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Summary IT Governance and Strategic Sourcing - 2019
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Summary of IT Governance and Strategic Sourcing - 2019 Ch: 1, 2, 3 articles
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IT Governance & Strategic Sourcing - COMPLETE SUMMARY
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Summary IT Governance and Strategic Sourcing (2019-2020)
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IG & SSIndex
IG & SS....................................................................................................................................................1
Chapter 1 – IT Governance Simultaneously Empowers and Controls.................................................3
Chapter 2 – Five key IT decisions: Making IT a strategic asset............................................................6
Chapter 3 – IT Governance archetypes for allocating decision rights.................................................7
IG SS Slides – hc1 – Course Introduction and ITG...............................................................................8
Paper 1: Don’t just lead govern..........................................................................................................9
IG SS Slides – hc2 – COBIT.................................................................................................................10
Paper 2: Defining IT Governance......................................................................................................14
Paper 3: HC2 Reading -COBIT5-Enabling Processes.pdf (pages 24, 69-72).......................................14
IG SS SLIDES – wc4 – COBIT (Applying COBIT to manage suppliers).................................................15
IG SS Slides – hc3 – Digital Transformation.......................................................................................16
Paper 4: Deloitte Strategy, not technology, drives digital transformation.......................................17
Paper 5: Digital transformation strategies........................................................................................17
Paper 6: Options for formulating a digital transformation strategy.................................................18
IG SS Slides – wc2 – Value chain, digital opportunities and insurtechs.............................................21
Paper 7: The impact of digitalization on the insurance value chain and the insurability of risk.......21
Paper 8: EY digital transformation in insurance................................................................................23
IG SS Slides – hc4 – ITO Theories......................................................................................................24
Paper 9: An assessment of the use of transaction cost theory in information technology
outsourcing.......................................................................................................................................28
Paper 10: Lessons from Dutch IT-outsourcing success and failure...................................................30
IG SS Slides – hc5 – ITO Practice.......................................................................................................31
Paper 11: From application outsourcing to infrastructure management.........................................34
IG SS SLIDES – wc5 – IT Outsourcing.................................................................................................37
HC 7 Overview..................................................................................................................................38
Info...................................................................................................................................................41
1
, Teacher info
For your exam preparation, you can refer to the following overview:
Guest talks: NOT included in the final exam;
First tutorial: NOT included in the final exam;
Reference: NOT included in the final exam;
The rest (regardless lecture or tutorial materials) are examable. Reading list for the exam is already
indicated in lecture and tutorial slides.
2019 - Questions about:
1 book
1 COBIT
1 Digital transformation
1 ITO Theory (IT outsourcing)
1 ITO Practice (IT outsourcing)
2
,Chapter 1 – IT Governance Simultaneously Empowers and Controls
The tight linkage between IT and organizational processes means that the IT cannot bear sole
responsibility for effective use of information and information technology.
Top performing enterprises proactively seek value from IT in a variety of ways:
They clarify business strategies and the role of IT in achieving them.
They measure and manage the amount spent on and the value received from IT.
They assign accountability for the organizational changes required to benefit from new IT
capabilities.
They learn from each implementation, becoming more adept at sharing and reusing IT
assets.
Top performing enterprises succeed by implementing effective IT governance to support their
strategies.
IT governance: specifying the decision rights and accountability framework to encourage desirable
behaviour in using IT.
IT governance is not about making specific IT decisions – management does that – but rather
determines who systematically makes and contributes to those decisions. IT governance reflects
broader corporate governance principles while focussing on the management and use of IT to
achieve corporate performance goals.
Thereby harmonizing business objectives, governance approach, governance mechanisms and
performance goals and metrics. Good governance design allows enterprises to deliver superior
results on their IT investments. Effective IT governance is the single most important predictor of the
value an organization generates from IT.
What is Governance?
Corporate governance became a dominant business topic in the wake of the spate of corporate
scandals of midyear 2002 (Enron, Worldcom and Tyco). A number of bodies published guidelines for
good corporate governance, like Economic Cooperation and Development’s (1900) which defined
corporate governance: providing the structure for determining organizational objectives and
monitoring performance to ensure that objectives are attained.
The book proposes a framework for linking corporate and IT governance (p. 5).
Desirable behaviours embody the beliefs and culture of the organization as defined and enacted
through not only strategy but also corporate value statements, missions statements, business
principles, rituals and structures. Behaviours not strategies create value. Desirable behaviours are
key to effective governance. The key elements of each asset include the following:
Human assets: people, skills, career paths, training, reporting etc.
Financial assets: cash, investments, liabilities, cash flow etc.
Physical assets: buildings, plant, equipment, maintenance, security etc.
IP assets: intellectual property (IP), product, services, process knowhow etc.
Information and IT assets: digitized data, information, knowledge about customers etc.
Relationship assets: Relationships within the enterprise as well as relationships, brand, and
reputation with customers etc.
HFPIIR
Governance of key assets occurs via a large number of organizational mechanisms. Enterprises with
common mechanisms across multiple assets perform better.
3
, What is IT Governance?
IT Governance: Specifying the decision rights and accountability framework to encourage desirable
behaviour in the use of IT.
Governance determines who makes the decisions. Problems occur when there is a mismatch
between desirable behaviour and governance.
Two complementary sides of Governance articulated by the OECD:
Behaviour side of corporate governance: defines the formal and informal relationships and
assigns decision rights to specific individuals or groups of individuals.
Normative side of corporate governance: defines mechanisms formalizing the relationships
and providing rules and operating procedures to ensure that objectives are met.
Important IT governance concepts
Effective governance must address three questions:
What decisions must be made to ensure effective management and use of IT?
Who should make these decisions?
How will these decisions be made and monitored?
Following grid, Governance Arrangements Matrix, answers the first two. The column lists five
interrelated IT decisions:
IT principles: clarifying the business role of IT.
IT architecture: Defining integration and standardization requirements.
IT infrastructure: determining shared and enabling services.
Business application needs: specifying the business need for purchased or internally
developed IT applications.
IT investment and prioritization: choosing which initiatives to fund and how much to spend.
These five key decisions are all related and require linking for effective governance.
The rows list a set of archetypes for specifying decision rights:
Business monarchy: Top managers
IT monarchy: IT specialists
Feudal: Each business unit making independent decisions
Federal: Combination of the corporate centre and the business units with or without IT
people involved.
IT duopoly: IT group and one other group.
Anarchy: Isolated individual or small group decisions making.
Why is IT Governance important?
Good IT governance harmonizes decision about the management and use of IT with desired
behaviours and business objectives, without it a carefully designed and implemented governance
structure enterprise leaves this harmony to chance. Reasons:
Good IT governance pays off: Higher ROA
IT is expensive: IT exceeding 50% of total capital investment. As IT has become more
important and pervasive, senior management teams are increasingly challenged to
manage and control IT to ensure that value is created.
IT is pervasive: 20% of IT spending is visible in the IT budget.
New Information Technologies bombard enterprises with new business opportunities:
Foresight is more likely if an enterprise has formalized governance processes for
harmonizing desirable behaviours and IT principles.
4
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