Executive Summery

This report attempts to introduce and analyse an issue in the governance structure module that Octo has experienced. Octo is a company initially started in Italy, and then has successfully expanded globally. The CIO, Giuseppe, adopted several governance modules in order to reach s a stabilised alignment between IT and business, and his role has changed accordingly. Yet, issues still occurring, and the analysis suggests that the governance modules were in appropriate given the organisation’s situation. A recommendation is provided to adapt the federalism governance module as an approach to surmount the issues and effectively align IT and business.
Pertinent organisational background

Summary of organisation functions and market
Octo Telematics, a multimillion value company specializing in providing telematics related services for automotive market. Octo, which was founded back in 2002 by Fabio Sbianchi and Giuseppe Zuco (the current CEO and CIO respectively), has enjoyed a great period of successful growth expanding from Italy its home country to global markets. Within five-year cycle from 2009 to 2013, the company’s financial value tremendously increased 500% attracting equity funds to invest in the promising telematics sector. The secret lays in the technology used by Octo, the core service is a device called On Board Unit (OBU), and the main functionality is to transmit data related to location, time and usage of vehicles in which it is installed. This innovative ecosystem service has added a unique value proposition for insurers, and further created opportunities for installers and manufacturers. Such a technology has yielded great deal of benefits to the key players in the insurance industry and car manufacturing. Developing an IT infrastructure to support and provide systems for clients was and still remains the crucial element in Octo, that is, to successfully ensure the provision of services, data transmission, market facilitating and information.

Report structure
This report aims to introduce the key challenges faced by CIO as well as to identify and differentiate the core issue from symptoms that is causing instability in the Octo’s governance structure. It will also analyse in depth, the various attempts and approaches by CIO to reshape the IT governance model in order to reach a stable level of alignment between IT and business units. And finally, drawing recommendations from the analysis to suggest an appropriate governance structure that may surmount the core issue in short and long terms.
Issue identification and description

The core issue

While the company has experienced noticeable issues, namely, lack of time in analysing recurrent issues, high workload, increasing number of tickets problems daily and delay in resolving tickets problems. Yet, all of which appear to be symptoms. The core issue is governance module of IT, that is, the structure in governing the alignment of business and IT. Octo’s “IT Monarchy” module, which was adopted by Giuseppe, was unable to deliver the business continuous needs, therefore, creating instability in the cross-functional tasks between IT and Business. Description
The IT governing structure at Octo, is regarded as an ineffective. Strengthening the relationship between IT and business through an effective governance structure in which common strategic goals are agreed upon, responsibilities are defined and a collaborative working environment is established are the key objectives. Cleary, this is what CIO attempted to achieve, unfortunately, it took several governance modules yet none really surmount the issue and achieved the key objectives.
Analysing the core issue in depth

