AFM241 Study Guide - Final Guide: Cio Magazine, Corporate Governance Of Information Technology, Industrial Espionage
30 May 2018
School
Department
Course
Professor
c. List large projects and new systems with big dependencies
Chapter 10: IT Governance
Epilogue
• The growing importance of IT in all organizations, cyber attacks, industrial espionage,
and the passing of Sarbanes-Oxley, among others, have driven the growing need for IT
governance in all organizations
• Numerous magazines articles and reports by consulting firms have tried to sensitive
TMTs and board members to the importance of IT governance as a prerequisite for
achieving IT business value
• While the term IT governance (ITG) has become very popular it means different things to
different people
• For example, Schwartz in an article in he CIO magazine explains ITG as:
o Its putting structure around how organizations align IT strategy with business
strategy, ensuring that companies stay to track to achieve their strategies and
goals and implementing good ways to measure IT’s performance
o It makes sure that all stakeholders’ interests are taken into account and that
processes provide measurable results
o An IT governance framework should answer some key questions such as how
the IT department is functioning overall, what key metrics management needs
and what return IT is giving back to the business from the investment its making
• According to Gartner:
o IT governance is defined as the processes that ensure the effective and
efficient use of IT in enabling an organization to achieve its goals
• IT Governance Institute (ITGI) defines it as:
o IT governance is the organizational capacity exercised by the board, executive
management and IT management to control the formulation and
implementation of IT strategy and in this way ensure the fusion of business
and IT
• In parallel, there has been a movement to sensitive board members and top
management teams (TMT) to the importance of being more actively involved with IT
• A recent article in the magazine Corporate Board Member made an explicit call to board
members
o Congratulations! Your company has just spent a heap on a dazzling new
information-technology system.
o It didn’t come cheap but management (CEO, CFO, and CIO) convinced the
board that the investment will boost productivity, eliminate bottlenecks,
sharpen your competitive edge, and enable you to respond much more
quickly to market conditions
o Maybe it will even help you emerge triumphant from current economic turmoil
o U.S. companies invest nearly 500 billion a year in their IT yet many directors
still wonder if they’re getting value for their money
o Companies whose boards made sure they had strong IT governance and
exercised it generated profits 20% higher than those with similar business
strategies but weak IT oversight
• A consensus emerging from this and other similar articles is that board members
should be able to measure the payoffs from IT investments
• Board members need to understand that a dialog with IT executives is not about
technology and it should not be about technology
o Dialog should be above overseeing an organization i.e. the IT organization,
that delivers services to the rest of the company
• As with any other key function, this boils own to the questions of cost, risk and benefit
