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IT Governance – Executives are from Mars, IT management is from Venus
Peter Hidas
IT Management Evolves — IT Governance Becomes a Critical Enabler
IT Leadership Focus
Company Leadership Focus
Internal Efficiency and Control
IT managers supporting
business management
Partnerships, Agility, Global Business
Ecosystem
2006
Business managers with a
functional responsibility for IT
20122012
IT Governance Impact
Low
High
Governance = styring
Management = få utført det som er bestemt
Key Issues
• How can IT governance be described pragmatically in terms of its scope and application?
• How do I develop the best IT governance strategy for my organization?
• What are best practices for implementing IT governance effectively?
IT Governance
"The processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals"
IT governance is made up of processes with activities, inputs, outputs, roles and responsibilities
IT's role is identified as "ensuring" as opposed to "executing"
The goals of IT governance are business goals
Key performance measures are effectiveness and efficiency
IT Demand Governance: The CIO's View …
• IT governance, broad in scope, a high-impact issue, a senior management operating responsibility
• However, business doesn't understand its responsibilities; therefore, it isn't committed, accountable or fully engaged
• IT governance is getting better, but going only from bad to neutral
• Business management's lack of understanding is a key inhibitor, but no compelling change is planned
• Business management and IT management each see IT governance as a way to control the other
Source: Gartner CIO IT Governance Survey, 2005
… Of a Persistent Challenge"To what extent is each of the following a priority for you in 200X?"
2004 20062005Delivering projects that enable business growth
Applying metrics to IS organization and services
Tightening security and privacy safeguards
Improving business continuity readiness
Improving the quality of IS service delivery
Consolidating the IS organization and operations
Developing leadership in the senior IS team
Attracting, developing and retaining IS personnel
Applying metrics to the IS organization and IT services
Improving the quality of IS service delivery
Flexible technology infrastructure
Consolidating the IS organization and operations
Delivering projects that enable business growth
Delivering projects that enable business growth
Improving the quality of IS service delivery
Attracting, developing and retaining IS personnel
Providing new types of information (for example, analytics)
Developing or managing a flexible technology
Leading change initiatives (involving more
Linking business and ITstrategies and plans
Demonstrating the business value of IS/IT
Improving IT governance
Linking business and IT strategies and plans
Demonstrating the business value of IT
Building business skills in the IS organization
Linking business and IT strategies and plans
Improving IT governance
Building business skills in the IS organization
Demonstrating the business value of IT
Improving IT governance
Source: Gartner Executive Programs' Annual CIO Survey
IT Governance — What Are the Components?
IT Governance Strategy
IT Governance• Goals• Domains• Principles and Policies• Decision and Input Rights
IT Governance OperationsWhat Should IT Work
On?
Demand Governance
Business Primary Responsibility
Supply Governance
How Should IT Do What It Does?
IT Management Primary Responsibility
IT Governance Strategy
Goals: Why?
What do we want to achieve through IT governance?
Decision Rights: Who?
Who makes what decisions? And who has input rights?
Principles/Policies: How?
How should we view the use of IT in the business?
Domains: What?
Which areas need to be governed?
Example Domains and Decision Rights
Input Decision
Goals
Input Decision
Principles
Input Decision
Bus. App.Requirements
Input Decision
Company Architecture
Input Decision
IT Investment and Prioritization
Exec.Committee
SteeringCommittee
LOBManagers
ITLeadershipBus. Proc.
Owners
DomainStakeholders
IT Rel.Managers
Note: This chart is adapted from MIT Sloan Center for Information Systems Research and Gartner drawing on the framework of Peter Weill and Richard Woodham, 2002.
• LOB Managers — Business unit (BU) heads/presidents
• Steering Committee — IT steering committee (representatives from executive and LOB management and senior IT management)
• Exec. Committee — Executive committee (C-level executives) • IT Leadership — CIO, CIO Office and BU CIOs• Bus. Proc. Owners — Business process owners
• IT Rel. Managers — IT/business relationship managers
• Bus. App. Requirements — Business application requirements
Example IT Principle/Policy — Investment Decision Making
Implications:• Business units (project sponsors) are responsible for benefits
realization of IT expenditure; IT is responsible for IT cost management• IT is a critical functional component of the business unit, and
business unit leaders are expected to understand and articulate how to achieve business value from this function
• IT is responsible for providing the right information to educate the business on the value, cost and risk of its investment
Principle/Policy:
• Business unit leaders and department heads are responsible for determining IT investment and prioritization decisions to maximize the business value of IT
Rationale:
IT is the organization's largest capital investment, and we need to manage the investment of technology expenditure to maximize the return on that asset
IT Governance
• Goals• Domains• Principles• Decision Rights• Styles
IT Governance Strategy
IT Governance Operations
SupplyGovernance
(How Should IT Do What It Does?)