The issue of the inappropriate governance structure evolved as the company expanded, in particular, the empowerment of the key business functional areas of sales, finance and operation. Those business units requested continuous supports, and the role of Giuseppe (CIO) had to be changed to adapt to the situation. It is worth noting that business and IT related decisions used to be made by Fabio (CEO) and Giuseppe (CIO), but now an IT governance initiatives need to take place to manage a stable alignment. To better analyse the issue, it is vital to consider the factors which influence how CIOs decide to adopt a governance structure. Guillemette and Pare (2011) noted that CIOs choice of IT governance structure is greatly influenced by how the IT is perceived by other top managers and CIOs responsible for the perception of IT. That is, CIO should indicate the importance of IT being whether or not being a central for achieving organisational strategies, and govern the IT structure accordingly. Since business units changed Giuseppe’s (CIO) role to be a technical provider rather than a strategic partner. This implies how IT value was perceived within Octo. The scope of the role for a technical provider is clarified by Peppard, Edwards and Lambert (2011) as a utility IT director who maintains the level of service, integrity of IT infrastructure, and efficiency. These were tasks that the business units expected from the IT. Yet, Giuseppe (CIO) took the approach of centralising power of IT related decisions, forming an IT monarchy for the sake of being s strategic partner with business. Such a module gives the decision authorities to be made by the CIO, so business matters and projects which require IT support had to be negotiated with Giuseppe (CIO). According to Davenport, Eccles and Prusak (1992) a monarchy module to govern information is ideal for managing different divisions within the organisation since power in centralised. It helps to establish defined strategic objectives that are common between IT and business as well as allow free flow if important information across the organisation. Additionally, Davenport, Eccles and Prusak (1992) further noted a crucial point, a monarchy module should be approached to better achieve organisational objectives, not to be approached as a response to a certain issue. Perhaps, it can be seen that the implementation of IT monarchy in Octo was more of a response to the issue of separating the Giuseppe (CIO) to be a technical provider rather than strategic partner. It is evident that a monarchy module would centralize and strength the power of IT in Octo, leading business units to refer to Giuseppe (CIO) in order discuss or negotiate IT based business matters. However, the IT capabilities could not deliver business requirements timely, and since Octo heavily rely on IT crucial issues occurred that cannot be ignored such as slow performance and decrease in revenues. Given the complexity of the issues, Giuseppe (CIO) attempted to reorganize the governance structure into duopoly as IT monarchy was not an ideal module and has not successfully aligned IT with business. It was plausible to loosen the centralisation power by creating bridge committees to better communicate with business units. By moving to “Duopoly”, new IT functions were introduced to align with business units. Yet, the desired alignment was not reached. With regard to the programme and service management, which was supposed to ensure consistency between business and information planning and define the guidelines on project prioritisation, was isolated from the sales unit. Ineffective flow of information is a major obstacle that creates instable alignment (Peppard, Edwards and Lambert, 2011). There was a need for an effective flow of information and shared decision making, within the duopoly governance module, Giuseppe (CIO) created Change Advisory Board (CAB). This was a good step to communicate with business units particularly sales. Such a step established a working in environment in which knowledge, information, and ideas can be shared. However, Giuseppe (CIO) still had the decision power to prioritise and approve projects. Thus, has not approved some of the sales’ plans, consequently sales complain to CEO.
Recommendations

Given the analysis above, it can be seen how the IT governance structure is the core of the issue, and has not effectively align IT with business. Implementing an inappropriate governance structure results in disorganised IT department that is not capable to be the key driver for business projects. The CIO plays a vitally important role in choose the governance structure that allows decision-making to be coherently distributed among key functional areas (Peppard, Edwards and Lambert, 2011) Therefore, it is recommended that Octo should adapt federalism as a module for governance structure. One of the main feature is allowing negotiations to take place among key functional areas in the organisation. Unlike, other modules such as technocratic utopianism, which does not consider politics, or monarchy, which centralises the decision-making authorities. Federalism is an approach that considers the importance of negotiation as well as establishes a collaborative environment in which top managers freely share knowledge and express different opinions (Davenport, Eccles and Prusak, 1992). In the short term, the business Integration (BI) created by Fabio alleviate the power of the IT monarchy, this is a great step to approach federalism (even though it was a rise of a business monarchy). Fabio should further empower the decision-making authorities of business units, and creates a steering committee that gathers top managers IT and business to meet in order to open a space for shared decision-making process. In the long term, a complete federalist module more likely to be achieved as a result of establishing an equal decision-making authority power governed under a steering committee.

Reference
Davenport, T. H., Eccles, R. G., & Prusak, L. (1992). Information politics. Sloan Management Review, 34(1), p. 53-65.
Guillemette, M. G. & Pare, G. (2012). Toward a new theory of the contribution of the IT function in organizations. MIS Quarterly, 36(2), p. 529-551.
Peppard, J., Edwards, C. & Lambert, R. (2011). Clarifying the ambiguous role of the CIO. MIS Quarterly Executive, 10(1), p. 31-44.
Vaia, G. & Carmel, E. (2013). Reshaping the IT governance in Octo Telematics to gain IT-business alignment. Journal of Information Technology Teaching Cases, 3(2), p. 88-95. doi:10.1057/jittc.2013.8