IT GOVERNANCE COURSES FOR CIO

Communications

Effective exchange of ideas and a clear understanding of what it takes to ensure successful strategies are high on the list of enablers and inhibitors to alignment. Too often there is little business awareness on the part of IT or little IT appreciation on the part of the business. Given the dynamic environment in which most organizations find themselves, ensuring ongoing knowledge sharing across organizations is paramount.

Many firms choose to draw on liaisons to facilitate this knowledge sharing. The key word here is facilitate. Often the author has seen facilitators whose role is to serve as the sole conduit of interaction among the different organizations. This approach tends to stifle rather than foster effective communications. Rigid protocols that impede discussions and the sharing of ideas should be avoided.

For example, a large aerospace company assessed its communications alignment maturity at Level 2. Business-IT understanding is sporadic. The relationship between IT and the business function could be improved. Improving communication should focus on how to create the understanding of IT as a strategic business partner by the businesses it supports rather than simply a service provider. The firm’s CIO made the comment that there is "no constructive partnership". However, in an interview with the firm’s Director of Engineering & Infrastructure, he stated that he views his organization as a "strategic business partner". One way to improve communications and, more important, understanding, would be to establish effective business function/IT liaisons that facilitate sharing of knowledge and ideas.

In a second case, a large financial services company’s communication alignment maturity placed it in Level 2 with some attributes of Level 1. Business awareness within IT is through specialized IT business analysts, who understand and translate the business needs to other IT staff (i.e., there is limited awareness of business by general IT staff). Awareness of IT by the firm’s business functions is also limited, although senior and mid-level management are aware of IT’s potential. Communications are achieved through bi-weekly priority meetings attended by the senior and middle level management from both groups, where they discuss requirements, priorities and IT implementation.

In a third example, a large utility company’s communication alignment maturity places it at a Level 2. Communications are not open until circumstances force the business to identify specific needs. There is a lack of trust and openness between some business units and their IT team. IT business partners tend to be bottlenecks in meeting commitments. Its poor performance in previous years left scars that have not healed.

Competency/Value Measurements

Too many IT organizations cannot demonstrate their value to the business in terms that the business understands. Frequently business and IT metrics of value differ. A balanced "dashboard" that demonstrates the value of IT in terms of contribution to the business is needed.

Service levels that assess IT’s commitments to the business often help. However, the service levels have to be expressed in terms that the business understands and accepts. The service levels should be tied to criteria (see subsection, Partnership) that clearly define the rewards and penalties for surpassing or missing the objectives.

Frequently organizations devote significant resources to measuring performance factors. However, they spend much less of their resources on taking action based on these measurements. For example, an organization that requires an ROI before a project begins, but that does not review how well objectives were met after the project was deployed provides little to the organization. It is important to assess these criteria to understand (1) the factors that lead to missing the criteria and (2) what can be learned to improve the environment continuously.

For example, a large aerospace company assessed its competency/value measurement maturity to be at a Level 2. IT operates as cost center. IT metrics are focused at the functional level, and Service Level Agreements (SLAs) are technical in nature. One area that could help to improve maturity would be to add more business-related metrics to SLAs to help form more of a partnership between IT and the business units. Periodic formal assessments and reviews in support of continuous improvement would also be beneficial.

A large software development company assessed its competency/value measurement maturity at Level 3. Established metrics evaluate the extent of service provided to the business functions. These metrics go beyond basic service availability and help desk responsiveness, evaluating such issues as end-user satisfaction and application development effectiveness. The metrics are consolidated onto an overall dashboard. However, because no formal feedback mechanisms are in place to react to a metric, the dashboard cannot be considered to be managed.

At a large financial services company, IT competency/value was assessed at a Level 2 because they use cost efficiency methods within the business and functional organizations. Balanced metrics are emerging through linked business and IT metrics, and a Balanced Scorecard is provided to senior management. Service level agreements are technical at the functional level. Benchmarking is not generally practiced and is informal in the few areas where it is practiced. Formal assessments are done typically for problems and minimum measurements are taken after the assessment of failures.

Governance

Ensuring that the appropriate business and IT participants formally discuss and review the priorities and allocation of IT resources is among the most important enablers/ inhibitors of alignment. This decision-making authority needs to be clearly defined.

