Availability of Information Services Chain

Master Thesis

Availability of Information

Services Chain

N.V. Nederlandse Gasunie

University of Groningen

Master of Science Business Administration:

Business & ICT

Author: Dragoslav Sikanja E-mail: d.sikanja@gmail.com Student number: 1601245

Date: 1 October 2013

Version: v1.0 Final

Acknowledgements

This master thesis is written as a final graduation assignment and as a part of Master of Science Business Administration education program, specialization Business & ICT at the University of Groningen, Netherlands. The research was conducted at NV. Nederlandse Gasunie, Groningen, specifically ICT department.

I am the author of this thesis and regardless of that fact I would not be able to finish this research without support of other people. Therefore, I would like to express my gratitude and thanks certain number of people who offered their patience and above all their useful support.

First, I would like to thank the faculty supervisor, prof. dr. ir. Hans Wortmann for his helpful guidance and support during my research. Furthermore, he offered me a constructive and useful feedback as well as valuable insights about the scientific research and my thesis. Similarly, thanks to prof. dr. Egon Berghout for his contribution as co-assessor.

Second, I would like to express my gratitude to my colleagues at Gasunie for their limited time and appreciated support. Special thanks to my supervisor and my ICT Team Manager, Vincent van der Klaauw for his practical support and feedback at Gasunie. Likewise, I would like to thank Jaap Jan Stuve, Service Delivery Manger of ICT department, for his valuable input about the world of Service Management and, therefore the research problem. Also, thanks to all other colleagues for their cooperation who participated as interview subjects during this research.

Finally, I would like to thank my friend Ranko Toljaga for his support and his critical review sessions. Last but not least, I would also like to thank my parents and family for their patience and moral support during my study as well as during this research.

Without your support I could not accomplish this achievement!

Summary

This thesis is conducted in collaboration with Gasunie, specifically the ICT department, as a part of Master of Science Business Administration, specialization Business & ICT education program at University of Groningen.

The main problem in management and maintenance of different information systems lies in the complexity of information systems, the high requirements (e.g. service level agreements (SLAs)), posed on the information which is timely delivered and exchanged by multiple information systems and information services. Moreover, the information provided by information systems should be guaranteed in terms of availability and quality of provided information. Finally, the service delivery is not always up to par according to SLAs. Summarized, the availability of the IT information services, called Near Real Time (NRT) information services chain, is not up to par.

This thesis strives to find the answer to the following research question:

“How can the ICT Department (M&A Team) guarantee the availability of Near Real Time information service chain according to service levels as agreed with internal customer?”

Two models, the DeLone and McLean (D&M) and the Soh and Marcus (S&M) appeared to be relevant for Gasunie because they offer two different points of view on IT systems yield, namely quality-to-benefits (D&M model) and strategy-to-performance (S&M model). Additional concepts relevant to answering the research question are defined being: Service Level Agreements (SLA) and IT best practices such as ITIL, ASL and COBIT (adopted by IT industry and Gasunie).

In practice, problems particularly occur within different IT architecture layers of NRT information services chain, specifically, infrastructure, application and control. These layers can respectively be explained by these best practices.

A case study is conducted in order to gather data by means of interviews based on the D&M and S&M models. The D&M model is used to measure the success of IT systems, in this case the success of NRT information services chain. The S&M model is used because it considers strategic implications of investment on business performance. This is relevant for this research because it is interesting to consider financial motives to improve (redesign or maintain) the existing NRT chain in which the calamities occur.

As results illustrate, the D&M model part of the interviews shows that infrastructure quality is not optimal, and the S&M part of the model shows that there is no sufficient driver for

improvement of the infrastructure quality. The infrastructure quality is therefore not optimal because of vulnerable technology and insufficient alignment between departments.

responsiveness. After all, ICT service responsiveness directly influences the availability of NRT information service chain, due to response speed and response knowledge of NRT chain

maintenance teams. Results show the following area of possible improvements which are expected to help guarantee desired levels of the NRT information services chain availability in the future: better alignment between Gasunie business and ICT department; better infrastructure system and service quality within Gasunie ICT department; introduce preventive monitoring of NRT information services chain; introduce driver for NRT chain improvement, and increase changeability in

workforce.

Table of Contents

Acknowledgements ... 2

Summary ... 3

1

Introduction ... 8

1.2 Research problem and scope ... 12

1.3 Research question ... 16

1.4 Research design ... 17

1.5 Outline ... 21

2

Literature review ... 22

2.1 The DeLone and McLean IS success model ... 23

2.2 The Soh and Marcus model - How IT creates business value: a process theory synthesis 28 2.2.1 The IT conversion process ... 29

2.2.2 The IT use process ... 30

2.2.3 The competitive process ... 30

2.2.4 The IT alignment process ... 33

2.3 Service Level Agreements (SLA) ... 34

2.3.1 SLA definition ... 35

2.3.2 SLA components ... 36

2.4 Best practices and frameworks ... 38

2.4.1 ITIL ... 39

2.4.2 ASL... 41

2.4.3 COBIT... 43

2.4.4 Best practices summary ... 46

2.5 Tacit knowledge ... 46

2.6 Quality improvement process ... 47

3

Analysis ... 53

3.1 Layered IT system architecture ... 53

3.2 Case study ... 55

3.2.1 D&M – model ... 56

3.2.2 S&M – model ... 58

3.3 Complexity of IT systems ... 60

3.4 Interview ... 61

3.4.1 Research type selection ... 62

3.4.2 Interview structure ... 62

3.4.3 Overcoming instrument problems ... 63

3.4.4 Interview subjects ... 63

3.5 Cross checking of interview answers ... 64

4

Results ... 66

4.1 D&M IS success model ... 66

4.1.1 Information quality ... 67

4.1.2 System quality ... 67

4.1.3 Service quality ... 67

4.1.4 Use and User Satisfaction ... 68

4.2 S&M process model ... 69

4.2.1 IT alignment process ... 69

4.2.2 IT conversion process ... 69

4.2.3 IT use process ... 70

5

Conclusions and recommendations... 72

5.1 Conclusions ... 72

5.2 Answering the research question ... 73

5.3 Recommendation ... 75

5.4 Research limitations ... 75

5.5 Contribution to academic knowledge... 75

References ... 78

Literature ... 78

Websites ... 83

Appendix 2 – Interview protocol ... 86

1 Introduction

In this document the master thesis is described for Master of Science Business Administration: Business & ICT of Dragoslav Sikanja which is conducted in collaboration with N.V. Nederlandse Gasunie, and specifically with Gasunie’s internal ICT department. This chapter describes the introduction of the research problem. Next, the research problem is further elaborated and transformed into a research question. Likewise, to determine a context of this research some general information is provided about Gasunie and internal ICT department where the research is conducted. Finally, this chapter is concluded with an outline about the structure and contents of this document.

