business Intelligence & MIS 1.3. Customer Management 1.4. Content Management 1.5. Billing 2. Service 2.1. Service Management

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2.2. Provisioning & Fullfillment 2.3. Rating 3. Resource 3.1. Network Management 3.2. Network Infrastructure 3.3. IT Infrastructure 4. Supplier/Partner 4.1. Supplier/Partner Management 5. Enterprise Management

4.2.2. SWOT Analysis

SWOT analysis of STI provides the following result

Table 4.4. SWOT Analysis

Strength Weaknesses

CDMA, more options

Low cost

Experience in rural market

Small agile company

No legacy technology

Lack of distribution

network

Lack of coverage

infrastructure

Lack of human resources

Large CAPEX required

Opportunities

Only operator on 450 MHz

frequency band

Targeting rural subscriber

inaccessible by competitor

More manufacturers are

Improving resource

efficiency

Improving operational

efficiency

Increasing price

Integrated Support

System

Improving Sales support

capabilities

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supporting CDMA 450

competitiveness

Create smart and

attractive packaging

Researching on new

offering

Threat

Highly competitive industry

Coverage expansion of

competitor

More education effort

required

New Technology, i.e.

WiMAX, GSM 450

Increasing service

coverage

Reducing inventory cost

Customer quality

experience

Increasing responsiveness

Improving supply chain

efficiency

Improving operational

readiness

Improving personnel

capabilities

Strength

1. Offering CDMA services, with more options going forward. CDMA is the

latest cellular technology. It provides more features and options compare to

other mature cellular technology, notably GSM.

2. STI is set to become a low cost provider, primarily due to it lower frequency.

Lower frequency means lower number of cellular infrastructure to be

provided.

3. STI has an experience of dealing with rural market. As the only operator

specializes in rural market, STI clearly has a competitive advantage in term of

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experience compare to other operator which specializes mostly in urban

market.

4. STI is a small company, there is not much bureaucracy. The company is more

agile compared to its bigger competitor.

5. STI does not have legacy technology that needs to be maintained. STI is a

start up company; no legacy technology exists in the company.

Weakness

1. Lack of distribution network. STI is using a unique frequency. Hence, unlike

any other operator, STI can not depend on external distribution channel to

provide terminal / handset. STI must provide its own distribution channel.

2. Lack of coverage infrastructure. STI is a start up company, deploying cellular

services would require time.

3. Lack of human resources. The numbers of STI staff are too small to be able to

operate effectively.

4. Large capex required. STI is a start up company; hence it requires large

capital in order to be able to provide cellular services. Cellular operator is a

capital intensive investment.

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Opportunity

1. STI is the only operator having license in the 450 MHz frequency band. This

frequency is enabling STI to provide larger coverage with fewer

infrastructures.

2. STI is targeting rural subscriber which is un-tapped by other operators. Other

operators are targeting urban market with high teledensity.

3. Around the world CMDA 450 is gaining momentum, with more manufacturer

provides equipment for CDMA 450. This will drive down the cost of the

terminal / handset.

Threat

1. Telecommunication industry is a highly competitive industry, competition

will be tough.

2. Coverage expansion of other operator could potentially take customer away

from STI’s service.

3. Since most of STI’s customer is rural market, more effort is required to

educate customer.

4. Entrance of new technology, especially GSM450 and WiMAX.

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To deal with weakness and threat faced by STI, STI should:

1. Improving resource efficiency, this would involve in increasing efficiency of

the resource usage in order to achieve company objective to become a low

cost operator.

2. Improving operational efficiency, this would involve in increasing efficiency

of daily operation in order to achieve company objective to become a low cost

operator.

3. Increasing price competitiveness, this would involve creating attractive price

of the terminal / handset itself and attractive price of the service / tariff.

4. Create smart and attractive packaging; this would involve creating packaging

that would appeal to mostly rural customer.

5. Researching on new offering, this would involve on researching on offering

based on CDMA technology that is usable to create smart and attractive

packaging.

6. Integrated Support System, this would involve in creating a single data source

that would be used by company wide application to expedite data extraction.

Hence all application would have a single view of the data.

7. Improving Sales support capabilities, this would involve in providing logistic

and POS application that would enable sales division to operate effectively.

