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Research Paper on "Project Management and IT Governance"
 

Research Paper on "Project Management and IT Governance"

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This is a research paper I wrote as part of my coursework on Project Management. The topic is "Project Management and IT Governance".

This is a research paper I wrote as part of my coursework on Project Management. The topic is "Project Management and IT Governance".

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    Research Paper on "Project Management and IT Governance" Research Paper on "Project Management and IT Governance" Document Transcript

    • Project Management and IT Governance Submitted by: Prasad K. Patankar A well-defined governance model is essential for project management to fulfill its role in governing project management. Governance ensures clarity of purpose and sets forth responsibilities. By exercising strict governance over the strategic direction and tactical control of technology projects, we can maximize the business value of our technology investments. Project technology management (PTM) principles and capabilities ensure that technology executives maintain the same degree of control, accountability and fiscal responsibility that is expected of projects. Some of the steps used in this process are 1) Developing strategic and tactical governance 2) Understand government and regulatory requirements 3) Ensure that the top management has project management knowledge 4) Configuration of infrastructure for the organization Developing strategic and tactical governance prepares an organization to address what decisions must be made, who is responsible for making them and what process is used to make those decisions. Enterprises should have ready answers that are ingrained and automatic. This relates to the full range of project management governance including investment decisions, standards, principles and target business and technology architectures. Understanding government and regulatory requirements starts with the compliance and risk management capability, which should be supported by the board and disseminated to everyone involved in enabling project management methodologies through the use of business technology. It is imperative that the board have an understanding of project management. Some management boards have addressed this issue by appointing outside board members, including CEO’s and CIO’s of well- regarded IT companies or by establishing project management strategic committees. Determining how the organization will configure its infrastructure to facilitate access to financial information will enable the company to determine what control systems and analytics are needed to detect vulnerabilities and fraud. This is because the enterprise architecture of an organization is composed of the technical, data and application architectures; which jointly enable the processing, sharing and management of data resources across divisional and organizational boundaries. IT Governance as a structure IT governance has a direct impact on how IT is managed within the organization. The IT Governance Institute has offered the following definition “IT Governance is the responsibility of executives, board of directors and consists of the leadership, 1
    • organizational structures, and processes that ensure that the enterprise’s IT sustains and extends the organization’s strategies and objectives. IT governance structure involves the existence of responsible functions for making IT decisions such as steering committees. Staffed by both the business and IT executives, the IT steering committee should be the primary governing body for ongoing IT operations and initiatives of the organization, including IT investment projects. The IT steering committee is responsible for translating business and strategic goals into actionable plans. Successful IT governance requires effective communication among all parties based on constructive relationships, a common language and a shared commitment to IT policies and procedures. IT Governance as a process IT governance processes involve the implementation of IT management techniques and procedures in compliance with established IT strategies and policies. Kaplan(2005) defines IT governance as the set of processes used by the organization to manage IT, aligning IT with business objectives, resourcing IT projects and monitoring IT performance ( Vitale,2001).In particular IT investment processes involve the identification, acquisition, implementation and ongoing operation and maintenance activities of IT applications. As a continuous process, effective IT governance provides transparent IT decision making, clear accountabilities and acceptable and actionable IT measurements. That is, effective IT governance enables business and IT executives to integrate business and IT decisions, implement IT solutions and monitor IT effectiveness. IT Outcome Metrics For IT governance to be effective, organizations should monitor their IT performance through appropriate measurement systems. Organizations need multiple set of metrics to measure their IT operational performance and overall value to the business. Recognizing that the business unit assessment of the value of IT may be different across the organization, a structure must be in place to assess the ultimate success of IT. Different organizations have different meanings of the term “success” and use different metrics to gauge the success of their IT activities. Many organizations have progressed from using elementary cost-benefit analysis to an entrepreneurial approach that encompasses the risk, uncertainty, and intangible elements of IT investments including organizational changes facilitated by these investments. IT governance encompasses three dimensions – IT governance structure, IT governance process and IT metrics. The three dimensions are driven by business value. The first dimension, IT 2
    • governance structure, strives to achieve strategic alignment of IT with business and includes mechanisms for decision-making, direction setting and casting policies. The second – IT governance process, is driven by embedding accountability into the organization, i.e., establishing the policies and procedures used to implement the IT investment projects. The third dimension, IT outcome metrics assesses both IT governance structure and processes to ensure that the desired results were and are being obtained. IT governance starts by providing IT with direction which means setting business strategies and performance goals. Second, IT investment projects that align with these strategies are developed and resourced. Third, a continuous loop is established by measuring performance and comparing these measurements to objectives, resulting redirection of activities or changes to objectives, as appropriate. Implementing an effective IT governance framework allows business value to be achieved through IT (Kearns and Sabherwal, 2006/07). For effective IT value delivery, IT governance must clearly articulate and implement IT governance arrangements for structure, process and outcomes. To be successful, an organization needs to be aware that different strategic contexts require different indicators of value. Implementing an effective IT governance framework context requires different indicators of value. Also, implementing a effective IT governance framework allows business value to be achieved through IT. For effective IT value delivery, IT governance must clearly articulate and implement IT governance arrangements for structure, process, and outcomes. IT Steering Committee Composition IT governance is concerned with the strategic alignment of IT