MIS782 IT Portfolio Theory Assignment Sample
Here’s the best sample of MIS782 IT Portfolio Theory Assignment, written by the expert.
Introduction
The digitalization is very important for the current banking system, so DBS bank decided to apply it in the Asian market to enhance the business. In this project, it is identified that there are some IT assets that are using by organisation to provide the balanced views of value and reduce the risk. Moreover, this part also identified different forms of business return that are using by DBS bank by using IT portfolio management. Some of the tangible and intangible returns of the DBS bank are also specified. In this project, some measurement of business returns defined and also the creditably measured.
Task 1
IT assets mentioned using the IT Portfolio theory
In this case, there are many IT assets classes that were used for the infrastructural development of DBS bank. On the basis of the IT portfolio theory, the assets classification is an important part of the organization that develops the IT portfolio (Wang and Xia, 2012). The important assets classes are informational, strategic, transactional and infrastructural investments. The organization can improve the quality, increase control, fast cycle time and better integration by the use of informational assets. Moreover, the strategic assets are helpful to provide innovative ideas, take decision, high value addition and customer integration. The cost cutting and increase throughput are possible by using transactional assets. At the same time, infrastructural assets of IT portfolio are related with IT cost reduction, company flexibility, standardization, business integration, etc (Brown and Walter, 2013). In this case, it is found that DBS bank highly focused in transactional IT assets for reducing the business cost. But, the organization wants to reduce the overall risk for the bank with high return of 25% to 40% by investing in these assets. The organization has developed all the IT related equipments and applied the digital innovations for the banking.
Furthermore, the organization also invested in the informational IT assets for increasing the profit margins and moderating different risk causes. These IT assets helped the organization to reduce the overall cost and provided a sound strategy to attract the customer. As well as, the investment in infrastructure IT assets were also related to increasing market value of the firm at high short-term cost (Sia, et al., 2016). For this, the bank decided to invest the money for acquiring congruable enterprise system to turn the engineers and provide modern legacy systems. This system is also helpful to follow an architecture that is service oriented and a technology that is based on the enterprise application integration which is useful to fulfill the requirements of the specific country. The new technology was also helpful for the organization to provide the competitive advantage by using advanced technology in the banking system of DBS bank.
The portfolio allocation approach also was helpful for the organization because it improves the quality of service and reduces the risk with high return. The customer also satisfied with the new IT assets which were used by firm to provide fast services (Dery, et al., 2017). The management of the organization has developed the IT portfolio by using the strategic plan according to the economy and available capital. For developing IT portfolio the organization needed to identify the previous years IT portfolio, then understood IT asset class performance. This IT portfolio helped the DBS to manipulate the risks related with the cultural differences and multilingual differences. These risks could highly impact on the organization for satisfying the customers so that the organization invested for the infrastructural development. The sales and profitability of the DBS bank was much low before using IT portfolio. For this, the bank invested in strategic IT assets by using IT portfolio that also helped the form to customize the service or products in an effective way. The DBS decided to develop an SMS “Q” service that was helpful for the customer to analyze estimated wait time before visit in the branch (Kien, et al., 2015). At the same time, the bank also invested in ATMs for providing suitability for the customer in withdrawal money and save the time of the branch officers. The insurance of the ATMs are done by the bank to recover the project cost. This strategy helped the organization to enhance the customer because it provides the suitability to get the deposited money back in an unproblematic manner.
Task 2
Forms of business returns
Business returns are the results of an activity or decision that was taken by the firm for achieving the organizational objectives. The business returns are also helpful to show the organizational achievement to achieve the goals. Moreover, the financial business returns includes the return on equity, profitability, etc. which are helpful to increase the shareholders wealth and market share of the company (Goddard, et al., 2012). For instance, the revenue of the company was increased in 2014 as comparison then 2010 because it increased from $1632 million to $4046 million. The organizational wealth management income was also increased from $506 million to $1.1 billion in year 2014. In addition, the return on equity also incrassated after digitalization by the firm that is 10.9 in year 2014 but it was only 10.2 in the year 2010. All the financial returns are measurable in quantity and the organization can calculate the performance in quantitative manner. On the flip side, the non-financial returns are process improvement, employee skill development and customer satisfaction with increase in the productivity (Aouni, et al., 2014). These returns are not able to calculate and measure in a quantitative way but highly impacts on the growth of the organization. The non-financial business returns are also helpful to achieve the organizational objectives to maximize the value of shareholders e.g. return on assets, return on equity, reputation, customer satisfaction, profitability, competitive advantage, brand development, skill development, increase in mobility, etc (Daly, and Zhang, 2014). All the non financial returns helped the DBS bank for high growth and improved the customer satisfaction by enhancement in the value of stockholders.
