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Chapter 11 IT Governance

Chapter 11 IT Governance. Managing the Information Technology Resource Paula Goulding. Chapter Outline. Definition of IT governance IT governance as issue for organizations Need for formal IT governance mechanisms IT governance alternatives

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Chapter 11 IT Governance

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  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

  24. ICT622

  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

  38. ICT622

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