with business. Effective exchange of ideas and shared understanding of business and IT objectives allow the organizational strategies to adopt harmoniously (Luftman et al., 1999; Johnson and Lederer). Therefore IT governance requires significant input from stakeholders about both strategic business needs and technological capabilities so that organizations can build a clear and comprehensive picture of the connection between business and IT and devise IT solutions that transcend functional boundaries. The IT steering committee brings together stakeholders from diverse backgrounds and organizational roles. The executive steering committee monitors IT management and sets IT spending and cost allocations. The IT strategy committee provides direction and assures that individual IT projects align with the overall business strategy. The IT steering committee is responsible for project advocacy, and for the provision of adequate resources for both planning and implementation of the IT investment decisions (Parr and Shanks, 2000). Furthermore, compliance with external regulations and internal guidelines should also be overseen by the IT steering committee (Ewusi- 3
    • Mensah, 1997). If the IT steering committee does not understand these tasks effectively, desired outcomes are unlikely to be achieved and, in extreme cases, the organization may not comply with regulatory requirements such as SOX. For the IT steering committee to be an effective team, they must have clear goals understood by all members. Higher levels of IT governance effectiveness are associated with a shared understanding of IT and business objectives by members of the steering committee. Higher levels of IT governance effectiveness are associated with active participation of the IT steering committee. Higher levels of IT governance effectiveness are also associated with a balanced representation of senior business and IT management on the steering committee. Formulation and communication of IT strategies and policies Rather than just focusing on purely technological issues, IT management must understand the business, its critical success factors, and how to develop a synergistic portfolio of IT capabilities (Bushell, 2003). Delivering effective IT governance requires an integrative and comprehensive set of strategies to promote more universal views of the value of information and the technology within the business. Critical to the success of IT governance structures and processes is effective communication of IT strategies and policies among all parties. The more effectively management communicates the IT governance mechanisms, how they work, and what outcomes are expected, the more effective are the IT governance processes(Weill and Ross,2004; Johnson and Lederer,2005). A priori evaluation and selection of IT investment projects The objective of the IT investment approval process is to ensure that IT investments generate significant returns to the organization relative to alternative investment opportunities. The range of possible circumstances suggests that no one single evaluation method or metric is likely to fit all cases( Scott Morton,1990 ).A complete picture of the likely impact of an investment can only be given if a balance is achieved between financial and non-financial impact assessments ( Renkema,2000). Early in the system development life cycle, proposed IT investment projects can be examined using a combination of financial, non-financial, and risk analysis. Projects subjected to such scrutiny experience a more accurate and complete assessment than projects examined using a less stringent combination of criteria. Obtaining a better appreciation of the risks and returns improves the likelihood of success of these projects relative to projects that experience less rigorous a priori evaluations. 4
    • Interim evaluation of IT investment project implementation During the system development stage, interim evaluations are needed so that projected costs and benefits can be revised in the light of updated information about the project. Frequent measurement and evaluation of project management metrics are critical to effective IT governance. The metrics aid in tracking each project’s progress and, when necessary, redirecting or terminating individual projects. Organizations use a variety of indicators for assessing project behavior or process improvement, e.g., actual versus planned task completions and actual versus planned resource consumption. Through a comprehensive set of project management metrics, the organization can provide better control of costs, greater reduction of risks, more substantial improvements in quality, and greater assurance that the project objectives can be met. Hence, project management metrics enhance the likelihood of implementation success. The goal of the formalized decision making structure is to drive the project to completion. Senior management involvement in or executive support of the structure is a critical success factor to IT project implementation success. Individuals or committees who take responsibilities for IT governance should also exercise important roles relative to the project implementation activities. The activities include setting up an appropriate IS development style, assessing project risk, ensuring adequate infrastructure, and providing the project with adequate visibility and transparency. A very important antecedent to a successful implementation of an information system is a “champion” for the system (Ewusi-Mensah, 1997;Reich and Benbasat,1990;Beath,1991). Project champions actively communicate their visions of the project with the project team and obtain support from business stakeholders. They push the project over or around approval and implementation hurdles. Therefore, the likelihood of success of IT investment projects is substantially improved when one or more project champions are involved .We can thus say that the success of IT project implementation is associated with higher levels of involvement by the project champion during project development. 5
    • References Agarwal R, Samamurthy V. Principles and models for organizing the IT function.MIS Q 2002; 1(1); 1-16 Clark HH,Brennan SE. Grounding in communication. In : Resnick LB,Levine JM,Teasley SD, editors. Perspectives on Socially Shared Cognition. Washington DC: American Psychological Association; 1991.p. 127-49 Coakes C,Cavanaugh N, brown C,Sambamurthy V. Building change-readiness IT capabilities : insights from the Bell Atlantic experience. MIS Q 1997; 21(4); 425-55. Coakes E. Focus issue on legacy information systems and business process change; the role of stakeholders in managing change. Commun ACM 1999;2(4):1-31. Keil M. Pulling the plug : software project management and the problem of project escalation. MIS Q 1995;19(4);421-47 Keil M,Cule pE,Lyytinen K,Schmidt RC. A framework for identifying software project risks. Commun ACM 1998;14(2);76-83 Peterson RR,O’ Callaghan R, Ribbers PMA. Information technology governance by design: investigating hybrid configurations and integration mechanisms. Proceedings of the 21st International Conference on Information Systems; 2000. Ribbers PMA, Peterson RR, Parker MM. Designing information technology governance process : diagnosing contemporary practices and competing theories. Proceedings of the 35th Hawaii International Conference on System Sciences, 2002. Sambamurthy V, Zmud RW. Arrangements for information technology governance : a theory of multiple contingencies. MIS Q 1999;23(2);261-90. Serafeimidis V,Smithson S. Information system evaluation in practice: a case study of organizational change.Journal of Information Technology,2000;15();93-105. The Standish Group International. Third Quarter CHAOS Report; 2007 6