8. Increasing service coverage, this would involve in providing larger service

coverage other than the existing coverage.

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9. Reducing inventory cost, this would involve better management of inventory

of terminal / handset in order to avoid over stock in one area and under stock

in other area.

10. Customer quality experience, this would involve in provide the customer with

the best experience in dealing with STI.

11. Increasing responsiveness, this would involve in increase responsiveness of

STI toward customer’s query.

12. Improving supply chain efficiency, this would involve in increasing efficiency

of supply chain that is provided by STI to provide terminal / handset to

customer.

13. Improving operational readiness, this would involve in increasing operational

readiness of STI’s operation division.

14. Improving personnel capabilities, this would involve in increasing the quality

of STI’s personnel.

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4.2.3. Porter’s Five Forces

Five forces analysis of STI could be seen on figure 6. The analysis is done on the

assumption that STI is offering basic communication services to rural subscribers.

Figure 4.5. Porter’s five forces

Bargaining power of supplier: Medium

• STI purchase terminal/handset in bulk directly from manufacturer. There are a few manufacturer in the world

Bargaining power of buyers: Medium

• Buyer could purchase competitor’s service

• For some buyers, STI is the only telecommunication provider.

Threat of new substitute product / service: Low

• Satellite communication (expensive)• Non interactive communication (i.e.

POS, telegram, telex)

Rivalry amongst existing competitor: High

• Telecommunication operators are continuously offering discount/bonus to attract subscriber

• Market leader has total subscriber equal to that of the sum of other operator

• Competitor could decide to enter rural market with low teledensity

Threat of new entrants: Low • High investment required to be a

telecommunication operator. • No other competitor is licensed to

operator on 450MHz frequency band

Threat of new entrants is considered low due to the fact that:

1. There is a high investment cost required to be a telecommunication operator.

This cost would cover license and capital.

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2. Currently, no other operator is licensed to operator on 450MHz frequency

band, and government is not offering 450MHz to other operator.

Bargaining power of buyer is considered medium due to the fact that:

1. For some buyers, STI is the only telecommunication provider. Other operators

are not interested to provide coverage if the buyer is located in an area with

low teledensity.

2. If competitor decides to enter the low teledensity market, there is a possibility

that the buyer would switch to competitor’s offering although this would cost

buyer a significant amount of money since their terminal / handset (purchased

from STI) is not usable on the competitor’s service. This is due to frequency

difference.

Threat of new substitute product / service is considered medium due to the fact that

competitor could decide to enter low teledensity market even though they will loose

money.

Bargaining power of supplier is considered medium due to the fact that STI always

purchase terminal / handset directly from manufacturer in bulk quantity. There are a

few manufacturers in the world. STI need to purchase its own terminal / handset since

the handset is specific to 450 MHz frequency. The market usually offers a very

competitive price on their product.

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Rivalry amongst existing competitor is high due to the fact:

1. Competitors are continuously offering discount / bonus for their subscriber.

2. Market leader (Telkomsel) has total subscriber of 18,500,000. This number is

bigger than the number of subscriber from all other operator combined. It

would be extremely difficult to challenge Telkomsel.

4.2.4. Strategic Group Map

Different competitive position of industry rivals in cellular industry is shown in

competition map of STI is as follows,

High

Low

Rural UrbanCoverage

Serv

ice

Pric

e STI

Telkom Flexi

EsiaStarOne

Telkomsel Excelcom

Satelindo

Mobile 8

Figure 4.6 Strategic Group Map

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4.2.5. Balanced Scorecard

Balanced scorecard model of STI is as follows,

Figure 4.7. Balanced Scorecard Model

The objective of STI is mapped into Balanced Score Card as follows,

Table 4.5. BSC Financial Perspective

Financial Perspective

Objective Measure Parameter

To increase corporate value

ROE High

To increase revenue Revenue High

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To improve resource efficiency

