The impact of IT governance on SME

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The following sections will explain the key concepts behind the chosen methodological traditions, the procedures followed, tools used for the collection and analysis of data, approach taken. It covers the strategies of inquiry, methods of data collections, analysis methods, questionnaire and the type of knowledge claim is described below.

Abstract

The national and international business are largely relying on IT and communication technology as a medium to carry out the strategic vision and working towards achieving the competitive advantage. Only small number of small and medium enterprise business deal with IT governance, meaning that most of the SME businesses often find themselves making their governance verdicts in emptiness. This chapter therefore aims to examine the theories and policies related to IT Governance, examine the important role played by IT governance in SME (Importance and prioritisation) and analyse how IT governance practices lead to business opportunities and failures for SME business.

IT Governance

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The IT governance discusses decision, power and alignment between the business and IT (Luftman etal, 2003). The integral part of any business is now IT which is more obvious than before. This indicates that large number of business does not know the process to incorporate the IT with business effectively. Currently the perspective of dealing with IT has changed big time with moving away from cost cutting and recognised as a valued partner, which in turn assist the business generate business value.

The Information Technology Governance Institute (2003) explains IT governance is the process "…to understand the issues of and strategic importance of IT, so that the enterprise can sustain its operations and implement the strategies required to extend its activities into the future"

Rau (2004) explains the Information technology governance is the process of creating a successful strategy by creating a relation between senior management and IT leaders to ensure that technology investments enable the achievement of business strategy in an effective and efficient manner.

Knowledge Claim

The pragmatism philosophy is chosen for research as a knowledge claim. Roger (2006) claims that the pragmatist's philosophy reflects all the practical or real concerns and consequences to be vital constituents of both truth and meaning, Further illustrated by Hoch(1996) argues that the pragmatists do not concentrate on finding the relation between practicality and truth but explains the implications of actions. Addition to the above statement Hart (2005, p.26) explains that the pragmatists always comes with the concept of execution 'How can I apply this in practice?'. The pragmatist always finds the practical relation between theory and a problem, also the pragmatists look for a chance to execute and evaluate their effectiveness. The pragmatists focus on finding practical problems challenged by business and people. The research methodology is concentrating on challenges faced by business and the IT governance factors affecting the success of small business enterprise.

Research Purpose

Yin (2009, p.7) claims that all the research methods can be used for 3 purposes namely descriptive, explanatory and exploratory. The concept of "Exploratory" is a key element when the researcher needs to simplify the potential problems and can be done in three methods 1. Search of existing literature 2. Discuss the topic with subject experts and 3. Interview the subject experts. The exploratory researches are appropriate when there is no evidence available and the relevant theory is unclear. The exploratory research will be used when detailed understanding is needed (Samouel et al., 2003).

The descriptive research methods will be more appropriate for structured problems. The methods are executed by the researchers on facts. The conclusion of the study is from a conclusive description of the examined aspects or variables.

The explanatory research is the process of creating basic relationship between variables. The explanatory research involves in studying the problem or situation to illustrate the relationship between variables (Saunders et al., 2003).

Further, Samouel et al. (2003) argued that the explanatory researches are developed to figure out whether one event causes another. Thus, this research follows Descriptive and Exploratory approach. The data for descriptive research has been gathered by interviews and observing the participants and the data is analysed for the output. The key objective of conductive the research is to investigate the key components of IT governance in a business which affects the business success. So, there are number of things describing success factors within business linked with IT governance. The research work is also exploratory since it discuss in details the way IT governance brings success or failure to the business based on theories to develop better understanding about the research area.

Secondary research

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The data found by secondary research assist the researcher in number of research aspects. The data found in secondary research provides answer to one or more of the research questions. The secondary research assist in making focussed research question appropriately with proper definitions and concrete support and it could help deciding on the appropriateness of a research method (Ghauri & Grønhaug, 2002).

The secondary research provides researcher the provision to save time and money. As Churchill (1999) puts it 'do not by pass secondary data'. Many authors recommend that all research should start with secondary data sources. The main advantage of using secondary data is obviously the enormous saving in time and money. The time aspect is essential for any researcher since there is a variety of available data, which may be related to the topic of interest.

