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03.07 Critical Factors IT Investment Success -- IT Governance by Dr James A Robertson


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Part 7 of presentations for Two Day Course The Critical Factors for IT and ERP Investment Success

IT governance -- the different components, a different approach to IT governance

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03.07 Critical Factors IT Investment Success -- IT Governance by Dr James A Robertson

  1. 1. JAMES A ROBERTSON AND ASSOCIATESEFFECTIVE STRATEGIC BUSINESS SOLUTIONS7. Some Considerations With Regard To Information Technology Governance Why your ERP is NOT delivering and how to FIX it The Critical Factors for Information Technology Investment Success Dr James Robertson Two Day Course Chief Executive Officer James A Robertson and Associates 1 Copyright 2004 - 2011
  2. 2. CRITICAL EXECUTIVE QUESTIONSQuestions Every Executive Should Answer Before Saying "YES"1. Value proposition p2. Achieving the outcome3. Acceptance of effort4. Business commitment c a Time Cost e Effort Overtime5. Acceptance of executive accountability ut Disruption R bo L a E!6. Accountability of business leader AL PL . is PEO7. Accountability of technologists I.TCustody of business outcome 2
  3. 3. THE ESSENCE OF GOVERNANCECRITICAL FACTORS TO BE MANAGED1. Executive Custody (25%)2. Strategic Solution Architect (18%) a p3. Clear Strategic Perspective and Alignment (16%) c4. Business Integration and Optimization (14%) e R5. Programme Schedule, Budget and Resource Management (12%)6. Data Engineering (10%) ut bo7. Technology Components (5%) L a LE! AL P . is PEO I.T 3
  4. 4. I.T. GOVERNANCE1. Multi-faceted2. Diversity of knowledge and experience ) very difficult (not possible?) to find in one individual3. Involvement and focus in different areas ) very difficult (not possible?) for one individual to manage4. Tension can be usefulChallenge is to create a stable, sustainable, balancedmanagement structure 4
  5. 5. I.T. GOVERNANCE -- SUGGESTED KNOWLEDGE,EXPERIENCE & RESPONSIBILITY1. Strategic Architecture ) overall strategic guidance of entire solution2. Executed Business Solution ) manage business interface and business integration ) ensure required level of business input, etc ) management of the entire I.T. operation ) staff position3. Technology ) the technical aspects 5
  6. 6. I.T. GOVERNANCE -- SUGGESTED KNOWLEDGE,EXPERIENCE & RESPONSIBILITY 35.0 Business Systems Strategic Solution Technical Team Executive Architect Leader 30.0Relative Weight (%) 25.0 20.0 15.0 10.0 5.0 0.0 Executive Overall Strategic Business Schedule, Data Individual Liaison Solution Direction & Integration Budget & Engineering Systems & Architecture Alignment Resource Solutions Management Critical Factors 6
  7. 7. I.T. GOVERNANCEAn effective sustainable solution to these issues is a vital requirement forreliable and successful outcomesThe design for each organization must take account of the existing knowledge,experience and accountability profile 7
  8. 8. EXAMPLEPROPOSED FUNCTIONS: HEAD OF BUSINESS SYSTEMS1. Strategic analysis, design, architecture, alignment, etc -- 14%2. Business integration -- 22%3. Decision support information, forecasting and other executive information support -- 20%4. Programme and project management -- 12%5. Information management including maintenance of codes, data quality, business intelligence, etc -- not a technology function -- 14%6. Business information system support and development -- 13%7. Information technology management -- 5% 8
  10. 10. FROM GOOD TO GREATTHE LEVEL 5 LEADERSHIP HIERARCHY2 LEVEL 5: LEVEL 5 EXECUTIVE ! Builds enduring greatness through a paradoxical blend of personal humility and professional will2 LEVEL 4: EFFECTIVE LEADER ! Catalyzes commitment to, and vigorous pursuit of, a clear and compelling vision, stimulating higher performance standards2 LEVEL 3: COMPETENT MANAGER ! Organizes people and resources toward the effective and efficient pursuit of predetermined objectives2 LEVEL 2: CONTRIBUTING TEAM MEMBER ! Contributing individual capabilities to the achievement of group objectives and works effectively with others in a group setting2 LEVEL 1: HIGHLY CAPABLE INDIVIDUAL ! Makes productive contributions through talent, knowledge, skills and good work habits“From Good to Great” by Jim Collins page 20 10
