IT Governance: Managing Resources Efficiently for Organizational Success

1. Chapter 11IT Governance Managing the Information Technology Resource Paula Goulding ICT622

2. 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 ICT622

3. IT Governance • Power • Who makes these decisions • Alignment • Why they make these decisions • Decision Process • How they make these decisions ICT622

4. Symptoms of Misalignment • Poor business understanding and rapport • Competitive decline • 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 ICT622

5. 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 ICT622

6. Definitions of IT Governance • Operating model for how organization will make decisions about use of IT • Involves external relationships for obtaining IT relationships • Involves authority, control, accountability, roles, and responsibilities • Involves processes and methods for making decisions • Involves judgments about how well use of IT enables strategic direction ICT622

7. Business Case Issues • Balance all measurements • Balance impact on • Customers/clients • Processes • People • Finance ICT622

8. 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 ICT622

9. Enablers 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 ICT622

10. Inhibitors to Alignment • 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 ICT622

11. Why Have Governance • Insufficient resources to meet commitments • Unreliable delivery schedules • Lack of focus on daily operations • Reduced quality of delivered projects • Potential for working on wrong things • Business functions move in own IT direction to satisfy own requirements • Chaotic/nonstandard infrastructure • Poor communications and relationships with IT/Business ICT622

12. 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 ICT622

13. Governance Alternatives • Budget • Career crossover • CIO-CEO • Communicate/market/negotiate • Competitive enabler/driver • Education/cross-training • Liaison • Location ICT622

14. Governance Alternatives • Organization • Centralized, Decentralized, Hybrid • Partnership/Alliance management • Process • Shared risks, responsibilities, reward/penalties • Steering committees • Value Measurement ICT622

15. 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 ICT622

16. Categories of Governance Alternatives • Governance based on organization structure • Governance based on processes • Governance based on human relationships ICT622

17. 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, ICT622

18. Forms of Governance and Leadership Roles ICT622

19. Effective IT Steering Committee • Business Executive Committee • CIO • Chief Technology Officer • Divisional Business Heads • Head of Information Systems/Networking ICT622

20. Considerations of Steering Committee • Bureaucracy • Career Building • Communication • Complex Decisions • Influence/Empowerment • Low-Hanging Fruit/Quick Hits • Marketing • Objectives/Measurements ICT622

21. Considerations of Steering Committee • Ownership/Accountability • Priorities • Relationships • Right Participants • Share Risks • Structure, Facilitator ICT622

22. Group Projects Based On: • Necessity, Opportunity, Desirability • Impact on organization • Likelihood of occurrence • Risk • Resource demands • Anticipated return ICT622

23. Priorities • Highest impact on firm • Highest likelihood of occurrence • Lowest combined attributes of risk • Least amount of resources demanded • Highest anticipated return ICT622

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25. 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 ICT622

26. 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 ICT622

27. 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 ICT622

28. 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” ICT622

29. Global Considerations • Global Exporter • Multinational • Multilocal • Transnational or Metanational ICT622

30. Source: Daniels, J. and Caroline, N., in J. Luftman, ed., Competing in the Information Age: Strategic Alignment in Practice.” Oxford University Press (1996). ICT622

31. 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 ICT622

32. 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 ICT622

33. 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 ICT622

34. 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 ICT622

35. 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 ICT622

36. Insource or Outsource? ICT622

37. 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 ICT622

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