WC 1

Question 1

What is ITG about?

Answer 1

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.

Question 2

Why is IT governance important?

Answer 2

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

• Does IT matter?
• Extracting value from IT requires innovations in business practices.
• IT spending rarely correlates with superior financial results.
• Need to change practices and exploit new capabilities.
• Link it to innovation.

Question 3

What 5 factors dictate variations in governance patterns?

Answer 3

1. strategic and performance goals: governance deisgned to facilitate the enterprise’s strategic and performacne goals.
2. organziational structure: governance designed to compensate for limitations of structure (e.g. require less change in structure as business needs change)
3. governance experience: IT governance tends to chagne and evolve with experience (many companies are still early in the IT governance learning curve)
4. Size and diversity: IT governance often reflects changes in size and diversity(e.g. growth geographically and introduction of conflicting objectives)
5. industry and regional differences: decision making cultures across the world often complicating IT governance. Same goes for industries (e.g. not-for profit are more heavy on Business Monarchies than for-profits)

Question 4

How do top performers govern IT?

Answer 4

• Governance performans is a function of: 1: cost-effective use of IT, 2: effective use of IT for asset utililization, 3: effective use of IT for growth, 4: effective use of IT for business flexibility
• financial performance is assessed by comparing three-year averages of industry-adjusted measures of profit (ROE), growth (% change in revenue) and asset utilization (ROA)
• governance performacne was associated with duopolies for IT principles/investments: It duopolies work well for these decisions because they enable joint decision making between business leaders and IT professionals, but remain focused on the specific and often local issues facing business leaders.

Question 5

How do poorer governance-performing enterprises typically use federal arrangements for their decision making?

Answer 5

• federal decision making often takes longer as more people and stages are involved, and there is less agreement on the objectives for the decisions.
• the long cycle times compound the problems faced by enterprises with poor governance. They continue to perform poorly until intervention occurs.
• worse still, when comprom,ises are made to “keep everybody happy”, neither the business units nor the enterprise achieves what is really needed.
• federal decision making predicted poorer performance in al decisions except applications needs. For business applications needs, the federal approach can work well if decision makers are rewarded for achieving both enterprise and business unit objectives.

Question 6

What ITG approaches should be used for:

1. Asset utilization?
2. Leaders on profit?
3. Leaders on growth?

Answer 6

1. IT duopoly governance for all five IT decisions
2. Centralized IT governance approach with IT-savvy business leaders (e.g. business monarchies) makign the IT decisions on principles, architecture and investments.
3. 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 business monarchy.

Question 7

What are the 8 governance critical succes factors?

Answer 7

1. Transparancy
2. Actively designed (designed around enterprise objectives)
3. Infrequently redesigned (it is a lot of work)
4. Education about IT governance
5. Simplicity (effective governance arrangements are simple and attempt to reach a small number of performance goals)
6. An exception-handling process
7. governance designed at multiple organzational levels (different business units require a seperate but connected layer of IT governance for each entity)
8. Aligned incentives