IT Governance: Establishing Who Decides

11

IT Governance:IT Governance:Establishing Who DecidesEstablishing Who Decides

Andrew J. Clark (Syracuse University)Andrew J. Clark (Syracuse University)

OR

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Value of organization’s Value of organization’s ITIT

1.1. My interest in GovernanceMy interest in Governance

2.2. Ineffective governance Ineffective governance

symptomssymptoms

3.3. Why is it important - who Why is it important - who

cares?cares?

4.4. IT Governance modelIT Governance model

5.5. ConclusionConclusion

33

My interest in IT My interest in IT GovernanceGovernance

• Recent reading/researchRecent reading/research

• New CIO at SUNew CIO at SU

• Functional area Functional area

relationshipsrelationships

• Enterprise thinkingEnterprise thinking

IT

Governance

by Weill &

Ross

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What is What is Governance?Governance?In the English language, “governance” is an old In the English language, “governance” is an old term which, like “civil society”, fell into disuse, term which, like “civil society”, fell into disuse, but which has been revived, given new but which has been revived, given new meaning, and attained widespread currency. meaning, and attained widespread currency. Like “government” and “governor”, it is derived Like “government” and “governor”, it is derived from the Latin work “gubernare” – the action of from the Latin work “gubernare” – the action of steering a ship. A popular definition reflects steering a ship. A popular definition reflects these ancient Roman roots by defining these ancient Roman roots by defining governance as “steering, not rowing.governance as “steering, not rowing.[1]

[1] MacLean, Don, “Herding Schrodinger’s Cats: Some Conceptual Tools for Thinking about Internet Governance”, page 6, Background paper for the ITU Workshop in Internet Governance Geneva, 26-27 February 2004. Accessed November 15, 2005. Available at http://www.itu.int/osg/spu/forum/intgov04/contributions.html Internet

http://www.itu.int/osg/spu/forum/intgov04/contributions.html

55

What is What is Governance?Governance?

““Providing the structure for Providing the structure for

determining organizational objectives determining organizational objectives

and monitoring performance to ensure and monitoring performance to ensure

that objectives are obtained.”that objectives are obtained.”[2]

[2] “OECD Principles of Corporate Governance, Organization for Economic Cooperation and Development, Directorate for Financial, Fiscal and Enterprise Affairs, SG/CG (99) 5 and 219, April 1999

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What is What is ITIT Governance?Governance?

3. Wikipedia

Information Technology Information Technology

Governance, IT Governance or Governance, IT Governance or

ICT Governance, is a subset ICT Governance, is a subset

discipline of Corporate discipline of Corporate

Governance focused on Governance focused on

information technology (IT) information technology (IT)

systems and their performance systems and their performance

and risk managementand risk management33..

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What is What is ITIT Governance? Governance? (continued)(continued)44

4. Holland, Norma, EDUCAUSE Leadership Program, June 2005

Describes the rules and Describes the rules and procedures for making and procedures for making and monitoring decisions on strategic monitoring decisions on strategic IT concerns.IT concerns.

IT governance is the term used to IT governance is the term used to describe how those persons describe how those persons entrusted with governance of an entrusted with governance of an entity will consider IT in their entity will consider IT in their supervision, monitoring, control supervision, monitoring, control and direction of the entity.and direction of the entity.

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IT Governance isIT Governance is::

1.1. Decision rightsDecision rights

2.2. AccountabilityAccountability

3.3. Desirable Desirable

behaviorsbehaviors

The assignment of The assignment of decision decision rightsrights and the and the accountabilityaccountability framework to encourage framework to encourage desirable behaviorsdesirable behaviors in the in the use of IT.use of IT.

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Symptoms of ineffective Symptoms of ineffective governancegovernance

• Low IT valueLow IT value• IT barrier to strategiesIT barrier to strategies• Ineffective IT mechanismsIneffective IT mechanisms• Can’t explain governanceCan’t explain governance• Projects late & over budgetProjects late & over budget• Outsourcing seen as fixOutsourcing seen as fix• Changes frequentlyChanges frequently

1010

Why is it Why is it important?important?

• IT Costs / Business valueIT Costs / Business value

• New business modelsNew business models

• Business riskBusiness risk

• Dependence on other entitiesDependence on other entities

• Essential business knowledgeEssential business knowledge

• Business’s reputationBusiness’s reputation

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Why is it important? Why is it important? (2)(2)

Research findings:Research findings:

Thoughtful design leads to Thoughtful design leads to above average returns on above average returns on IT investmentsIT investments

Percent of executives who Percent of executives who can describe IT can describe IT governance.governance.

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Governance ModelGovernance ModelThree Major ComponentsThree Major Components

• What decisions need to be made?What decisions need to be made?

(Domains)(Domains)

• Who has decision and/or input Who has decision and/or input

rights?rights?

