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Abstract
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Introduction
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Business and Management
Information Systems and Management

Structures, Processes and Relational Mechanisms for IT Governance

Profile image of Wim Van GrembergenWim Van Grembergen

Strategies for Information Technology Governance

https://doi.org/10.4018/978-1-59140-140-7.CH001
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Abstract

In many organisations, Information Technology (IT) has become crucial in the support, the sustainability and the growth of the business. This pervasive use of technology has created a critical dependency on IT that calls for a specific focus on IT Governance. IT Governance consists of the leadership and organisational structures and processes that ensure that the organisation’s IT sustains and extends the organisation’s strategy and objectives. This introductory chapter records and interprets some important existing theories, models and practises in the IT Governance domain and aims to contribute to the understanding of IT Governance and its structures, processes and relational mechanisms.

FAQs

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What explains the relationship between IT Governance and Corporate Governance?add

The paper reveals that IT Governance is integral to Corporate Governance, necessitating alignment with enterprise objectives. This alignment ensures IT strategies influence corporate goals, enhancing overall business performance.

How does the Strategic Alignment Model (SAM) facilitate IT and business integration?add

The Strategic Alignment Model articulates the relationship between business and IT strategies, emphasizing alignment through strategic fit and functional integration. It defines how companies achieve competitive advantage by synchronizing IT capabilities with business objectives.

What are the critical success factors for achieving effective IT Governance?add

Research identifies top management's selection of appropriate alignment approaches and the need to match internal IT with external market demands as key success factors. Additionally, a structured communication framework within the organization enhances governance effectiveness.

What methodologies can organizations use to assess IT Governance maturity?add

The paper describes maturity models that score IT Governance on a scale from 'non-existent' to 'optimised', allowing organizations to benchmark their governance practices. This includes utilizing the IT Governance Institute’s model to identify gaps and provide actionable insights.

What role do IT Strategy and Steering Committees play in governance?add

IT Strategy Committees oversee the alignment of IT with business goals, while IT Steering Committees manage execution and prioritization of IT projects. These committees are vital for ensuring IT initiatives support strategic business objectives.

