I need a MS Word document that answers the questions posted below for the DentDel Inc. caselet.
Answers questions 1-3 below in in a single document
As the internal audit team lead for IT Audit, you have been asked to utilize COBIT as a framework to:
1. Identify which processes were ineffective and allowed this situation to occur, using COBIT to justify your responses.
2. Suggest the steps management should take to assess the situation, and create an action plan.
3. Identify which governance processes should be initiated to prevent reoccurrence of a project failure such as this one.
DentDel Inc. Caselet
"IT Governance Using COBIT® and Val IT: Caselets, 3rd
Edition": Caselet 1: DentDel Inc.
This case focuses on IT strategic
alignment with business objectives and strategies.
Dan O’Reilly is the chief executive
officer (CEO) of DentDel Inc. He is facing a critical decision on whether to
terminate or continue development on a systems development project that affects
the future of DentDel. The further he investigates the issue, the more
uncertain he becomes about the viability of the project and the more concern he
has over the lack of alignment between IT and business objectives.
DentDel began operations as a regional
provider of dental supplies to dental providers. The initial marketing plan was
to employ sales staff, travel to dentist offices and take orders. Because this
business is extremely competitive, timely ordering and delivery of the products
was the key differentiator between DentDel and its competitors.
DentDel is a wholesale distributor; it
purchases and resells dental equipment. The wholesale distribution business has
been undergoing significant change as companies move from a direct sales
approach to a consumer-driven order process through the Internet.
The key players are:
• Dan O’Reilly, CEO
• Cedric James, Chief Information
• Chuck Hernandez, Director of Systems
• Sarah Stein, Vice President of Sales
• Rafael Colon, Chief Financial
• Alicia David, Audit Committee Chair
The sales staff would take orders on
paper and, nightly, bring the orders to the office for processing. This proved
to be too costly and time consuming, and in response, the sales people were
provided with portable fax machines to send the orders after each visit. This,
too, was inefficient because the orders had to be transcribed from the faxes,
which were often illegible. The IT department, led by Cedric James, decided
that wireless technology had become reliable and secure enough to begin equipping
the sales team with hand-held devices. Since Cedric had a Pear P-Phone, he
decided that this would be the platform on which to build a new order entry
system. Cedric brought his idea to Chuck Hernandez, who began developing a
business case. Chuck spoke with Sarah Stein and Rafael Colon to get some
initial feedback on the current sales system. He also met with several members
of the field sales force to determine which technologies would make their sales
efforts more efficient. Chuck completed the
business case and conceptual design.
He presented it to Cedric, who forwarded it to Sarah and Rafael with a
recommendation that they approve it. Cedric, Sarah and Rafael held a 10-minute
meeting in which the project was discussed. Cedric presented his representation
of the operational benefits and financial savings, using his assumptions and
cost estimates. After limited discussion, based on Cedric’s
representations of the savings and
benefits, Rafael approved the US $20 million project, which included systems development
and acquisition of the equipment. Because of the desire to implement the
project development quickly, the project was not presented to the executive
committee, comprised of the CEO, CFO, chief operating officer (COO) and general
counsel. It was decided that Sarah, Cedric and Chuck would oversee the project
as an ad hoc committee. Rafael would sit in on meetings affecting financial
issues. No chairperson was established. In preparation for the later rollout,
Cedric decided to replace the sales team’s mobile phones with the P-Phone to
save the expense of replacing the phones later. At the last status meeting,
involving Rafael, Sarah, Chuck and Cedric, the following issues were raised:
• The project team has spent US $8
million, but reports that only 25 percent of the project plan has been
completed. The original plan was to spend US $3.5 million by this point in the
• The project team was having internal
– The business subject matter experts
were only available in the late afternoon, after they had finished their
– The IT project team feels that the
business is not providing enough resources or attention.
– The project team reports that the
sales team has been complaining about phone service at the locations they
visit. The IT project team suggests that the signal is good enough and that the
sales team members can always find a place with an adequate signal.
– The project team has not reported
any issues to the executive committee.
• Sarah reported that the dentists
have less time to visit with the sales team members and would prefer to have
their administrative assistants place the orders directly via the web. She
questioned whether it would be best to convert this project to a web-only order
entry system and abandon the sales visits. Cedric was angered because Sarah
questioned the viability of his technology strategy.
• Rafael indicated that he was
concerned that the write-off of this project could be unsettling to the
shareholders. After this meeting, Rafael was quite concerned about the whole
tenor of the project and foresaw a write-off of US $8 million, which would be
considered financially material and require a US Securities and Exchange
Commission (SEC) disclosure. He decided to bring this issue to Dan O’Reilly.
Dan was extremely concerned and requested an internal audit of the process to
determine how to stop the hemorrhaging. Since the situation also involved a
material financial impact, he was obliged to notify the Audit Committee Chair,
Alicia David. Alicia shared all of the concerns identified by Dan, but felt
that the internal audit assessment should have a wider scope.
to Be Made
Alicia David requested that the
Internal Audit Department prepare a discussion document to provide the Audit
Committee and CEO with an understanding of what happened and what actions
should be taken.