IT Governance Navigating for Value

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IT Governance Navigating for Value
CIO Conference Steering the Enterprise Through
Stormy Seas

• Michael Vitale
• 6 May 2003

Image source Access2000
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Why IT Governance is no fad

• IT value creation, capture, and return on
  investment
• Permanent shift in the role of IT in
  organisationscost, supplier and buyer pressure,
  opportunities
• Changes in industry competition and
  regulationdisintermediation of traditional value
  chains
• Continuing battle between IT and the rest of the
  business
• Public trust

Ensuring IT value in the competitive landscape
e-challenges
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What underlies interest in IT Governance?
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There are a range of perspectives of IT
Governance
IT management architectureIT governance mode
(centralised, decentralised and federal)IT
governance style (business or IT monarchy,
feudal, federal, duopoly, anarchy) A structure
with administrative or control mechanisms and
focussed on traditions in accounting, control,
security and audit. Also expects IT governance
to be a major responsibility of the board A
structure with coordinating or integrating
mechanisms and dependent on tools and
relationships e.g. IT councils, service level
agreements, process teams with IT membership,
investment approval and architecture committees A
process centred on sustainable capabilities
(rather than IT tasks to be managed). The
capability for integrating the IS/IT effort with
business purpose and activity. IT value
management is a capability of the IT governance
mechanism A process centred on a continuous
activity such as decision-making with specialist
processes. Outcomes drive the whole process
centred on transparent IT decision making, clear
accountabilities, and acceptable and actionable
IT measurements
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What is your IT Governance reality?

• What are the expectations of doing IT
  Governance for your managers? Your firm?
• What do they understand to be IT Governance?

• How do they approach it?

• How would management know the degree to which
  your organisation has IT Governance?
• How would you know how well its working?

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Research shows IT Governance is an unsettled
concept

1. Perceptions of IT Governance vary considerably
2. Little attention is explicitly focussed on IT
   Governance outside the domains of IT financing
   and IT control
3. How well approaches to IT Governance are
   perceived to work is variable - and not related
   to specific governance structures or mechanisms
4. The process of decision-making around IT is
   largely not transparent.
5. Accountability for the decision-making process
   and outcomes is still a moving target

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Understanding the role of IT in the organisation
is fundamental to appropriate IT Governance
Appropriate IT Governance
Role of IT
Competitive Strategy
Business Model
Environment Rivalry
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and therefore for getting value from IT
Achieving IT Value for the business
Responding to changing business contexts

• Justification of investment decisions for the
  future
• Proof of ROI in retrospect - justification of
  past decisions
• Accounting for capital investments and costs

• Investment decisions for the future
• Ensuring IT delivers value in use
• Ensuring infrastructure aligns with use
• Accounting for intangibles

Appropriate IT Governance
Role of IT
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Importance of defining Goals of IT Governance
Appropriate IT Governance
Role of IT
Goals of IT Governance
Regulatory environment
Health of the business
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How mature is your IT Governance?
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Management of IT Value
Impact Management Ensuring IT is leveraged for
maximum Business Value
Financial Management Assessing (proving?) the
Financial and Economic Value of IT
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IT Governance drives IT value management
Source Adapted from research by S.Keyes-Pearce
University of Sydney 2003
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Issues arising about the Direction of
Developments in IT Governance Practice

• Does there have to be a right definition?
• Can good IT Governance
• be based on expected and targeted outcomes
• involve a variety of processes and structures
  which are based on the culture of the
  organisation rather than a standard
• Does the foundation or purpose for IT Governance
  need to be the same for all organisations?
• Control of Resources and/or Creation of Value
• Accounting, audit, and risk control
• Leveraging IT for better business value and
  business innovation

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What is your IT Governance reality?

• What are the expectations of doing IT
  Governance for your managers? Your firm?
• What do they understand to be IT Governance?

• How do they approach it?

• How would management know the degree to which
  your organisation has IT Governance?
• How would you know how well its working?
• How would you know how much value the
  organisations IT Governance is creating?

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IT Governance Navigating for Value
CIO Conference Steering the Enterprise Through
Stormy Seas

• Michael Vitale
• 6 May 2003

Image source Access2000