AFM241 Chapter Notes - Chapter 10: Corporate Governance Of Information Technology, Industrial Espionage, It Risk
17 May 2018
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Chapter 10
Growing importance of IT due to
- Cyberattacks
- Industrial espionage
- Passing of Sarbanes-Oxley
IT Governance: The processes that ensure effective and efficient use of IT in enabling an
organization to achieve its goals
- Controls in place to regulate IT implementation and strategy
• It is important to get TMT to be more sensitive and actively involved with IT
- Companies with strong IT governance and exercised it generated 20% more profits
- Board members should be able to measure the payoffs from IT investments
• Board’s approach to )TG information technology governance depends on specific context
- Company history
- External environment (industry structure)
- Current competitive and financial position
- Quality of IT and non-IT management
o Use McFarlan’s strategic grid
ITG in TMT perspective: framework of decision rights and accountabilities to encourage desirable
behaviour in use of IT
• Need difference between )T governance and )T management
- IT management: Decisions regarding everyday IT decisions and issues
• Effective )T governance requires the following
1. Clear business strategy and vision for IT
a. Have vision that ties in with IT synergy
2. Document costs and benefits
3. Implement alignment of IT with business strategy
4. Accountability for organizational changes
a. IT initiatives may require organizational changes and this accountability is assigned
to people
5. Knowledge Management
a. Documenting prior IT history is important and key to future success
• Effective )T governance leads to the following four objectives
1. Cost effective use of IT
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2. Effective use of IT for growth
3. Effective use of IT for assets utilization
4. Effective use of IT for business flexibility
• More and more senior executive teams have been called upon to get involved with technology
issues
• Stakes from getting technology right is quite large
- Half of M&A synergies depend on IT, making it a core driver of deal success
- Major corporate changes such as supply-chain transformation have major IT components
that can imperil delivery if anything goes wrong
ITG in IT Governance Institute (ITGI) perspective: IT governance is the responsibility of the
board of directors and executive management. IT is integral part of enterprise governance and
consists of the leadership and organisational structures and processes that ensure that the
organisation’s )T sustains and extends the organisation’s strategies and objectives
• Concerned with two things
1. IT ability to deliver value
a. Alignment of IT to business strategy
2. Mitigation of IT risk
a. Embedding accountability into enterprise will help
• Main Areas of Delivery include
1. Strategic Alignment
2. Risk Management
3. Resource Management
4. Value Delivery
5. Performance Measurement
10.1 Concluding Remarks – Pg 399
• Naïve to think spending more on IT = more value
- IT initiatives are risky and only firms that mange this risk will obtain expected results
• Not all firms need to be )T innovative
- All firms need to align their IT initiatives with their corporate priorities
Whirlpool case
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Document Summary
It governance: the processes that ensure effective and efficient use of it in enabling an organization to achieve its goals. Controls in place to regulate it implementation and strategy: it is important to get tmt to be more sensitive and actively involved with it. Companies with strong it governance and exercised it generated 20% more profits. Board members should be able to measure the payoffs from it investments: board"s approach to )tg (cid:523)information technology governance(cid:524) depends on specific context. Quality of it and non-it management: use mcfarlan"s strategic grid. Itg in tmt perspective: framework of decision rights and accountabilities to encourage desirable behaviour in use of it. Half of m&a synergies depend on it, making it a core driver of deal success. Major corporate changes such as supply-chain transformation have major it components that can imperil delivery if anything goes wrong.
