IT GovernanceA presentation for CIOs

What are the biggest challenges that face a modern CIO? (Let’s list them…)

Question for Class Discussion:

What is IT Governance?

For class discussion:

What are the costs of IT Governance?

For class discussion:

Do you really believe the promise of IT Governance?

For class discussion:

What are the major challenges, issues, and obstacles that face the typical CIO or IT Director?

For class discussion:

Which of those challenges, issues and obstacles are addressed/resolved by IT Governance?

For class discussion:

What is it?“To achieve success in this information economy,

governance of IT is a critical facet of enterprise governance. Good IT Governance assists enterprise leaders in their responsibility to ensure that IT goals align with those of the business, it delivers value, its performance is measured, its resources properly allocated and its risks mitigated.”

Who initiates it? Who manages it? See The IT Governance Institute at:

http://www.itgi.org/

IT Governance

Include a steering committee of senior IT and business executives to decide on company-wide IT priorities and investments

Set up self-directed work teams made up of IT staffers and business-unit liaisons to manage individual projects

Establish boundaries that specify what kind of decisions the work teams can and can’t make

Form an architectural council that sets corporate IT standards, plus more targeted groups such as an IT security council.

Classical IT Governance Components

Involve line users (at V.P. level) in taking ownership of IT projectsoBetter funding stabilizationoBetter end-user involvement better system

requirements, feedback, less criticism of IT, better roll-out success

Increases Perception (and reality) of IT being a quality service provider

Increases perception (and reality) that CIO/IT Director has an executive business mind

Increases perception (and reality) that CIO/IT Director is an executive team player.

Reasons for Doing It:

Takes more time and energy up front (but less redo and wasted time in the long run)

Requires effort to hone executive communication skills

Must be presented in the positive light or might be perceived as dodging responsibility

For others on IT Governance board: Their time is already short and their plates are already full so this must be sold as …

Downsides and Cautions:

What is IT Governance: “It is the decision rights and accountability framework for encouraging desirable behavior in the use of IT”

What is the business imperative for IT Governance and

How strong is this business imperative?

Recipe for Good Governance

An M.I.T. study of good governance:◦ 3 years◦ 250 companies◦ 23 countries

Good governance yields an average of 20% higher return on assets! (Why?)

The Business Imperative

Limit number of decision making structures Create overlapping responsibilities for IT

decisions Involve senior management in major IT

decisions Design exception processes into governance

processes Change governance only when desirable

behaviors change Provide transparency and education

Principles of Good (Proven Successful) Classical IT Governance

Assign clear responsibilities for each type of IT decision to individuals who can accept accountability for the outcomes of those decisions.

Example makeup for successful IT Governance board: CIO, COO, CFO, and business unit (or department) heads.

Governance board function: ◦ clarifies IT objectives, ◦ establishes the annual enterprisewide IT

budget, and ◦ negotiates the approved list of projects and

IT infrastructure initiatives.

Limit Number of Decision Making Structures

1. IT principles decisions dictating the role of IT in the enterprise

2. IT architecture decisions on technical choices and directions

3. IT infrastructure decisions on the delivery of shared IT services

4. Business application requirements decisions for each project

5. IT investment and prioritization decisions

But You Might Want Different Decision Making Structures for:

Make sure that your membership in different decision making structures overlap. For example:◦ CIO might be member of Exec committee as well

as IT council and Architecture committee◦ Head of IT process teams might also be member

of Architecture committee and Capital Approval committee

Create Overlapping Responsibilities for IT Decisions

If senior management is not involved in IT decision making, the organization is likely to experience a disconnect between business objectives and IT capabilities.

The more involvement, the better the governance performance.

Who should be the involved senior managers?

Involve Senior Management in Major IT Decisions

Other CXOs exert varying degrees of impact on IT decision making. The CEO is the real heavyweight, with more than twice the impact compared to the CIO alone.◦ Chief Executive Officer 2.1 ◦ Chief Operating Officer 1.7 ◦ Business Unit Leader 1.6 ◦ Business Unit Chief Information Officer 1.3 ◦ Chief Financial Officer 1.2 ◦ CIO (without other CXOs) 1.0

The Most Effective Corporate Governance Decision Makers

Allowing for exceptions to technology and business process standards is just as important as establishing and enforcing standards.

Governance exception processes give individuals an audience when they feel that standards are limiting business success.

More important, by revealing when standards are inappropriate or out of date, exceptions create learning opportunities.

Organizations with effective governance had fewer renegade exceptions, but more exceptions approved through a formal exception process.

Design Exception Processes Into Governance Processes

Governance takes six months or longer to implement.

Once a company has designed a coherent set of mechanisms, governance can remain intact until a change in strategic direction redefines desirable behaviors.

Successful governance companies changed their governance less than once per year.

Change Governance Only When Desirable Behaviors Change

The most important predictor of top governance performance in our study was the percentage of managers in leadership positions who could accurately describe their enterprise's IT governance.

Without an awareness of IT governance, there is no chance that it will be followed.

Proactively designing governance and then educating everyone in the enterprise as to how governance decisions are made reduces the mystery of IT and enables managers throughout the organization to accept responsibility for its effective use as a strategic asset.

Provide Transparency and Education

Without looking at your notes, what are the six principles of good Classical IT governance?

What are the anticipated difficulties in implementing these in your organization?

Quiz