1.1 Context of research

In this section the context of the research is elaborated. First, the organization of Gasunie is briefly described. Furthermore, the division of Gasunie is described and finally, the department where the focus of this research lies is described.

1.1.1 Organization

Gasunie is a European gas infrastructure company and it provides the transport of natural gas and green gas in the Netherlands and the Northern part of Germany. Gasunie is the first independent gas transport provider with a cross-border network in Europe and offers transport services via its subsidiaries Gasunie Transport Services B.V. (GTS) in the Netherlands and Gasunie Deutschland in Germany. Gasunie also provides the market with gas storage facilities (Gasunie Zuidwending), the pipeline to England (BBL Company) and the LNG terminal Gate at Maasvlakte. In addition, they facilitate and stimulate the green gas market through its subsidiary Vertogas.

Executive Board

Gas Transport Services

Operations Legal, Regulatory

& Public Affairs

Projects ICT

Corporate Strategy Human Resources

Treasury & Risk Management Participations

Health, Safety & Environment Finance

Figure 1: Organization chart Gasunie

In the following sections the background of Gasunie as organization is depicted. Also, the place and the purpose of the ICT department are described. The mission, vision and the strategy of Gasunie is stated below (www.gasunie.com, 2013).

Mission

Gasunie is a leading European gas infrastructure company. Gasunie serves the public interest, offers integrated transport and infrastructure services to its customers and adheres to the highest safety and business standards. It focuses on short and long term value creation for its shareholder(s), other stakeholders and the environment.

Vision

Gasunie has a vision to believe in a sustainable future with a balanced energy mix and a lasting role for diversified gas. Also, Gasunie serves its customers best with innovative gas infrastructure solutions. Therefore, Gasunie has committed to the three strategic pillars.

Strategic pillars

1. Optimize value of existing assets

2. Strengthen leading position as cross- border gas infrastructure company in Europe 3. Enable transition towards more sustainable energy usage

1.1.2 Division

stakeholders. The vision of the GTS is to be an organization that provides the best service to the customer, responds flexibly to changes in the environment, is open to sustainable gas flows and consequently fulfills a pivotal role in north-west Europe’s gas roundabout. GTS offers gas transportation services and related services such as quality conversion and balancing. GTS is also responsible for: management, operation and development of the gas; transportation network on an economic basis; monitoring the safety, reliability and efficiency of the transmission system; sufficient transportation capacity; connections to other national and international networks; public tasks related to security of supply and the small-fields policy; offering flexibility services under certain conditions and peak supply (www.gasunietransportservices.com, 2013).

1.1.3 Department

The internal ICT (Information & Communications Technology) department (also known as Unit I) is the ICT service provider to Gasunie. The objective of ICT department is to be the full ICT business partner for Gasunie, including Gasunie Germany and all Gasunie participation companies. The main strategic goals of the ICT department is “to work closely together to enable business innovation, service delivery based on ICT strategy and architecture in order to reduce costs and delivery times, and to act customer oriented and knowledgeable.“

Similarly, the ICT department has committed to the three strategic pillars in order to enhance technical platforms as service delivery. The ICT department has a task, as a service provider, to deliver ICT support and facilitate the ICT requirements to all departments of Gasunie. As a result of this support organization of Gasunie is able to conduct the strategic goals. The goal of ICT department and its strategic pillars is to contribute to strategy of Gasunie. Therefore, these are the strategic pillars of ICT department:

 Business and ICT alignment;

 Cost efficiency and delivery enhancement by means of standardization of ICT landscape;

 Competent workforce.

These strategic pillars are in place to support the strategy of Gasunie as organization, part of which is to “strengthen leading position as cross-border gas infrastructure company in Europe” (see section 1.1.1). Therefore, adequate service and products must be delivered to the customers. The ICT department plays an important role in getting the right product and service to the external customers on time.

Figure 2: Organization chart ICT department

A short description of each sub-department is given as follows:

 IS Supply handles supply of ICT services;

 IG Gas Transport is competence center which handles the delivery of information services within gas transport field of expertise;

 IL License to Operate is competence center which handles the delivery of information services license to operate field of expertise;

 IP ICT Projects provide services related to the demand of the ICT-services by managing the ICT-projects.

Each of these four sub-departments consists of a several teams which are responsible for the various support and delivery of information services. The definition of information services will be elaborated in next section. In figure 2 the structure of IG Gas Transport sub-department is depicted. One of these teams, specifically, Metering & Allocation Team (marked red) is responsible for the area where the focus of this research lies. Hence, only this sub-department is described in more detail within this research.

In the next section the research problem and the scope of this research will be introduced followed by research question.

ICT IL License to Operate IG Gas Transport IP ICT Projects IS Supply Metering & Allocation Team

1.2 Research problem and scope

The liberalized gas market in the Netherlands is becoming more complex and the time to market is becoming essential. Consequently, the management of Gasunie expects the internal ICT organization to be more flexible to the changes in the internal and external environment. The relations between different information systems are becoming larger, complex and more important. Consequently, within Gasunie the focus shifts from information systems to information services.

The main problem in management and maintenance of different information systems lies in the complexity of information systems (see figure 6 for conceptual structure), the high requirements (e.g. service level agreements (SLAs)), posed on the information which is timely delivered and exchanged by multiple information systems and information services. Accordingly, the internal ICT department should provide support which is “information services focused” and not “information system focused”, because information services consist of interconnected information systems which are described in the upcoming text of this section. Moreover, the information provided by information systems should be guaranteed in terms of availability and quality of provided information. Definition of availability used within this thesis is: “Ability of a configuration item or IT Service to perform its agreed function when required. Availability is usually calculated as a percentage.” (ITIL, OGC, 2007). Finally, the service delivery is not always up to par according to SLAs. As will be described in this thesis, the availability of the IT information services, called NRT information services chain, is not up to par. This fact justifies the undertaking of this research, because past has shown that the information services were not always available according to SLAs. Therefore, in the past, this underperformance has damaged the reliability of the ICT department, specifically the M&A Team, as perceived by the internal (business department) as well as external customers (Gasunie customers). For example, there were Gasunie customers who complained and even threatened with legal measures due to unavailability of the NRT information services chain.

The figure 3 depicts conceptual structure of the NRT chain with its stakeholders and relevant SLAs. Likewise, the ICT components of the chain are shown schematically and boundaries of Gasunie.

Figure 3: Conceptual structure of NRT information services chain

In order to investigate the possible problem in more detail, some background information will be provided. As previously described the Metering & Allocation Team is the focus of this research. Within this team lies the responsibility for support and delivery of, so called, Near Real Time (NRT) information services chain. The NRT chain, as the name states, is the information chain which is responsible for providing the information services on almost real time basis (delay of five minutes). Information provided to the customer by the NRT chain is for example, among others, the gas transport contracts, their transported quantities, and invoices. Therefore, this NRT-chain is characterized by high availability and timely delivery requirements to internal customers (business department) as well as to external customers (Gasunie customers) when required. The responsibility of the high availability and timely delivery of information provided lies at Metering & Allocation (M&A) Team Manager. This research is conducted under approvement, sponsorship and supervision of M&A Team Manager, as NRT information services fall under his responsibility and supervision.

Some of the parts of the NRT information services chain are outsourced and some are internally managed by ICT department and delivered as an information service to the business department. The delivery of the information services is secured by the service level agreements (SLAs), see figure 3, on supply side as well as demand side. Also, there are SLAs defined for each information system shackle. Demand side refers to delivery of information services by ICT department to the business departments. Supply side refers to delivery of services by third parties (such as external and internal suppliers) to the internal ICT department.

Figure 4: Overview of the calamities

For example, in case of software error calamity, when the NRT information service chain fails to deliver the information to the customers (internal or external) the responsibility of M&A Team Manager is to deploy the members of his team to solve this issue as soon as possible. Also, he should ensure that the necessary steps are taken in order to prevent the calamity from occurring again. This is mostly possible in the cases when the issue occurs at the information chain components which are under direct control and support of the ICT department (specifically M&A-team), such as business applications. However, if a calamity occurs on a component, such as internet connection or firewall supplier, which is managed by a supplier, then the calamity is not always timely or adequately solved according to the required service levels. For example, calamities were caused by a supplier regarding the firewall and internet connection. These two calamities caused the unavailability of the NRT information services, which resulted in an estimated damage cost of 300.000 EUR for each calamity. According to M&A Team Manager, similar examples happened in the period of past years more structurally than incidentally. Subsequently, the M&A Team Manager has the responsibility to deliver support according the SLAs but, as discussed, in case of some calamities these SLAs fail to meet these required service levels. Therefore, the M&A team manager requires to resolve this NRT chain unavailability issue.

Therefore, the research problem of this thesis is as follows:

1.3 Research question

In order to solve the problem described in previous section the following research question is posed (see figure 3):

The Near Real Time information service chain is described in the section 1.2 as well as the definition of availability. The focus in this research question lies on internal customer because the ICT department has only the agreements with this customer and not with external customer.

The availability of Near Real Time information service is not up to par as required by the current Service Level Agreements, which potentially results in customer (internal and external)

dissatisfaction. This is in direct conflict with the first strategic pillar of the ICT department, Business and ICT alignment, and NRT information service chain availability increase is therefore

an ICT department priority.

Therefore, the external customer is not taken into account during this research. Chapter two describes the literature in more detail which is used to formulate research question as well as to understand the concepts relevant to answering of the research question. Therefore literature review has a threefold function: (1) critically checking and concretizing the research demand, resulting in (2) research question definition as stated above; and (3) overview of relevant theory required for the analysis phase of this research, see figure 5 in the following section for elaboration of this functions. In the following section the steps taken during the research are described in an elaboration of the research design.

1.4 Research design

In this section, the research design is described. All the design parts of the research are explained, and the visual representation of the research is depicted.

The main objective of this research is to find the answer to the research question. Firstly, the motive of this research is described by means of an elaboration of the research context. Secondly, in the research context the motive for the research and its boundaries are explained. Subsequently, the research objective is translated into research question by performing literature research. The analysis is executed by means of a cross-sectional and exploratory case study (Cooper and Schindler, 2006). The results are presented which are the fundaments for the final part of the research. Finally, the conclusion is made, research question is answered and the recommendations are summarized resulting from the research question answer.

Figure 5: Research design structure

Research demand is the first part of the research structure. In this part of the research, the researcher is seeking for the motive of the research within literature (1, see figure 5) and by consulting relevant company documents and experts, and the problem definition is made. Moreover, the context of the research is established: what are the boundaries, and who is the main sponsor and who are the stakeholders of the research. As noted in previous section (1.3), this research is conducted within the ‘boundaries’ of the M&A team. More specifically, the main sponsor of the research is the M&A Team manager. Accordingly, the research is focused on NRT information services chain because the research problem lies in this part of Gasunie.

Additionally, the relevant literature is consulted to develop a better picture of the problem at hand. As a result, the context of the research, the motive and the relevant literature are used to define the research problem and subsequently, to formulate the research question (2, see figure 5). From the literature research the frameworks, models (e.g. SLAs) and all relevant research concepts are selected and used in analysis (3, see figure 5).

The following scientific sources are used for the literature research: Business Source Premier, Science Direct and Google Scholar. To get a better understanding of all research concepts,

the following search terms are used in above noted scientific sources: service level agreement (definition, structure, elements, and components), SLA, model, framework, information services, success model, business value process, tacit knowledge, stakeholder, business and IT alignment, research design and research methods. Furthermore, literature (books, articles, etc.) provided during the master course are used as source to utilize the knowledge about relevant topics and concepts discussed during this research.

