Measuring the Unmeasurable: Governance & Management of Information Technology

1. Measuring the Unmeasurable:Governance & Management of Information Technology Mark Toomey Author: Waltzing with the Elephant Managing Director Infonomics Pty Ltd Member, Standards Australia Committee IT-030 Member, ISO/IEC JTC-1 WG6 9:00/0

2. Today’s briefing • The topic, and the problem: Governance of Information Technology; • The ISO 38500 Framework for governance; • The Infonomics approach to assessment; • What we learn about governance effectiveness. 9:00/1

3. The topic and the problem: … IT keeps going wrong! 2005 2004 2006 2007 Cargo Management Futures Market ERP Consolidation Five Day Fiasco 2008 2009 2010 2010 Terminal 5 Choked Amadeus Crippled Year 2010 9:01/3

4. The promise of Information Technology... ... or a shattered dream. Photos: (1) http://velocityresource.com/RS6AvantPlus.aspx and Audi. (2) Public domain – widely circulated email 9:04/1

5. We have tried to make IT better… …but we have missed the key issue! 9:05/2

6. ISO 38500: First GlanceAustralian guidance leads the world… 9:10/2

7. The ISO 38500 Framework for governance:Part of Corporate Governance. Definition from “Report of the Committee on the Financial Aspects of Corporate Governance” (Chair: Sir Adrian Cadbury), London, 1992 Ownership “Appoint the Directors” Corporate Governance: The System by which entities are directed and controlled. (Cadbury) Governance “Protect owners interests” Direct Monitor Establish Strategy Management “Develop business capabilities” “Run business operations” Adapted from “Corporate Governance – A Working Definition”, Teresa Barger, Director IFC/World Bank Corporate Governance Department 9:07/2

8. Information technology in context... ... management responsibilities. The System of Management Business Domain: How IT is used to enable and operate the business Strategic Business Future Ongoing business operations Supply Demand Supply Demand IT Domain: How IT is managed and delivered. Effective IT enabled change Reliable IT Service 9:09/2

9. Information technology in context... The System of Management Business Domain: How IT is used to enable and operate the business Strategic Business Future Ongoing business operations The System of Management Strategic Business Future Ongoing business operations Business Domain: How IT is used to enable and operate the business Supply Demand Supply Demand Supply Supply IT Domain: How IT is managed and delivered. Demand Demand Effective IT enabled change Reliable IT Service IT Domain: How IT is managed and delivered. Effective IT enabled change Reliable IT Service 9:11/1

10. Information technology in context...... Governance oversees management. Governance Top level oversight Evaluate Current & proposed demand for & supply of IT Monitor Direct The System of Management Strategic Business Future Ongoing business operations Business Domain: How IT is used to enable and operate the business The System of Governance Supply Supply Management Responsibility Demand Demand IT Domain: How IT is managed and delivered. Effective IT enabled change Reliable IT Service 9:12/1

11. Governance and management of IT...... a symbiotic system... Business Needs Business Pressures Governance Top level oversight Evaluate Evaluate Current and Future use of IT Current & proposed demand for & supply of IT Direct Monitor Monitor Direct Plans, Policies Performance Conformance The System of Management Strategic Business Future Ongoing business operations Business Domain: How IT is used to enable and operate the business The System of Governance Supply Supply Management Responsibility IT enabled business change projects IT enabled business operations Demand Demand IT Domain: How IT is managed and delivered. Effective IT enabled change Reliable IT Service 9:13/1

12. Governance and management of IT...... a symbiotic system... Business Needs Business Pressures Business Needs Business Pressures Governance Governance Evaluate Current and Future use of IT Direct Monitor Evaluate Plans, Policies Performance Conformance Monitor Current and Future use of IT Direct The System of Management Performance Conformance Plans, Policies Management IT enabled business change projects IT enabled business operations IT enabled business change projects IT enabled business operations 9:14/2

13. Business Needs Business Pressures Governance and management of IT...... a symbiotic system based on principles. Governance ISO 38500 principles • Responsibility; • Strategy; • Acquisition; • Performance; • Conformance; • Human Behaviour. Evaluate Monitor Current and Future use of IT Direct Performance Conformance Plans, Policies Management IT enabled business change projects IT enabled business operations 9:16/2

14. The ISO 38500 Assessment FrameworkAre we governing and managing effectively? What does each cell mean? How do you perform? What should you seek to improve? What consequences of improvement should you seek? 9:18/2

15. 1 2 3 4 5 6 The Infonomics Assessment System:The first 6 Indicators from a set of 84 points. Huh? No Very little Somewhat Very close Exactly 9:21/2

16. 1 2 3 4 5 6 The Infonomics Assessment System:The scoring model. • Assertions reflect good practice and outcomes that would be observed in organisations that have good governance that is well aligned with ISO 38500. • Consider each and score it using the 1 to 6 scale below. • Score 1 if you think your organisation would not understand the point. • Score 2 if your organisation would understand it, but clearly doesn’t do it. • Score higher as you see the extent of alignment. No Very little Somewhat Very close Exactly Huh? 9:20/1

17. 1 2 3 4 5 6 The Infonomics Assessment System:Interpretation framework. Never gets driving wrong, whether on public roads or race tracks. Exemplary Competently identifies and controls most road hazards including the bad driving of others. Good Basic Can drive to many places. Crash if there’s oil on the road. Weak Can get the car moving – crash at first corner. Known Gap Know what a car is: Can’t drive. Unknown Gap Don’t know what a car is. 9:23/2

18. The Infonomics Assessment System:Benchmarking and comparing performance • Human Communities: • Who are they? • How do they behave? • What do they need? • What motivates them? Principles Strategy Performance Human Behaviour Responsibility Acquisition Conformance RMIT and Infonomics research 2006-7. Published in “Achieving Business Sustainability” (Infonomics), and “Information Technology Entrepreneurship and Innovation”, edited by Fang Zhao, published by IGI Global, 2008. 9:23/1

19. The Infonomics Assessment System:Behavior drives performance Can improved conformance lead to better results? 9:24/1

20. The Infonomics Assessment System:Cross referencing provides insight 9:25/1

21. The Infonomics Assessment System:Detailed modeling exposes behaviour patterns. Alignment Index = 3 Overall View • One executive (X1) has a much more positive view, consistently, across all assertions, including several “exemplary”. • Technology managers tend to be broadly consistent in their views, and see things differently to the business managers in several areas. However most executives agree with technology managers. • Broader engagement and some comfort in finance may be linked to closer engagement on SAP. • The “black holes” reflect poor business engagement and participation in setting the IT agenda. Improvement in this area would almost certainly help performance in other areas. 9:26/1

22. Questions More information: www.infonomics.com.au The Infonomics Letter Waltzing with the Elephant Today’s slides: www.infonomics.com.au/PresACOSM2010.htm 9:27/1