2. Governance and Not-for-profit Organization Pertemuan ke-23 & 24 Matakuliah: Pengantar IT Governance Tahun: Feb - 2009

3. Bina Nusantara University 3 Framework for Value in Not-for-profit Organizations Authorizing environment Customers Fund providers Political power holders Capabiilities Organizational external Public Value Goods & services Public goods equity Delivery Sales Transfers Direct provision Permission Market signals Political acceptance Resource acquisition Money Authority Production Coproduction

4. Bina Nusantara University 4 Particular Challenges for Governance in Governments and Not-for-profits 4 factors influence the way not-for-profit organizations govern IT : 1.Measuring value and performance 2.IT infrastructure Investment 3.Coproduction and Architectures 4.Citizens, Clients, and Customers

5. Bina Nusantara University 5 Measuring Value and Performance The broad concept of public value in not-for-profit organizations make measuring value and performance very complex. Uncertain science, more of an art Broadening the representation on the mechanism used for IT Governance in several of the five IT decisions.

6. Bina Nusantara University 6 IT Infrastructure Investment Infrastructure investments can be justified in 3 ways : 1.They are mandated 2.They reduce costs 3.They enable new capabilities Governing IT infrastructure in not for profits requires different tools and mechanisms than in for-profit organizations. External representation on committees for infrastructure investment decisions can be valuable

7. Bina Nusantara University 7 Coproduction and Architectures Coproduction provides unique opportunities and responsibilities for not-for-profit organizations. IT Architecture decision makers must consider many issues outside the organization. A key dilemma for governance and decision makers is the willingness and capability of the coproducers to invest in standard compliant systems.

8. Bina Nusantara University 8 Citizens, Clients, and Customers Virtually all government organizations operate in some type of legislative authorizing environment that requires the organization to provide services. Making IT decisions requires balancing the needs of the three types of consumers – customers, clients, and citizens.

9. Bina Nusantara University 9 How Not-for-profit Organizations Govern More business monarchies in all decisions except architectures. Significantly fewer IT monarchies in all decisions More federal arrangements in all decisions except investments. More federal arrangements for inputs to all decisions More duopolies for IT architecture

10. Bina Nusantara University 10 Comparing IT Governance Arrangements in Not-for Profit and For-profit Organizations Governance performance in not for profits is statistically significantly lower than in for profit organizations. The complexity described earlier makes performance measurements, organization goal setting, and thus It governance more difficult in not for profits, resulting in an average 10% lower governance performance.

11. Bina Nusantara University 11 Comparing Governance Performance of Not-for-profit and For-profit Organizations More business monarchies in all decisions except architectures Significantly fewer IT monarchies in all decisions More federal arrangements in all decisions except investment

12. Bina Nusantara University 12 How Top Performers Govern Aligned value creation and governance-designed frameworks The process began with understanding and communicating the way value was to be created. The top performers articulated their required capabilities both internally and via coproduction to create maximum value within the limits of their authorizing environment.

13. Bina Nusantara University 13 Top governance performers govern differently –Use joint business and IT decision making for principles –Consider IT infrastructure principles to be strategic business decisions –Don’t use a feudal model for business application needs –Use joint decision making for IT investments

14. Bina Nusantara University 14 Mechanisms Used by Top Performers –Executive committees focused on all key assets including IT –IT council comprising business and IT executives –IT leadership committee comprising IT executives –Architecture committee –Tracking of IT projects and resources consumed –Business/ IT relationship managers

15. Bina Nusantara University 15 UNICEF Case Study Authorizing environment – Customers, funds providers, and political power holders Capabilities – organizational and external Public value – goods and services, public goods and quity

16. Bina Nusantara University 16 IT Governance at UNICEF UNICEF’s business objectives include achieving results for children, sharing and reusing information globally, and achieving operational excellence under difficult field conditions with limited budgets.

17. Bina Nusantara University 17 What is Different in Not-for-profits In many ways, IT governance in not-for-profit organizations is the same as for profit seeking firms. The cultural norms of not for profits, with more focus on consensus, transparency, and equity.