IT Governance : Managing the Information Technology Resource

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IT Governance : Managing the Information Technology Resource. Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99223 chen@gonzaga.edu. Source: Managing the IT Resource – J. N. Luftman. Chapter Outline. Definition of IT governance
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IT Governance:Managing the Information Technology Resource Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99223 chen@gonzaga.edu Source: Managing the IT Resource – J. N. Luftman Chapter Outline
  • Definition of IT governance
  • IT governance as issue for organizations
  • Need for formal IT governance mechanisms
  • IT governance alternatives
  • Forms of governance and leadership roles in cross-functional initiatives
  • Steering committees
  • Prioritizing projects and assessing risks
  • Global considerations
  • Why invest IT?
  • improvement in the delivery of service to its customers/clients
  • reduce the cost to manufacture or deliver some product or service to its customers/clients
  • shorten the cycle time required to develop and produce some new product or service
  • IT Governance
  • Power
  • Who makes these decisions
  • Alignment
  • Why they make these decisions
  • Decision Process
  • How they make these decisions
  • What is IT Governance?
  • IT governance is the term used to describe the selection and use of organizational process to make decision about how to obtain and deploy IT resources and competencies.
  • In short, IT governance is about:
  • Who makes these decision (power)
  • Why they make them (alignment)
  • How they make them (decision process)
  • Symptoms of Misalignment
  • Poor business understanding and rapport
  • Competitive advantage declines
  • Frequently fired IT managers
  • High turnover of IT professionals
  • Inappropriate resources
  • Frequent IT reorganizations
  • Lack of executive interest
  • Lack of vision/strategy
  • No communication between IT and users
  • Symptoms of Misalignment
  • Ongoing conflicts between business and IT
  • Unselective outsourcing of IT function
  • Productivity decrease
  • Projects not used, canceled, late
  • Redundancies in systems development
  • Absent systematic competencies
  • Systems integration difficult
  • Unhappy users/complaints
  • Definitions and Implications of IT Governance
  • 1. Operating model for how organization will make decisions about use of IT
  • 2. Involves external relationships for obtaining IT relationships
  • 3. Involves authority, control, accountability, roles, and responsibilities
  • 4. Involves processes and methods for making decisions
  • 5. Involves judgments about how well use of IT enables strategic direction
  • Why is IT Governance an Issue?
  • Why despite the growing evidence that IT has become an integral part of business, IT governance is still an issue for many organizations?
  • While the governance models for marketing or finance are rarely discussed, the governance of IT for many organizations is still neither well understood nor well executed, and becomes a topic of debate. Why?
  • Business Case Issues
  • Balance all measurements
  • Balance impact on
  • Customers/clients
  • Processes
  • People
  • Finance
  • Organizations Just Do It
  • Maintenance
  • Fixing application problems
  • Government legislation requirements to ensure compliance
  • CEO or senior executive idea receives top priority
  • Competitor’s innovative application of IT
  • Enablers Inhibitors Table: Enablers and Inhibitors to Alignment
  • Senior executive support for IT
  • IT involved in strategy development
  • IT understands the business
  • Business-IT partnership
  • Well-prioritized IT projects
  • IT demonstrates leadership
  • IT/business lack close relationships
  • IT does not prioritize well
  • IT fails to meet commitments
  • IT does not understand business
  • Senior executives do not support IT
  • IT management lacks leadership
  • Diagnosing Poor or “Broken” IT Governance
  • “We have too many people and organizations making decisions about technology.”
  • “Business units aren’t accountable to corporate IT for any technologies they decide to employ.”
  • “We heave no enterprise architecture because we cannot agree on how it will be established or maintained.”
  • “We spend too much on hardware and software because we cannot agree on a common sourcing policy.”
  • “We are measuring our performance, but the business doesn’t understand what our measures mean.”
  • “We do not measure the success of IT. I would not know where to begin.”
  • Why Have Governance
  • 1. Insufficient resources to meet commitments
  • 2. Unreliable delivery schedules
  • 3. Lack of focus on daily operations
  • 4. Reduced quality of delivered projects
  • 5. Potential for working on wrong things
  • 6. Business functions move in their own IT direction to satisfy own requirements
  • 7. Chaotic/nonstandard infrastructure
  • 8. Poor communications and relationships with IT/Business
  • How Critical is IT Governance for E-Business?
  • Who makes decisions about which e-business initiatives to fund?
  • Who has accountability for e-business IT architecture?
  • Who drives e-business initiatives?
  • How are e-business initiatives funded?
  • How will we measure the business value of e-business initiatives?
  • How will we allocate resources to e-business initiatives?
  • Will we outsource any of our e-business operations?
  • How will we leverage our strategic alliance, if at all?
