AFM241 Study Guide - Final Guide: Corporate Governance Of Information Technology, Knowledge Management, Cloud Computing
30 May 2018
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strategy – this relates to chapter 3,4. Chapter 6 provides explicit reference to
cost/risk and expected benefits associated with enterprise systems
4. Accountability for organizational changes: they understand that extracting the
maximum possible value from IT initiatives may require organizational changes
and they align accountability for achieving these organizational changes. This
relates to material in chapter 8
5. Knowledge management: they understand the importance of documenting the
importance of capturing knowledge that the organization has accumulated from
prior IT initiatives and share this across the organization. A knowledge
management system is a database system, however it successful
implementation will depend on the firm’s organizational IT capability
• Benefits of effective IT governance have been linked to how well it enables IT to help the
firm achieve the following four objectives
o Cost effective use of IT
o Effective use of IT for growth
o Effective use of IT for assets utilization
o Effective use of IT for business flexibility
• Firms well thought and effective forms of IT governance tend to be 20% of more
profitable than their competitors that have implemented a similar strategy, and achieve
40 – 60% higher returns from comparable IT investments
• McKinsey article:
o Businesses are becoming increasingly digital and it’s not just a matter of
process automation or resource-planning systems.
o Technology trends such as big data, cloud computing, mobility and social
media are giving rise to new marketing and operational capabilities
o Technology has become too embedded in the fabric of the business and too
critical for competitive performance to be left on the IT function alone
As a result, many senior exec teams have been called upon to get
involved in technology issues
o Value at stake from getting technology right is typically quite large
o Recent research indicates that about half of M&A synergies depend on IT,
which makes it a core driver of deal success
o Risk of cyber attacks is another area that can directly affect both operations
and the broader brand or business reputation
o There are many other competitive opportunities and threats that are driven
by technology trends such as new entrants causing industry disruptions with
radically different costs structures or game-changing innovations
o What’s more, major corporate investments or transformations, such as supply-
chain or operating-model transformations, often have a major IT component that
can imperil delivery if anything goes wrong
• IT Governance Institute (ITGI) defines ITG as:
o IT governance is the responsibility of the board of directors and executive
management
o It is an integral part of enterprise governance and consist of leadership and
organizational structure and processes that ensure that organization’s IT sustains
and extends the organization’s strategies and objectives
• According to IT Governance Institute:
o ITG is concerned with two things: IT’s ability to deliver value to the
business and mitigation of IT risks
• The first is driven by strategic alignment of IT with the business
• The second is driven by embedding accountability into enterprise
• Both need to be support by adequate resources and measured to ensure that results
are obtained
• According to ITGI, the main aim of ITG is to ensure effective utilization of IT by
focusing in:
