CSE-E 4655 IT Governance (Fall 2015) Implementing IT Governance 19.11.2015, Aalto University, Aalto University One company, Three businesses 1
Rethinking the Traditional Organization Source: Hagel & Singer, HBR 1999 3 Rethinking the Traditional Organization Source: Hagel & Singer, HBR 1999 4 2
Operating model Enterprise Architecture as Strategy Authors: Jeanne Ross, Peter Weill and David Robertson 6 3
Four Types of Operating Models Source: Ross, Weill & Robertson, HBR 2006 7 Lesson 1: Face the facts 4
What is the Role of IT in the Organization? Role of IT in the Organization 10 5
Role of IT as technology Source: Nolan & McFarlan, HBR 2005 11 The role of IT and IT Leadership is changing Source: Gartner 12 6
Lesson 2: Face the facts Corporate governance 7
What is driver for operations? Cost Outright minimizing Flexibility for good costs Outcome Maximizing profit Maximizing produced services Minimizing risks Cost according to plans Avoiding other surpises Time horizon Quartal Long term planning WHAT IS MEASURED AND REMUNERATED? 15 Is the structure clear? Target setting and responsibility for achieving the targets Vision and direction Operating model and culture KPIs Organizing logic Centralized, cooperation, federated Permanent and temporary structures Decision making What is decided and by whom? What is the basis of these decisions? Who does the preparation? Who decides who will be preparing? Is it just Yes or No decisions or also the context? 16 8
Organizational planning and management Operations Running the business Transforming the business Finance Common or separate budgeting Where does IT money reside? Resources HR IT Time horizon Strategy Annual planning What is actually happening? Finance Development portfolio balancing act IT & Bus resources 17 Experiences from real life 9
Business Driven Development BUSINESS ARCHITECTURE EVOLVES PROJECTS Source:OP-Pohjola, 2009 19 Turning the rotation BUSINESS FOCUS ON: 1) Communication and education 2) To-be architecture 3) Portfolio management 4) Existing processes ja solutions ENTERPRISE ARCHITECTURE GUIDES PROJECTS Source:OP-Pohjola, 2009 20 10
Business development process Source:OP-Pohjola 21 Lesson 3: Face the facts but put effort to education to enhance maturity 11
Best Practices for IT Governance Purpose of IT Governance by ITGI The purpose of IT governance is to direct IT endeavors, to ensure that IT's performance meets the following objectives: For IT to be aligned with the enterprise and realize the promised benefits For IT to enable the enterprise by exploiting opportunities and maximizing benefits For IT resources to be used responsibly For IT-related risks to be managed appropriately 24 12
25 Select framework based on the purpose 26 13
Select framework based on the purpose 27 IS Lite by Gartner Source: Gartner 28 14
Five principles of COBIT 5 29 30 15
Elements of a governance model Source: Van Grembergen & De Haes, 2010 31 Seven neccesary practices for Enterprise Governance of IT 1. IT leadership 2. CIO reporting to the CEO/COO 3. IT steering committee 4. IT project steering committee 5. Portfolio management 6. Project governance/management methodologies 7. IT budget control and reporting Source: Van Grembergen & De Haes, 2010 32 16
IT Governance Three questions for effective Governance 1. What decisions must be made? 2. Who should make these decisions? 3. How will we make and monitor these decisions? Key IT Governance decisions 1. IT principles 2. IT architecture 3. IT infrastructure 4. Business application needs Fostering creative solutions Disciplined execution 5. IT investment and prioritization How much to spend? How to allocate IT investment? How to align investment with strategic needs? Source: Ross & Weill, 2004 34 IT-Business alignment maturity assessment Source: Luftman 35 17
ICT Standard for Management Laitoksen nimi 36 Demand and Supply sides of IT Typical CIO s tasks: IT strategy as an integral part of the business strategy Business and information architecture Innovation in business processes and exploitation of new technologies Business case development and approval Investment prioritization Portfolio management Risk management IT governance IT principles IT financial management and performance management Typical Chief IT Operating Officer s tasks: Service delivery for an agreed portfolio of services Providing customer support through a service desk Meeting SLAs Technology architecture Disaster recovery Maintaining secure environment Asset management Project management Resource management Budget management and cost benchmarking Supplier management Source: Gartner 37 18
Key Governance decisions (with steroids) 1. Principles for unified development 2. IT architecture with Enterprise Architecture focus 3. IT infrastructure Including external services Including common and continuous services 4. Business (application) needs 5. Portfolio management and prioritization Including all investments 38 Lesson 4: Build a solid foundation 19
