Getting Better Business Value from IT

Many companies start their business planning with a strategic initiative and then IT becomes responsible for implementing it, said Dr. Jeanne Ross, a researcher at the Sloan School of Management’s Center for Information Systems Research at MIT, in a recent ebizQ Webinar (to listen, click here: http://www.ebizq.net/webinars/5561.html). Over time, such approaches have created two kinds of problems. First, IT becomes a bottleneck in itself, and second, “Each action becomes its own silo, which leads to redundancy, lack of integration and lack of standardization and bigger problems for the next application,” she said.



That’s why architecture and governance are critical to the future of successful enterprises. Ross provided the following definitions for enterprise architecture and IT governance:

Enterprise Architecture: The organizing logic for IT applications, data, and infrastructure captured in policies and technology choices to achieve the standardization and integration requirements of the firm’s operating model.

IT Governance: The decision rights and accountability framework to encourage desirable behavior in the management and use of IT.

Three main questions define an enterprise’s IT governance, Ross said.

  • What decisions have to be made? What are the key decision domains for IT governance? In other words, what is the objective for IT?
  • Who is accountable for each decision (what governance archetype* is used)?
  • Infrastructure strategies. What mechanisms will we rely upon to enact the governance?

Ross provided several key recommendations for enacting and IT governance and architecture strategy:

1. Enterprise architecture enables and constrains business strategy. EA defines the essence of a firm’s operating model by clarifying integration and standardization requirements. This creates a stable platform for responding to market changes.

2. Maturity matters. Greater maturity is related to greater strategic value and profitability. Aggressive investment in IT capabilities can be slow to generate a return—it does not pay to skip stages.

3. Enterprises learn through IT governance. Generating value from architecture investments is a learning process. Governance assigns responsibility and accountability for IT decisions. Effective governance mechanisms help firms invest strategically and generate returns on those investments.

4. There is no substitute for strong senior management leadership. A strong IT unit cannot ensure effective management and use of IT. The critical decisions involve setting business priorities and mechanisms for implementing them. These are senior management responsibilities, but there is a need for creative IT leadership to identify alternative approaches to addressing priorities.

*Governance Archetypes include the following:

Business monarchy: A group of, or individual, business executives (i.e., CxOs). Includes committees comprised of senior business executives (may include CIO). Excludes IT executives acting independently.

IT Monarchy: Individuals or groups of IT executives.

Federal: Shared by C level executives and the business groups (i.e., CxOs and BU leaders) — may also include IT executives. Equivalent of the center and states working together.

IT duopoly: IT executives and one other group (e.g., CxOs or BU leaders).

Feudal: Business unit leaders, key process owners or their delegates.

Anarchy: Each individual user provides their own governance, or lack thereof.

For the full presentation, please click this link: http://www.ebizq.net/webinars/5561.html

About the Author

Elizabeth Book Kratz has been Editor-in-Chief at ebizQ since 2004. Her business, technology and analytical writing has been published in the International Herald Tribune’s Germany edition -- the Frankfurter Allgemeine Zeitung-Weekly, the Jerusalem Post, National Defense Magazine, the Johns Hopkins Journal of American Politics, the British Financial Times, the Wall Street Journal Europe and many others. She is a 2003-2004 fellow of the Robert Bosch Foundation, and holds memberships in the Atlantic Bridge and the Düsseldorf Institute for Foreign and Security Policy. Elizabeth can be reached at editor at ebizQ.net.

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