In order to proceed towards required results of this thesis, the first step is the realization of the complexity of the problem. This research constitutes a multidimensional problem. Therefore, in order to gain overview of the problem, literature is used for modeling different dimensions. The goal of this research is to reduce the complexity of the problem. This reduction of complexity is achieved by interviews with relevant experts. The interview questions are designed by means of literature used to model the multidimensional problem. The input distilled from answers given by the experts is used to gain insight into possible research directions which potentially increase availability of the NRT information services chain, which otherwise would have obscured by complexity described in figure 6.

Figure 6: Complex relationship between three dimensions

The goal during the literature research was not to acquire complete and in-depth image of all available literature, but to understand and develop the knowledge about the main concepts and various definitions relevant for this research. Chapter two describes the relevant concepts and definitions from literature, which are used for problem definition, research question definition and analysis phase of this research. In the analysis phase, a case study is chosen as a research method to collect the descriptive data relevant for answering the research question. This is performed by means of interviews because the interviews are a valid method for capturing an expert knowledge. According to Cooper and Schindler (2006) a case study is “a powerful research methodology that combines individual and (sometimes) group interviews with record analysis and observation”. It is, likewise, suitable for extraction of the information from the organizations’ documents such as annual reports, websites, brochures, etc. These organizations’ information together combined with the data collected by means of interviews is a powerful tool to obtain understanding of the research problem at hand (Cooper and Schindler, 2006). This analysis phase is described in chapter three in detail.

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A qualitative case study characterizes a methodology that is ideally suitable for creating relevant knowledge for management (Gibbert et al., 2008). It is best suited to comprehensively understand, describe and explain complex and dynamic nature of the organizations and stakeholders involved (Delattre et al., 2009). Moreover, the qualitative research is designed to shed light on how (process) and why (meaning) things happened as they do (Cooper and Schindler, 2006).

Primarily, data collection is mainly done by structured interview, observations, and company documents and reports. The interviews are conducted mainly for the collection of data. The structure of the interviews as well as the selection of the interview participants is described in more detail in section 3.4. This section describes how the interview has been designed and conducted. The same section 3.4 describes selection of relevant interview subjects. During the interviews company documents and reports are used to support the process of collecting the data, while the interview is composed of concepts from two ICT models from literature, from quality-to-benefits (D&M model) and strategy-to-performance (S&M model) points of view.

Some of the documents, due to confidentiality, are not attached within this thesis. Additionally, to support the primary data collection method, specifically interview, secondary data is consulted. Secondary data are e-mails, presentations, Excel sheets, and similar documents.

The next section will depict the outline of this document.

1.5 Outline

2 Literature review

Main goals of literature review are to situate the current research within the body knowledge in literature and to provide context for the reader in which the research is conducted. In order to investigate and get better understanding of all parts mentioned in the research problem definition, the literature review is performed leading to a research question which is defined in previous chapter, see figure 5.

First, the DeLone and McLean (D&M) Information System (IS) success model is elaborated. The D&M (1992, 2003) model is possibly one of the most cited models in the field of Information Systems (Agourram, 2009; Agourram et al., 2007 and Raiet al., 2002). This model is more than 300 times citied in the Business Source Premier database as of May 2013. This indicates that McLean and DeLone model is well received in the field of IS research. Therefore, D&M model is worthy to be examined in more detail and similarly, to be a part of this literature review. Moreover, the number of citations suggests that the D&M model contributes to better modeling of the concept of IS success which is the main motivation in the DeLone & McLean (1992) paper.

Next, the Soh and Markus (S&M) model named: “How IT Creates Business Value: A Process Theory Synthesis” is described. The S&M model describes the relationship between IT investments and organizational performance (Marshal et al., 2005). This model is chosen to be elaborated because this model sheds light on the process of business value creation caused by IT services.

These two models are relevant for Gasunie for this research because they offer two different points of view on IT system yield for the organization, namely quality-to-benefits (D&M model) and strategy-to-performance (S&M model).

Additional concepts relevant to answering of the research question, and described within this chapter are: Service Level Agreement (SLA) and IT best practices: ITIL, ASL and COBIT (adopted by IT industry and Gasunie). The SLA has been elaborated in more detail in this chapter in order to understand the purpose of this type of agreement within the context of a multinational organization. As service levels are the part of the research question, it is imperative to understand this concept. As figure 3 illustrates the conceptual structure of the NRT chain, it is important to understand all relevant parts of this structure. To accomplish this, the author makes use of the best practices which model IT systems over different layers of IT architecture. Therefore, this chapter describes relevant best practice models (ITIL, ASL and COBIT) in order to gain knowledge important for a successful IT system over relevant layers of IT architecture.

knowledge is to be extracted within this thesis by means of interviews, the relevant literature about tacit (implicit) expert knowledge is consulted. After all, it is imperative to extract knowledge held unconsciously by the experts, in order to perform an effective case study. Although the information in the section 2.6 is not referenced back to literature it represents body of knowledge which is held within Gasunie by relevant experts, and it is supported by Gasunie documents (Gasunie, 2013). All these concepts are described within this chapter. Concluding the chapter, a summary is given of relevant literature.

First, the DeLone and McLean IS success model is described. Next, the Soh and Marcus business value model is elaborated. Thereafter, the Service Level Agreement concept is discussed. Furthermore, best practices are presented in this chapter as well. Hereafter, tacit knowledge and the Quality Improvement Process are described. Finally, a summary of most important information from literature is given.

2.1 The DeLone and McLean IS success model

The DeLone and McLean published a paper in 1992 in which they attempted to create structure and awareness to the ‘variable’ – IS success – in Information Systems (IS) research. They proposed an interactive model (referred to as the “D&M IS Success Model”). This model was represented as a framework to conceptualize and operationalize IS success. In the original paper, authors attempted to construct a more coherent body of knowledge and provide guidance to future research based on previous research of communications of Shannon and Weaver (1949), the information ‘influence’ theory of Mason (1978) and empirical management information systems (MIS) research studies from 1981-87. These three research sources were the fundament of the IS model.

