Reshaping The IT Governance in Octo Telematics To Gain IT-business Alignment

Reshaping the IT governance in
Octo Telematics to gain IT-

business alignment
A Case Study Presentation by:
Jaya Kumar (MS19A011)
Liokchila Jamir (MS19A024)
Lois Mary Jose (MS19A025)
Manjula S (MS19A028)
Neha George (MS19A034)
Nikhil Raj (MS19A035)
Potluri Sahas Chowdhary (MS19A040)
Sreya Miriam Abraham (MS19A058)
Susmita Baruah (MS19A059)
Priyanka Azad (MS19A070)
Octo Telematics
 Set up in 2002
 large telematics provider specialized in the provision of telematics services and

systems for the insurance and automotive market
 new and profitable customer value proposition for insurers based on a

customer’s driving and risk profiles
 pilot program for its first 2500 OBUs(On Board Unit) in 2003
 basis of value-adding analytics-tried to align the information architecture and

services to its stakeholder needs
 Technology is at the heart of a new ecosystem of services, resources, data and

stakeholders
 Octo-the systems integrator played the role of market facilitator and enabler
 Octo has had to reshape the organisation and the link between the IT
function and the business
 The alignment between IT and business, is still not stable
 In 2002, IT was almost the entire business
 Today, IT is seen more as a provider of specialised technology
• IT separate from business
• CIO as technical expert
 The case describes the continuous attempt of CIO to forge a dual

identity: IT function as strategic partner of business and the CIO as
business problem solver
 Challenges faced by the CIO and the organisation in designing a new IT

governance model
Governing the alignment of business
and IT: methods and approaches
 Top concern of IT managers for 30 years
 Alignment as a competitive weapon and a way to get a superior performance
 Considers the strategic fit between strategy and infrastructure as well as the
functional integration between business and IT
 2012 survey revealed IT and business alignment as a major issue
 Alignment is a continuous process

 Alignment evolves through a search of a dynamic equilibrium, among the
many variables of strategy, technology, organization architecture,
processes and skills
 6 enablers that help the alignment (Luftman and Brier):
 Senior executive support for IT
 IT involved in strategy development
 IT understands business
 Business/IT partnership
 Well-prioritized IT projects
 IT demonstrates leadership
Weill’s Framework of analysis on IT
governance
 Business Monarchy – IT decisions are
made by Chief Officers (CxOs).
 IT Monarchy – Corporate IT professionals
make the IT decisions.
 Feudal – Decision by autonomous business
units.
 Federal – Hybrid decision making.
 IT Duopoly – IT executives and one
business group.
 Anarchy – Each small group makes
decisions.
Combining performance measure with
type of decisions and governance
 Leaders in asset utilization typically use ‘IT Duopoly’ governance for all
five IT decisions and the IT group plays an important coordinating role.
 Leaders on profit have a more centralized IT governance approach making

decisions on principles, architecture and investments.
 Leaders in revenue growth try to balance the entrepreneurial needs of the

operational units with the firm-wide business objectives. More often a
‘Business Monarchy’ or a ‘Feudal’ approach is used to set mainly the IT
principles
Octo Telematics
Fabio Sbianchi and
Giuseppe Zuco, the
founded Octo Telematics
in 2002, they are today
Octo’s CEO & CIO
The company offered a

10% discount on Both founders have
premiums for maintained 10% stake
accidents, and 50% on and rest 90% is with
premiums for theft. private equity firms
65% is with
The value of the Montezemolo and
company increased partners, 25% is with
about 500% from 2009 Amadeus Capital
to 2013. partners limited and R
Capital management
EBITDA around 50% and a

growth rate exceeding 25%
(2013) in Italy, its home
market, and some
international markets.
Octo Telematics
 Octo’s value proposition

 Stolen Vehicle tracking
 Automatic crash notification
 Profiling
 Octo also started to deliver services
to carmakers and companies with big
fleets
Infrastructure and Services
 The OBU is able to collect specific driving data (e.g., location, crash statistics) and transmit them to a
server for further processing.
 The data flow into the data exchange repository, which is the heart of the telematics infrastructure. This
repository is maintained by Octo Telematics.
 Machine to machine (M2M) infrastructure allows the sharing of data about driving, contracts, policies
between the insurance company and Octo via different IP protocols or via file exchange.
 The “Smart services” are used to enrich an existing or new telematics offering or as a starting point for
potential or existing insurance clients , to be rolled out successively towards other customer segments.
The organization and IT dilemmas
 Since its inception Octo had a strongly centralized structure following ‘Business
Monarchy’ archetype
 The CEO held strong control of functional areas- procurement, marketing, sales,
operations and especially of IT
 Establishment of international branches and the arrival of new investors led to
a restructuring of the company
 New managers were brought in and international approach was enhanced
CEO
Sales Finance Operations