  • Fulfilling IT Promise to Business
  • Decisions about IT use made jointly
  • Develop mutual and agreed-upon expectations
  • Help senior business management understand costs and risks
  • Provide IT capabilities required to implement decisions
  • Monitor and measure value of IT investments
  • Help senior business management understand it is ongoing process
  • Governance Alternatives
  • Budget
  • Career crossover
  • CIO-CEO
  • Communicate/market/negotiate
  • Competitive enabler/driver
  • Education/cross-training
  • Liaison
  • Location
  • Organization
  • Hybrid (or “Federated”)
  • Governance Alternatives
  • Organization
  • Centralized, Decentralized, Hybrid
  • Partnership/Alliance management
  • Process
  • Shared risks, responsibilities, reward/penalties
  • Steering committees
  • Value Measurement
  • Steering Committees
  • Strategic
  • Tactical
  • Operational
  • Clearly state business role of IT
  • Identify alignment between organization vision and IT vision
  • Establish principles for investing in IT
  • Establish ethical guidelines and policies
  • Establish architectural principles and standards
  • Establish goals and measurements for assessment
  • Categories of Governance Alternatives
  • Governance based on organization structure
  • Governance based on processes
  • Governance based on human relationships
  • Forms of Governance
  • Govern cross-functional initiatives by:
  • Assembling matrixed project team
  • Guidance and assistance provided by corporate IT management
  • Recognizing human resources and intellectual capital are geographically dispersed,
  • Forms of Governance and Leadership Roles Effective IT Steering Committee
  • Business Executive Committee
  • CIO
  • Chief Technology Officer
  • Divisional Business Heads
  • Head of Information Systems/Networking
  • Considerations of Steering Committee
  • Bureaucracy
  • Career Building
  • Communication
  • Complex Decisions
  • Influence/Empowerment
  • Low-Hanging Fruit/Quick Hits
  • Marketing
  • Objectives/Measurements
  • Considerations of Steering Committee
  • Ownership/Accountability
  • Priorities
  • Relationships
  • Right Participants
  • Share Risks
  • Structure, Facilitator
  • Group Projects Based On:
  • Necessity, Opportunity, Desirability
  • Impact on organization
  • Likelihood of occurrence
  • Risk
  • Resource demands
  • Anticipated return
  • Priorities
  • Highest impact on firm
  • Highest likelihood of occurrence
  • Lowest combined attributes of risk
  • Least amount of resources demanded
  • Highest anticipated return
  • Technology Risk Mitigation
  • Subject matter experts available
  • Establish emerging technology scanning function
  • Employ already known technology
  • Perform pilot projects studies
  • Attend conferences, read professional journals
  • Maintain professional memberships
  • Implement professional certification/study programs
  • Participate in master’s degree/master’s certification
  • Development Risk Mitigation
  • Modularize projects
  • Employ project management with prior experience
  • Establish development life cycle methodology
  • Reduce scope of projects
  • Follow “best practices” model for software engineering
  • Organizational Risk Mitigation
  • Secure executive sponsorship
  • Joint accountability of business/IT management
  • Early and continuous involvement of stakeholders
  • Establish formal change management program
  • Establish formal communication channels
  • Establish formal and well-understood processes
  • Establish formal escalation processes
  • Market Risk Mitigation
  • Reduce initial scope of geographic coverage
  • Employ SME’ and consultants for expert advice
  • Documentation and formal sign-off on customer requirements
  • Establish customer “knowledge base”
  • Global Considerations
  • Global Exporter
  • Multinational
  • Multilocal
  • Transnational or Metanational
  • Source: Daniels, J. and Caroline, N., in J. Luftman, ed., Competing in the Information Age: Strategic Alignment in Practice.” Oxford University Press (1996). Do’s of Vendor Management
  • Establish vendor management team
  • Monitor service levels and end-user satisfaction
  • Track service/product market
  • Continually renegotiate contract
  • Keep business units accountable and involved
  • Think ongoing relationship
  • Use vendor’s expertise for solutions
  • Don’ts of Vendor Management
  • Try to manage a vendor without adequate expertise available
  • Ignore need to establish service level agreements
  • Fail to establish firm accountability
  • Understaff vendor management function
  • Rely solely on vendor’s expertise
  • Forget to keep eye on vendor reputation and profitability
  • Contract Renegotiation Processes
  • Contract expiration
  • Material breach in contract by vendor
  • Major change in organization’s management or industry
  • Significant change in price for same services
  • New technology
  • Outsourcing Considerations
  • Do:
  • Ask for and check references
  • Assess culture of outsourcing partner
  • Evaluate multiple options
  • Get it in writing
  • Metrics matter
  • Open kimono
  • Pick outsourcing partner with strong partner network
  • Outsourcing Considerations
  • Don’t:
  • Buy on price alone
  • Overlook reference-checking process
  • Use price contract without consideration of long-term consequences
  • Forget to provide for contingencies
  • Communicate via committee
  • Hand over project management
  • Rely on marquee references
  • Single-source
  • Let head be turned by goodies
  • Insource or Outsource? Outsourcing RFP
  • Objectives and Scope
  • Background
  • Technology Vision
  • Services Requested
  • Transition/Migration Services
  • Performance Requirements
  • Resources
  • Requirements for Vendor Proposal
  • General Terms and Conditions for Proposal
  • Proposal Evaluation
  • Related Search
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