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Disciplined governance, IT portfolio management, and enterprise architecture (inclusive of IT architecture) are no longer optional. Failure to integrate and optimize these three areas and accept the increased velocity of legislative mandates will put organizations and government agencies at a competitive disadvantage (bordering on managerial negligence). Governance must align the current state of IT with the desired future state to meet these requirements, achieve continuous improvement, and drive return on investment.
THE BUSINESS—IT ALIGNMENT
The organization chart for the vast majority of companies shows a distinct box for the information technology/information systems group. The criteria for employees within IT/IS are typically based on knowledge of specific technologies and systems or the ability to perform a specific type of IT role. Business expertise, strategic planning, trending and forecasting, metrics management, and interpersonal communication skills are not typical core competencies of the IT/IS group.
Business and IT have become inextricably linked and must collaborate closely, share complementary approaches, and jointly provide continuous insight and improvement to the company. Simply allocating a few resources to bridge business and IT is insufficient in optimizing alignment between business and IT.
Business management should own the IT portfolio because IT leveraged and used effectively to support the business maximizes value. There are also examples where co-ownership of the IT portfolio between business and IT management has
IT GOVERNANCE 8!
been successful. Whether owned by business management or jointly controlled with IT, having business make decisions in selecting or sunsetting investments in the IT portfolio can be a major change for companies, and the loss of control may not be well received by some individuals in IT. Many within the IT organization will not view business managers as having the requisite training, skills, or expertise to make decisions in the best interest of the company.9 There is some validity to this concern. Even with the growing importance of IT in businesses, many business managers only possess a cursory understanding of IT. IT knowledge and skills have not become embedded in a typical business manager’s lingua franca, and this must change. Conversely, IT managers must become more strategic in their approach as they learn to work with the highest levels in the company in the formulation and execution of corporate business and strategic plans.
IT and business must remain closely aligned throughout the entire IT life cycle and in the development of the business and strategic plans. IT must provide input for business and strategic plans as opportunities to leverage IT, assessing risks and dependencies associated with IT. Business managers must have visibility across the entire IT investment portfolio, assuring IT investments are aligned with the business and strategic objectives and viewed in context with other investments and priorities.
Helen Pukszta presents nine challenges that need to be overcome for an organization to fully integrate IT with business strategy. The results of her findings, the key business IT model and characteristics (disjointed, adjacent, and integrated), and key challenges and suggested remedies are shown in Exhibit 3.1.
IT portfolio management and the alignment of business and IT is about people, communications, collaboration, partnership, and moving toward desired behaviors. There must be clear responsibilities and accountabilities assigned with an understanding of the culture of the company in mind and backed by training, consensus building, and buy-in to IT governance across the company. Only through this type of effort will the highest level of maturity be achieved.
IT governance ensures that the right people make the right decisions in a timely basis to address the vital needs of a company. IT governance also helps eliminate rogue and duplicative spending, striving for reuse wherever appropriate. The MIT Center for Information Systems Research defines IT governance as “specifying the decision rights and accountability framework to encourage the desirable behavior in the use of IT.”10
EXHIBIT 3.1 CHALLENGES OF IT ORGANIZATIONAL MODELS
Business IT Model and Its Characteristics Key Challenges and Suggested Remedies
1. Disjointed Challenge 1: Little or no innovation in the strategic use of information technology
Specifications for business applications are Suggested remedies
given to the IT organization, and the IT group * Institute massive education of business managers about IT