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10: IT Governance (Governance (IT Governance (Subset of company…
10: IT Governance
Governance
IT Governance
Subset of company governance
IS Strategic Plan
Time horizon: 3-5 yrs
Current situation (
AS IS
)
Architecture
Applications
Personnel
Organization
Company strategy
IS Budget
New situation (
TO BE
)
Architecture, applications, Systems
Personnel
Organization
New projects
IS Plan
Time horizon: 1 yr
Budget allocated
New Projects
Company governance
Define strategy of the company
Strategic plan
Alignment
Explicit
Made by CEO
CEO gives IS objectives to CIO
More centralization
More homogeneity
Less knowledge of real needs of business functions
Implicit
Changes requested by Business Functions
Better knowledge of business functions needs
Divergence of requests from different BFs
Costs
IT Area
Fixed costs
Personnel
Facilities
Hardware and software (Bought)
Variable costs
Services from other companies
Hardware/Software rental
Personnel rental
IT Project
TCO
Selection
Requirement definition
Vendor identification and selection
Contract definition
Deployment
Installation of product
Training of users
Operation
Day by day support
Mainteinance
Changes
Dismissal
IT Value
Savings made on
Internal coordination cost
Agency theory
Assumptions
Agents
Own interests
Agency costs
Monitoring
Control of agent by principals
Bonding
Time to report to principals
Residual loss
Suboptimal behavior
Effect of IT on agency costs
Lower for bonding and monitoring
Increases decision power on lower levels
Decision theory
Decisions
Structured
Taken on well defined parameters
Unstructured
Planned
Unplanned
Taken to face unexpected events
Operation cost
Transaction theory cost
Assumptions
Actors take decisions rationally to maximize utility and profit
All actors have all informations
Choice
Vertical disintegration
Product bought from market
Contract definition
Cheap
Vertical integration
Product developed internally
Expensive
Requires knowledge
Effect of IT on transaction costs
Lower for search and selection
Lower for communication and coordination