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  • 1. A new perspective onIT Governance in SMEsDr. ir Jan DevosECCF 2012 Conference Skopje MKJan Devos - 8/11/2012 pag. 1Faculty of Engineering and Architecture – Campus Kortrijk
  • 2. Outline of the presentation- Corporate Governance and IT Governance- Why IT Governance?- Is IT Governance a concept for SMEs?- New findings- ConclusionsJan Devos - 8/11/2012 pag. 2Faculty of Engineering and Architecture – Campus Kortrijk
  • 3. Corporate Governance IT Governance Strategic Information SystemsWeill, 2004; Van Grembergen, 2000Jan Devos - 8/11/2012 pag. 3Faculty of Engineering and Architecture – Campus Kortrijk
  • 4. IT Governance (IT Governance Institute, 2003)Is to direct IT endeavors, to ensure IT‟s performancemeets the following objectives:- For IT to be aligned with the enterprise and realize the promised benefits- For IT to enable the enterprise by exploiting opportunities and maximizing benefits- For IT resources to be used responsibly- For IT related risks to be managed appropriatelyJan Devos - 8/11/2012 pag. 4Faculty of Engineering and Architecture – Campus Kortrijk
  • 5. IT Governance• Separating Governance from Management• Meeting Stakeholders needs• IT-Business Alignment• Benefits Management• Risk Management• ComplianceGRC (Governance, Risk, Compliance)Jan Devos - 8/11/2012 pag. 5Faculty of Engineering and Architecture – Campus Kortrijk
  • 6. IT GovernanceSeparating Governance from ManagementGovernance: Board of directors under leadership of chairperson Evaluate, Direct and MonitorManagement: Executive management under leadership of CEO Plan, Build, Run and MonitorJan Devos - 8/11/2012 pag. 6Faculty of Engineering and Architecture – Campus Kortrijk
  • 7. IT Governance• Meeting Stakeholders needsJan Devos - 8/11/2012 pag. 7Faculty of Engineering and Architecture – Campus Kortrijk
  • 8. Jan Devos - 8/11/2012 pag. 8Faculty of Engineering and Architecture – Campus Kortrijk
  • 9. Outline of the presentation- Corporate Governance and IT Governance- Why IT Governance?- Is IT Governance a concept for SMEs?- New findings- ConclusionsJan Devos - 8/11/2012 pag. 9Faculty of Engineering and Architecture – Campus Kortrijk
  • 10. Why bring IT on the agenda of the board?The good news• IT is a competitive weapon (Porter,1989)• IT is an enabler for innovation• IT transforms businesses (Laudon, 2011)• Cloud, BYOD, Mobile, Emergent Collectives (Facebook, Twitter, LinkedIN), Big Data, Business Analytics…Jan Devos - 8/11/2012 pag. 10Faculty of Engineering and Architecture – Campus Kortrijk
  • 11. Information technology investment, defined as hardware, software, and communications equipment, grew from 32% to 51% between 1980 and2008. Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, 2008.Jan Devos - 8/11/2012 pag. 11Faculty of Engineering and Architecture – Campus Kortrijk
  • 12. Why bring IT on the agenda of the board?The bad news…• 1980s: IT Failures (Lyytinen, 1987)• 1990s: IT productivity paradox (Brynjolfsson, 1998) „The Squandered Computer‟ (Strassman, 1997)• 2000s: IT doesn‟t matter (Carr, 2003)Jan Devos - 8/11/2012 pag. 12Faculty of Engineering and Architecture – Campus Kortrijk
  • 13. Why bring IT on the agenda of the board?The bad news…• 2006: "Computers can land people on Mars, why cant they get them to work in a hospital?" - Implementation of an Electronic Patient Record System in a UK Hospital (Jones, 2006)• 2012: 70% of all IT projects do not deliver on time, on budget or with all defined requirements…(Standish, 2011)Jan Devos - 8/11/2012 pag. 13Faculty of Engineering and Architecture – Campus Kortrijk
  • 14. Outline of the presentation- Corporate Governance and IT Governance- Why IT Governance?- Is IT Governance a concept for SMEs?- New findings- ConclusionsJan Devos - 8/11/2012 pag. 14Faculty of Engineering and Architecture – Campus Kortrijk
  • 15. Jan Devos - 8/11/2012 pag. 15Faculty of Engineering and Architecture – Campus Kortrijk
  • 16. “The perfectly bureaucratic giant industrial unit not only outsets the small- or medium-sized firm and expropriates its owners, but in the end it also ousts the entrepreneur and expropriates the bourgeoisie as a class which in the process stands to lose not only its income but also, what is infinitely more important, its functions.” (Schumpeter, 1942)Jan Devos - 8/11/2012 pag. 16Faculty of Engineering and Architecture – Campus Kortrijk