Shannon and Weaver, in their communication research, argued that the information on three levels of communication can be measurement:

 technical level: where accuracy and efficiency of the communication system produces information and can be measured;

 semantic level: where the information in conveying the intended meaning can be measured; and

 the receipt of the information;

 an evaluation of the information, leading to a change in recipient behavior; and

 the application of the information, leading to a change in system performance. In D&M IS Success Model, authors made the following classification of the measurements:

 ‘systems quality’ measures technical success;

 ‘information quality’ measures semantic success; and

 ‘use, user satisfaction’, individual impacts’, and ‘organizational impacts’ measure effectiveness success.

The first version of the model resulted into the visual representation of the model which is depicted in the figure 7.

Figure 7: D&M IS Success Model (1992).

The two important contributions of understanding of IS success can be achieved by the D&M-model (1992). First, model offers framework to categorize the measures of IS success that are used in literature (Wang, 2007). And second, it proposes “a model of temporal and causal interdependencies between the categories” (Seddon, 1997 and McGill et al., 2003).

In the research community, the original IS success model of DeLone and McLean (1992) received a broad attention from researchers which is supported by number of citations. The model argues “that an individual’s attitude and subsequent behavior are preceded by his or her beliefs about the quality of the information and system” (Chen and Cheng, 2009). Behavior (e.g. use) is under the influence of attitude (e.g. satisfaction), likewise, an attitude is formed by actual use. Consequently, users’ attitude and actual use of the system result in individual impact, which in turn produces organizational impact. Evidently, attitude and behavior are two mutual concepts which could result in the following interpretations according to Chen en Cheng (2009):

 “whether or not a user performs an actual behavior is determined by their previously perceived qualities and formed attitude towards the activity;

 whether or not a user forms a positive or negative attitude towards the activity is in turn influenced by their perceived qualities and actual behavior” (Chen and Cheng, 2009).

Seddon (1997) suggests that casual and process factors used in DeLone and McLean’s (1992) leads to “[…] so many potentially confusing meanings that the value of the model is diminished.” Moreover, the original version of IS model (1992) was not very accepted by the research community regarding the management of IS and the new economic developments (Chen and Cheng, 2009). Therefore, DeLone and McLean took in consideration over 285 publications that investigate the measurement of IS success, in order to update their original model (Khayun, 2012). Additionally, the original model was also exposed towards the criticism from the research community and therefore, DeLone and McLean proposed an updated version of their IS success model in 2003. One of the purposes of the new model was to update the old one but also to evaluate the usability of the model in order to serve the changes in information technology (IT) evolution in past decades, specifically the growth of e-commerce (Chen and Cheng, 2009). The new updated IS success model has few major additions. First, the IS model is primarily altered by adding a new quality dimension, explicitly ‘service quality’. In addition, the ‘use’ part was divided into ‘intention to use’ and ‘actual use’. The last change resulted in combination of individual and organizational impacts into single factor, called ‘net benefits’.

As described, one of the additions to the new updated IS success model was the new quality dimension ‘service quality’. DeLone and McLean argue that the service quality could be used as an addition to model. However, it should be properly measured as a quality dimension which has influence on user satisfaction and actual use. The measurement of the service quality is performed by a measurement instrument: Servqual. Jiang (et al., 2002) examined in their research the validity of this instrument. Originally, this instrument measures the potential gap between the consumers’ expectations and their perceived delivery. The Servqual consists of the five factors:

 “tangibles: the appearance of physical facilities, equipment, and personnel;  reliability: the ability to perform the promised service dependably and accurately;  responsiveness: the willingness to help customers and provide prompt service;

 assurance: the knowledge and courtesy of employees and their ability to inspire trust and confidence; and

based on the empirical and theoretical contributions of the researchers who have discussed or tested the original model (DeLone and McLean, 2003). This resulted into new version of the model which is depicted in the figure 8.

Figure 8: Updated DeLone and McLean IS Success Model (2003).

The updated D&M IS success model consists of six interrelated dimensions of information systems success:  System quality  Information quality  Service quality  Intention to use/Use  User satisfaction  Net benefits

System Quality is divided into several criteria:

 Usability of an information system refers to the ease with which a consumer can achieve a particular goal (e.g. product searching or purchasing);

 Availability of an information system (IS) is the amount of time a IS functions according to required conditions;

 Reliability refers to the dependability of information systems’ operations (whether a IS acts efficiently at the proper moments);

 Response time refers to how quickly the system responds to requests for information or action (e.g. download time).

Information quality has often been used as a success measure for traditional IS (Wu and Wang 2006). The following variables are most generally used for measuring information quality (DeLone and McLean 2003):

 Accuracy: refers to the consumer’s perception that the information is correct;

 Currency: refers to the consumer’s perception that the information is new and frequently updated;

 Relevance: refers to whether an information system (e.g. NRT information services chain) is concerned with the interests of the consumer;

 Completeness: refers to whether an information system provides all the necessary information; and

 Understandability: refers to the ease with which the consumer understands information system content.

Service Quality, DeLone and McLean propose four variables to measure service quality:

 Reliability indicates if the information system provider is capable of performing and maintaining their support services;

 Responsiveness refers to the efficiency of the service staff;

 Assurance refers to the expertise of the service staff; and

 Empathy indicates that an information system is designed with the consumer in mind. Use and User Satisfaction are dimensions which are closely interrelated. Use must lead to User Satisfaction in process sense. On the other hand, positive experience with Use leads to increase of User Satisfaction, in casual sense. Following the same causality, increased User Satisfaction leads to increased Use. Likewise, increased User Satisfaction will lead to increased Intention to Use, and therefore Use. Use can be measured by the number of website visits and User Satisfaction can be captured from repeat website visits (DeLone and McLean, 2003).

Net Benefits are the most important success measures as they represent the balance between positive and negative impact DeLone and McLean (2003, 2004). From the user’s perspective, a Net Benefit can be a positive or negative and results in reinforcement or decrease of Use and User Satisfaction.