(Styles)(Styles)

• How are the decisions formed andHow are the decisions formed and

enacted?enacted? (Mechanisms)(Mechanisms)

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What Decisions Need to be What Decisions Need to be Made?Made?

((Domains)Domains)

There are five major decisions There are five major decisions domainsdomains

1.1. PrinciplesPrinciples

2.2. Infrastructure strategiesInfrastructure strategies

3.3. ArchitectureArchitecture

4.4. Business application needsBusiness application needs

5.5. Investment and prioritizationInvestment and prioritization

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Who has Decision & /or Input Who has Decision & /or Input Rights?Rights?(Styles)(Styles)

1.1. Business Business MonarchyMonarchy

2.2. IT MonarchyIT Monarchy

3.3. FeudalFeudal

4.4. IT DuopolyIT Duopoly

5.5. FederalFederal

6.6. AnarchyAnarchy

1515

Key players in Governance Key players in Governance ArchtypesArchtypes55

C-levelC-level ITIT BizBiz

Business MonarchyBusiness Monarchy √√

IT MonarchyIT Monarchy √√

FeudalFeudal √√

IT DuopolyIT Duopoly √√ √√

√√ √√

FederalFederal √√ √√ √√

√√ √√

AnarchyAnarchy

5. Weill, P. & Ross, J.W. (2004)5. Weill, P. & Ross, J.W. (2004)

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How are Decisions Formed & How are Decisions Formed & Enacted?Enacted?

(Mechanisms)(Mechanisms)

• Decision-making structuresDecision-making structures

• Alignment processesAlignment processes

• Communication approachesCommunication approaches

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Mechanisms: Decision-making Mechanisms: Decision-making structuresstructures55

Decision-making structureDecision-making structure % using

CIO Rank

Executive or senior management Executive or senior management committeecommittee

89 %89 % 3.53.5

*** IT leadership committee *** IT leadership committee comprising IT executivescomprising IT executives

85 %85 % 3.83.8

Process teams with IT membersProcess teams with IT members 84 %84 % 3.43.4

*** Business/IT relationship *** Business/IT relationship managersmanagers

83 %83 % 3.93.9

*** IT council comprising business *** IT council comprising business and IT executivesand IT executives

71 %71 % 3.73.7

Architecture committeeArchitecture committee 66 %66 % 3.13.1

Capital approval committeeCapital approval committee 55 %55 % 3.13.15. Weill, P. & Ross, J.W. (2004)5. Weill, P. & Ross, J.W. (2004)

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Mechanisms: Alignment Mechanisms: Alignment ProcessesProcesses66

Alignment ProcessAlignment Process % % usinusin

gg

CIO CIO RankRank

*** Tracking of IT projects and *** Tracking of IT projects and resources consumedresources consumed

96%96% 3.43.4

*** Service-level agreements*** Service-level agreements 88%88% 3.23.2

Formally tracking business value of Formally tracking business value of ITIT

62%62% 2.92.9

Chargeback arrangementsChargeback arrangements 61%61% 2.82.8

6. IBid6. IBid

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Mechanisms: Communication Mechanisms: Communication ApproachesApproaches77

Communication approachCommunication approach % % usingusing

CIO CIO RankRank

*** Work with managers who don’t follow *** Work with managers who don’t follow the rulesthe rules

90%90% 3.23.2

Senior management announcementsSenior management announcements 88%88% 2.92.9

*** Office of CIO or Office of IT *** Office of CIO or Office of IT governancegovernance

85%85% 3.63.6

Web-based portals and intranets for ITWeb-based portals and intranets for IT 79%79% 2.92.9

7. Ibid7. Ibid

2020

The Governance ModelThe Governance ModelThe “Harmony ‘What-How’ The “Harmony ‘What-How’

Framework”Framework”

StrategyStrategy GovernanceGovernanceArrangementsArrangements

PerformancePerformanceGoalsGoals

DesirableDesirableBehaviorsBehaviors

GovernanceGovernanceMechanismsMechanisms

Metrics &Metrics &AccountabilitiesAccountabilities

HowHow HowHow HowHow

WhatWhat WhatWhat

WhatWhat WhatWhat

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Mapping Styles Against Mapping Styles Against DomainsDomains

DomainsDomains PrinciplesPrinciples ArchitectureArchitecture InfrastructureInfrastructure Business Business ApplicationsApplications

Investment & Investment & PrioritiesPriorities

StylesStyles InpuInputt DecisionDecision InputInput DecisionDecision InputInput DecisionDecision InputInput DecisionDecision InputInput DecisionDecision

Business Business MonarchyMonarchy

IT IT MonarchyMonarchy

FeudalFeudal

FederalFederal

DuopolyDuopoly

AnarchyAnarchy

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SU’s Mapping of Styles Against SU’s Mapping of Styles Against DomainsDomains






