Luftman Chapter 11

Chapter 11
IT Governance
Managing the Information
Technology Resource
Jerry N. Luftman
© 2004 Managing the Information Technology Resource, Jerry N. Luftman Chapter 11 - Slide 1
Chapter Outline
• Definition of IT governance
• IT governance as issue for organizations
• Need for formal IT governance mechanisms
• IT governance alternatives
• Forms of governance and leadership roles in
cross-functional initiatives
• Steering committees
• Prioritizing projects and assessing risks
• Global considerations
IT Governance
• Power
– Who makes these decisions
• Alignment
– Why they make these decisions
• Decision Process
– How they make these decisions
Symptoms of Misalignment
• Poor business understanding and rapport
• Competitive decline
• Frequently fired IT managers
• High turnover of IT professionals
• Inappropriate resources
• Frequent IT reorganizations
• Lack of executive interest
• Lack of vision/strategy
• No communication between IT and users
Symptoms of Misalignment
• Ongoing conflicts between business and IT
• Unselective outsourcing of IT function
• Productivity decrease
• Projects not used, canceled, late
• Redundancies in systems development
• Absent systematic competencies
• Systems integration difficult
• Unhappy users/complaints
Definitions of IT Governance
• Operating model for how organization will make
decisions about use of IT
• Involves external relationships for obtaining IT
relationships
• Involves authority, control, accountability, roles,
and responsibilities
• Involves processes and methods for making
decisions
• Involves judgments about how well use of IT
enables strategic direction
Business Case Issues
• Balance all measurements
• Balance impact on
– Customers/clients
– Processes
– People
– Finance
Organizations Just Do It
• Maintenance
– Fixing application problems
• Government legislation requirements to
ensure compliance
• CEO or senior executive idea receives top
priority
• Competitor’s innovative application of IT
Enablers to Alignment
• Senior executive support for IT
• IT involved in strategy development
• IT understands the business
• Business-IT partnership
• Well-prioritized IT projects
• IT demonstrates leadership
Inhibitors to Alignment
• IT/business lack close relationships
• IT does not prioritize well
• IT fails to meet commitments
• IT does not understand business
• Senior executives do not support IT
• IT management lacks leadership
Why Have Governance
• Insufficient resources to meet commitments
• Unreliable delivery schedules
• Lack of focus on daily operations
• Reduced quality of delivered projects
• Potential for working on wrong things
• Business functions move in own IT direction to
satisfy own requirements
• Chaotic/nonstandard infrastructure
• Poor communications and relationships with
IT/Business
Fulfilling IT Promise to Business
• Decisions about IT use made jointly
• Develop mutual and agreed-upon expectations
• Help senior business management understand
costs and risks
• Provide IT capabilities required to implement
decisions
• Monitor and measure value of IT investments
• Help senior business management understand it
is ongoing process
Governance Alternatives
• Budget
• Career crossover
• CIO-CEO
• Communicate/market/negotiate
• Competitive enabler/driver
• Education/cross-training
• Liaison
• Location
• Organization
– Centralized, Decentralized, Hybrid
• Partnership/Alliance management
• Process
• Shared risks, responsibilities,
reward/penalties
• Steering committees
• Value Measurement
Steering Committees
• Strategic
• Tactical
• Operational
• Clearly state business role of IT
• Identify alignment between organization vision and
IT vision
• Establish principles for investing in IT
• Establish ethical guidelines and policies
• Establish architectural principles and standards
• Establish goals and measurements for assessment
Categories of
• Governance based on organization
structure
• Governance based on processes
• Governance based on human
relationships
Forms of Governance
• Govern cross-functional initiatives by:
– Assembling matrixed project team
– Guidance and assistance provided by
corporate IT management
– Recognizing human resources and intellectual
capital are geographically dispersed,
Forms of Governance and
Leadership Roles
Effective IT Steering Committee
• Business Executive Committee
• CIO
• Chief Technology Officer
• Divisional Business Heads
• Head of Information Systems/Networking
Considerations of
Steering Committee
• Bureaucracy
• Career Building
• Communication
• Complex Decisions
• Influence/Empowerment
• Low-Hanging Fruit/Quick Hits
• Marketing
• Objectives/Measurements
Considerations of
Steering Committee
• Ownership/Accountability
• Priorities
• Relationships
• Right Participants
• Share Risks
• Structure, Facilitator
Group Projects Based On:
• Necessity, Opportunity, Desirability
• Impact on organization
• Likelihood of occurrence
• Risk
• Resource demands
• Anticipated return
Priorities
• Highest impact on firm
• Highest likelihood of occurrence
• Lowest combined attributes of risk
• Least amount of resources demanded
• Highest anticipated return
Technology Risk Mitigation
• Subject matter experts available
• Establish emerging technology scanning function
• Employ already known technology
• Perform pilot projects studies
• Attend conferences, read professional journals
• Maintain professional memberships
• Implement professional certification/study
programs
• Participate in master’s degree/master’s
certification
Development Risk Mitigation
• Modularize projects
• Employ project management with prior
experience
• Establish development life cycle
methodology
• Reduce scope of projects
• Follow “best practices” model for software
engineering
Organizational Risk Mitigation
• Secure executive sponsorship
• Joint accountability of business/IT management
• Early and continuous involvement of
stakeholders
• Establish formal change management program
• Establish formal communication channels
• Establish formal and well-understood processes
• Establish formal escalation processes
Market Risk Mitigation
• Reduce initial scope of geographic
coverage
• Employ SME’ and consultants for expert
advice
• Documentation and formal sign-off on
customer requirements
• Establish customer “knowledge base”
Global Considerations
• Global Exporter
• Multinational
• Multilocal
• Transnational or Metanational
Source: Daniels, J. and Caroline, N., in J. Luftman, ed., Competing in the Information Age: Strategic Alignment in Practice.” Oxford University Press (1996).
Do’s of Vendor Management
• Establish vendor management team
• Monitor service levels and end-user
satisfaction
• Track service/product market
• Continually renegotiate contract
• Keep business units accountable and
involved
• Think ongoing relationship
• Use vendor’s expertise for solutions
Don’ts of Vendor Management
• Try to manage a vendor without adequate
expertise available
• Ignore need to establish service level
agreements
• Fail to establish firm accountability
• Understaff vendor management function
• Rely solely on vendor’s expertise
• Forget to keep eye on vendor reputation
and profitability
Contract Renegotiation Processes
• Contract expiration
• Material breach in contract by vendor
• Major change in organization’s
management or industry
• Significant change in price for same
services
• New technology
Outsourcing Considerations
• Do:
– Ask for and check references
– Assess culture of outsourcing partner
– Evaluate multiple options
– Get it in writing
– Metrics matter
– Open kimono
– Pick outsourcing partner with strong partner
network
Outsourcing Considerations
• Don’t:
– Buy on price alone
– Overlook reference-checking process
– Use price contract without consideration of
long-term consequences
– Forget to provide for contingencies
– Communicate via committee
– Hand over project management
– Rely on marquee references
– Single-source
– Let head be turned by goodies
Insource or Outsource?
Outsourcing RFP
• Objectives and Scope
• Background
• Technology Vision
• Services Requested
• Transition/Migration Services
• Performance Requirements
• Resources
• Requirements for Vendor Proposal
• General Terms and Conditions for Proposal
• Proposal Evaluation

Luftman Chapter 11

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Luftman Chapter 11

Uploaded by

Copyright:

Available Formats

Chapter 11

You might also like