IT Governance & IT Engagement

MIS
Session-4a
MDI Gurgaon

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 IT Governance
● According to Weill (2004), IT Governance is
specifying the framework for decision rights and
accountabilities to encourage desirable
behaviour in the use of IT
● Desired behaviour is alignment with
organizational strategy, vision, mission, culture
● IT Governance is related to who makes each
type of decision (decision rights), who has input
to a decision (input rights), who is accountable
for decisions made
● Better Governance leads to better returns!!!! 2
 Five major IT decisions
IT Principles High level idea about how IT will help business
IT Architecture Integrated set of technical choices, set of policies and
rules for the use of It (data, technology, and applications)

IT Infrastructure Strategies Network and other central resources

Business application needs Specifying need for bought or created application

IT investment and Where and how much to invest, project approvals and
prioritization justification techniques

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 Governance Archetypes
Decision Rights CxO level Corp IT/ Business Unit
Business Unit Leaders/
IT Process
Owners
Business Senior leaders / Yes
Monarchy committee

IT Monarchy Yes
Feudal Yes
Federal CXO + one Yes Either Or
other group
IT Duopoly IT group + any Either Yes Or
other group
Anarchy Any individual

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 Common Patterns
IT Principles Input: Federal

Decision: IT Duopoly / Business Monarchy

IT Architecture Input: Federal / IT Duopoly

Decision: IT Monarchy

IT Infrastructure Strategies Input: Federal

Decision: Monarchy

Business Application Needs Input: Federal

Decision: Federal / IT Duopoly

IT Investment and Prioritization Input: Federal

Decision: Business Monarchy / IT Duopoly / Federal

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 How the best do it?
● Top performers are divided into top IT Governance performers,
top financial performers
● IT Governance performance: CIOs self rate on 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
● Financial performance: 3 year average for industry adjusted
RoE, RoA, revenue growth
● Firms where the CIO rates IT governance performance highly
use IT duopolies for both IT principles and investments
● No dominant IT governance patterns seen among top
governance performers for the other three decisions
● The poorer governance-performing enterprises were found to
use federal arrangements for their decision making

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 How the best do it?
● Top leaders in asset utilization typically use IT duopoly
governance for all five IT decisions
− IT group plays an important coordinating role because it is
one of the few groups that interacts with all business units
and can thus see firm-wide opportunities for sharing and
reuse across business units, business processes, and
regions
● Enterprises leading on profit are seen to have more centralized
IT governance approach.
− This requires IT-savvy business leaders (e.g. business
monarchies) making the IT decisions on principles,
architecture, and investments
− For architecture effective use of senior business
management committees (involving the CIO) to achieve cost
control and standardization
● For infrastructure, leaders on profits used either business or IT
monarchies and the federal archetype for business application 7
needs
 Three Arrangements
● Arrangement 1 uses duopolies for principles and investment, IT
monarchies for infrastructure and architecture, and federal for
business application needs.
− This arrangement requires IT groups that are finely tuned to
business needs, with a strong level of trust between the
business and IT.
− The federal model for application needs can capitalize on
potential synergies (such as common customers) across
business units
● Arrangement 2 is similar, using a duopoly for application needs
and a business monarchy for investment
− For enterprises with few synergies
● Arrangement 3 is more centralized, with business monarchies
making all decisions except business application needs (which
is federal)
− Used in firms with single business units or where profitability
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or cost control is a predominant issue
 CSFs for IT Governance
● Transparency
● Actively designed: “silo” problem
● Infrequently redesigned
● Education about IT Governance
● Simplicity
● Exception handling process
● Inclusive so at to involve multiple levels of
organization
● Aligned incentives

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 IT Engagement
● Twin objectives are to be achieved
− Coordination across multiple organization levels
− Alignment between IT and business
● Engagement is to be understood broadly, negotiation,
influencing, interacting across organizational levels and
functional boundaries to achieve better alignment and
coordination
● IT engagement model is defined as the system of mechanisms
that brings together key stakeholders to ensure that projects
achieve both local and company-wide objectives
● Alignment between IT and the business ensures that each party
is doing its best to help the others achieve business value.
Coordination across the company hierarchy ensures that
bottom-up actions support top-down initiatives.
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 Linking Mechanisms
● IT Governance at business level depends on
different mechanisms as compared to Project
management (for bringing together IT and
non-IT people)
● Fonstad and Robertson (2004) talk about three
types of linking mechanisms
● Business linkage mechanisms
● Architecture linkage mechanisms
● Alignment linkage mechanisms

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 Linking Mechanisms
● Business linkage mechanisms:
− Vertical, links projects to business and company level
strategies
− Process owners for assuring business process
performance standards,
− Funding reviews
● Architecture linkage mechanism:
− Vertical, link projects to business and company
architectures
− Architecture office, exceptions handling process,
establish/ update standards, review projects for
compliance
● Alignment linkage mechanism:
− Horizontal, linking IT with business,
− Boundary spanners/Business IT relationship managers 13
 Studying Linking Mechanisms in an Org

Top Down Approach

● What mechanisms do your IT governance bodies use to reach and to enforce
their decisions?
● How do these mechanisms interact with your projects?
● How are your projects coordinated?
● What linking mechanisms connect your projects to business leadership? To IT
leadership? To IT architects?

Project Focus
● If you were to attach yourself to the initiative and follow it from inception to
completion, what mechanisms would it experience?
● For each mechanism, describe who provides inputs and who is authorized to
make the final decision.
● How do these mechanisms enable or constrain business-IT alignment across
organizational levels? How do the mechanisms enable or constrain coordination
across the company and within IT?

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 References
● Weill, P., 2004, “Don’t just lead, Govern: How
top-performing firms govern IT”, MIS Quarterly
Executive, Vol. 3, No. 1.
● Fonstad, N.O., Robertson, D., 2006,
“Transforming a company, project by project:
The IT engagement model”, MIS Quarterly
Executive, Vol. 5, No. 1.

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Thanks!!!

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