1. Managing the Information Technology Resource Paula Goulding
Chapter 11 IT Governance
Managing the Information Technology Resource
Paula Goulding
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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
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3. IT Governance Power Alignment Decision Process
Who makes these decisions
Alignment
Why they make these decisions
Decision Process
How they make these decisions
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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
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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
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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
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7. Business Case Issues Balance all measurements Balance impact on
Customers/clients
Processes
People
Finance
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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
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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
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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
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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
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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
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13. Governance Alternatives
Budget
Career crossover
CIO-CEO
Communicate/market/negotiate
Competitive enabler/driver
Education/cross-training
Liaison
Location
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14. Governance Alternatives
Organization
Centralized, Decentralized, Hybrid
Partnership/Alliance management
Process
Shared risks, responsibilities, reward/penalties
Steering committees
Value Measurement
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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
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16. Categories of Governance Alternatives
Governance based on organization structure
Governance based on processes
Governance based on human relationships
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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,
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18. Forms of Governance and Leadership Roles
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19. Effective IT Steering Committee
Business Executive Committee
CIO
Chief Technology Officer
Divisional Business Heads
Head of Information Systems/Networking
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20. Considerations of Steering Committee
Bureaucracy
Career Building
Communication
Complex Decisions
Influence/Empowerment
Low-Hanging Fruit/Quick Hits
Marketing
Objectives/Measurements
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21. Considerations of Steering Committee
Ownership/Accountability
Priorities
Relationships
Right Participants
Share Risks
Structure, Facilitator
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22. Group Projects Based On:
Necessity, Opportunity, Desirability
Impact on organization
Likelihood of occurrence
Risk
Resource demands
Anticipated return
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23. Priorities Highest impact on firm Highest likelihood of occurrence
Lowest combined attributes of risk
Least amount of resources demanded
Highest anticipated return
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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
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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
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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
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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”
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29. Global Considerations
Global Exporter
Multinational
Multilocal
Transnational or Metanational
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30. Source: Daniels, J. and Caroline, N. , in J. Luftman, ed
Source: Daniels, J. and Caroline, N., in J. Luftman, ed., Competing in the Information Age: Strategic Alignment in Practice.” Oxford University Press (1996).
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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
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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
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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
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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
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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
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36. Insource or Outsource?
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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
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