Carnegie Mellon University ©2006 - 2010 Robert T. Monroe 70-451 Management Information Systems Information Systems Governance 70-451 Management Information.

Carnegie Mellon University ©2006 - 2010 Robert T. Monroe 70-451 Management Information Systems

Information Systems Governance

70-451 Management Information Systems

Robert Monroe

September 22, 2010


Quiz

Three T/F questions. For each, indicate whether it is True or False that the authors of ‘Ten Principles of IT Governance’ make these arguments:

1. It is a good idea to actively design an IT governance framework.

2. An effective IT governance framework forces managers to make choices

3. The most effective IT governance programs are run only with the input of highly skilled Information Technology specialists


Goals For Today

By the end of today's class you should be able to:– Explain what IT Governance and IT Management are, as well

as the difference between the two.

– List and explain five categories of decisions that an effective IT governance structure addresses.

– Explain the concept of decision rights and how it relates to IT governance

– Understand the importance of deliberately designing a governance structure for your company's IT decision making process.


Some Definitions


Decision Rights

• Decision Rights define who within an organization is authorized to make what decisions.

• Decision rights can be explicit – Example: The CFO of TepCo has the authority to commit the

company to spend money up to 100,000 QAR without further review by the CEO

• … or implicit– Example: Hmmm, I’m not sure who decides when we are

supposed to be in the office each morning. Most managers just set a schedule that works well for their team.


Exercise: IT Governance or IT Management?


Exercise: IT Governance or IT Management?

• The VP of sales wants to buy a new salesforce automation system that is not compatible with our current customer database. Should we approve this exception to our normal IT standards?

• How do we handle requests to make exceptions to our IT standards?

• When deciding between different IT investment proposals, what are the roles of the business sponsor for each proposal and the IT organization in evaluating the alternatives?

• How do we decide on IT Architecture standards for our organization? How do we decide when and how those standards can evolve and change?


Getting IT Governance Right Is Important

Source: [WR04] pages 15-18


Effective IT Governance Addresses 3 Questions:

1. What decisions must be made to ensure effective management and use of IT?

2. Who should make these decisions?

3. How will these decisions be made and monitored?

Source: [WR04]


Five Fundamental IT Decision Categories

IT principles decisionsHigh-level statements about how IT is used in the business

IT architecture decisionsOrganizing logic for data,

applications, and infrastructure captured in a

set of policies, relationships, and technical choices to

achieve desired business and technical standardization

and integration

IT infrastructure decisionsCentrally coordinated, shared IT services that

provide the foundation for the enterprise’s IT capability

IT investment and prioritization decisions

Decisions about how much and where to invest in IT,

including project approvals and justification techniquesBusiness application needs

Specifying the business need for purchased or internally

developed IT systems

Source: [WR04], page 27


Effective IT Governance Addresses 3 Questions:

1. What decisions must be made to ensure effective management and use of IT?

2. Who should make these decisions?

3. How will these decisions be made and monitored?

Source: [WR04]


IT Stakeholders Include…

• Shareholders• Corporate executives and enterprise-level managers• Business unit heads and managers• IT Managers• IT staff (business-unit or corporate level)• End-users (employees, customers, suppliers, etc)


Who Controls IT Governance: Different Models

• Business Monarchy – a group of senior executives with corporate, or enterprise-wide authority

• IT Monarchy – IT management controls IT decisions

• Feudal – each business unit, or sub-org controls their own

• Federal – shared governance between corp. and business-units

• Duopoly – shared governance between IT and one other group

• Anarchy – non-existent, poorly defined and/or non-enforced governance model


Weill and Ross Governance Arrangements Matrix

IT Principles

IT Architecture

IT Infrastructure

Business Application

NeedsIT

Investment

Business Monarchy

IT Monarchy

Feudal

Federal

Duopoly

Anarchy

Source: [WR04]


Class Exercise – MobileToGO!

• Congratulations on opening your new mobile phone retail store – MobilesToGO! You have a single retail outlet in a Doha mall, but have been so successful that you are now in the process of expanding to five new locations in Doha, Wakra, and Al Khor. You started out as the sole owner of the store but to finance your expansion you have partnered with an investment company who is funding the expansion. When you are done with the expansion you will have 50 employees and be selling 10,000+ handsets per year .


MobilesToGO! Task 1

Form groups of 3-4 people and answer these questions:• What are the kinds of IT decisions you need to make

while doing this expansion?• How might you structure IT governance in the new 5-

store business? – Which questions will you focus on?

– Which model will you likely use? Why?

• Are you focusing on different IT decisions now than you did when you were a sole-proprietorship with one store?


MobilesToGO! Task 2:

• Congratulations! Your business has taken off. Now you want to expand from Qatar to open twenty new stores throughout the GCC.

• Will the kind of IT decisions you need to make change as you pursue this expansion? What will you need to focus on to make this expansion succeed?

• Do you need to change how you have allocated decision rights? Should you change other parts of your IT governance (model, emphasis, etc.)?


MobilesToGO! Task 3:

• You’ve recently decided to move into the higher-value, higher-marging ICT Systems Integration Business. You will no longer just sell mobile handsets, you will also help small business customers put together complete communication systems for their businesses

• Will the kind of IT decisions you need to make change as you pursue this expansion? How so? What will you need to focus on to make this expansion succeed?

• Do you need to change how you have allocated decision rights? Should you change other parts of your IT governance (model, emphasis, etc.)?


Recap: Goals For Today

By the end of today's class you should be able to:– Explain what IT Governance and IT Management are, as well

as the difference between the two.

– List and explain five categories of decisions that an effective IT governance structure addresses.

– Explain the concept of decision rights and how it relates to IT governance

– Understand the importance of deliberately designing a governance structure for your company's IT decision making process.


References

The framework for this discussion of IT Governance, as well as much of the material comes from the book:

[WR04] Peter Weill and Jeanne W. Ross, IT Governance, Harvard Business School Press, 2004. ISBN: 978-1-59139-253-8.

[WR04-note] Peter Weill and Jeanne W. Ross, Ten Principles of IT Governance, Harvard Business School Press, Working Knowledge Note. http://hbswk.hbs.edu/archive/4241.html

Carnegie Mellon University ©2006 - 2010 Robert T. Monroe 70-451 Management Information Systems Information Systems Governance 70-451 Management Information.

Documents

definitions governance

corporate governance

governance programs

carnegie mellon university

governance structure

logistics systems

concept of decision

final decision