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Developing RAE1
Developing RAE1
Developing RAE1
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Reza Samizadeh
Alzahra University
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
ABSTRACT
IT projects have special features like high risks, intangible outcomes, hidden benefits and high costs
that make the use of traditional evaluation techniques very difficult and the outcomes unreliable,
therefore information technology (IT) investments should be carefully controlled and evaluated. Large
efforts have been done to provide appropriate methods for evaluating IT projects. In this paper,
traditional methods of measuring projects are reviewed and advantages and disadvantaged of them in
measuring IT projects are specified. Then new techniques that are specialized in measuring IT projects
are introduced and IT-BSC as an appropriate method with available information is selected. As COBIT
framework is defined for IT projects, from the combination of COBIT and IT-BSC, a framework for
evaluating IT projects is proposed. Besides, the proposed framework is validated by experts opinion
with questionnaire and appropriate hypothesis test. Finally, an implemented project in IT area is
selected as a case study and is evaluated by measures of the proposed framework. The results show
that this framework can be very effective in evaluating IT projects.
Balanced Scorecard
Control Objectives for Information and related Technology
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
transactions. These models not only pay attention to financial tracking, storage and analysis of processes
but also analyses what occurs in the case of using other options. This model changes dynamically its
structure and coefficients to improve the chances in the decision [27]. Equation of Cox-Rubenstein
model is an example of options model that is used as a base for creating new Feasibility assessment
method [7, 27]. Of course there are some doubts on this method that can be referred as follow: 1 quality
of outputs not only depend on the model but depends on the inputs. Low quality of data and conflicts
will affect outputs, 2 - Suggestions for capital investment in IT projects happens less in comparison with
the number of financial transactions, 3 - Most of these methods are complex and difficult to understand
and utilize. Before recruitment of these methods, suggestions must be approved for the applicability of
these methods in the management of portfolio investment [7]. Multilayered evaluation process: This
method uses assessment methods that more or less are hierarchical. Usually a combination of traditional
methods and strategic approach is used. it is believed that the evaluation of capital investment in IT
Projects will be effective only when the evaluation process is included in the higher levels of business
processes [21, 28] and so traditional methods are not completely put away because they can create many
benefits [6, 28]. This method usually leads to a process of two or multilayered process. In the first stage,
all capital investments that are not related to business goals of organization are eliminated. In the second
stage, selection on the remaining projects is done based on calculations obtained form modified
traditional methods. For example Earl [6] has broken the second stage to three sub stages: 1- use NPV
on the basis of tangible costs and benefits (quantitative), 2- list the intangible costs and benefits
(qualitative), 3 - analyze risks and uncertainties. Finally managers must make their decisions based on
the information obtained.
IT-BSC approach: IT projects include the production of IT application programs, programs under
Internet, work with the data bases and searching the data and so on. As mentioned in previous sections,
these projects have specific characteristics that the most important of them are intangibility and inability
to calculate the full cost of the project. Therefore, using traditional criteria that evaluate solely based on
financial criteria, is insufficient. So BSC for IT projects is specialized as IT-BSC. Use of IT-BSC from
its early concept began since 1985 [36]. Gold in 1992 and Vilkoks in 1995 made a conceptual analysis
of it that is more developed by Grembergan in 1997 and later by van Bergen and Tymerman in 1998
[37]. Also in 2005, designing performance management system aimed at monitoring and promoting the
use of IT through IT-BSC was investigated [38]. Other similar research with the aim of using the BSC in
the evaluation of organizational system performance has been done [39]. In that study all aspects that the
researchers of IT has added to general BSC model to evaluate the performance, have been investigated
and the framework for IT-BSC is presented based on measurements and strategies used in them.
Researches have shown that aspects of BSC should be changed as follows in the field of IT [39, 40, 41].
1- Company contribution: means that how much value the capital investment in IT projects creates to
business and organization.
2 - Users and customers: the evaluation of stakeholders from IT facilities which are created in the project.
