W6 IT Governance & Benefit Management (What are the benefits of …
W6 IT Governance & Benefit Management
IT Investments bring both value and risk
• IT investments are about enabling business change and can bring enormous returns if managed properly
• Yet, without effective governance and good management, there is an equally significant risk to destroy value
• ‘The concept of value relies on the relationship between meeting the expectations of many differing stakeholders and the resources used in doing so. The aim of value management is to reconcile these differences …’
A new approach is needed
• Managing IT-enabled change requires that IT investments be managed
• One approach is to apply the principles of financial portfolio management to evaluating, selecting and managing IT investments over their full economic life cycle
• A Massachusetts Institute of Technology (MIT) (USA) study of more than 300 enterprises in 23 countries
found that faster-growing and more agile firms such as 7-11 Japan, United Parcel Service (UPS) and ING Direct
all had a portfolio approach to IT management …
: an IT governance framework that potentially helps board and executive management ensure that IT investments, services and assets are managed throughout their full economic life cycle—and that they continue to deliver optimal benefits
Proven practices and techniques for evaluating and managing investment in business change and innovation
COBIT helps executives:
– Increase the probability of picking winners
– Increase the likelihood of IT investment success
– Reduce surprises from IT cost and delivery date overruns
– Reduce costs due to inefficient investments
An organization needs stronger
governance over IT investments if:
IT investments are not supporting the business strategy or providing expected value
There are too many projects, resulting in inefficient use of resources
Projects often are delayed, run over budget, and/or do not provide the needed benefits
There is an inability to cancel projects when necessary
It needs to ensure compliance to industry or governmental regulations
Key Questions involving value management
are we doing the right things?
are we doing them the right way?
are we getting them done well?
are we getting the benefits?
COBIT underlying principles about value
IT-enabled investments will:
Be managed as a portfolio of investments
include the full scope of activities required to achieve business value
be managed through their full economic lifecycle
Value delivery practices will:
recognise different categories of investments to be evaluated & managed differently
define & monitor key metrics
& respond quickly to any changes or deviations
engage all stakeholders & assign appropriate accountability for delivery of capabilities & realisation of business benefits
be continually monitored, evaluated & improved
establishes the overall governance framework, including defining the portfolios required to manage investments and resulting IT services, assets, and resources.
monitors the effectiveness of the overall governance framework and supporting processes and recommends improvements as appropriate.
establishes the strategic direction for investments, the desired characteristics of the
investment portfolio, and the resource and funding constraints within which portfolio decisions must be made.
evaluates and prioritises programmes within resource and funding constraints, based on their alignment with strategic objectives, business worth (both financial and non-financial), and risk (both delivery risk and benefits risk), and moves selected programmes into the active portfolio for execution.
monitors the performance of the overall portfolio, adjusting the portfolio as necessary in response to programme performance or changing business priorities.
What are the benefits of
adopting and using COBIT?
Increased ROI for projects
Business value is generated
IT-enabled business investments are managed through their full life cycle
Increased value of technology investments, leading to business growth
Reduced costs resulting from inefficient investments
Better decisions are made on where to invest in business change