 Since its reorganization on 2009, Giuseppe started centralizing IT
decisions- IT Monarchy came into picture
 Sales and Operations were rivals for Giuseppe’s resources:

requirements and priorities on customer’s project were defined on a
direct agreement with Giuseppe and not on the basis of an objective
analysis and a feasibility study.
 Increased the number of customized services and changes on

implemented services, where the return on investment was not always
positive.
 IT department was perceived to be under pressure.
 Giuseppe was concerned about profitability of projects and quality of

services delivered by the company
Stage 1: From “IT Monarchy” to “Duopoly”
 First Step – Transparency
Introduced Program & Service Management [I.T.] and Demand Management [I.T.] function
and the Incident Management (IM) process [Bridge].
Demand Manager [I.T.] was too isolated from the IT team. Program Management [I.T.] was
isolated from sales people, so the unit did not have an overall view of projects, needs and
planning. Furthermore, sales people did not accept his support during the negotiation with
clients
To strengthen the relationship with Operations [Business],Giuseppe introduced an inter-
functional process, IM, with shared common objectives.
IM was a success except within the development team [I.T.], which felt ‘controlled.’ The unit
refused to use the procedure and the tools for the management of tickets.
 Second Step – Sharing

Sales [Business] signed contracts agreeing on delivery dates, effort and services without
consulting with IT.
Created a new bridge organization, called Change Advisory Board (CAB) [Bridge] for shared
decision making – especially with Sales.
Started losing credibility when changes approved were not put into planning, causing a
large backlog in development
Stage 2: Dis-integration: back to the
‘Business Monarchy’
 The IT department was seen as disorganized.
 New inter-organizational process to manage new project set-up by Giuseppe
• Level I: Planning during the project design stage (Design Team – inter-functional)
[Bridge].
• Level II: Delivery project planning (Project Team – inter functional)[Bridge].
• Level III: Detailed operating planning after the contract (Functional Teams in each
area of Octo)
 Such a reshaping of program management would bring a loss of power for

Sales [Business].
Introduction of a new
function – Business Integration (BI)
 BI, with a strong commitment from the CEO, worked as a bridge between Sales and
Operations [Business] and the IT department.
 It incorporated functions and roles that Giuseppe had created before: Demand[Bridge],
Program and Project Management [Bridge], plus the responsibility for Change
Management [Bridge]. BI was to support business requests, organize the IT work and
support improvement of services released to customers.
 The mission of the BI unit was to:
• support standardized sales and effectiveness of customization;
• minimize time to market;
• ensure logistics and IT readiness;
• minimize planning inefficiencies;
• maximize cross- and up-selling on the existing customer base;
• maximize IP protection;
• ensure process effectiveness and efficiency.
Business Integration Unit
Difficulties with new system
Business units have to negotiate IT projects with the BI manager [Bridge], but then the CIO
has to be negotiated separately.
Sales managers often have to persuade the CIO to put in planning and accelerate projects.
The BI manager [Bridge] is at the same hierarchical level as the CIO, so he cannot impose
decisions. The CEO has to resolve conflicts between them.
There is still a gap between the demand of new platforms/services for new clients and the
ability of the IT department [I.T.] to deliver.
Procedures, processes and templates from Sales [Business]through BI [Bridge] to IT are not
aligned and shared.

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Reshaping the IT governance in

Octo Telematics to gain IT-

 large telematics provider specialized in the provision of telematics services and

 new and profitable customer value proposition for insurers based on a

 basis of value-adding analytics-tried to align the information architecture and

 Technology is at the heart of a new ecosystem of services, resources, data and

 The alignment between IT and business, is still not stable

 In 2002, IT was almost the entire business

 Today, IT is seen more as a provider of specialised technology

• IT separate from business

• CIO as technical expert

 The case describes the continuous attempt of CIO to forge a dual

 Challenges faced by the CIO and the organisation in designing a new IT

 Top concern of IT managers for 30 years

 Alignment as a competitive weapon and a way to get a superior performance

 2012 survey revealed IT and business alignment as a major issue

 Alignment is a continuous process

 6 enablers that help the alignment (Luftman and Brier):

 Senior executive support for IT

 IT involved in strategy development

 Leaders on profit have a more centralized IT governance approach making

 Leaders in revenue growth try to balance the entrepreneurial needs of the

The company offered a

EBITDA around 50% and a

 Octo’s value proposition

Sales Finance Operations

 Sales and Operations were rivals for Giuseppe’s resources:

 Increased the number of customized services and changes on

 IT department was perceived to be under pressure.

 Giuseppe was concerned about profitability of projects and quality of

 Second Step – Sharing

 New inter-organizational process to manage new project set-up by Giuseppe

• Level II: Delivery project planning (Project Team – inter functional)[Bridge].

 Such a reshaping of program management would bring a loss of power for

has to be negotiated separately.

decisions. The CEO has to resolve conflicts between them.

ability of the IT department [I.T.] to deliver.

aligned and shared.

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