3- Operational excellence: the promotion of IT products and services which are created by the assessed
project, how much depend on processes that develop and deliver software applications and information
systems.
4 - Future orientation: how much opportunities from the perspective of human resources and technology
have been created to respond to future needs of organization in the evaluated project.
Each of these aspects must be translated to indicators and measurable criteria related to the leading
project to evaluate the current state. This evaluation should be periodically repeated and objectives
already determined by using information of the best models, should be compared [37]. Other
mechanisms of communication between IT and business is development of waterfall BSC [42] In a
study in 1999 by Van der. Zee, designing "operational IT-BSC" and "developmental IT-BSC for the
development of waterfall IT-BSC has been proposed. The following figure shows the model [43].
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
4. Research Methodology
To extract goals and measures in each aspect of proposed framework, goals and metrics in the first
level of COBIT IT processes has been used and they are allocated to different aspects of the framework.
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
For allocating goals to each aspect, a complete list of goals in the COBIT IT processes (including 27
goals) were given to IT experts and managers to be selected and prioritized separately for each aspect.
As in proposed framework, there are 4 aspects, SO 4 questionnaires were designed and experts opinions
were analyzed in each one. In the designed questionnaires, to determine importance of each objective in
each aspect, different questions were asked which could be answered in likert scale with 5 point:
strongly disagree (1), disagree (3), neither agree nor disagree (5), agree (7) and strongly agree (9). The
method of model evaluation was based on survey-description research method and by appropriate
statistical tests, questionnaires were analyzed.
One of the most popular ways of identification of the data statistical distribution is one-sample
Kolmogorov-Smirnov test. The Kolmogorov-Smirnov test compares the observed cumulative
distribution function for a variable with a specified theoretical distribution, which may be normal,
uniform, Poisson, or exponential [31]. According to our test results, the p-value of all questions was less
than 0.05, which showed that the distribution of them was not normal. So, a statistical non-parametric
test should be used. In this way, the binomial test is used as a non-parametric test in this paper to
determine the importance of the objectives from the view of experts. Binomial test for each question is
conducted. In this stage 7 first priority objectives in each aspect have been selected as the main goals in
each aspect because when organization can plan achieve its goal that have limited and distinguished
objectives (5 to 7) to be able to extract the key success factors among its goals [45][49]. Then by using
Friedman test, objectives were prioritized. To evaluate reliability of the questionnaires, Cronbach's Alfa
method was used.
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
Table 1. Binomial test for testing hypothesis for importance of each objective of customers and users aspect
Code
in COBIT
objective
- 15 -
Percent
of
consensus
Approved or
non approved
of H1
hypothesis
Asymp. Sig.
(p-value)
50
Isnt Approved
.142
60
Isnt Approved
.196
60
Isnt Approved
.021
70
Isnt Approved
.075
60
Isnt Approved
.095
70
Isnt Approved
.125
100
Approved
.000
30
Isnt Approved
.325
50
Isnt Approved
.025
90
Approved
.008
70
Isnt Approved
.065
70
Isnt Approved
.045
60
Isnt Approved
.125
80
Approved
.008
90
Approved
.004
80
Approved
.000
100
Approved
.000
70
Isnt Approved
.045
100
Approved
.000
80
Approved
.005
90
Approved
.002
80
Approved
.012
70
Approved
.002
80
Approved
.018
60
Isnt Approved
.621
Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
ME2DS13
DS8DS4DS3
DS13
ME2DS11
ME4ME3
and disaster
Ensure service availability
Ensure IT compliance with rules and
contracts
100
Approved
.000
50
Isnt Approved
.725
As its mentioned above, 7 first priorities between approved objectives were selected as key objective
in the aspect. Then by using Friedman test the objectives were prioritized. Results were shown for
customers and users aspect in Table 2. Hypothesis for Friedman test are as follows:
H0: there is no significant difference between objectives
H1: there is significant difference between objectives
Table 2. Friedman test for prioritizing objectives of customers and users aspect
Objective
Score
Rank
1
2
3
4
5
6
7
13.5
15
20.7
14
19.4
8.5
26.9
Based on results of Friedman, related objectives of each aspect are determined. Further by using
metrics of first level objectives in COBIT, appropriate measures of objectives in each aspect are
determined. Results are shown in table 3.