  11. 11. WHAT IS EXCELLENCE?THE CRITICAL COMPONENTS OF CORPORATE EXCELLENCE1. Leadership (Strategic and Operational) -- 28%2. Governance and Custody -- 20%3. Strategic Definition -- 18%4. Strategic Capability -- 16%5. Standards and Policies -- 8%6. Systems, Methods, Tools, etc -- 6% ut bo7. Continuous Improvement -- 4% L a E! AL PL . is PEO I.T 11
  12. 12. WHAT IS SABOTAGE?THE OPPOSITE OF EXCELLENCE1. A conscious or unconscious response to unwanted or threatening change that results in actions that hinder, delay, obstruct, damage or wreck a change initiative. Natural and almost2. Coming late, leaving early, “too busy" ... inevitable at some level3. "Project hero" -- “my way so you clone me no matter unless how inefficient for the computer system” effectively managed4. Fear of unemployment, pride, holding on to personal ut bo L a E! investment in the legacy, etc5. Frequently difficult to identify AL PL . is PEO I.T6. Requires clear leadership and constructive actions and psychology 12
  13. 13. LEADERSHIP = ENTHUSIASM THROUGHAPPRECIATION AND ENCOURAGEMENT“I consider my ability to arouse enthusiasm among mypeople," said Schwab, “the greatest asset I possess, and ?the way to develop the best that is in a person is by What happens when the corporation putsappreciation and encouragement.“ an end to a system that many employees have"There is nothing else that so kills the ambitions of a invested hugely in?person as criticisms from superiors. I never criticizeanyone. I believe in giving a person incentive to work. So Iam anxious to praise but loath to find fault...“Charles Schwab, one of the first American executives to earnUS$1 million per annum as first President of the newly formedUnited States Steel Company in 1921 -- cited by Dale Carnegie in “How to Win Friends andInfluence People” 13
  15. 15. CONTEXT: INFORMATION TECHNOLOGYGOVERNANCE1. “This [I.T.] is an area where boards of directors will be named in stockholder suits” a p2. “Senior management is not engaged enough in strategic information technology decisions and situations that could put the company at risk.“ corporate scandals.“ e c3. "Information systems could cause the next outbreak of Enron-like R4. "I.T. is the next corporate disaster waiting to happen”“Creating an IT Watchdog for the Board by Assembling an I.T.Oversight Committee” presented to the I.T. Governance andStrategy Summit by Professor Rossouw von Solms of NelsonMandela Metropolitan University quoting Richard Nolan ofHarvard Business School in Harvard Business Review 15
  16. 16. THE HARSHEST JUDGEWhy? 16
  17. 17. CAUSES OF INFORMATION TECHNOLOGYINVESTMENT FAILURE1. Information technology mythology (30%) 65%2. Lack of executive custody and inappropriate policies (20%)3. Lack of strategic alignment (15%) a p The first three require quality EXECUTIVE c4. Lack of an engineering approach (12%) decisions and limited e time5. Poor data engineering (10%) R6. People / soft issues (8%) ut7. Technology issues (5%) a bo L LE! AL P . is PEO I.T 17
  18. 18. WHERE IN THE WORLD IS I.T. GOING? WHERE SHOULD WE FOCUS OUR ATTENTION? 1. Dramatic failures, litigation and legislation (5%) 2. Software company shake outs (6%) p 3. Long software product life spans (7%) a c 4. Less is more (10%) Radical redefinition of the industry e 5. Executives take custody (20%) R 6. Emphasis shifts to decision support (22%) 7. Corporate level solution innovation (30%) Leading edge A challenging and exciting place to be Run of the milltechnology mothballed technology = worlds most successful aircraft 18
  19. 19. THE CRITICAL FACTORS FOR SUCCESS1. Executive Custody (25%) p2. Strategic Solution Architecture (18%) 59%3. Strategic Alignment (16%) c a4. Business Integration and Optimization (14%) R e5. Programme and Project Management (12%)6. Data Engineering / Information Management (10%)7. Technology Components (5%) 19
  20. 20. COMPONENTS OF ACHIEVING EXECUTIVECUSTODY1. Engagement -- 30% p2. Leadership -- 50% ut a bo L a E!3. Prove it works -- 5% c4. Make it work -- 15% e I.T AL PL . is PEO RExecutive Custody is an attitude, a state of mind, NOT a large amount of work 20
  21. 21. ESSENTIAL TECHNOLOGY KNOWLEDGEI.T. KNOWLEDGE FOR INFORMED DECISIONS1. Computers Are Adding Machines (On / Off Switches) ut bo p L a E!2. Databases Are Warehouses AL PL c4. Networks Are A Postal Service a3. Automation Software Products Are Like Machines I.T . is PEO R e5. Graphics is A Presentation Or Navigation Aid - Versus Text6. Validation Codes Are the Primary Way Computers Know About Your Business7. People and Business Strategy Determine the Value Delivered 21