Ratio of Cost per subscriber

Low

Table 4.6. BSC Customer Perspective

Customer Perspective

Objective Measure Parameter

Customers quality experience

Customer churn rate Low

Creating smart & attractive packaging

Customer growth High

Increasing service coverage

Customer growth High

Increasing price competitiveness

Service price vs competitor price

Increasing Responsiveness

Customer Care Response Time

Low

Table 4.7. BSC Internal Perspective

Internal Perspective

Objective Measure Parameter

Integrated support system response time low Improving operational readiness

Time to market Low

Improving operational efficiency

Ratio of OPEX per subscriber

Lower

Table 4.8. BSC Innovation and Learning Perspective

Innovation and Learning Perspective

Objective Measure Parameter

Researching on new offering

Number of product / service offering

High

Improving personnel capabilities

Ratio of Revenue per employee

High

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4.2.6. Critical Success Factor

Critical Success Factor of STI is mapped as follows,

Table 4.9. CSF Financial Perspective

Financial

Objective CSF IS Needed Portfolio

To increase corporate value

To increase revenue

Aggressively launch new market and new product

Better resource planning

ERP Strategic

ERP Strategic CRM Strategic Office automation Support

To improve resource efficiency

Using automation where possible

EAM Support

Table 4.10. CSF Customer Perspective

Customer

Objective CSF IS Needed Portfolio

Customers quality experience

Commit to provide best service

CRM Strategic

Creating smart & attractive packaging

Develop packages suitable for target market

Business Intelligence

Strategic

ERP Strategic Increasing service coverage

Launch new market Business

Intelligence Strategic

Office automation Support Increasing price competitiveness

Improving operational efficiency

ERP Support

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Knowledge Management

Strategic Identifying and sharing causes of all problem CRM Strategic

Increasing Responsiveness

Tracking all enquiries / progress daily

Trouble ticketing system

Strategic

Table 4.11. CSF Internal Perspective

Internal

Objective CSF IS Needed Portfolio

ERP Strategic CRM Strategic

Integrated support system

Provide integrated system

POS Strategic Provide easy customized system

Billing system Key Operational

Knowledge Management

Support

Office automation Support

Improving operational readiness Provide SOP that

align with business objective

ERP Strategic Reducing inventory cost

Inventory Management system

Key Operational Improving operational efficiency

Improving supply chain efficiency

Inventory Management system

Support

Table 4.12. CSF Innovation and Learning Perspective

Innovation and Learning

Objective CSF IS Needed Portfolio

Market survey & analysis

Business Intelligence

Support Researching on new offering

Research and development

Knowledge Management

Support

Recruit right candidates

HR information system

Support Improving personnel capabilities Provide sufficient

training Learning Management System

Support

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Merit system for innovation

HR information system

Support

Each portfolio of the IS need is mentioned on the right most column.

4.2.7. Consolidated Balanced Scorecard and Critical Success Factors

Consolidated BSC and CSF are as follows,

Table 4.13. Consolidated BSC – CSF Financial Perspective

Financial

Objectives Measure (s) Action (CSF) IS Needs

To increase corporate value

ROE

To increase revenue

Revenue Aggressively launch new market and new product

Better resource planning

ERP

ERP CRM Office automation

To improve resource efficiency

Ratio of Cost per subscriber

Using automation where possible

EAM

Table 4.14. Consolidated BSC – CSF Customer Perspective

Customer

Objectives Measure (s) Action (CSF) IS Needs

Customers quality experience

Customer churn rate

Commit to provide best service

CRM

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Creating smart & attractive packaging

Customer growth Develop packages suitable for target market

Business Intelligence

ERP Increasing service coverage

Customer growth Launch new market Business

Intelligence Office automation Increasing price

competitiveness Service price vs competitor price

Improving operational efficiency

ERP

Knowledge Management

Identifying and sharing causes of all problem CRM

Increasing Responsiveness

Customer Care Response Time

Tracking all enquiries / progress daily

Trouble ticketing system

Table 4.15. Consolidated BSC – CSF Internal Perspective

Internal

Objectives Measure (s) Action (CSF) IS Needs

ERP CRM

Integrated support system

Response time Provide integrated system

POS Provide easy customized system

Billing system

Knowledge Management Office automation

Improving operational readiness

Time to market

Provide SOP that align with business objective

ERP Reducing inventory cost

Inventory Management system

Improving operational efficiency

Ratio of OPEX per subscriber

Improving supply chain efficiency

Inventory Management system

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Table 4.16. Consolidated BSC – CSF Innovation and Learning Perspective