Figures (23)
Figure 1. The New Infrastructure Broadbent, M. & Weill, P. (1998). Leveraging the new infrastructure — How market leader: capitalize on Information Technology. Harvard Business School Press. eee eee ee ae Eee ee The Information Technology Portfolio not only has the potential to support -xisting business strategies, but also to shape new strategies (Henderson, Venkatraman, x Oldach, 1993; Henderson & Venkatraman, 1993; Guldentops, 2003). In this mindset, IT yecomes not only a success factor for survival and prosperity, but also an opportunity o differentiate and to achieve competitive advantage. IT also offers a means for ncreasing productivity. Leveraging IT successfully to transform the enterprise and ‘reate products and services with added value has become a universal business ‘competency (Guldentops, 2003). In this viewpoint, the IT department moves from a “commodity service provider to a strategic partner, as illustrated by Venkatraman (1999) Table 1).
Figure 1. The New Infrastructure Broadbent, M. & Weill, P. (1998). Leveraging the new infrastructure — How market leader: capitalize on Information Technology. Harvard Business School Press. eee eee ee ae Eee ee The Information Technology Portfolio not only has the potential to support -xisting business strategies, but also to shape new strategies (Henderson, Venkatraman, x Oldach, 1993; Henderson & Venkatraman, 1993; Guldentops, 2003). In this mindset, IT yecomes not only a success factor for survival and prosperity, but also an opportunity o differentiate and to achieve competitive advantage. IT also offers a means for ncreasing productivity. Leveraging IT successfully to transform the enterprise and ‘reate products and services with added value has become a universal business ‘competency (Guldentops, 2003). In this viewpoint, the IT department moves from a “commodity service provider to a strategic partner, as illustrated by Venkatraman (1999) Table 1).
Venkatraman, N. (1999). Valuing the IS contribution to the business. Computer Sciences Corporation. Table 1. IT as Service Provider or as Strategic Partner
Venkatraman, N. (1999). Valuing the IS contribution to the business. Computer Sciences Corporation. Table 1. IT as Service Provider or as Strategic Partner
Peterson (2003). Information Strategies and Tactics for Information Technology Governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. be seen as a driver for enterprise governance. Looking at this interplay in more depth (second part of Figure 3), enterprise activities require information from IT activities to meet business objectives, and IT must be aligned with enterprise activities to take full advantage ofits information (ITGI, 2000). IT Governance and Enterprise Governance can therefore not be considered as pure distinct disciplines, and IT Governance needs to be integrated into the overall enterprise governance structure, as denoted by several authors and entities (Guldentops, 2003; ITGI, 2001; Peterson, 2003; Duffy, 2002). The close relationship between corporate and IT Governance can also be derived
Peterson (2003). Information Strategies and Tactics for Information Technology Governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. be seen as a driver for enterprise governance. Looking at this interplay in more depth (second part of Figure 3), enterprise activities require information from IT activities to meet business objectives, and IT must be aligned with enterprise activities to take full advantage ofits information (ITGI, 2000). IT Governance and Enterprise Governance can therefore not be considered as pure distinct disciplines, and IT Governance needs to be integrated into the overall enterprise governance structure, as denoted by several authors and entities (Guldentops, 2003; ITGI, 2001; Peterson, 2003; Duffy, 2002). The close relationship between corporate and IT Governance can also be derived
Table 3. IT Governance and Corporate Governance Questions Adapted from: Shleifer, A. & Vishny, W. (1997). A survey on corporate governance. The Journa of Finance, 52(2).
Table 3. IT Governance and Corporate Governance Questions Adapted from: Shleifer, A. & Vishny, W. (1997). A survey on corporate governance. The Journa of Finance, 52(2).
Henserson, J. C. & Venkatraman, N. (1993). Strategic alignment: leveraging Information Technology for transforming organizations. IBM Systems Journal, 32(1). Figure 4. Strategic Alignment Model e.g., systems development maintenance), (3) IT skills (choices pertaining to the acqui- sition, training and development of the knowledge and capabilities of the individuals required to effectively manage and operate the IT infrastructure). Henderson and Venkatraman (1993) argue that the external and the internal domains are equally impor- tant, but that managers traditionally think of IT strategy in terms of the internal domain, since historically IT is viewed as a support function less essential to the business. Relating this to the difference between IT Governance and IT management as referred to in Figure 1, the historical internal view coincides with the IT management perspective, which is focused on the internal domain (while the IT Governance perspective is focused on both the internal and the external domains).
Henserson, J. C. & Venkatraman, N. (1993). Strategic alignment: leveraging Information Technology for transforming organizations. IBM Systems Journal, 32(1). Figure 4. Strategic Alignment Model e.g., systems development maintenance), (3) IT skills (choices pertaining to the acqui- sition, training and development of the knowledge and capabilities of the individuals required to effectively manage and operate the IT infrastructure). Henderson and Venkatraman (1993) argue that the external and the internal domains are equally impor- tant, but that managers traditionally think of IT strategy in terms of the internal domain, since historically IT is viewed as a support function less essential to the business. Relating this to the difference between IT Governance and IT management as referred to in Figure 1, the historical internal view coincides with the IT management perspective, which is focused on the internal domain (while the IT Governance perspective is focused on both the internal and the external domains).
Henserson, J. C. & Venkatraman, N. (1993). Strategic alignment: Leveraging Information Technology for transforming organizations. BM Systems Journal, 32(1). Figure 5. Strategic Alignment Domains
Henserson, J. C. & Venkatraman, N. (1993). Strategic alignment: Leveraging Information Technology for transforming organizations. BM Systems Journal, 32(1). Figure 5. Strategic Alignment Domains
Figure 6. Vertical and Horizontal Alignment Practises
Figure 6. Vertical and Horizontal Alignment Practises
Luftman, J. & Brier, T. (1999). Achieving and sustaining Business-IT alignment. California Management Review, 42(/), 109-122. Table 5. Enablers — Inhibitors of Strategic Alignment Maturity Models for Strategic Alignment
Luftman, J. & Brier, T. (1999). Achieving and sustaining Business-IT alignment. California Management Review, 42(/), 109-122. Table 5. Enablers — Inhibitors of Strategic Alignment Maturity Models for Strategic Alignment
Figure 7. Generic Maturity Model (CobiT’s Framework) between the business and IT. This maturity model states that in level one, there is a fundamental disconnect between the technology executive and the rest of corporate management. A maturity level of four (the highest level in this model), however, implies that IT and business are inextricably entwined and there is only one single strategy that incorporates both business and IT.