IT organization, structure and processes Pohjola Group IT (2005) Tietohallinto Liiketoiminta Konsernin tietohallinto Yhteistyökumppanit Asiakkuusjärjestelmät Pirkko Alajoki Arkkitehtuurit ja teknologia Heikki Räyhäntausta Pohjolan Systeemipalvelu Oy Arjaleena Smolander Varainhoitopalvelut Ella Hämäläinen Toimittaja- ja palvelusuhteet Jorma Hutri *) Pohjolan ATK-palvelu Oy Timo Knuutila Vakuutustuotanto Markku Laine Tietoturva Juha Leppälä Korvaustoiminto Leila Honkela Henkivakuutustoiminta Matti Rahikka Yhteiset palvelut, SAP-toimisto Taina Leino Yhteiset palvelut, EDW Seija Tuominen CIO Office *) 1.1.2005 mennessä 20
Creating Demand ó Supply structure provides flexibility for structural changes and sourcing Demand and Supply sides of IT Typical CIO s tasks: IT strategy as an integral part of the business strategy Business and information architecture Innovation in business processes and exploitation of new technologies Business case development and approval Investment prioritization Portfolio management Risk management IT governance IT principles IT financial management and performance management Typical Chief IT Operating Officer s tasks: Service delivery for an agreed portfolio of services Providing customer support through a service desk Meeting SLAs Technology architecture Disaster recovery Maintaining secure environment Asset management Project management Resource management Budget management and cost benchmarking Supplier management Source: Gartner 43 21
How to organize: function or processes? Function based Function based / Processes identified Process based / Process owners responsible for development Process based / Process owners responsible for results Organisaatio toimii tulosyksikkö ja toimintopohjaisesti. Tuloyksiköiden/toimintojen sisäisiä ja välisiä prosesseja ei ole tunnistettu. Tulosyksiköillä/toiminnoilla on resurssit ja taloudellinen vastuu. Tulosyksiköt/toiminnot ovat siiloissa, eikä yrityksen sisäisiä synergioita hyödynnetä. Tulosyksiköiden/toimintojen sisäiset ja väliset prosessit on tunnistettu, ja niitä on kuvattu tulosyksiköiden/toimintojen sisällä. Tulosyksiköillä/toiminnoilla on resurssit ja taloudellinen vastuu. Tulosyksiköt/toiminnot ovat edelleen siiloissa, eikä yrityksen sisäisiä synergioita hyödynnetä. Prosessit on tunnistettu ja kuvattu yritystasolla. Tulosyksiköillä/toiminnoilla on resurssit ja taloudellinen vastuu. Prosesseille on määritelty kehittämisvastuulliset omistajat, joiden tehtävänä on parantaa tulosyksiköiden/ toimintojen välistä yhteistyötä prosesseissa. Tulosyksiköt/toiminnot ovat edelleen siiloissa, mutta yrityksen sisäisiä synergioita hyödynnetään. Yrityksen toimintamalli on muutettu prosessisuuntautuneeksi siten, että prosesseille on määritelty prosessinomistajat yritystasolla. Tulosyksiköillä/toiminnoilla on resurssit ja taloudellinen vastuu. Prosessinomistajilla on prosessien suorituskykyvastuu koko yrityksen tasolla. Prosessinomistajat varmistavat, että yrityksen sisäiset synergiat hyödynnetään. Source:OP-Pohjola, 2009 44 Core IT processes Customers CIO Office Customer Interaction Delivery Competences Operations planning and development Enterprise Architecture management Demand and portfolio management Project and AM deliveries HR capacity and competence management Data Center and infrastructure management Source:OP-Pohjola, 2009 45 22
Clear responsibilities Strategy process Annual planning Business is responsible for this Customer Development planning Commitment to customer Demand and Portfolio management Demand and Portfolio management Demand process Commitment of delivery Project and AM deliveries Commitment of capacity HR capacity and competence management Project and AM deliveries HR capacity management Project portfolio process Delivery process Resourcing process Source:OP-Pohjola, 2009 46 Like this? Kehittämistoimikunta Yritysarkkitehtuurin johtoryhmä Tietohallinnon johtoryhmä Tietoturvan johtoryhmä Strateginen ohjaus ICT-toiminnan ohjausryhmä Taktinen ohjaus Hanketoimisto Palveluinfrastruktuurin johtoryhmä ICT-palvelut johtoryhmä Asiakkuuden hoitomalli Asiakkaat Hankesalkun hallinta Asiakkuudet ja palvelut osasto jr Kehittämispalvelut Kehittämispalvelut osasto jr osasto jr osasto jr Sovelluspalvelut Tuotantopalvelut Projektitoimitusten jr Jatkuvien palvelujen jr Arkkitehtuurin ja yhteisten palveluiden johtoryhmä ICT:n prosessien kehityksen ohjausryhmä Jatkuvat palvelut Operatiivinen johtaminen Source:OP-Pohjola 47 23
Or this? ICT-ohjausryhmä Taktinen ohjaus ICT-johtoryhmä Operatiivinen johtaminen 48 Laitoksen nimi 49 24
Lesson 5: Foster organizational interaction Culture eats strategy for breakfast and governance model for lunch 51 25
Key to success 52 Thank you! marco.halen@aalto.fi 26