Innovation and Learning

Objectives Measure (s) Action (CSF) IS Needs

Market survey & analysis

Business Intelligence

Researching on new offering

Number of product / service offering

Research and development

Knowledge Management

Recruit right candidates

HR information system

Provide sufficient training

Learning Management System

Improving personnel capabilities

Ratio of Revenue per employee

Merit system for innovation

HR information system

4.2.8. Mapping of eTOM and Consolidated BSC/CSF

Mapping between eTOM and consolidated BSC/CSF is described in table 4.17

Table 4.17. Mapping of eTOM and Consolidated BSC/CSF

eTOM Consolidated BSC/CSF

Sales & Marketing

Business Intelligence, Inventory Management System, POS

Business Intelligence & MIS

Business Inteligence

Customer Management

CRM (operational), Trouble Ticketing

Content Management

Billing System, CRM (operational)

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Billing

Billing System

Service Management

Network Resource Management (NRM), Enterprise Asset Management (EAM), Billing System

Provisioning and Fulfillment

Network Resource Management (NRM), Enterprise Asset Management (EAM)

Rating

Billing System

Network Management

Enterprise Asset Management (EAM)

Network Infrastructure IT Infrastructure Supplier / Partner Management

Inventory Management System, Point of Sales (POS)

Enterprise Management

Enterprise Resource Planning (ERP), Office Automation, Human Resource Information System, Learning Management System

Sales and Marketing requirement can not be fulfilled entirely with automated system.

Business Intelligence System, Inventory Management System and Point of Sale

System would only provide support for Sales and Marketing objectives.

Network Resource Management (NRM) and Enterprise Asset Management (EAM)

would also only provide support for Service Management, and Provisioning and

Fulfillment objectives. Billing System also provides support for Service Management

objectives.

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Enterprise Management is a large area consisting of many objectives. Some of the

objectives will be supported by Enterprise Resource Planning (ERP) System, Office

Automation System, Human Resource Information System and Learning

Management System.

4.3. IS Strategy

The analysis produces the following strategy.

4.3.1. Applications Portfolio

IS needs and each of its placements in the application portfolio (table 4.17)

Table 4.17. Applications Portfolio

Strategic High Potential ERP

CRM (operational) Business Intelligence

Trouble Ticketing POS

Billing System Inventory Management System

Office Automation EAM

Knowledge Management HRIS LMS

Key Operational Support

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4.3.2. Management of IS investment

IT investment is a significant investment for STI, it has to be managed correctly. The

current industry standard for IT governance is COBIT and the current industry

standard for IT management is ITIL. Current mapping of COBIT and ITIL is

available (IT Service Management Forum 2005). The mapping also shows that 42%

of COBIT control objectives are not covered in ITIL processes. However, 100% of

ITIL processes are covered in COBIT control objectives.

Complying with COBIT would also provide a competitive edge for STI to pass IS

audit successfully since it is most likely that audit would also use COBIT since it is

an industry standard.

4.3.2.1. Organizational Structure

The recommended organization structure is those of COBIT, this would include an IT

steering committee and separation of four functions:

1. Planning and Organization

2. Acquisition and Implementation

3. Delivery and Support

4. Monitoring

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Inclusion of IT Steering Committee within organization is also advised under COBIT

Planning and Organization control objective number 4 (PO4) which is to define the IT

organization and relationship,

The organization's senior management should appoint a planning or steering

committee to oversee the information services function and its activities.

Committee membership should include representatives from senior management,

user management and the information services function. The committee should

regularly meet and report to senior management.

There are four steps involved in IT Steering Committee:

1. Review the IT steering committee charter

2. Determine the effectiveness of IT steering committee

3. Review the IT steering committee

4. Issue audit report

4.3.2.2. Business Continuity Planning

Business Continuity Planning is advised under,

1. COBIT Delivery and Support control objective number 4 (DS4): Ensure

continuous service. Detailed control objectives are:

1. IT Continuity Framework

2. IT Continuity Plan Strategy and Philosophy

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3. IT Continuity Plan Contents

4. Minimising IT Continuity Requirements

5. Maintaining the IT Continuity Plan

6. Testing the IT Continuity Plan

7. IT Continuity Plan Training

8. IT Continuity Plan Distribution

9. User Department Alternative Processing Back-up Procedures

10. Critical IT Resources

11. Back-up Site and Hardware

12. Off-site Back-up Storage

13. Wrap-up Procedures

2. COBIT Delivery and Support control objective number 1 (DS1): Define and

manage service levels. Business Continuity Planning will incur additional

operational cost to the company. It must be justified using Service Level

Agreement.