Tangible returns or Intangible returns
The business returns may be tangible as well as intangible and based on the investment. The tangible business returns can be measured objectively and it is measured in quantitative way and shows the financial position in qualitative format. While, intangible returns can be measured subjectively and there is not a possibility to show the returns in measurable manner (Donelson, and Resutek, 2012). In this case, it is analyzed that the business return are in both tangible and intangible way. DBS bank has a stock value, fast services delivery, cash through ROA, cost effective processes, return on equity and profitability, etc. that shows tangibility of the returns. Whereas, intangible business returns for DBS bank are developed skill of employees, improved processes, good quality services, satisfied customer, goodwill, innovated services due to technology, brand image, etc. At the same time, the financial, technological, HR parts of the investment are tangible for the organization (Liang, 2012). It is because the organization invested money for the skilled person, technological development, networking equipment for project of digitalization.
Measurement of business returns and its credibility
In the words of Szegö (2014) it is analyzed that business returns can be measured by the use of explicitly and implicitly measures. In the explicitly measures, the customer complaints, new customers and return on investments are included with the use of financial data, income and the budgets. These measures are based on the quantitative terms which are used to measure the returns of the organization. The explicitly measures are creditable due to quantitative form and it is immediately creditable by organizational management team (Ai, et al., 2012). On the other hand, implicitly measures are the reports of the vender which are valued form measurement of perceived value through different interviews and surveys. The company developed the process and service delivery after digitalization for determining the detailed views and opinions of the customers. It is difficult to measure the implicitly measures due to convert it in monetary value, so there is less creditability of this measure.
Task 3
Bank process in the IT portfolio management
The bank process in IT portfolio management is used by the organisation to reduce risk for the business. For this, the management of DBS bank decided to use portfolio management for increase the profitability of the firm (Hur, et al., 2014). In this portfolio management, most of the banking works are digitalised by DBS bank to multiplies the work and mitigate the problem of high errors in the accounting. In order to complete the process, the bank management decided to use the credit portfolio management of IT department of DBS bank.
Conclusion
From the above discussion, it can be concluded that digitalization through innovative technology is a significant form to get high profitability by the DBS Bank. In the banking service, the digitalization is highly adopted by most of the bank, so it is a good strategy for the DBS Bank. In addition, it can also be concluded that the organization has both tangible and intangible business returns to measure the business value. Moreover, it can also be found that the company has implicit and explicit both king of business returns but the explicit measures are high creditable then implicit measures in this case.
References
Ai, H., Croce, M.M. and Li, K., 2012. Toward a quantitative general equilibrium asset pricing model with intangible capital. The Review of Financial Studies, 26(2), pp.491-530.
Aouni, B., Colapinto, C. and La Torre, D., 2014. Financial portfolio management through the goal programming model: Current state-of-the-art. European Journal of Operational Research, 234(2), pp.536-545.
Brown, P. and Walter, T., 2013. The CAPM: theoretical validity, empirical intractability and practical applications. Abacus, 49(S1), pp.44-50.
Daly, K. and Zhang, X., 2014. Comparative analysis of the performance of Chinese Owned Banks’ in Hong Kong 2004–2010. Journal of Multinational Financial Management, 27, pp.1-10.
Donelson, D.C. and Resutek, R.J., 2012. The effect of R&D on future returns and earnings forecasts. Review of Accounting Studies, 17(4), pp.848-876.
Goddard, J., Molyneux, P. and Zhou, T., 2012. Bank mergers and acquisitions in emerging markets: evidence from Asia and Latin America. The European Journal of Finance, 18(5), pp.419-438.
Hur, W.M., Kim, H. and Woo, J., 2014. How CSR leads to corporate brand equity: Mediating mechanisms of corporate brand credibility and reputation. Journal of Business Ethics, 125(1), pp.75-86.
Kien, S.S., Soh, C., Weill, P., and Chong, Y., 2015. Rewiring the Enterprise for Digital Innovation. The Case of DBS Bank.
Liang, W.L., 2012. Information content of repurchase signals: Tangible or intangible information?. Journal of Banking & Finance, 36(1), pp.261-274.
Sia, S.K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive, 15(2).
Szegö, G.P., 2014. Portfolio theory: with application to bank asset management. NY: Academic Press.
Wang, S. and Xia, Y., 2012. Portfolio selection and asset pricing (Vol. 514). USA: Springer Science & Business Media.
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