  22. 22. EXECUTIVE INVOLVEMENTHow involved should executive management be in I.T. strategy? 22
  23. 23. EXECUTIVE INVOLVEMENTHow involved should executive management be in I.T. strategy?How involved should executive management be in business strategy? 23
  24. 24. EXECUTIVE INVOLVEMENTHow involved should executive management be in I.T. strategy?How involved should executive management be in business strategy?Executive Custody is an attitude, a state of mind, NOT a large amount of work 24
  25. 25. HOW TO STRATEGICALLY POSITION I.T.THE ESSENCE OF I.T. INVESTMENT SUCCESS1. Determine why your organization exists and how it thrives -- one sentence -- and then core drivers and strategic map2. Determine where I.T. is getting in the way3. Modify accordingly4. Determine where I.T. can be used by BUSINESS PEOPLE as a tool to assist the business in its endeavours to thrive Clear, concise, intuitive,5. Procure or modify accordingly cognitive thinking, communication and action by6. Communicate a clear intention -- leadership business executives -- the rest is grind by the business7. Make it work -- this is a business action including the I.T. team 25
  26. 26. THE HARSHEST JUDGE OF GOVERNANCECONCLUSION1. Bad I.T. decisions can wreck your business2. I.T. Strategy is a BUSINESS responsibility3. I.T. Strategy is NOT about technology policy it is about business initiative4. Definition of strategy should be a concise, high intensity, business executive activity5. I.T. is a collection of tools and tools should work all the time6. I.T. will harshly judge executives who abdicate responsibility7. There is a huge opportunity for creative thinking to define concise ways for I.T. to add REAL VALUE in your organization! 26
  27. 27. EXECUTIVE CUSTODYRole of executives in Strategic LeadershipA key responsibility of executives is innovation that will generate highbottom line value outcomesthat is Strategic outcomesExecutives therefore define the role of information technology increating sustainable competitive advantageStrategy is the essence of why an organization exists and how it thrives 27
  28. 28. ESSENTIAL BUSINESS KNOWLEDGEESSENTIAL COMPONENTS OF STRATEGY1. Core economic driver2. Core human resource driver3. Core market differentiator / value proposition / sales or marketing method4. Core customer / market / user5. Core asset / product / natural resource / size / growth6. Core technology / capability / know-how / distribution7. Essential reason the organisation exists (generally NOT profit)8. Core values9. Other 28
  29. 29. STRATEGIC MAPPING Mapping & Managing the Strategic Environment & Objectives CORE STRATEGIC 2. MARKET AND PARAMETERS PRODUCT FACT 4. EXTERNAL STRATEGIC ENV Strategy and strategic MAF, CSF, product fact, drivers, also what NOT Market portfolio, etcHorizon, medium term, done Countered by alienatorsshort term, immediateincl threats, opps, etc 3. SUPPLIER 1. SHAREHOLDER CSFS FACTORS 5. INTERNAL STRATEGIC ENV Supplier relationship and other supplier factorsStrengths, weaknesses CORE STRATEGICOperation, Systems, OBJECTIVES 6. STRAT CAPABILITY Maximize value creationManagers, Staff, Workers minimize value destruction (The Solution Map) Thrive Ess Qs, realisation (value), 7. CORPORATE STRATEGIC StratProc, Crit Fct Success GOVERNANCE Mgmt of failure factors, etc 29
  30. 30. DEVELOPING ROBUST SPECIFICATIONANALYSIS & DESIGN FOR DOABLE PLANS1. Analysis of Strategic Environment, Context, Requirements, Benefits, Value, etc2. Strategic Gap Analysis low3. Strategic Design l fo4. Strategic Governance Framework5. Strategic Action Plan To6. Strategic Project Management7. Strategic Plan, Business Outcome Auditing, Monitoring, Performance Measurement and Incentives, Journey Management8. Continuous Strategic Improvement 30
  31. 31. I.T. GOVERNANCECONCLUSION1. Business determines value proposition = requirement drives I.T. specification2. Analyse strategic environment based on business objectives and opportunities Business case3. Determine value delivery opportunities4. Determine opportunities to minimize value destruction Avoid change for the sake of change5. Specify what the business must do in order to deliver t ou6. Take decision ab ! LL LE A P is EO .T. P7. Develop I.T. requirements I 31
  32. 32. I.T. GOVERNANCE QUESTIONS?Dr James Robertson PrEngJames A Robertson & AssociatesTelephone: +27-11- 782-5997Cell: 083-251-6644 (preferred)P O Box 4206, Randburg, 2125, South Africawww.JamesARobertson.comemail: Finding the missing pieces of your I.T. and strategy puzzles Please remember the evaluation forms 32