Problem/Issue Statement
After experiencing a radical IT transformation in the past decade that saw a successful realignment of IT governance, integration, maintenance, and approach, Accenture is now considering adopting COBIT 5 IT standards as its business framework for the governance and management of its enterprise IT. Although the company has already accomplished greater efficiency and accountability in its IT, the adoption of COBIT 5 could potentially lead toward better information for business decisions, a more efficient application of its IT systems and projects, and a mitigation of risk associated with regulatory and compliance laws.
The scope of this issue is the entirety of Accenture’s operations in hundreds of locations across over 50 different countries, all supported by Accenture’s IT systems and all affected by any changes made necessary by the implementation of COBIT 5.
Situation Assessment
The proposal to adopt COBIT 5 comes 5 years after the completion of a holistic overhaul of Accenture’s IT practices that the company has been able to both maintain and even enhance. This change was performed on the principles of:
-Running IT like a business within a business rather than as a cost center
-A single-vendor approach to meet application needs through economies of scale
-Reduced technology costs by implmenting a web-enabled enterprise technology solution (SAP through Microsoft technologies)
-A new IT governance system where high-level management and senior IT staff ;prioritized projects on the basis of ROI and corporate strategic objectives
The COBIT 5 framework seeks to improve the governance and management of enterprise IT through meeting stakeholder needs, covering the enterprise end-to-end, applying a single integrated framework, enabling a holistic approach and separating governance from management. It recognizes seven categories of enablers that are integral to the realization of these 5 principles seen in the graphic below:
As depicted in the image, principles, policies and frameworks are at the core of implementing COBIT 5 since they are the medium by which strategic objectives can be converted to specific daily processes.
This decision must be made on the criteria of whether or not altering Accenture’s management framework to accommodate COBIT 5 standards will improve the objectives achieved through its IT restructuring over the past 13 years. COBIT 5 standards should be adopted if doing so would streamline operations, align IT objectives with general corporate strategies, and make better use of existing resources without creating significant disruptions to the company.
List of Plausible Alternatives Courses of Action and Evaluation of Alternatives
Maintain Existing IT Management Framework: Accenture can choose to keep on the path it has started by continuing to improve its already successful restructuring. From 2001 to 2008, Accenture was able to reduce its spending per employee by 60 percent and reduce overall IT expenses as a percentage of net revenue by 57 percent and at the same time improving the satisfaction of Accenture employees with IT tools and services. Accenture could decide to continue its IT strategy of leveraging its global presence through the use of a “core-light” personnel policy that relies primarily on outsourced staff proficient in their own portion of the global chain. By embracing and even enhancing its reformed IT architecture and management, Accenture can keep the status quo that has reduced necessary applications, integrated its technology platform, and facilitated significant revenue growth and IT cost reduction.
Adopt COBIT 5 Framework:
The other approach would be to implement a COBIT 5 framework by altering existing controls, IT enterprise architecture, project decision methodologies, applications and general IT processes to satisfy the COBIT 5 standards. The goals and objectives of COBIT are similar in many respects to the ones we have enacted recently such as the connection of IT processes to business procedures and the application of a single integrated framework through a holistic approach. If Accenture was to enact COBIT 5 standard, however, its IT infrastructure would have to be altered to accommodate for principles such as the separation of governance and management and compliance mechanisms.
Although the framework for COBIT is available free online, the in-depth training materials required to fully understand the standards can be purchased through ISACA, the non-profit entity that developed the framework, for a cost of $175 per reference volume with 5 volumes available spanning the topics of general principles, enabling processes, implementation, information security, and assessment of the program. Additionally, courses are offered to accompany the training materials spanning from 1-4 days with costs ranging from $200-$1000 at various locations globally, mainly in the United States and England. The full depth of these costs would be dependent upon how many of our employees would be required to learn the entirety of COBIT 5 and to what extent they could both train themselves and our own internal employees. The real cost, however, would be the time and energy lost due to the interruption of integrating a new IT model and any failure in IT processes accompanied by such a complete reformation.
