IT Governance
in SMEs
Instructor: Prof. Dr. Martin Knahl
Group 4: Mai Nam Chuong
Nguyen Huu Quang
Agenda
 Introduction
 Four IT Governance important constructs
 Three case studies analysis
 Recommendations for IT Gov...
Introduction
 Research in 2004 (*). Peter Weill – Jeanne W. Ross
 Plus sign: IT Governance helps company increase 20% pr...
Introduction
 IT Governance
 “Specifying the decision rights and accountability framework to
encourage desirable behavio...
Introduction
 SMEs in Vietnam
 2010: 250.000 SMEs
 2015: 600.000 (est.)
 32% of enterprises
65%
30%
2% 3%
Micro
Small
...
Introduction
 Limitation of using IT in SMEs
 Financial constraints limit their abilities to invest in IT and to
attract...
Introduction
How can SMEs optimize IT performance
through governance practices?
7
Source: Rui Huang, Robert W. Zmud, R Leo...
Four IT Governance
important constructs
 Decision structure
 Senior management involvement in IT Governance Processes
 ...
Four IT Governance
important constructs
1. Decision structure: How IT decisions are made?
Sub-Category Description
Central...
Four IT Governance
important constructs
2. Senior Management Involvement in IT Governance Processes:
Ensure the alignment ...
Four IT Governance
important constructs
3. IT Governance Communication Practices: Ensure members
behave correctly with IT-...
Four IT Governance
important constructs
4. IT Success: How the company success in deploying IT?
Sub-Category Description
E...
Coming up next!
 Introduction
 Four IT Governance important constructs
 Three case studies analysis
 Recommendations f...
Three case studies analysis *
 HealthCare:
 Health care management organization
 Multiple offices in US
 Agriculture:
...
Three case studies analysis
HealthCare Agriculture Pharma
Firm size 182 300 360
IT Group size 12 14 10
Interviewees
CIO
4 ...
Three case studies analysis
IT Governance Structure
HealthCare Agriculture Pharma
Structure Centralized Centralized Centra...
Three case studies analysis
Senior Management Involvement in IT Governance Processes
HealthCare Agriculture Pharma
Formal
...
Three case studies analysis
IT Governance Communication Practices
HealthCare Agriculture Pharma
Communication
channels
Ema...
Three case studies analysis
IT Success
HealthCare Agriculture Pharma
Efficiency of IT
use
3.2
(moderate)
3.3
(moderate)
4....
Recommendations for SMEs
 Senior Management Involvement in IT Governance Processes
 Recommendation 1: In order to enhanc...
Recommendations for SMEs
 IT Governance Communication Practices
 Recommendation 4: In order to improve the performance o...
Summary
Theme
Theory
Case studies
Recommendations
Why ITG in SMEs is important?
What is ITG, SMEs?
Examine ITG practices i...
Questions and Answers
23
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IT governance in SMEs

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  • (*) IT Governance on One page.- Companies with effective IT governance have profits that are 20% higher than other companies pursuing similar strategies. One explanation for this differential is that IT governance helps companies align their IT investments with their business priorities.
  • “IT governance is the set of processes that specify decision rights and accountability to encourage desirable behavior in the use of IT.Effective IT governance encourages and leverages the ingenuity of all the enterprise's people in using IT, not just the leaders, while ensuring compliance with the enterprise's overall vision and principles” (Source: Weill, P.)At its core, governance is about alignment and value. For IT governance, we want to align the strategies, goals and objectives of IT with those of the enterprise to ensure that IT effectively supports and drives the entity.Number of workers is diff in countries: German = 255, 200, 100.
