IT Governance – Executives are from
Mars, IT management is from Venus
Peter Hidas
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IT Management Evolves —
IT Governance Becomes a Critical Enabler
Business
managers with a
functional
responsibility for IT
2012
IT Governance
Impact
IT Leadership
Focus
IT managers
supporting
business
management
High
2006
Internal Efficiency
and Control
Low
Partnerships, Agility,
Global Business
Ecosystem
Company Leadership Focus
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
Delivering projects that enable
business growth
Linking business and IT
strategies and plans
Demonstrating the business
value of IS/IT
Applying metrics to IS
organization and services
2005
Delivering projects that enable
business growth
Linking business and IT strategies
and plans
Building business skills in the IS
organization
2006
Delivering projects that enable
business growth
Linking business and IT strategies
and plans
Improving the quality of IS service
delivery
Demonstrating the business value
of IT
Tightening security and privacy
safeguards
Attracting, developing and retaining
IS personnel
Attracting, developing and retaining Demonstrating the business value of
IT
IS personnel
Improving business continuity
readiness
Applying metrics to the IS
organization and IT services
Providing new types of information
(for example, analytics)
Improving the quality of IS
service delivery
Improving the quality of IS service
delivery
Developing or managing a flexible
technology
Consolidating the IS organization Flexible technology infrastructure
and operations
Developing leadership in the
Improving IT governance
senior IS team
Improving IT governance
Consolidating the IS organization
and operations
Source: Gartner Executive Programs' Annual CIO Survey
Improving IT governance
Building business skills in the IS
organization
Leading change initiatives (involving
more
IT Governance — What Are the Components?
IT Governance Strategy
IT Governance
• Goals
• Domains
• Principles and Policies
• Decision and Input
Rights
Supply Governance
Demand Governance
IT Governance Operations
What Should IT Work
On?
How Should IT Do What
It Does?
Business Primary
Responsibility
IT Management Primary
Responsibility
IT Governance Strategy
Goals: Why?
Domains: What?
What do we want to
achieve through
IT governance?
Which areas need to
be governed?
Principles/Policies: How?
How should we view the use of IT
in the business?
Decision
Rights: Who?
Who makes what
decisions? And
who has input
rights?
Example Domains and Decision Rights
Domain
Stakeholders
Goals
Input
Exec.
Committee
Steering
Committee
LOB
Managers
IT
Leadership
Bus. Proc.
Owners
IT Rel.
Managers
Decision





Principles
Input




Decision
Bus. App.
Requirements
Input

Decision





• Exec. Committee — Executive committee (C-level executives)
• Steering Committee — IT steering committee
(representatives from executive and LOB management and
senior IT management)
• LOB Managers — Business unit (BU) heads/presidents
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.
Company
Architecture
Input



Decision
IT Investment
and Prioritization
Input



 


Decision

• 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
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
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
IT Governance — The Operational View
(What Should IT Work On?)
IT Governance Strategy
IT
Governance
Demand
Governance
• Goals
• Domains
• Principles
• Decision Rights
• Styles
IT Governance Operations
Business Management Primary Responsibility
Plan
Implement
Manage
Monitor
Business/
IT Strategy
Validation
Develop Demand
Governance
Processes
Business Unit
Prioritization
Spending/Project
Oversight
Business/
IT Operational
Planning
Demand
Governance
Implementation
Intraenterprise/
Interenterprise
Prioritization
Business
Benefits
Realization
Overall
IT Investment
and Expense
Councils/
Committees
Issue Escalation/
Resolution
IT Value
Assessment
IT Investment
Portfolios
(PPM)
IT Services
Funding
IT Governance
Effectiveness
(Metrics, etc.)
Investment
Evaluation
Criteria
Board IT
Governance
IT
Service
Chargeback
(How Should IT Do What It Does?)
Supply
Governance
IT Management Primary Responsibility
IT Supply Governance Domains
Security
• Plan
• Implement
• Manage
• Monitor Compliance
Architecture
• Plan
• Implement
• Manage
• Monitor Compliance
Corporate
Compliance
• Plan
• Implement
• Manage
• Monitor Compliance
Project
Management
• Plan
• Implement
• Manage
• Monitor Compliance
Sourcing
• Plan
• Implement
• Manage
• Monitor Compliance
Procurement
• Plan
• Implement
• Manage
• Monitor Compliance
Etc.
• Plan
• Implement
• Manage
• Monitor Compliance
Business/IT Role Segmentation Model
The Butler
Expected
IT Role:
Tactical/
Utility
Business: Market
Leader/Risk Taker/High
Growth
"IT provides
supporting services
but is not strategically
important"
The Entrepreneur
"IT is a vital
component of our
business model"
The Team Player
The Grinder
"IT is a cost of
doing business;
costs should be
as low as
possible"
"We are totally
dependent on IT
systems in our
business operations,
so we give IT as much
time as we can afford"
Business: Market
Follower/RiskAverse/Mature
Expected IT
Role: Strategic/
Transformational
IT Governance vs. IT Role
Business: Market
Leader/Risk Taker/High
Growth

The Butler
Minimized governance

Principles for speed/quality
balance
 Clear domain responsibility

Anticipate business needs
 Portfolios for focus
 Low governance overhead

Expected
IT Role:
Tactical/
Utility

The Grinder
Governance as selfprotection
Expected IT
Role: Strategic/
Transformational

Principles for focus
 Benefits realization for value
 Strong ROI criteria

The Entrepreneur
No time for IT governance
The Team Player
Formal collaborative
governance
Clear decision rights
 Focus on benefits
realization
 Agile governance processes

Business: Market
Follower/Risk-Averse/Mature
Example Effective IT Governance —
Implement Processes to Achieve Goals
Adding a New IT Shared Service
Relationship and
Product Managers
Operating
Management and
Governance Board
Product Manager and
Service Delivery
Manager
Operating
Management and
Governance Board
Roles and
Responsibilities
Roles and
Responsibilities
Roles and
Responsibilities
Roles and
Responsibilities
Activities
Activities
Activities
Activities
Prepare
Proposal for
New Service
Evaluate
Feasibility
Prepare Detailed
Product
Development and
Operational
Deployment Plan
Go/No Go
Decision
Good
Investment
Decision
Effective IT Governance — Governance via
Stakeholder Collaboration
Strategy Council
Business
Initiative
Council
 Initiative management
 Project priorities
 Resource allocation
 Funding allocation
 Measurement criteria
 Trading partner liaison
 Company business
vision
 Overall funding
 Infrastructure
investment
 Issue resolution
 CEO, CxO, CIO and
LOB manager
 Project manager, business manager,
BU process manager and IT manager
Technical Council
 Technical architecture
 Project management
practices
 Tools and standards
 Vendor criteria
 Technical manager, BU
process manager and IT
manager
IT Governance Pitfall!
'Common Good' or 'Common Reality'










"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
"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
Recommendations
Understand
Your
Customer(s)
Common
Goals
IT Governance
Implement
Processes, Not
Committees
Clear
Principles