For example, IT Governance in a large aerospace company is tactical at the core business level and not consistent across the enterprise. For this reason, they reported a Level 2 maturity assessment. IT can be characterized as reactive to CEO direction. Developing an integrated enterprise-wide strategic business plan for IT would facilitate better partnering within the firm and would lay the groundwork for external partnerships with customers and suppliers.

A large communications manufacturing company assessed its governance maturity at a level falling between one and two. IT does little strategic planning because it operates as a cost center and, therefore, cost reduction is a key objective. In addition, priorities are reactive to business needs as business managers request services.

A large computing services company assessed their governance maturity at a level 1+. A strategic planning committee meets twice a year. The committee consists of corporate top management with regional representation. Topics or results are not discussed nor published to all employees. The reporting structure is federated with the CIO reporting to a COO. IT investments are traditionally made to support operations and maintenance. Regional or corporate sponsors are involved with some projects. Prioritization is occasionally responsive.

Partnership

The relationship that exists between the business and IT organizations is another criterion that ranks high among the enablers and inhibitors. Giving the IT function the opportunity to have an equal role in defining business strategies is obviously important. However, how each organization perceives the contribution of the other, the trust that develops among the participants, ensuring appropriate business sponsors and champions of IT endeavors, and the sharing of risks and rewards are all major contributors to mature alignment. This partnership should evolve to a point where IT both enables AND drives changes to both business processes and strategies. Naturally, this demands having a good business design where the CIO and CEO share a clearly defined vision.

For example, a large software development company assessed their partnership maturity at a level of two. The IT function is mainly an enabler for the company. IT does not have a seat at the business table, either with the enterprise or with the business function that is making a decision. In the majority of cases, there are no shared risks because only the business will fail. Indications are that the partnership criterion will rise from a Level 2 to 3 as top management sees IT as an asset, and because of the very high enforcement of standards at the company.

Partnership for a large communications manufacturing company was assessed at Level 1. IT is perceived as a cost of being in the communications business. Little value is placed on the IT function. IT is perceived only as help desk support and network maintenance.

For a large utility company, partnership maturity was assessed at a level of 1+. IT charges back all expenses to the business. Most business executives see IT as a cost of doing business. There is heightened awareness that IT can be a critical enabler to success, but there is minimal acceptance of IT as a partner.

Partnership for a large computing services company was assessed at Level 2. Since the business executives pursued e-commerce, IT is seen as a business process enabler as demonstrated by the Web development. Unfortunately, the business now assigns IT with the risks of the project. Most IT projects have an IT sponsor.

Scope and Architecture

This set of criteria tends to assess information technology maturity. The extent to which IT is able to:

• go beyond the back office and the front office of the organization

• assume a role supporting a flexible infrastructure that is transparent to all business partners and customers

• evaluate and apply emerging technologies effectively

• enable or drive business processes and strategies as a true standard

• provide solutions customizable to customer needs

Scope and Architecture was assessed at a level of 2+ at a large software development company. This is another area where the company is moving from a Level 2 to a Level 3. ERP systems are installed and all projects are monitored at an enterprise level. Standards are integrated across the organization and enterprise architecture is integrated. It is only in the area of Inter-enterprise that there is no formal integration.

A large financial services company assessed their scope and architecture at Level 1. Although standards are defined, there is no formal integration across the enterprise. At best, only functional integration exists.

Skills

Skills include all of the human resource considerations for the organization. Going beyond the traditional considerations such as training, salary, performance feedback, and career opportunities are factors that include the organization’s cultural and social environment. Is the organization ready for change in this dynamic environment? Do individuals feel personally responsible for business innovation? Can individuals and organizations learn quickly from their experience? Does the organization leverage innovative ideas and the spirit of entrepreneurship? These are some of the important conditions of mature organizations.

For example, a large aerospace company assesses their skills maturity at a Level 2. A definite command and control management style exists within IT and the businesses. Power resides within certain operating companies. Diverse business cultures abound. Getting to a non-political, trusting environment between the businesses and IT, where risks are shared and innovation and entrepreneurship thrive, is essential to achieving improvements in each of the other maturity tenets.

Skills maturity at a large computing services company is assessed at a level of one. Career crossover is not encouraged outside of top management. Innovation is dependent on the business unit, but in general is frowned upon. Management style is dependent on the business unit, but is usually command and control. Training is encouraged but left up to the individual employee.