To sum up, the D&M model is a means of measuring success of an IT system by relating quality dimensions to benefits yielded by IT system. It examines the quality of IT systems by means of six interrelated dimensions of IS success and therefore it provides the potentially gained net benefits. This quality-to-benefits point of view is used as input for the first part of the interview. Second part of the interview is developed by using the Soh and Marcus model of business value, which relates strategy considerations to IT performance. The Soh and Marcus model is described in next section.

2.2 The Soh and Marcus model - How IT creates business value: a process theory

synthesis

An additional model which is used during the analysis in order to find the answer to research question is the Soh and Markus (1995) model. This model is a business value model and as such it is not designed as a measurement model. This model is more a model to understand the fit between the patterns of IT assets, elements that affect the organizations’ ability to receive benefits from these assets, and organizations performance (Mahmood and Szewczak, 1999).

Soh and Markus (1995) defined this model in an article titled “How IT Creates Business Value: A Process Theory Synthesis”. Their model is used to measure business value of IT (investments). Soh and Markus (1995) examined the theoretical literature about number of the process theories. Their work is based on the five models. These models are as follows:

 Appropriate Use [Lucas (1993)]:

 Strategic fit [Grabowski and Lee (1993)]:

 IT Assets [Markus and Soh (1993)]:

 Leveraging IS Processes [Beath, Goodhue and Ross (1994)]

 IT Impacts [Sambamurthy and Zmud (1994)]:

Figure 9: How IT Creates Business Value: A Process Theory Synthesis – model (adopted from Soh and Markus, 1995)

To effectively convert money and other resources into an asset for the organization depends on a number of IT management activities:

 formulating IS/IT strategy and ensuring alignment with business strategy,

 creating appropriate structures and mechanisms to implement strategy,

 establishing effective means of prioritizing requests for IT expenditure, and

 effectively managing IT development and/or acquisition projects.

These activities are important for this conversion process. However, IT assets have desired impact in an organization if they are used properly and potential benefits from these investments are managed in the proactive manner. IT assets create favorable IT impacts on the organization if appropriate IT use is ensured in given context. In this regard, proper restructuring of roles and responsibilities together with the appropriate redesign of business processes are imperative. However, whether or not IT impacts have the desired effect on organizational performance is dependent on a number of factors. Many of these factors are outside the control of the organization. The factors such as the general state of the economy, the nature of competition in the industry, the behavior of competitors, etc., will all have the impact on organizational performance.

2.2.1 The IT conversion process

The IT conversion process encompasses converting of IT financial resources and other IT resources into an IT asset which is part of an organization. Consequently, IT assets are the result of IT expenditures. The ‘process’ where an organization converts IT expenditures into IT assets can be labeled as ‘IT Management’. Soh and Markus defined four areas of IT Management in relation to IT conversion effectiveness:

 Formulating IT strategy;

The IT Conversion Process

The IT Use Process The Competitive

Process IT Assets IT Impacts IT Expenditure Organizational Performance  IT Management / Conversion Activities  Appropriate /

Inappropriate Use  _ Competitive Position

 Selecting appropriate organizational structures for executing IT strategy;

 Selecting the right IT projects; and

 Managing IT projects effectively.

Accordingly, IT management strategies are complex for an organization, the stakeholder politics often play a role in the selection and implementation of the IT management policies and IT management interactions, sometimes interfering and sometimes reinforcing with each other. Therefore, the ‘IT management / resources conversion’ should probably be treated as a ‘process’ in which IT expenditures are essential, however not sufficient requirement for production of IT assets (Soh & Markus, 1995).

2.2.2 The IT use process

IT assets contains of the applications portfolio, IT infrastructure and user skill. The application portfolio refers to all uses of IT in the organization, quantifiable by means of deployed business applications. IT infrastructure includes the fundaments of IT; hardware and systems software (e.g. operating systems), shared services, such as networking services, and skilled IT personnel. User skill comprises everything what users know about their applications and infrastructure and what they can do with it. Without this, the potential of the applications portfolio and IT infrastructure can never be realized. Soh and Markus (1995) advocate, if IT assets are used appropriately and if the potential benefits from IT investments are proactively managed, consequently IT assets will have the impact on the organizations. “IT Impacts occur when people and organizational units use IT assets (technology and skills) appropriately, a process affected by organizational structures, processes and culture” (McKay & Marshall, 2004; Soh & Markus, 1995).

2.2.3 The competitive process

“The recipe that connects the necessary ingredient of IT impacts with the uncertain outcome of enhanced organizational effectiveness includes the tournament of organizational competition, in which organizations attempt to improve their outcomes by preplanning and capitalizing on unplanned events (which is a result of their competitive position and the competitive dynamics)” (Soh & Markus, 1995). Due to favorable economic and environmental conditions in combination with IT investment, these above discussed outcomes occur. The first necessary condition is ‘IT impacts’ due to investment in IT from improved organizational perspective. In case of IT Competitive Process the organization must have achieved a state in where the following statements are valid:

 Business processes have been redesigned using IT in such a way that the processes are more efficient or effective, leading to organizational outcomes such as increased productivity, employee satisfaction, etc.

 IT has enabled organizational decision makers to improve their understanding of resource markets and of customers leading to better sourcing of inputs, better product / service design, etc.

 IT has enabled flexible and adaptive organizational structures among organizational members and with customers and suppliers potentially leading to decreased lead time in product / service development / delivery, leading to increased market share, etc. (Soh & Markus, 1995).

These IT impacts are essential to improve the organizational performance, however, they cannot be sufficient, because of any number of factors outside the control of organization can result in failure to realize them (Soh and Markus 1995). Nevertheless, if the business conditions are positive, the impacts can only result in improved organizational performance.

In the table 1 Marshal (et al., 2005) summarized the organizational activities and practices according to the S&M (1995) model. In the eleven organizations the study was conducted by Marshal (et al., 2005), were they identified from the transcripts the practices contributing to the delivery of business value. The phase ‘IT impacts to Organizational performance’ is not described in this article (Marshal et al., 2005) and therefore is not included in the following table either. In their research Marshal (et al., 2005) focus on first two parts of the S&M model: ‘IT Expenditure to Assets’ and ‘IT Assets to IT Impacts’.