There are four steps involved in implementing Business Continuity Plan,

1. Business Impact Analysis (BIA)

2. Risk Assessment

3. Risk Management

4. Risk Monitoring

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4.3.2.3. Security Management

Information is a critical asset of the company. Information security is advised under,

1. COBIT Planning and Organization control objective number 2 (PO2): Define

the information architecture. Detailed control objective number 4: Security

levels.

2. COBIT Planning and Organization control objective number 4 (PO4): Define

the IT organization and relationship. Detailed control objective number 6:

Responsibility for logical and physical security

3. COBIT Planning and Organization control objective number 6 (PO6):

Communicate management aims and direction. Detailed control objective

number 8: Security and internal control framework policy.

4. COBIT Acquisition and Implementation control objective number 1 (AI1):

Identify automated solutions. Detailed control objective number 9: Cost

effective security controls

5. COBIT Acquisition and Implementation control objective number 3 (AI3):

Acquire and maintain technology infrastructure. Detailed control objective

number 3: System software security.

6. COBIT Acquisition and Implementation control objective number 5 (AI5):

Install and accredit system. Detailed control objective number 10: Security

testing and accreditation.

7. COBIT Delivery and Support control objective number 2 (DS2): Manage

third party services. Detailed control objective number 7: Security relationship.

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8. COBIT Delivery and Support control objective number 5 (DS5): Ensure

system security. All detailed control objectives.

9. COBIT Delivery and Support control objective number 7 (DS7): Educate and

train users. Detailed control objective number 3: Security principles and

awareness training.

10. COBIT Delivery and Support control objective number 11 (DS11): Manage

data. Detailed control objective number 16: Security provision for output

reports.

11. COBIT Delivery and Support control objective number 12 (DS12): Manage

facilities. Detailed control objective number 1: Physical security.

12. COBIT Monitoring control objective number 2 (M2): Assess internal control

adequacy. Detailed control objective number 4: Operational security and and

internal control assurance.

13. COBIT Monitoring control objective number 3 (M3): Obtain independent

assurance. Detailed control objective number 1: Independent security and

internal control certification / accreditation of IT services.

14. COBIT Monitoring control objective number 3 (M3): Obtain independent

assurance. Detailed control objective number 2: Independent security and

internal control certification / accreditation of third party service providers.

Security must conform to three tenets of information security: confidentiality,

availability and integrity. International Information System Security Certification

Consortium (IISSCC) defines 10 security domains that must be fulfilled,

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1. Access Control Systems and Methodology

2. Application and Systems Development Security

3. Business Continuity Planning and Disaster Recovery Planning

4. Cryptography

5. Law, Investigation, and Ethics

6. Operations Security

7. Physical Security

8. Security Architecture and Models

9. Security Management Practices

10. Telecommunications and Networking Security

4.3.2.4. Budget

The budget for acquisition of applications should be requested by business users and

approved by management since it is a significant investment.

4.3.2.5. Measurement

Survey was conducted by IT Governance Institute and Lighthouse Global on 2004 to

measure the effectiveness of performance measurement techniques for IT projects

and investment. The result is shown on figure 4.8.

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Figure 4.8. Perceived Effectiveness of Performance Measurement Techniques for IT Projects and Investments

It could be seen that for project / investment with intangible benefit, Information

Economics is widely used. However, the in-house method of measurement is

perceived as more effective than Information Economics.

IT measurement is also advised under COBIT Delivery and Support control objective

number 1 (DS1): Define and manage service level. Detailed control objectives are,

1. Service Level Agreement Framework

2. Aspects of Service Level Agreements

3. Performance Procedures

4. Monitoring and Reporting

5. Review of Service Level Agreements and Contracts

6. Chargeable Items

7. Service Improvement Programme