Week 1

Question 1

Describe IT governance

Answer 1

IT governance is “the framework for the leadership, organizational structures and business processes, standards and compliance with these standards, which ensures that the organization’s information systems support and enable the achievement of its strategies and objectives”.

Question 2

Describe IT governance in terms of decision rights, input right and accountability

Answer 2

We define IT governance as: specifying the framework for decision rights and accountabilities to encourage desirable behavior in the use of IT.

• IT governance is not about what specific decisions are made.
• It is about systematically determining who makes each type of decision (decision rights), who has input to a decision (input right) and how these people (or groups) are held accountable for their role.
• Managing a key management paradox: simultaneously empowering and controlling.

Question 3

Why is IT governance important?

Answer 3

IT governance matters because it influences the benefits received from IT investments.

Question 4

What are the 5 major IT decisions large enterprises have to make?

Answer 4

Question 5

What are IT principles?

Answer 5

High level statements about how IT is used in the business

Question 6

What is IT architecture?

Answer 6

An integrated set of technical choices to guide the organization in satisfying business needs. The architecture is a set of policies and rules for the use of IT and plots a migration path to the way business will be done (includes data, technology and applications)

Question 7

Describe IT infrastructure strategies

Answer 7

Strategies for the base foundation of budgeted-for IT capability (both technical and human), shared throughout the firm as reliable services, and centrally coordinated.

Question 8

Describe business application needs

Answer 8

Specifying the business need for purchased or internally developed IT applications

Question 9

Describe IT investment and prioritization

Answer 9

Decisions about how much and where to invest in IT including project approvals and justification techniques.

Question 10

What is a business monarchy?

Answer 10

A group of, or individual, business executives.

Includes committees comprised of senior business executives (may include CIO).

Excludes IT executives acting independently

Question 11

What is IT monarchy?

Answer 11

Individuals or groups of IT executives

Question 12

What is Feudal?

Answer 12

Business unit leaders, key process owners or their delegates

Question 13

What is Federal?

Answer 13

C level executives and at least one other business group. (e.g., CxO and BU leaders)

IT executives may be an additional participant.

Question 14

What is an IT duopoly?

Answer 14

IT executives and one other group

Question 15

What is anarchy?

Answer 15

Each individual user

Question 16

What are the 5 factors that dictate variations in governance patterns?

Answer 16

• Strategic and performance goals: Governance designed to facilitate the enterprise’s strategic and performance goals
• Organizational structure: Governance designed to compensate for limitations of structure (e.g., require less change in structure as business needs change)
• Governance experience: IT governance tends to change and evolve with experience (many companies are still early in the IT governance learning curve)
• Size and diversity: IT governance often reflects changes in size and diversity (e.g., growth geographically and introduction of conflicting objectives)
• Industry and regional differences: Decision-making cultures vary across the world, often complicating IT governance. The same goes for industries (e.g., not-for-profit are heavier on business monarchies than for-profits)

Question 17

IT governance performance is a function of:

(name 4)

Answer 17

• Cost-effective use of IT
• Effective use of IT for asset utilization
• Effective use of IT for growth
• Effective use of IT for business flexibility

Question 18

What makes duopolies a successful governance performance for IT principles/investments?

Answer 18

• Enable joint decision-making between business leaders and IT professionals
• Remain focused on the specific and often local issues of the business leaders

Question 19

Why have federal arrangements for decision making poorer governance performance?

And what’s the exception of this?

Answer 19

* Takes longer as more people are involved and there is less agreement

* Long cycle times compound problems and continue until an intervention occurs

* Worse still, when compromises are made to “keep everybody happy”, neither the business units nor the enterprise achieves what is really needed

EXEPT:

Federal decision making predicted poorer performance in all decisions except application needs.

• Can work well if decision makers are rewarded for achieving both enterprise and business unit objectives.
• Poorer governance-performing organizations use feudal models for deciding their business application needs

Question 20

Why is 1 a good IT governance pattern?

Answer 20

Arrangement 1:

• Requires IT groups that are finely tuned to business needs
• Strong level of trust between business and IT required
• Federal model for application needs can capitalize on potential synergies (such as common customers) across business units

Arrangements 1 and 2:

• Both good starting points for organizations balancing growth and profitability as the tensions of business units seeking to meet their local customer needs are nicely balanced with senior managers governing the IT investments

Question 21

Why is 2 a good IT governance pattern?

Answer 21

Arrangement 2:

• For enterprises with few synergies – duopoly works well for application needs as there is less need for coordination across business units

Arrangements 1 and 2:

• Both good starting points for organizations balancing growth and profitability as the tensions of business units seeking to meet their local customer needs are nicely balanced with senior managers governing the IT investments

Question 22

Why is 3 a good IT governance pattern?

Answer 22

Arrangement 3:

• Very centralized, with business monarchies making all decisions except business application needs (which is federal).
• More centralized approaches are typically used in firms with single business units or where profitability or cost control is a predominant issue.
• Requires business leaders who are interested and well informed about IT issues.
• Also sensible when major changes are occurring (e.g., mergers, major cost-cutting, crises etc.) and decision rights must be tightly held.

Question 23

How do leaders on Asset Utilization govern IT?

Answer 23

IT Duopoly governance for all five IT decisions in which the IT group has an important role as it interacts with all business units and can see firm-wide opportunities

Question 24

How do leaders on profit govern IT?

Answer 24

Centralized IT governance approach with IT-savvy business leaders (e.g., business monarchies) making the IT decisions on principles, architectures, and investments

Question 25

how do leaders on Growth govern IT?

Answer 25

• A business monarchy typically defines the IT principles, attempting to balance operational unit and firm-wide goals
• IT investments are typically governed by either feudal or a business monarchy

Question 26

What are the eight critical IT governance success factors?

Answer 26

1. Transparency
• Make each IT governance mechanism transparent to all managers

2. Actively designed
• Design IT governance around organization’s objectives and performance goals, creating a coherent design that can be widely communicated

3. Infrequently redesigned
• Should only be done when desirable behaviors change

4. Education about IT governance
• Educated users are more likely to be accountable for the decisions they make and less likely to second-guess other decisions

5. Simplicity
• Effective governance mechanisms are simple and attempt to reach a small number of performance goals

6. An exception-handling process
• To support new opportunities, IT governance must include an exception-handling process – to bring issues out in the open, allow debate, and foster organizational learning

7. Governance designed at multiple organizational levels
• Assembling governance arrangements at multiple levels makes explicit the connections, common mechanisms, and pressure points

8. Aligned incentives
• Alignment between incentive and reward systems with the behaviors the IT governance arrangements are designed to encourage