Table 1: S&M process model organizational practices

Phase Practices

Strategic Imperative to IT Expenditure

Formulating IT vision and strategy

Aligning and embedding IT strategy in business strategy Identifying IT opportunities

Prioritizing and selecting IT investment proposals

Building a broad but rigorous business case for IT investment

opportunities, including evaluating proposals and identifying business benefits, and estimating the time required to realize benefits

Identifying IT investment project risks

Constantly monitoring and reassessing proposals for organizational and strategic fit

IT Expenditure to Assets Managing IT project risk

Redesign of business processes, and assessing and planning required business change

Project management – effectively managing all aspects associated with acquiring and/or developing the desired information system

Carry out evaluations of the partly developed system or proposed system including checks on changing business requirements

IT Assets to IT Impacts Post implementation reviews

Implementation of business process change

Measurement of the achievement of goals and objectives for IT investments

Possible reallocation and restructuring of roles and responsibilities to achieve organizational fit

Management of the realization of benefits from IT investments Evaluation of stakeholder satisfaction with IT

Assessment of perceived value of IT investments

Management of business change required to accommodate IT implementation

Training and reskilling

Soh and Marcus (1995) raise a number of important benefits from their process model of IT for the creation of business value. Their research showed a number of main points. First, they argued why IT investment does not always lead to improved organizational performance where authors attempt to move the research focus away from simple relationships between spending and performance. Second, their model offers a framework which is a means to test the IT conditions and processes that are related with improved organizational performance. Third and last, their research can offer for the practitioners a guideline which is practical in nature, in areas such as IT impacts, specification of appropriate IT use, type and quality of IT assets, and IT management processes (Soh and Markus, 1995).

This is supported by Earl (1990) and Kohli and Deveraj (2004) as they advocate that: “a business-led approach to IT expenditure is required, with business opportunity and need driving decisions on IT investments”. Therefore, Marshal (et al., 2005) argue for a modification of the S&M model in order to ensure that the business focus of IT expenditure is both explicitly acknowledged and included in the model.

The new adjusted model is based on the accuracy, authenticity and clarity given to the description of the IT business value creation process by splitting the stage of IT Expenditure to IT Assets into two stages. The first stage is from Strategic Imperative to IT Expenditure, and the second stage, which is the first stage in the original model, is from IT Expenditure to IT Assets. Marshal et al., (2005) advocate that their description of the business IT value creation process would be improved and clarified by introducing this extra stage, or by making this first stage more distinct and explicit. The figure 10 depicts the modified S&M model according to Marshal et al., (2005).

Figure 10: Modified S&M process model for the realization of business value from IT

Additionally, the adjusted process model provides another feature, it ‘closes the loop’ between business strategic thinking and organizational performance. The strategic imperative of the organization, growing business opportunities and needs, and making comprehensive IT investment decisions are the factors that rise as a result of an insight where business performance can be, or needs to be, improved. Accordingly, these factors serves to glue the processes of expending money and driving value from IT to the desire to improve organizational performance, as well as to improve business-based drivers, opportunities and strategic initiatives (Marshal et al., 2005).In the next section, extra added process stage is briefly described.

2.2.4 The IT alignment process

The main activities in this additional process, called ‘The IT Alignment Process’ consists of understanding the competitive, or strategic environment of the organization, and the threats and opportunities inherent in such environments. This process involves identification of both business

The IT Alignment Process

The IT Conversion Process

The IT Use Process The Competitive Process IT Assets IT Impacts IT Expenditure Organizational Performance  IT Management / Conversion Activities  Appropriate / Inappropriate Use  Competitive Position  Competitive Dynamics Strategic Imperative

and technology opportunities and in defining a comprehensible investment strategy for IT which would result in IT investments aligned to the business strategy and direction of the organization (Marshal et al., 2005). The goal in this process would be the realization of a strategic ‘fit’ between an organization (and its strategies and objectives) and IT investment (IT strategy and portfolio). IT initiatives can be introduced by business executives from perception of needs and requirements and therefore, another activity of this process would be to match these perceptions of business to business initiatives. As a result these IT and business initiatives should be the aligned through prioritization and consequently, via the formulation of a convincing detailed and credible business case.

The modified S&M model is valuable framework for explaining and describing the processes and activities involved in effective realization of business value from IT investments. Marshal (et a., 2005) argue that the importance of the first stage of IT strategy, IT opportunity identification, and IT business analysis by the CIO’s in their research, justifies the modification of the S&M model, explicitly, inclusion of Strategic Imperative to IT Expenditure as a part of the IT Alignment process. The close relationship between IT initiatives and business drivers and requirements was regularly highlighted in modified S&M model, and therefore was considered as the most significant element (of all stages) in finally developing business value. There is empirical support for the adjustments made to the model, and that the modified model (see Figure 9) better represents the concerns and practices of CIOs (Marshal et al., 2005).

In short, the Soh and Markus (S&M) model is not a measurement model but is a model which connects processes between IT strategy and business value created by IT and therefore models the IT system form strategy-to-performance point of view. As mentioned in previous section, this strategy-to-performance notion is used as a second part of the interview presented to the relevant expert interview subjects from Gasunie.

The two previous sections describe D&M and respectively S&M model which are used as the foundation of the interview in chapter three. However, to understand the research problem and consequently research question the concept of the service levels is described in detail in the next section.

2.3 Service Level Agreements (SLA)

structure of the SLA. Moreover, the components of the SLA are discussed and their mutual relationship.

2.3.1 SLA definition

A Service Level Agreement (SLA) between a service provider and its customers will guarantee customers that they will receive the service they requested for, on one hand, and will compel the service provider to accomplish its service promises, on the other hand. A service provider is a party which provides the service to the customer. If the service provider does not meet the SLA, that could result in serious financial consequences for a service provider. As explained in problem definition section 1.2, calamities were caused by a supplier regarding the firewall and internet connection. These two calamities caused the unavailability of the NRT information services and which resulted in an estimated damage cost of 300.000 EUR each.

Therefore, service providers have to have a reasonable knowledge regarding what services they can deliver in an SLA and what their IT delivery capabilities are. Similarly, consumers are interested in the impact of the service described in the SLAs on their own productivity (Jin et al. 2002). There are a various definitions of SLA, but there are no large distinctions between the different definitions. A few examples are described below.