Figure 7. Generic Maturity Model (CobiT’s Framework) between the business and IT. This maturity model states that in level one, there is a fundamental disconnect between the technology executive and the rest of corporate management. A maturity level of four (the highest level in this model), however, implies that IT and business are inextricably entwined and there is only one single strategy that incorporates both business and IT.
Table 6. Strategic Alignment Maturity Levels (Luftman) Luftman, J. (2000). Assessing business-IT alignment maturity. Communications of AIS, 4.
Table 6. Strategic Alignment Maturity Levels (Luftman) Luftman, J. (2000). Assessing business-IT alignment maturity. Communications of AIS, 4.
Broadbent, M. & Weill, P. (1998). Leveraging the new infrastructure — How market leaders capitalize on Information Technology. Harvard Business School Press. Figure 8. Business Value Hierarchy
Broadbent, M. & Weill, P. (1998). Leveraging the new infrastructure — How market leaders capitalize on Information Technology. Harvard Business School Press. Figure 8. Business Value Hierarchy
Based on: Weill, P. (2002). Research Briefing. MIT Sloan,2, nr. 2C. Figure 9. Management Practises that Lead to IT-Enabled Business Value
Based on: Weill, P. (2002). Research Briefing. MIT Sloan,2, nr. 2C. Figure 9. Management Practises that Lead to IT-Enabled Business Value
Ribbers, P. M. A., Peterson, R. R., & Parker, M. M. (2002). Designing information technology governance processes: Diagnosing contemporary practises and competing theories. In Proceedings of the 35the Hawaii International Conference on System Sciences (HICCS), CD-ROM, Maui. Figure 11. IT Governance Contingencies
Ribbers, P. M. A., Peterson, R. R., & Parker, M. M. (2002). Designing information technology governance processes: Diagnosing contemporary practises and competing theories. In Proceedings of the 35the Hawaii International Conference on System Sciences (HICCS), CD-ROM, Maui. Figure 11. IT Governance Contingencies
Based on: Peterson (2003). Information strategies and tactics for Information Technology governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Table 9. Structures, Processes and Relational Mechanisms for IT Governance
Based on: Peterson (2003). Information strategies and tactics for Information Technology governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Table 9. Structures, Processes and Relational Mechanisms for IT Governance
Table 10. Authority and Membership of IT Strategy/Steering Committee The IT Strategy Committee should of course work in close partnership with the other Board committees and management (committees) to provide input to, review and amend, the aligned corporate and IT strategies (ITGI, 2002; Duffy, 2002). The detailed implemen- ation of the IT strategy will be the responsibility of Executive Management, assisted by one or more IT “Steering” Committees. Typically, such a Steering Committee has the specific responsibility for overseeing a major project or managing IT priorities, IT costs, T resource allocation, etc. While the IT Strategy Committee operates at Board level, the T Steering Committee is situated at Executive level, which of course implies that these committees have different membership and a different authority (Table 10) (ITGI, 2002). Luftman and Brier (1999) provide a list of Critical Success Factors for sustaining a Steering Committee (Table 11). In practice. the terminology used and roles and respon-
Table 10. Authority and Membership of IT Strategy/Steering Committee The IT Strategy Committee should of course work in close partnership with the other Board committees and management (committees) to provide input to, review and amend, the aligned corporate and IT strategies (ITGI, 2002; Duffy, 2002). The detailed implemen- ation of the IT strategy will be the responsibility of Executive Management, assisted by one or more IT “Steering” Committees. Typically, such a Steering Committee has the specific responsibility for overseeing a major project or managing IT priorities, IT costs, T resource allocation, etc. While the IT Strategy Committee operates at Board level, the T Steering Committee is situated at Executive level, which of course implies that these committees have different membership and a different authority (Table 10) (ITGI, 2002). Luftman and Brier (1999) provide a list of Critical Success Factors for sustaining a Steering Committee (Table 11). In practice. the terminology used and roles and respon-
Peterson (2003). Information strategies and tactics for Information Technology Governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Table 12. Determinants of Centralised/Decentralised IT Organisation
Peterson (2003). Information strategies and tactics for Information Technology Governance. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance. Hershey, PA: Idea Group Publishing. Table 12. Determinants of Centralised/Decentralised IT Organisation
Figure 12. Cascade of Balanced Scorecards Van Grembergen, W. & Saull, R. (2001). Aligning business and Information Technology through the balanced scorecard at a major Canadian financial group: Its dtatus measured with and IT BSC Maturity Model. In Proceedings of the 34th Hawaii International Conference on System Sciences (HICCS), CD-ROM, Maui.
Figure 12. Cascade of Balanced Scorecards Van Grembergen, W. & Saull, R. (2001). Aligning business and Information Technology through the balanced scorecard at a major Canadian financial group: Its dtatus measured with and IT BSC Maturity Model. In Proceedings of the 34th Hawaii International Conference on System Sciences (HICCS), CD-ROM, Maui.
Figure 13. Alignment through the IT Balanced Scorecard Van Grembergen, W., Saull, R., & De Haes, S. (2003). Linking the IT Balanced Scorecard to the business objectives at a major Canadian financial group. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance.
Figure 13. Alignment through the IT Balanced Scorecard Van Grembergen, W., Saull, R., & De Haes, S. (2003). Linking the IT Balanced Scorecard to the business objectives at a major Canadian financial group. In W. Van Grembergen (Ed.), Strategies for Information Technology Governance.
Figure 14. Information Economics Van Grembergen, W. & Van Bruggen, R. (1997). Measuring and improving corporate information technology through the balanced scorecard technique. /n Proceedings of the European Conference on the Evaluation of Information Technology, Delft, The Netherlands.
Figure 14. Information Economics Van Grembergen, W. & Van Bruggen, R. (1997). Measuring and improving corporate information technology through the balanced scorecard technique. /n Proceedings of the European Conference on the Evaluation of Information Technology, Delft, The Netherlands.
Duffy, J. (2002). IT Governance and Business Value Part 2: Who’s responsible for what? IDC document # 27807. Executive Responsibilities of the Board, the CIO and the CEO
Duffy, J. (2002). IT Governance and Business Value Part 2: Who’s responsible for what? IDC document # 27807. Executive Responsibilities of the Board, the CIO and the CEO
Executive Responsibilities of the Board, the CIO and the CEO (continued)
Executive Responsibilities of the Board, the CIO and the CEO (continued)

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Related topics

  • Business
  • Information Technology
  • Knowledge Management
  • Technology Governance
  • IT Governance
  • Organisational Structure
  • Information governance

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