- 16 -
Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
infrastructure
C45- number of
systems that cover
security requirements
C46- percent of IT
compliance with rules,
regulations and
contracts
C47- degree of senior
satisfaction from
internal and external
monitoring reports
C48- percent of spend
expenses from
competitive
procurement
6- Create agility in IT
processes
7- Ensure minimum
effect of defects and
changes of IT
services in business
- 18 -
Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
Company
contribution
Users and
customers
Operational
excellence
Future
orientation
measure
Average
Standard
deviation
mode
Normal
weight
C11
C12
C13
C14
C15
C16
C17
C21
C22
C23
C24
C25
C26
C27
C28
C29
C31
C32
C33
C34
C35
C36
C37
C38
C39
C310
C41
C42
C43
C44
C45
C46
C47
C48
8.2
7.4
6.2
5.8
5.8
5.4
6.6
4.6
5.4
5.8
5.8
5.4
6.2
5
7
5.8
5.8
5.8
5.4
7.4
5
4.6
3.4
6.6
6.2
4.6
6.2
3.8
6.2
2.2
4.2
5.8
6.6
4.2
.98
.80
.98
.98
.98
.80
.80
1.50
.80
.98
2.04
.80
1.60
1.26
1.26
.98
.98
.98
.80
.80
1.26
1.50
.80
.80
.98
1.50
.98
.98
1.60
1.60
.98
.98
1.50
1.60
9
9
7
7
7
7
7
7
7
7
9
7
9
7
9
7
7
7
7
9
7
7
5
7
7
7
7
5
9
5
5
7
9
7
.16
.18
.13
.13
.14
.11
.15
.10
.12
.12
.12
.10
.11
.10
.10
.12
.10
.09
.10
.09
.09
.10
.07
.11
.13
.12
.15
.11
.11
.09
.14
.13
.15
.12
Overall
weight
score
6.59
5.68
5.53
5.07
As its shown in the table the company contribution aspects has higher score. This shows that the
mentioned project realize this aspect more than other ones. Realization of users and customers,
operational excellence and future orientation aspects are in the next order.
- 19 -
Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
Nasrin Dastranj Mamaghani, Reza Samizadeh, Fatemeh Saghafi
International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
Figure 2. Realization degree of evaluating measures in project (scores below 4 is weak, scores between
4 and 6 is medium, and scores above 6 is strong)
7. Conclusion
Today information is the most important asset and strategic resources in any organization. Therefore,
management of IT is the major basis of organizational planning and the need to ensure the value of IT,
related risk management and information control are considered as key element in the governance of any
organization. IT project have specific characteristics such as high risk, limited return on investment,
having intangible results, high costs and hidden benefits that make the use of traditional methods to
measure the benefits of the project very difficult. This article provided a framework for evaluating IT
project with combining IT-BSC and COBIT framework. Aspects of proposed framework are chosen
from IT-BSC and objectives and related measures extracted from COBIT and validated using binomial
test and survey of experts in the field of information and communication technology. Since strategic
alignment issue is one of the most important concerns of todays IT managers, this framework is greatly
contributed to alignment of IT and business in the organization. These measures can be used to evaluate
all IT projects and assess the value of various projects to each other in an organization. For this purpose
its necessary to provide weights to four aspects of "company contribution", "users and customers",
"operational excellence" and "Future orientation" in accordance with vision and strategies of
organization and then the mean weight scores according to weight of aspects are determined. So it will
give only one score to each project that makes it comparable with other projects.
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Developing a Combined Framework for Evaluating IT Projects based on IT-BSC and COBIT
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International Journal of Digital Content Technology and its Applications Vol.5 No.5, May 2011
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