chapter 9 information, organization, and control...
TRANSCRIPT
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Chapter 9
Governance of the Information
Systems Organization
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Information, Organization,
and Control
• “The important point is that technology neither
__________ nor __________ centralized or
decentralized or other structures and controls, but …
N
offers new possibilities.”
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Twelve Main Responsibilities
• The following responsibilities often define the role of the CIO: 1. Championing the organization.
2. Architecture management.
3. Business strategy consultant.
4. Business technology planning.
5. Application development.
6. IT infrastructure management.
7. Sourcing.
8. Partnership developer.
9. Technology transfer agent.
10. Customer satisfaction management.
11. Training.
12. Business discontinuity/disaster recovery planning.
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How Is the IS Department Organized?
Fig 9-Extra Typical Senior-level Reporting Relationships
This organizational structure chart shows the typical top-level reporting
relationships. Depending on the organization, the Chief Information
Officer (CIO) may report to the Chief Executive Officer (CEO), the
Chief Operating Officer (COO), or the Chief Financial Officer (CFO).
CFO
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CKO, CTO
(telcom.)
CNO, CRO,
CPO
John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices 5
Information System Strategy Triangle
Business (Firm)
Strategy
Organizational Strategy IS/IT Strategy
Where is the business
going and why?
What is required? How it can be delivered?
Needs and priorities
Infrastructure and
services
Strategy Triangle
1. Architecture/Infrastructure,
2. MIS Organization (sourcing and IT
governance),
3. Funding (investment and prioritization)
4. Project Management John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
IT Governance
• Governance in the context of business enterprises is all
about making decisions that define expectations, grant
authority, or ensure performance.
– Aligning behavior with business goals through
empowerment and monitoring.
• Empowerment comes from granting the right to make
decisions.
• Monitoring comes from evaluating performance.
• IT governance focuses on how decision ______ can be
distributed differently to facilitate centralized,
decentralized, or hybrid modes of decision making.
• The organizational _________ plays a major role.
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Four Perspectives
1. ________ of decision making – Traditional
Centralized vs decentralized
2. Decision _____: Accountability and allocation
of decision rights
3. Digital _________ : Emergent governance
Ecosystems represent disparate and self-interested
companies that provide services that involve synergies
with those of others.
4. ________ structures from legislation
(regulation)
IT control and Sarbanes-Oxley Act of 2002 7
John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Figure 9.3 - Federal IT The federal IT attempts to capture the benefits of centralized and decentralized
organizations while eliminating the drawbacks of each
IT Vision and
Leadership
Scale Economies
Control of Standards
Critical Mass of Skills
Users Control IT
Priorities
Business Units Have
Ownership
Responsive to Business Unit’s
Needs
Strategic control
Synergy
Groupwide IT
Strategy and
Architecture
Federal IT
Centralized IT Decentralized IT
Unresponsive
No Business Unit Ownership of Systems
No Business Unit Control of Central Overhead Costs
Doesn’t Meet Every Business Unit’s Needs
Excessive Overall Costs to Group
Variable Standards of IS Competence
Reinvention of Wheels
No Synergy and
Integration
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Distributes power,
hardware, software,
data and personnel
John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Recent Global Survey
Percent of firms reporting that they are:
• Centralized: 70.6%
• Decentralized: 13.5%
• Federated: 12.7%
9 John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Another Perspective on IT Governance
• Peter Weill and his colleagues define IT governance as
– “specifying the ______ ______ and ____________
framework to encourage desirable behavior in using IT.”
• IT governance is not about what decisions are actually
made, but ____:
– “Who is making the decisions (i.e., who holds the decision rights)
and how the decision makers are held accountable for them.”
• Match the manager’s decision rights with his or her
accountability for a decision.
• Figure 9.4 indicates what happens when there is a
mismatch.
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
A FOURTH – OUT OF A FIRM’S
CONTROL:
Legislation –
Sarbanes-Oxley Act of 2002
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
Sarbanes-Oxley Act of 2002
Summary
• The Sarbanes-Oxley (SoX) Act of 2002 was enacted to increase regulatory ________ and ___________ of public companies and their financial health.
– All companies subject to the SEC are subject to the requirements of the act.
– CEO’s and CFO’s must personally certify and be accountable for their firm’s financial records and accounting (stiff penalties).
– Firms must provide real-time disclosures of any events that may affect a firm’s stock price or financial performance.
– IT departments realized that they played a major role in ensuring the accuracy of financial data.
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John Wiley & Sons, Inc. & Dr. Chen, Information Systems – Theory and Practices
What IS Does Not Do
• Does not perform _____ business functions such as:
– Selling
– Manufacturing
– Accounting.
• Does not set ________ strategy
– General managers must not delegate critical technology decisions.
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• The power of IS department now and the future will come from leadership, influence and capability - and less from control.
• The roadblock to competitive advantage generally is not technology, but _______________ - with people.
• Alternative governance approaches are possible: centralized, decentralized and federalism (hybrid).
• A second governance approach involves decision rights
– How to allocate decision rights in such a way as to encourage desirable behavior in the use of IT (Figure 1.6 Managerial Levers)
• A third view is digital ecosystem an emergent governance that disparate and self-interested companies that provide services that involve synergies with those of others.
• A fourth governance approach is based on controls
– Sarbanes-Oxley Act an IT governance framework based on control that can be used to promote IT-related internal controls and Sarbanes-Oxley compliance.
Conclusions
TM -14 Dr. Chen, Information, Organization, and Control