  • 17. What usually gets lost is that more than 99% of all European businesses are, in fact, SMEs. They provide two out of three of the private sector jobs and contribute to more than half of the total value-added created by businesses in the EU. Moreover, SMEs are the true back-bone of the European economy, being primarily responsible for wealth and economic growth, next to their key role in innovation and R&D. What is even more intriguing is that nine out of ten SMEs are actually micro enterprises with less than 10 employees. Hence, the mainstays of Europes economy are micro firms, each providing work for two persons, in average. This is probably one of the EUs best kept secrets!Source: website Europe (http://ec.europa.eu/enterprise/policies/sme) Jan Devos - 8/11/2012 pag. 17 Faculty of Engineering and Architecture – Campus Kortrijk
  • 18. Is IT Governance a concept for SMEs ? Theoretical Foundations of  Small and Medium-sized IT Governance Enterprises - Control Theory (Eisenhardt, 1989) - Theory of the growth of the Alignment of interests firm (Penrose, 1951) - Transaction Cost Economics - Resource Based Theory (Coase, 1937) - Less separation between the - Agency Theory (Jensen & right of ownership and the Meckling, 1976) right to control Moral Hazard / Adverse Selection - People centric (CEO) - Mistrust in human behavior (Ghoshal, 2005) - Amoral theories ?→ CorporatesJan Devos - 8/11/2012 pag. 18Faculty of Engineering and Architecture – Campus Kortrijk
  • 19. Independency• Not owned by a larger firm; family firms, start-ups• Not depended for decision-making• Weak concept of Corporate Governance• Entrepreneurial risk ≠ Risk ManagementJan Devos - 8/11/2012 pag. 19Faculty of Engineering and Architecture – Campus Kortrijk
  • 20. Personal Influence of the CEO• Two arms, two legs and a giant ego (Levy, 2005)• Influence and personal beliefs of CEO is paramount for success• Does the CEO believe in IT as an enabler for innovativeness?Jan Devos - 8/11/2012 pag. 20Faculty of Engineering and Architecture – Campus Kortrijk
  • 21. Flexibility and Innovation• Lack of innovativeness due to cost• Lack of managerial and technical capabilities due to low maturity and resource povertyJan Devos - 8/11/2012 pag. 21Faculty of Engineering and Architecture – Campus Kortrijk
  • 22. Outline of the presentation- Corporate Governance and IT Governance- Why IT Governance?- Is IT Governance a concept for SMEs?- New findings- ConclusionsJan Devos - 8/11/2012 pag. 22Faculty of Engineering and Architecture – Campus Kortrijk
  • 23. New Findings- Call for chapters: „Information Systems and Small and Medium-sized Enterprises – State of art of IS research in SMEs‟- Focus: IT Governance- 33 contributions from 22 countries- 16 developed / 17 developing & transition- Findings will be published in 2013 by SpringerJan Devos - 8/11/2012 pag. 23Faculty of Engineering and Architecture – Campus Kortrijk
  • 24. New Findings- IT driver for innovation? Yes but not always- Is IT important? Yes but SMEs are slow adopters- Where are the benefits of IT ? Hard to measure- Outsourcing is common in SMEs (constructs: trust, empathy, …)- Government support for SMEs needed, but difficult- Idiographic nature of SMEs with respect to IT- Strategic thinking about IT ? or a bottom up approach?Jan Devos - 8/11/2012 pag. 24Faculty of Engineering and Architecture – Campus Kortrijk
  • 25. Outline of the presentation- Corporate Governance and IT Governance- Why IT Governance?- Is IT Governance a concept for SMEs?- New findings- ConclusionsJan Devos - 8/11/2012 pag. 25Faculty of Engineering and Architecture – Campus Kortrijk
  • 26. Conclusions- Existing IT Governance principles too much grounded in a mechanical view of an organization- An SME is not a cybernetic machine that can be controlled accordingly- Is there a need for a formal control system for IT?- Is a top-down, linear approach appropriate?- IT Governance too generic and too much based on „What must be done‟ and too less on „How it should be done‟- IT Governance for SMEs should focus more on peopleJan Devos - 8/11/2012 pag. 26Faculty of Engineering and Architecture – Campus Kortrijk
  • 27. Thank youJan Devos - 8/11/2012 pag. 27Faculty of Engineering and Architecture – Campus Kortrijk