  • http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/SDN/2013/01/04/090224b081856516/1_0/Rendered/PDF/Vietnam000Viet0Report000Sequence010.pdf
  • IT governance in SMEs

    1. 1. IT Governance in SMEs Instructor: Prof. Dr. Martin Knahl Group 4: Mai Nam Chuong Nguyen Huu Quang
    2. 2. Agenda  Introduction  Four IT Governance important constructs  Three case studies analysis  Recommendations for IT Governance practices  Summary  Questions and answers 2
    3. 3. Introduction  Research in 2004 (*). Peter Weill – Jeanne W. Ross  Plus sign: IT Governance helps company increase 20% profit  Minus sign: Only 38% of senior managers know how IT is governed  Study of 300 enterprises – Weill and Ross  There is not a single best formula for governing IT  100% sure: effective ITG doesn‟t happen by accident  Top performing enterprises carefully design governance  Managers make daily decision putting design into practice  PwC research  Most interviewed organizations recognize the importance of IT Governance  However, a „holistic‟ view that considers all dimensions of IT Governance is not widely found Source: http://www.researchgate.net/publication/228139751_IT_Governance_on_One_Page/file/e0b49518ae03e11409.pdf http://www.pwc.com/en_mt/mt/publications/assets/it-governance-in-practice-jan-2007.pdf 3
    4. 4. Introduction  IT Governance  “Specifying the decision rights and accountability framework to encourage desirable behavior in the use of IT”, Weill and Ross  Align IT strategies/goals/objectives with other activities of the company to ensure that IT effectively supports the development of the company.  Small and Medium sized Enterprise  Workers: < 500 (US); < 300 (VN)  Capital: < $50m (US); < $5m (VN) Source: White paper – SMEs in Vietnam http://www.economica.vn/Portals/0/MauBieu/70c475bbbf81ecb8d32698a30924e978.pdf US International Trade Commission http://www.usitc.gov/publications/332/pub4169.pdf 4
    5. 5. Introduction  SMEs in Vietnam  2010: 250.000 SMEs  2015: 600.000 (est.)  32% of enterprises 65% 30% 2% 3% Micro Small Medium Large Source: General Statistics Office, Viet Nam’s Enterprises in the first 9 years of 21 century. Statistics Publishing House, Ha Noi, 2010 http://www.economica.vn/Portals/0/MauBieu/70c475bbbf81ecb8d32698a30924e978.pdf 5
    6. 6. Introduction  Limitation of using IT in SMEs  Financial constraints limit their abilities to invest in IT and to attract highly capable IT professionals  Enterprise‟s owner/top manager lack IT expertise and experience  Use of IT in SMEs in Vietnam  Only 20% of SMEs use ICT  Only 5% do so for business operations Source: [World Bank] Vietnam - ICT Development Report http://www.worldbank.org/projects/P079344/vietnam-ict-development?lang=en 6
    7. 7. Introduction How can SMEs optimize IT performance through governance practices? 7 Source: Rui Huang, Robert W. Zmud, R Leon Price IT Governance Practices in Small and Medium-Sized Enterprises: Recommendations from an Empirical Study http://ifipwg82.org/sites/ifipwg82.org/files/Ch12-19-IT%20Governance%20Practices%20in%20SME-formatted.pdf
    8. 8. Four IT Governance important constructs  Decision structure  Senior management involvement in IT Governance Processes  IT Governance Communication Practices  IT Success Source: Rui Huang, Robert W. Zmud, R Leon Price IT Governance Practices in Small and Medium-Sized Enterprises: Recommendations from an Empirical Study http://ifipwg82.org/sites/ifipwg82.org/files/Ch12-19-IT%20Governance%20Practices%20in%20SME-formatted.pdf 8
    9. 9. Four IT Governance important constructs 1. Decision structure: How IT decisions are made? Sub-Category Description Centralization Decisions made by corporate-level IT/business senior managers Hybrid Decisions jointly made by corporate and divisional senior managers Decentralization Decisions made by divisional senior managers 9
    10. 10. Four IT Governance important constructs 2. Senior Management Involvement in IT Governance Processes: Ensure the alignment b/w business and IT Sub-Category Description Formal Involvement Active participation of executive managers in formal IT steering committees Informal Involvement Senior managers, categorized as corporate senior managers, divisional senior managers or both, having regular interactions with the CIO 10