It is very important to find out where the data is coming from (source), the purpose for which it is collected and who collected the data. The reliability and validity of data is very important and aim of collecting the data in the secondary research.

Most secondary data have been collected for a different reason and it implies that one must be cautious in using them without scrutinising them carefully. These disadvantages are more of a concern when dealing with quantitative research, and are less important e.g. when dealing with literature review.

To minimise the drawbacks of the secondary data mentioned above, a great deal of attention will be paid to the evaluation of the availability of secondary data in terms of its reliability and accuracy . The major sources of secondary data for this dissertation will be gathered from academic published books and journal articles. The available data has been outlined and discussed in chapter two and three and creates the foundation for the primary research, which is needed to obtain updated and specific data related to the research topic. The primary research will be outlined in the next section.

Primary research

Ghauri and Gronhaug (2002) provide an extensive discussion regarding the research process, and argue that when secondary data are not available or unable to help answer the research questions, the researchers must themselves collect the data which is relevant to their particular study and research problem, and this data is called primary data.

The main advantage of primary data is that data is collected for a particular project at hand, which means that data is more consistent with the research questions and research objectives. Moreover, if researchers are interested in knowing people's attitudes and intentions of their decision-making, only primary data can help researchers answer these questions.

Nevertheless, there are some problems gathering primary data as well. The main disadvantage with gathering primary data is that it can take a long time to collect. Other than that, it is difficult to get access. Thus one major weakness in the quality and scope of information gathered through primary sources is that the researcher is fully dependent on the willingness and ability of respondents.

Despite these critical disadvantages of gathering primary data mentioned above, researchers can hardly learn about opinions and behaviour without asking questions directly to people involved. In this project, through the use of primary data, the researcher may understand and answer the key questions based on the in-depth interview with management of Xpert consultancy service

Primary research can be categorised in two ways, e.g. qualitative and quantitative Easterby-Smith et al, (1991) and there are four main ways of collecting primary data: observations, experiments, surveys (questionnaires) and interviews.

Figure 1 - Primary data collection (Ghauri and Gronhaug (2002), p.81)

Interviews

Interview is a process of conducting focussed and purposeful conversation between two or more individuals Saunders et al, (1997). Burgess (1982) claims that the interview create an opportunity to identify new clues and ideas and discover details to expose in new dimensions of a problem and to secure accurate, inclusive accounts that are based on individual experience.

Ghauri and Gronhaug (2002) claims that the interviews provide various advantages. The author also claims that the interview approach gives very much accurate and clear picture of a respondent's position or behaviour to the researcher.

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The researcher can conduct the interview by asking open ended questions and provides an opportunity to the respondents to answer according to their perspective and experience. Having weighted up the researcher has the opportunity to question the respondent with additional explanation of answers and attitudes, which would have been impossible with questionnaires. Therefore, this approach is highly suitable for exploratory and inductive types of study.

It is debatable that the interview approach has few negative areas since it is focussed on the respondent answers, the respondent need to be complete cautious about the research problem and its purpose and what information is sought to best fulfil the research questions.

The other negative aspect of interview technique is time consumptions and that the researcher needs to arrange more than one interview with the respondent to gather all the required information for the research. Furthermore the researcher need to be very careful when interpret the meaning of respondent answers and analyse due to nuances in the language and different backgrounds.

(Ghauri and Gronhaug, 2002) states that the convenience sample is the form of selection which is carried out by conduct personal interview with people carefully chosen who work in companies which are very close to the research topic with appropriate background and knowledge.

The purpose of the interviews for the topic is to get a deeper understanding of the following general questions:

How is IT governance applied in SMB business?

How IT governance role is measured in SMB business?

There are other sources of gathering primary data which a researcher can use like mail and telephone interviews. The main advantage of gathering data through mail is that it is fairly cheap to use and it is ideal when the researcher has identified the respondent. However, gathering data through the post has its setbacks as well. The mail may be lost or damaged which will in return influence the response rate, thereby the reliability of the research.

Furthermore, the respondents may answer the questions incorrectly as the researcher has no chance to elaborate on the meaning of the contents. Without an incentive for the respondent, it may be difficult to obtain a high response rate due to lack of time to answer and send the questionnaire back.