Recommendation
Understanding the inherent risk of initiating any IT project, much less a complete restructuring to meet a new set of standards, I would recommend against the adoption of COBIT 5 standards. Perhaps changing our IT systems to meet COBIT standards would have been practical in 2001 as a means to “achieve operational excellence” or “optimize the cost of IT services” as ISACA’s website promises, but in 2013 Accenture has already accomplished these goals through its own internal development procedures. Using COBIT’s principles as guidelines towards the improvement or enhancement of our existing IT infrastructure would be reasonable, seeing as how much of what it promotes is already in sync with our existing system. However, a complete full-scope adoption of COBIT standards would threaten the revenue expansion and operational efficiency Accenture has enjoyed since its successful IT transformation.
Presentation
The presentation should make sure to take note of Accenture’s IT evolution but not excessively describe it in its entirety. The focus should remain on what COBIT 5 actually is, what its costs and constraints are in defensible and concrete figures, what benefits could be achieved through adopting COBIT 5 and a realistic timeframe for the realization of those benefits, and how the implementation of a COBIT 5 framework would co-exist/replace/reconcile with the current IT enterprise architecture. The consultants must keep in mind that there is a heavy burden of proof necessary for implementing COBIT 5 practices considering that Accenture’s IT recent restructuring is seen as a model for the industry.
Reflection
Mr. Smith,
After careful consideration of yesterday’s evaluation of COBIT 5 by the hired consulting team, I am satisfied to reject the implementation of COBIT’s IT governance and management framework. The presentation affirmed what I had already concluded in my preparation that the robust IT governance model Accenture has initiated is far too valuable as a successful customized framework to discard in favor of or be superseded by an external set of controls and processes.
The consulting team addressed three achievements in particular that are telling of the achievement of our company’s IT transformation. They are that in comparison to the world’s largest IT services companies Accenture was ranked the best in the measurements of IT expense as a percentage of net revenue, IT workforce as a percentage of headcount, and IT expense per employee. What the consultants did not stress was that all of the success from our IT reformation took place as Accenture was in a state of significant expansion.
One of our greatest feats is that an almost doubling of revenues from 2001 to 2010 from $11.44 billion to $21.6 billion and a more than doubling of workforce from 75,000 to 180,000 employees was accompanied by a 22% reduction in overall IT expenditures. Revenue increase and cost reductions were made possible through greater simplicity in governance and enterprise management, executed through actions like using a single-vendor approach for application needs and adopting server virtualization for greater efficiency and fewer e-mail servers. Complexity is something the consultants stressed was a major pitfall with COBIT 5, warning us that the system’s 5 principles, 7 enabler categories and 37 processes that are all cross referenced to IT related goals would unnecessarily complicate our governance procedures. Personally, I feel that addressing the importance of efficiency and streamlined processes in Accenture’s growth is a primary argument against COBIT 5 that needs to be emphasized.
I was less intimidated by the $48.9 million price tag of COBIT adoption than the consultants, considering that our company’s revenue for 2010 was just under $22 billion. If I truly believed that COBIT would provide greater operational efficiency than our existing framework, I would be inclined to think that our company could absorb the temporary negative cash flow. However, I concur with the presenting team that Accenture has already developed a set of processes personalized to the company that provide greater value to ourselves and our clients than the system that would emerge from a complete redevelopment under COBIT 5 guidelines. Additionally, reworking our IT governance could be extremely disruptive for a marginal benefit, and might incur the same disruption if Accenture were to implement the next iteration of COBIT when it is released.
Ultimately, our current IT governance methodologies have supported the company’s growth and should continue to successfully do so in the future without the rigid constraints COBIT 5 would impose. The consultants may have highlighted some flaws in our current infrastructure such as our IT staff’s sentiment that their requirements have been unjustly increased to be more than a support staff and managerial discontent with the time required for internal audits, but COBIT is definitely not the answer to these minor shortcomings. I would recommend that our Senior IT management make a comprehensive review of our current procedures for assigning responsibility to staff and the requirements for an audit of past projects. However, any changes to processes should be made according to our internal management’s own sense of what is most efficient and productive for the company, and not in accordance with the strict set of guidelines that a framework like COBIT would require. At this time, our company is best suited to maintain the existing IT infrastructure that has served as a model for the industry.
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