    11. 11. Four IT Governance important constructs 3. IT Governance Communication Practices: Ensure members behave correctly with IT-related actions Sub-Category Description Number of Channels Number (and types) of communication channels used to communicate IT governance policies, guidelines and practices throughout the SME. Primary Communication Channel The primary communication channel used to communicate IT policies, guidelines and procedures throughout the SME 11
    12. 12. Four IT Governance important constructs 4. IT Success: How the company success in deploying IT? Sub-Category Description Efficiency of IT Use How efficient the firm has been in its use of IT (a 5-point scale with 5 representing the highest efficiency; averaged by number of respondents) Breadth of current IT use The number of distinct areas identified, aggregated across interviewees, where IT is being appropriately used Breadth of potential IT use The number of distinct work processes identified, by any interviewees, as being actively considered or planned for future IT use 12
    13. 13. Coming up next!  Introduction  Four IT Governance important constructs  Three case studies analysis  Recommendations for SME Governance practices  Summary  Questions and answers 13
    14. 14. Three case studies analysis *  HealthCare:  Health care management organization  Multiple offices in US  Agriculture:  Provide consultation services in agriculture techniques  Non-profit research foundation  Pharma:  Manufacture subsidiary of an international pharmaceutical company  Businesses in Asia Pacific, North American, and Europe (*) Data getting from IT Governance Practices in Small and Medium-Sized Enterprise paper 14
    15. 15. Three case studies analysis HealthCare Agriculture Pharma Firm size 182 300 360 IT Group size 12 14 10 Interviewees CIO 4 Divisional VPs CIO 2 Divisional Directors CIO Controllers Divisional Director Demographic Information on Research Sites 15
    16. 16. Three case studies analysis IT Governance Structure HealthCare Agriculture Pharma Structure Centralized Centralized Centralized Key IT decision CxOs (CEO, CIO,..) CIO CIO 16
    17. 17. Three case studies analysis Senior Management Involvement in IT Governance Processes HealthCare Agriculture Pharma Formal Involvement CIO Corporate Executives N/A CIO Divisional Executives Informal Involvement Corporate Executives Divisional Executives Divisional Executives 17
    18. 18. Three case studies analysis IT Governance Communication Practices HealthCare Agriculture Pharma Communication channels Email Word of mouth Paper docs Formal meeting Word of mouth Intranet Paper docs Formal meeting Word of mouth Primary communication channel Email Paper docs Intranet 18
    19. 19. Three case studies analysis IT Success HealthCare Agriculture Pharma Efficiency of IT use 3.2 (moderate) 3.3 (moderate) 4.3 (high) Breadth of current IT use 3 (moderate) 2 (limited) 5 (high) Breadth of potential IT use 3 (moderate) 1 (limited) 1 (limited) 19
    20. 20. Recommendations for SMEs  Senior Management Involvement in IT Governance Processes  Recommendation 1: In order to enhance performance of IT use (as indicated by efficiency and breadth of IT use) in SMEs, senior management should be involved through joint formal and informal IT governance interactions  Recommendation 2: In order to improve the breadth of potential IT use in SMEs, corporate executives should be involved in IT governance processes  Recommendation 3: In order to improve the breadth of current IT use in SMEs, operational executives should be involved in IT governance processes. 20
    21. 21. Recommendations for SMEs  IT Governance Communication Practices  Recommendation 4: In order to improve the performance of IT use (as indicated by efficiency and breadth of IT use) in SMEs, IT governance policies, guidelines and practices should be communicated through a number of channels  Recommendation 5: In order to improve the performance of IT use (as indicated by efficiency and breadth of IT use) in SMEs, IT governance policies, guidelines and practices should be communicated through accessible channels 21
    22. 22. Summary Theme Theory Case studies Recommendations Why ITG in SMEs is important? What is ITG, SMEs? Examine ITG practices in SMEs Give recommendations for ITG practices in SMEs 22
    23. 23. Questions and Answers 23

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