 “SLA is an explicit statement of the expectations and obligations that exist in a business relationship between two organizations: the service provider and the customer” (Verma, 1999).

 “A SLA is an agreement regarding the guarantees of a service provided by a service provider. It defines mutual understandings and expectations of a service between the service provider and service consumers. The service guarantees are about what transactions need to be executed and how well they should be executed” (Jin et al. 2002).

 “A SLA is a contract that defines services that the vendor will provide to the client and specifies ‘meta-data’: information about the agreement itself, such as its term, the parties, and ways in which disagreements or changes are to be negotiated” (Beaumont, 2006).

According to Isail (et al., 2013) an SLA contains a number of agreed components related to the service delivered by a service provider. The components are the terms which represent the demands of the service consumer and the constraints of the service provider. Both parties have a certain requirements about the service. The service consumer requires certain quality aspects of the service whereas, the service provider may enforce certain time limitations related to the service. The service consumer is interested in time requirements of the service and the service provider can set some time constraints regarding its resource capability. The resource capability represents resources that a service provider is able to offer by providing the service, such as availability of the NRT information service chain. The time constraint is a term which refers to the time slices of the capability (Ismail et al. 2013). For example, the time constraint of the NRT information service chain states that the service is 24x7 available.

2.3.2 SLA components

As discussed in previous section, SLA is an agreement between two parties, service provider and service receiver (customer) where mutual understandings and expectations of service are defined. Those mutual understandings and expectations are mostly described as components (Jin et al. 2002), sets of elements (Karten, 2010) or service characteristics (Goo et al., 2008). However, Verma (1999) argues SLA components on its legal grounds as described in the following text.

According to Jin (et al., 2002) an SLA may have the following components:

 Purpose: a short description of the reasons behind the creation of the SLA

 Parties: this part describes the parties involved in the SLA and their roles (service provider and service consumer).

 Validity period: the period of time is in this part defined that the SLA will cover. In most cases there is a start time and end time of the period.

 Scope: states the service(s) which is/are defined in the agreement.

 Restrictions: in order to provide the requested service levels the essential steps are defined.

 Penalties: in case when the service provider is not able to meet the SLA objectives and under-performs are described in this part of SLA. For example, in worst case scenario, the termination of contract should be built in if the unacceptable levels of service are provided.

 Optional services: compels any exceptions regarding service levels which are not required by service consumer in the first place, however may be required.

 Exclusions: specifies what factors are not covered in and by the SLA.

 Administration: this part describes the creation processes of the SLA, states the objectives to be measured and explains the responsibility of the organization for management of each of those elements.

Karten (2010) argues that an effective SLA has two sets of elements: service and management. “An SLA must contain both elements to be effective” (Karten, 2010). A SLA consists of the following service elements:

 the services that will be provided;  the services that are not provided;  conditions of services' availability;  service standards, such as time frames;  each department's responsibilities;  cost vs. service tradeoffs;

 escalation procedures.

The management element should put emphasis on:

 how the effectiveness of the service is to be tracked;

 how information about the effectiveness of the services will be reported;  how disagreements relating to service will be resolved;

 how the SLA will be reviewed;

 how the SLA can be revised (Karten, 2010).

components, sets of elements or service characteristics. Moreover SLA is a legally binding document which describes legal obligations of service provider and service receiver.

A SLA usually has the following components:

 A description of the service that is to be provided.

 The expected performance of the service.

 A detailed procedure for handling problems with the service.

 A procedure for monitoring and reporting the service level to the customer.

 The consequences of the service provider not meeting the agreed service level.

 A description of under which circumstances the SLA does not apply (Verma, 1999).

In this section SLA definition and SLA components were explained. Next step is to elaborate the best practices and frameworks; this will be done in the following section of this document.

2.4 Best practices and frameworks

In this section, the different approaches of best practices and frameworks used within Gasunie are illustrated. First, a brief overview of all selected models is given. Throughout this section the author uses the term models for all best practices and frameworks. In subsequent sub-sections these models are elaborated.

(Gehrmann, 2012). The latter is contrary to Six Sigma, CMMI, ISO standard and Balanced Score Card, which are used over much wider range of industries (from manufacturing to financial services) (Bhuiyan, 2005). This is further explained in section 3.1. These models represent part of the scope of the analysis phase of this research. As such, this scoping is a logical step in literature review in order to understand the IT architecture. This is needed to understand, on which layers of the IT architecture the calamities occur and how the availability of the NRT chain can potentially be improved. First, the next section describes ITIL. Next, ASL is elaborated in more detail and finally, the model of COBIT is explained.

2.4.1 ITIL

The Information Technology Infrastructure Library (ITIL) is one of the available approaches to IT Service Management (ITSM) in the world. ITIL offers a consistent set of best practices which are collected from the private and public sectors internationally. It provides a wide range of management procedures which supports businesses in accomplishing value and quality in ICT operations. These procedures are supplier-independent and are a guide for ICT infrastructure, development and operations. According to Cartlidge et al. (2007), ITIL represents a framework that describes best practice in IT service management. In ITIL, the focus lies on the continual improvement and measurement of the quality of IT service delivered, from business as well as from customer perspective.

ITIL was originally developed in the 1980s and 1990s by the then UK Central Computer and Telecommunications Agency (CCTA). Today, the Office of Government Commerce (OGC), under contract to the UK Government is responsible for its development. “Since then, ITIL has provided not only a best practice-based framework, but also an approach and philosophy shared by the people who work with it in practice” (Van Bon and Dyer, 2009). The first version of ITIL was published between 1985 and 1995 and the second version between 2000 and 2004. The first version of ITIL contained a library of a 31 associated books. ITIL (now available as version 3) provides a logical sets of guidelines, which consolidate different aspects of ICT management, applications and services. ITIL is published in a series of books (therefore, the term “Library”); each of these books illustrates a core area within ICT management. According to ITIL, an IT service consists of ICT components such as infrastructure, data and applications that are produced outside the IT Service Management domain.

ITIL v3 explains in five volumes how to:

 Determine which IT services should be provided (Service Strategy – SS)

 Create or change services and service management processes (Service Design – SD)