Talking about telephone interview, it is more time efficient and more accurate approach of gathering data. The telephone is cheap to use, but may become a problem when the interviews are long and the researcher needs to call abroad.

Nevertheless, it provides the researcher with instant access to the respondent, and further, with the opportunity for the researcher to explain the questions and use further questions to obtain the wanted information.

Research Approach

There are two methods according to Creswell (2003) are Quantitative Research, Qualitative Research, and Mixed Method. The following picture is extracted from Cresswell (2005) shows the associations between research methods and research styles.

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Quantitative Approach

This method is used to research and study natural phenomena and originally developed in the natural sciences context (Myers and Avison, 2002). The quantitative approach is a well-established method in social sciences arena which includes experiments and survey methods. The other reference given to this method is called hypothesis testing research. Creswell (2008) claims that the method provides means for testing objective theories by exploratory the association among variables. The outcomes of the variables will be numeric patterns and can be used and analysed using statistical procedures.

Qualitative Approach

This method is used to research and study cultural phenomena and originally developed in the social and cultural context; the research helps us to understand people and their lives (Myers and Avison, 2002). Qualitative research aims to investigate, describe and explore phenomena that have already been recognised but not able to understood clearly.

Creswell (2003) states that the qualitative research method used to understand and identify the meaning of groups and individuals assign to a human or social problem. The method includes Case study, ethnography and action method, are the some of the methods of qualitative research method.

The direct observation, interview, documents, questionnaires and text are used to collect the data. After analysing both quantitative and qualitative approach, 'Qualitative' research approach is suitable for this research work. The research topic and specific problem area are more about theories rather than numeric and statistical data. Basically, the ultimate target of this research is to gain better understanding of the IT governance factors affecting the success of the business.

Case study

A case study is a preferred approach when 'how' or 'why' questions are to be answered, when the researcher has little control over events and when the focus is on a current phenomenon in real-life context (Ghauri and Gronhaug, 2002).

According to Eisenhardt (1989, pp. 548-9), case studies are: particularly well suited to new research areas or research areas for which existing theory seems inadequate. This type of work is highly complementary to incremental theory building from normal science research. The former is useful in early stages of research on a topic or when a fresh perspective is needed, while the latter is useful in later stages of knowledge.

Ghauri and Gronhaug (2002) refer to case studies as qualitative and field-based construction and analysis of case studies. They further identify the case study as a description of a management situation, which is useful for theory development and testing. One of the greatest advantages with case studies is the interaction between the respondent(s) and the researcher. A challenge for the researcher in using a case study approach is that it is demanding since the researcher has to collect data personally. The personal skills in interpreting answers and listen carefully, are crucial to make the full use of this approach. On the basis of the research questions identified and discussed in the previous chapters, this method seems to be the best suited to clarify and provide useful information.

In addition, Ghauri and Gronhaug (2002) argue that the researcher may benefit by using several methods to shed light on the research questions.

Data Analysis

The process involves examining the data, tabulating and categorising the data or otherwise recombining the evidence to address the initial propositions of the study'. (Yin, 2009, p.126).

Validity and Reliability

In the research it is important to judge the quality of research designs. According to Kidder and Judd (1986, pp.26-29), there are four tests available to verify all social science methods.

Construct validity is the process in which the research to identify the accurate operational measures for the concepts being studied.

Internal validity is the process of establishing a causal relationship, whereby certain conditions are shown to lead to other conditions, as distinguished from spurious relationship

External validity: Establishing the domain to which a study's findings can be generalised.

Reliability: Demonstrating that the operations of a study-such as the data collection procedures-can be repeated, with the same results.

Limitations

The researcher currently working with Xpert Consultancy Service as a consultant and the case study is based on a practical experience. Due to the nature of the research it was difficult to obtain data without bias.

Ethical Issues

The possible ethical measures have considered and will be followed by the researcher. Personal information of the participants who involved in the interviews will not be published. The internal organisational privacy will not be disclosed and business rules and regulations will be adhered. The business name will be used with appropriate permission from the management. This research has not placed any of the participants at risk. It has been ensured the security of organisation's critical information during and after completion of the research. The work or text considered from the text books, journals, articles and web sites will be properly referenced.