Effective information technology (IT) governance mechanisms: An IT outsourcing perspectiveYuen Ka Chun Jason 12001074Shiu Fu Cheong Joson 12000965Ngai Chi Lung Kyle 12001007 1

Introduction

• author: Sysaiful Ai and Peter Green

• the effective of IT governance vs performance of IT resources

• Effective IT governance can ensure target between IT and business goals

• references: IT governance, Information system management or outsourcing

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Definition of IT Governance

According to the IT Governance Institute (2003b):

IT governance is defined as: “A structure of relationships and

processes to control the enterprise in order to achieve the

enterprise’s goals by adding value while balancing risk

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Concepts of IT governance(Refer to Vaswani 2003 & Weill 2004)

• is crucial for an organization to achieve its corporate performance goals

• to implement IT governance effectively

• a set of IT governance mechanismso IT steering committeeo IT organizational structure

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Concepts of IT governance(Refer to Vaswani 2003 & Weill 2004)

• to encorages behaviors with the organization’so missiono strategyo valueso normso culture

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Research objective – what and whyThis study empirically examines the relationship between effective IT governance and the level of IT outsourcing decisions.

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Research objective – what What individual IT governance mechanisms impact significantly a higher perceived

level of overall effective IT governance?

1) What extent does IT Intensity influence effective IT Governance?

Ali and Green (2012) said that it extends the examination of individual IT

governance mechanisms to include a wider number of mechanisms.

2) What extent are effective IT governance and IT outsourcing decisions correlated? Ali and Green (2012) stated effective IT governance on IT outsourcing decisions while controlling for the level of IT Intensity in the organization

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Research objective – why to do itAli and Green (2012) stated

this study seeks to examine empirically the individual IT governance mechanisms that influence the overall effectiveness of IT governance.

Furthermore, this study examines the relationship of effective IT governance, the extent of IT outsourcing decisions within the organizations, and the level of IT Intensity in the organizations.

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Research ModelConducted by1. General theories2. Pervious studies

Hypothesized to contribute to effective IT governance

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Research Modele.g.,H1: The existence of an IT strategy committee willpositively influence the perceived level of effective IT governance.

The below argument from pervious research paper leads to the hypothesis:- A recent study by Ali & Green (2007) in publicsectororganizations in Australia expressed that an IT strategy committee has a positive significant correlation with the level of effectiveness of overall IT governance.

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Questionnarie - Never conduct a self-made question

e.g., Ask about the aspect of IT Strategy CommitteeQuestion: To what extent does IT strategy committee provide strategic direction and the alignment of IT and the business issue?

- Take reference from IT Governance Institute

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Questionnarie

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Sampling Technique & Statistical MethodsWhy?Suitable target --

Reason 1: Adequate professional qualifications and experience of ISReason 2: Up-to-date information and knowledge in IT governance mechanisms

How?Email invitaions to participate in the web-based survey

*ISACA = Information Systems and Audit Control Association 13

Sampling Technique & Statistical MethodsWhy?Suitable target --

Reason 1: Adequate professional qualifications and experience of ISReason 2: Up-to-date information and knowledge in IT governance mechanisms

How?Email invitaions to participate in the web-based survey

*ISACA = Information Systems and Audit Control Association

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Sampling Technique & Statistical Methods

Check that the sample is representative- One of goals: the relationship between effective IT governance and IT outsourcing decisions→ Remove non-outsourcing members from the sample

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Sampling Technique & Statistical Methods

Statistical Techique: - Structural equation modeling analysis - Testing causal relations using a combination of statistical data and hypothesis

4 types of Sampling Techniques1. Simple random Sampling2. Systematic Sampling3. Stratified Sampling4. Quota Sampling

I think it chose “Simple random Sampling”16

Finding & Results

Sample Size = 110 ->76 internal auditors(69%)->34 external auditors (30.7%)

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Reliability of the chosen Sample

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Overall model fitThis study examined 1. Absolute fit measures2. Incremental fit measures3. Parsimonious fit measures using AMOS.

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Absolute fit measures

The chi-square value = 2.759 >> 0.05a probability value = 0.838

Since the probability value of the chi-square test is far greater than the .05 level, this study suggests that the model fits the observed data.

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GFI = 0.994 (above the required threshold)The goodness of fit index (GFI) is a measure of fit between the hypothesized model and the observed covariance matrix. RMSR =

0.07 (acceptable)Root Mean Square Residual (RMSR) is an absolute measure of fit and is defined as the standardized difference between the observed

correlation and the predicted correlation.

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Incremental Fit Measures*All of the three incremental fit measures exceeded the

recommended level of 0.90.

Therefore, it is an indication of good model fit.

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Parsimonious fit measuresAGFI = 0.959 > 0.90(above the minimum recommended)Adjusted Goodness of Fit Index (AGFI)

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Limitationa proxy for measuring IT intensity factor within each organization. that the approach used ofasking respondents to give values of the four items (total PCs, total employment, total IT employment and the last year’s IT

budget) has difficulties.

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Summary of the Findings(1) the existence of ethics and a culture of compliance in IT is positively correlated

with the overall effectiveness of IT governance

(2) the existence of corporate communication systems support greatly enhances the overall effectiveness of IT governance

(3) involvement of senior management on a regular basis is crucial to high levels of effective IT governance

(4) a corporate performance measurementsystem significantly impacts the level of effective IT governance however this impact

may be negative if the measurement system is not used appropriately. 26