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IT Governance

IT Governance. A presentation for CIOs. Question for Class Discussion:. What are the biggest challenges that face a modern CIO? (Let’s list them…). For class discussion:. What is IT Governance?. For class discussion:. What are the costs of IT Governance?. For class discussion:.

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IT Governance

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  1. IT Governance A presentation for CIOs

  2. Question for Class Discussion: • What are the biggest challenges that face a modern CIO? (Let’s list them…)

  3. For class discussion: • What is IT Governance?

  4. For class discussion: • What are the costs of IT Governance?

  5. For class discussion: • Do you really believe the promise of IT Governance?

  6. For class discussion: • What are the major challenges, issues, and obstacles that face the typical CIO or IT Director?

  7. For class discussion: • Which of those challenges, issues and obstacles are addressed/resolved by IT Governance?

  8. IT Governance • What is it? “To achieve success in this information economy, governance of IT is a critical facet of enterprise governance. Good IT Governance assists enterprise leaders in their responsibility to ensure that IT goals align with those of the business, it delivers value, its performance is measured, its resources properly allocated and its risks mitigated.” • Who initiates it? • Who manages it? • See The IT Governance Institute at: http://www.itgi.org/

  9. Classical IT Governance Components • Include a steering committee of senior IT and business executives to decide on company-wide IT priorities and investments • Set up self-directed work teams made up of IT staffers and business-unit liaisons to manage individual projects • Establish boundaries that specify what kind of decisions the work teams can and can’t make • Form an architectural council that sets corporate IT standards, plus more targeted groups such as an IT security council.

  10. Reasons for Doing It: • Involve line users (at V.P. level) in taking ownership of IT projects • Better funding stabilization • Better end-user involvement better system requirements, feedback, less criticism of IT, better roll-out success • Increases Perception (and reality) of IT being a quality service provider • Increases perception (and reality) that CIO/IT Director has an executive business mind • Increases perception (and reality) that CIO/IT Director is an executive team player.

  11. Downsides and Cautions: • Takes more time and energy up front (but less redo and wasted time in the long run) • Requires effort to hone executive communication skills • Must be presented in the positive light or might be perceived as dodging responsibility • For others on IT Governance board: Their time is already short and their plates are already full so this must be sold as …

  12. Recipe for Good Governance • What is IT Governance: “It is the decision rights and accountability framework for encouraging desirable behavior in the use of IT” • What is the business imperative for IT Governance and • How strong is this business imperative?

  13. The Business Imperative • An M.I.T. study of good governance: • 3 years • 250 companies • 23 countries • Good governance yields an average of 20% higher return on assets! (Why?)

  14. Principles of Good (Proven Successful) Classical IT Governance • Limit number of decision making structures • Create overlapping responsibilities for IT decisions • Involve senior management in major IT decisions • Design exception processes into governance processes • Change governance only when desirable behaviors change • Provide transparency and education

  15. Limit Number of Decision Making Structures • Assign clear responsibilities for each type of IT decision to individuals who can accept accountability for the outcomes of those decisions. • Example makeup for successful IT Governance board: CIO, COO, CFO, and business unit (or department) heads. • Governance board function: • clarifies IT objectives, • establishes the annual enterprisewide IT budget, and • negotiates the approved list of projects and IT infrastructure initiatives.

  16. But You Might Want Different Decision Making Structures for: 1. IT principles decisions dictating the role of IT in the enterprise 2. IT architecture decisions on technical choices and directions 3. IT infrastructure decisions on the delivery of shared IT services 4. Business application requirements decisions for each project 5. IT investment and prioritization decisions

  17. Create Overlapping Responsibilities for IT Decisions • Make sure that your membership in different decision making structures overlap. For example: • CIO might be member of Exec committee as well as IT council and Architecture committee • Head of IT process teams might also be member of Architecture committee and Capital Approval committee

  18. Involve Senior Management in Major IT Decisions • If senior management is not involved in IT decision making, the organization is likely to experience a disconnect between business objectives and IT capabilities. • The more involvement, the better the governance performance. • Who should be the involved senior managers?

  19. The Most Effective Corporate Governance Decision Makers • Other CXOs exert varying degrees of impact on IT decision making. The CEO is the real heavyweight, with more than twice the impact compared to the CIO alone. • Chief Executive Officer 2.1 • Chief Operating Officer 1.7 • Business Unit Leader 1.6 • Business Unit Chief Information Officer 1.3 • Chief Financial Officer 1.2 • CIO (without other CXOs) 1.0

  20. Design Exception Processes Into Governance Processes • Allowing for exceptions to technology and business process standards is just as important as establishing and enforcing standards. • Governance exception processes give individuals an audience when they feel that standards are limiting business success. • More important, by revealing when standards are inappropriate or out of date, exceptions create learning opportunities. • Organizations with effective governance had fewer renegade exceptions, but more exceptions approved through a formal exception process.

  21. Change Governance Only When Desirable Behaviors Change • Governance takes six months or longer to implement. • Once a company has designed a coherent set of mechanisms, governance can remain intact until a change in strategic direction redefines desirable behaviors. • Successful governance companies changed their governance less than once per year.

  22. Provide Transparency and Education • The most important predictor of top governance performance in our study was the percentage of managers in leadership positions who could accurately describe their enterprise's IT governance. • Without an awareness of IT governance, there is no chance that it will be followed. • Proactively designing governance and then educating everyone in the enterprise as to how governance decisions are made reduces the mystery of IT and enables managers throughout the organization to accept responsibility for its effective use as a strategic asset.

  23. Quiz • Without looking at your notes, what are the six principles of good Classical IT governance? • What are the anticipated difficulties in implementing these in your organization?

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