Managing the Information Technology Resource Instructor’s Manual
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CHAPTER 11 – IT GOVERNANCE______________
CHAPTER OBJECTIVES
Study of this chapter will enable the student to:
1. Define IT governance
2. Understand why IT governance is an issue for organizations
3. Recognize why formal IT governance mechanisms are needed
5. Appreciate forms of governance and leadership roles in cross-functional initiatives
7. Be familiar with prioritizing projects and assessing risk
8. Appreciate global IT governance considerations
CHAPTER OVERVIEW
This chapter discusses the concept of IT governance as the organizational mechanism for making
decisions about the use of information technology. The concept of the IT steering committee as an IT
governance best practice is presented. Some approaches for prioritizing projects are discussed. The
chapter also discusses IT governance issues with respect to globalization, vendor relationships, and
outsourcing arrangements.
CHAPTER OUTLINE
I. Introduction to IT Governance
II. Some Definitions of IT Governance
III. Why Is IT Governance an Issue?
A. The Business Case Issue
B. Why Have Governance?
C. Governance Alternatives
IV. Forms of Governance and Leadership Roles in Cross-Functional Initiatives
A. Steering Committees
B. Prioritizing Projects
V. Global Considerations and IT Governance
VI. IT Governance and Vendor Management
VII. Outsourcing Considerations
EXAMPLES IN ACTION
• “Pure Strategic Thinking” – p.294
• Diagnosing Poor or “Broken” IT Governance – p. 299
• How Critical is Governance for E-Business? – p. 300
• Steering Committees in Action – Some “Real–World” Examples – pp. 307-308
• The Do’s and Don’ts of Vendor Management – pp. 316-317
• The Do’s and Don’ts of Picking an Outsourcing Vendor – p. 320
• What Should an RFP for an Outsourcing Vendor Contain? – pp.321-322
Managing the Information Technology Resource Instructor’s Manual
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ANSWERS TO END-OF-CHAPTER REVIEW QUESTIONS
1. Describe the principles of IT governance and its importance to a company.
IT governance involves the selection and use of organizational processes to make decisions about
how to obtain and deploy IT resources and competencies. IT governance is about
2. What are the major organizational symptoms of poor governance?
The major symptom of poor governance is when the business does not see that its investments in
IT provide the expected return. This can be evidenced in many ways, including:
3. Describe some alternative forms of governance and their advantages and disadvantages.
• Budget – how and why financial resources are allocated to a project. Basic, but tends to
encourage the view of IT as merely a cost center and not a value center.
4. Why is governance important to effective management of cross-functional initiatives?
5. Is governance important in creating an effective e-business? Why?
6. Describe the primary leadership roles and responsibilities in IT governance.
The primary leadership roles are the corporate IT headquarters, who may design and mandate
7. What are the primary roles of an IT steering committee?
The role of an executive IT steering committee should include:
8. Who should be part of an IT steering committee and why?
To provide the best leadership for the IT function, the membership of the steering committee
should include:
9. What is IT management’s role in an IT steering committee?
10. What techniques might an IT steering committee use to prioritize projects?
11. What considerations regarding IT governance come into play when addressing international or
global strategies?
12. What governance mechanisms are most commonly employed in managing vendor relationships?
13. Describe the decision-making process when considering outsourcing arrangements.
Organizations should consider outsourcing partnerships for IT functions that are both noncore
14. Describe remedies for poor performance that might be included in an outsourcing arrangement.
Remedies for poor performance may include:
• Credits for performance shortfalls
ANSWERS TO END-OF-CHAPTER DISCUSSION QUESTIONS
1. What forms of IT governance does your organization employ?
2. Have you observed any symptoms of poor IT governance in your organization? What are they?
Student responses will vary. Look for anecdotes that illustrate common symptoms of poor IT
governance, including:
• Poor business IT understanding and rapport
3. Does your organization have an IT steering committee? What is its role and responsibilities?
Who sits on the steering committee?
4. How does your organization prioritize projects?
5. How does your organization evaluate project risk?
6. How does your organization de-escalate troubled projects?
7. How will your organization make decisions about its international IT function?
8. What mechanism does your IT organization have in place regarding vendors? How well do they
work?
9. How are outsourcing decisions made in your organization? By whom?
10. What do you believe might be the most important considerations in structuring an outsourcing
agreement for your organization?
Student responses will vary. Some possible issues that may arise include: