MIT CISR research has found that firms with effective IT governance have 20% higher profits than their competitors. We define IT governance as a framework for decision rights and accountability to encourage desirable behavior in the use of IT. This definition distinguishes governance from IT management. IT management is the daily decision making and implementation activities around the firm’s use of IT. Governance identifies who will make key IT decisions and how will they be held accountable. Good governance is enabling and reduces bureaucracy and dysfunctional politics by formalizing organizational learning and thus avoiding the trap of making the same mistakes over and over again. Our research has found that effective IT governance has several key elements:
- IT governance focuses on a small set of critical IT-related decisions: IT principles, enterprise architecture, IT infrastructure capabilities, business application needs, and IT investment and prioritization. (Slide: Five Key IT Decisions Need to be Governed).
- IT governance relies on a limited set of governance mechanisms (e.g. committees, project management, business cases, architecture exception processes) designed to ensure effective use of IT (e.g., State Street Corp.: Evolving IT Governance) and slide: Business IT Engagement Model.
- Simplify IT governance and represent it on one page: see “A Matrixed Approach to Designing IT Governance” (Sloan Management Review, Reprint #46208) and Six IT Decisions Your IT People Shouldn’t Make and slide: State Street’s IT Governance on One Page).
- Determine what should be shared at enterprise, sector and BU levels and govern at that level (e.g., Governance of Global Shared Solutions at Procter & Gamble).
- Centralize decision making for cost focus—decentralize for innovation/growth and blended governance to achieve both. Self assess your IT governance performance and compare to our research (How Effective Is Your IT Governance? and slide: Governance Lessons from Leaders).
- IT governance engages stakeholders at multiple organizational levels (Engagement Matters: Enhancing Alignment with Governance Mechanisms and slide: Business IT Engagement Model ).
- Podcast: IT Governance, published on April 02, 2009
- Book: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results
- Working Paper: “Don’t Just Lead, Govern: How Top-Performing Firms Govern IT"
- Journal Articles
- “A Matrixed Approach to Designing IT Governance,” Sloan Management Review, Reprint #46208
- "Six IT Decisions Your IT People Shouldn't Make," Harvard Business Review, Reprint #R0211F
- MIT Sloan CISR Research Briefings
- "IT Governance & Strategic Drivers-Agility, Synergy, Autonomy"
- "Describing and Assessing IT Governance-The Governance Arrangements Matrix"
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