IT Management Primary Responsibility
DemandGovernance
(What Should IT Work On?)
Business Management Primary Responsibility
Business/IT StrategyValidation
Overall IT Investment and Expense
Develop DemandGovernance Processes
Business/IT Operational
Planning
IT Investment Portfolios
(PPM)
Investment Evaluation
Criteria
Intraenterprise/Interenterprise
Prioritization
Demand Governance
Implementation
Board ITGovernance
IT GovernanceEffectiveness(Metrics, etc.)
IT ValueAssessment
ITService
Chargeback
IT ServicesFunding
Spending/ProjectOversight
Councils/Committees
Issue Escalation/Resolution
BusinessBenefits
Realization
Business UnitPrioritization
Plan Implement Manage Monitor
Architecture
• Plan• Implement• Manage• Monitor Compliance
Security
• Plan• Implement• Manage• Monitor Compliance
CorporateCompliance
• Plan• Implement• Manage• Monitor Compliance
ProjectManagement
• Plan• Implement• Manage• Monitor Compliance
Sourcing
• Plan• Implement• Manage• Monitor Compliance
Procurement
• Plan• Implement• Manage• Monitor Compliance
Etc.
• Plan• Implement• Manage• Monitor Compliance
IT Supply Governance Domains
IT Governance — The Operational View
Expected IT Role: Tactical/
Utility
Expected IT Role: Strategic/
Transformational
Business: Market Follower/Risk- Averse/Mature
Business: Market Leader/Risk Taker/High
Growth
Business/IT Role Segmentation Model
"IT provides supporting services
but is not strategically important"
The Butler
"IT is a vital component of our business model"
The Entrepreneur
"We are totally dependent on IT systems in our
business operations, so we give IT as much time as we can afford"
The Team Player
"IT is a cost of doing business; costs should be
as low as possible"
The Grinder
Expected IT Role: Tactical/
Utility
Expected IT Role: Strategic/
Transformational
Business: Market Follower/Risk-Averse/Mature
Business: Market Leader/Risk Taker/High
Growth
The Butler Minimized governance
Anticipate business needs Portfolios for focus Low governance overhead
The Entrepreneur No time for IT governance
Principles for speed/quality balance Clear domain responsibility
The Team Player Formal collaborative
governance Clear decision rights Focus on benefits realization Agile governance processes
The Grinder Governance as self-
protection Principles for focus Benefits realization for value Strong ROI criteria
IT Governance vs. IT Role
Example Effective IT Governance — Implement Processes to Achieve Goals
GoodInvestment
Decision
Roles and Responsibilities
Activities
Prepare Proposal for New Service
Relationship and Product Managers
Roles and Responsibilities
Activities
Evaluate Feasibility
Operating Management and
Governance Board
Roles and Responsibilities
Activities
Prepare Detailed Product
Development and Operational
Deployment Plan
Product Manager and Service Delivery
Manager
Go/No Go Decision
Roles and Responsibilities
Activities
Operating Management and
Governance Board
Adding a New IT Shared Service
Technical Council
Technical Council
Technical architectureTechnical architecture Project management Project management
practicespractices Tools and standardsTools and standards Vendor criteriaVendor criteria Technical manager, BU Technical manager, BU
process manager and IT process manager and IT managermanager
Company business Company business visionvision
Overall fundingOverall funding Infrastructure Infrastructure
investmentinvestment Issue resolutionIssue resolution CEO, CxO, CIO andCEO, CxO, CIO and
LOB managerLOB manager
Strategy CouncilStrategy Council
Business Initiative Council
Business Initiative Council
Initiative managementInitiative management Project prioritiesProject priorities Resource allocationResource allocation Funding allocationFunding allocation Measurement criteriaMeasurement criteria Trading partner liaisonTrading partner liaison Project manager, business manager, Project manager, business manager,
BU process manager and IT managerBU process manager and IT manager
Effective IT Governance — Governance viaStakeholder Collaboration
IT Governance Pitfall!'Common Good' or 'Common Reality'
"Common Good" Based on a collaborative corporate culture
and shared needs BU management sets individual BU
priorities BU management collaborates to decide
overall priorities and allocate resources Steering committees as major forum for all
stakeholders Steering committees have decision-making
role"Common Reality"
BUs do not normally collaborate, and each demands an individual relationship with IT
BUs are IT's customers (some are more important than others)
Relationship management and product management are used to drive service
Steering committees serve as stakeholder forums linked to decision making
Senior business management acts as the IT "board" and oversees demand management
IT Governance
Implement Processes, Not
Committees
Understand Your
Customer(s)
Common Goals
ClearPrinciples
Recommendations