FeudalFeudal

FederalFederal

DuopolyDuopoly

AnarchyAnarchy

√√

√√

√√√√√√√√

√√

√√

√√√√√√√√

√√

√√

√√√√√√√√

√√

√√

√√√√√√√√

√√

√√

√√√√√√√√

√√

√√

√√

√√

√√ √√

√√

√√

√√

√√√√

√√ √√

√√

√√

2323

Mapping Styles Against Mapping Styles Against DomainsDomains





00


11

FeudalFeudal

FederalFederal

DuopolyDuopoly

AnarchyAnarchy

00

88331515

00 00

3636

1414

33

1818

2727 00 66 00 77 11 1212 11 3030

7373 59592020 1010 00 88 00 99

00 00 11 22 11 1818 00 33

4466

5599

8811

9933

3030 2727

2727 3030

44 66

1515 3030 2323 1717 66334400 0011 11 00 0033 11

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How Top Financial Performers How Top Financial Performers GovernGovern88

PrinciplePrinciple

ss

ArchitecturArchitectur

ee

InfrastructureInfrastructure BusinesBusines

s Needss Needs

InvestmeInvestme

nt & nt &

PrioritiesPriorities

Business Business

MonarchMonarch

yy

ProfitProfit

GrowtGrowthh

ProfitProfit ProfitProfit GrowtGrowt

hh

ProfitProfit

GrowthGrowth

IT IT

MonarchMonarch

yy

ProfitProfit

FeudalFeudal GrowthGrowth

FederalFederal ProfitProfit

DuopolyDuopoly ROAROA ROAROA ROAROA ROAROA ROAROA

2525

Non-Profit IT Non-Profit IT GovernanceGovernance

• More Business MonarchiesMore Business Monarchies

• Less IT MonarchiesLess IT Monarchies

• More Federal decision arrangementsMore Federal decision arrangements

• More Federal input arrangementsMore Federal input arrangements

• More IT duopoliesMore IT duopolies

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Top 10 Leadership Top 10 Leadership PrinciplesPrinciples

1.1. Actively design governanceActively design governance

2.2. Know when to redesignKnow when to redesign

3.3. Involve senior managersInvolve senior managers

4.4. Make choicesMake choices

5.5. Clarify exception handlingClarify exception handling

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Top 10 Leadership Principles Top 10 Leadership Principles (continued)(continued)

6.6. Provide right incentivesProvide right incentives

7.7. Assign ownership & accountabilityAssign ownership & accountability

8.8. Design at multiple levelsDesign at multiple levels

9.9. Provide transparency & educationProvide transparency & education

10.10. Implement common mechanismsImplement common mechanisms

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ReferencesReferences Board Briefing on IT Governance , Available from Board Briefing on IT Governance , Available from http://http://www.isaca.orgwww.isaca.org Click on Governance, then on Downloads, and scroll down to Anonymous Click on Governance, then on Downloads, and scroll down to Anonymous AccessAccess

Broadbent, M. & Kitzis, E., The New CIO Leader: Setting the Agenda Broadbent, M. & Kitzis, E., The New CIO Leader: Setting the Agenda and Delivering Results, Cambridge, Harvard Business School Press, and Delivering Results, Cambridge, Harvard Business School Press, 20042004

Lane, D, CIO Wisdom: Best Practices from Silicon Valley’s Leading IT Lane, D, CIO Wisdom: Best Practices from Silicon Valley’s Leading IT Experts, Upper Saddle River, Pearson Prentice Hall, 2004Experts, Upper Saddle River, Pearson Prentice Hall, 2004

McCredie, J. (2006) Improving IT Governance in Higher Education McCredie, J. (2006) Improving IT Governance in Higher Education (Research Bulleting 18). Boulder, CO: EDUCAUSE Center for Applied (Research Bulleting 18). Boulder, CO: EDUCAUSE Center for Applied Research. Available from Research. Available from http://www.educause.edu/ecarhttp://www.educause.edu/ecar

McNurlin, B.C. & Sprague Jr, R.H. (2004) Information Systems McNurlin, B.C. & Sprague Jr, R.H. (2004) Information Systems Management in Practice, Upper Saddle River, Pearson Prentice Hall.Management in Practice, Upper Saddle River, Pearson Prentice Hall.

Weill, P. & Ross, J.W. (2004), IT Governance: How Top Performers Weill, P. & Ross, J.W. (2004), IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, Boston, Harvard Manage IT Decision Rights for Superior Results, Boston, Harvard Business School PressBusiness School Press

http://www.isaca.org/

http://www.isaca.org/

http://www.educause.edu/ecar

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Contact Information:Contact Information:

Andrew J. ClarkAndrew J. ClarkSyracuse UniversitySyracuse UniversityChief Process ArchitectChief Process ArchitectE-mail: E-mail: [email protected]@syr.edu

Documents

IT Governance: Establishing Who Decides