gse it governance
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IT-Governance
(GSE-Projects 1 and 2 - Highlights)
Copyright GSE/Project IT-Governance
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www.gse.orgwww.gse.org
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GSE – Facts and Figures
11 European Regions- 1.300 Members (Companies)- 2-6 European Events (CIO, Mgmt.Summ., MAC’s)- 11 Regional Conferences- 150 Workinggroups- 3 European Projects (IT-Gov., Bus.Issues)
3-5 Top Business Concerns/year400 Product-Requirements/yearConference Cooperation-Agreement with IBM-ITES
-----------------------------------------------------------------------------Part of the worldwide Usergroup Community
(23.000 Company Memberships worldwide)Member of the International User Group Council
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Strategy 2006-2008
Keeping the topics for the Working Groups closely aligned with the major IT developments.
Improve and extend dialogue and cooperation on IT-Management Level between our members, IBM and its Partners.
Support all customer intentions providing value to the business using IT, through the organisation of sector specific events.
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Areas of Operation/Services
Value Creation
Business Solution
Infrastructure
Products
Cur
rent
cove
rage
New
Cov
erag
e6
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GSE Members per Industry code
IT Services
IT ServicesIT Services
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Scenario IT-Governance
IT is an intensively discussed topic in Organisations and Enterprises. Discussion ranges from ‘cost factor’ to ‘business enabler’ and‘innovator’ in general.A close link between the Enterprise-Strategy and IT-strategy is key, but it seems the distance between Enterprise-Management and IT is growing.Top Managers come very often from the „classical“ disciplines.CIO’s are not very often members of the Board.For many Enterprises are „Consolidation“, and „Concentration on core business“ priorities of today. (But this is tightly coupled with Processmanagement, IT-Infrastructureand IT-Skills !!)
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CIO
BudgetRestrictions
Staff/skillsshortage
IToutsourcing
New Technologies,
methods
Increasingworkload
Need forconsolidation
Businessvalue ?
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CIOCIO
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Target/Goals of the Projects
The 2 Projects „IT Governance“ are dealing with :
the role of ITthe strategic positioning of ITalignment of IT in/with the enterprise-strategyNecessary control gremiarelated organisational aspects
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IT Governance Project-1
• Goal :- a Backgroundanalysis- an estimation of Development Trends- the identification of Successfactors and Best Practice Samples- raise quality and influence of the CIO (IT-Department)
• Discuss representative Referencemodels for :- the establishment of an effective IT-Strategy- IT-Guidance- IT-Services tightly linked to the Enterprise- Strategy.
• Targetgroups are CEO’s, CIO’s
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IT Governance Project-2
• Due to the changed “rules” in an on Demand scenario there is a strong demand to adapt the classical IT-Governance model, elaborated by GSE’s Project IT-Governance/1.
• Top Managers have to be made familiar with the necessary changes, best practise examples and pitfalls. They often not realize the potential of the on demand opportunities and the necessary adaption of the classical IT-Governance model including the IT-Strategy.
• GSE was working together with IBM on this subject.
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The GSE Working Group
Insights on current IT Governance Trends were developed by experienced IT Managers, Business Managers and Consultants
Industry and Public Sector Consulting CompaniesAmt der oberösterreichischenLandesregierung
IT-Sektion
Bundespensionsamt
IT Austria
This broad range of diverse backgrounds and experiences results in a comprehensive view on IT governance with different perspectives and emphases. Some foils are company-copyrights.
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Let‘s repeat the keymessages of the IT-Governance Project-1, the „classical“ IT-Governance approach.
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1.1. Role of IT
IT is evolving from a Support Tool into a Source of Competitive Advantage...
Copyright © The Boston Consulting Group
Airlines Retailing Automotive
Health Care
Financial Services
Development Exhausted Or New Future Push To Be Expected?(1)
Source of differentiation
and advantage
Support core business
processes
Supportback office
1960's 1970's 1980's 1990's 2000's 2010's
IT evolution over timeIT evolution over time
ITrole
IT needs to be linked with business strategy to generate value for the business
Copyright © The Boston Consulting Group
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1.2. Our Definition of IT Governance
Our Definition of IT Governance emphasizes the close Link of IT to the Organization as a whole ...... but also acknowledges the Limits of IT Governance (!!)
IT governance is an integral part of corporate governance and analogously combines leadership, organizational structures, and processes that ensure that IT sustains and extends the organization’s strategies and objectives
IT governance provides guidelines, establishes criteria and standards for decision making, monitoring, measuring, and improving the performance of IT
IT governance is the responsibility of the executive board and the executive management (incl. IT) and supports the interaction of all the organization's parties involved with IT
What?
How?
Who?
Though guided by it, daily operations or operative project management, are not core part of IT governance nor can IT governance substitute for a sound business strategy
What not?
(1) Vorstand Source: GSE Arbeitskreis "IT Governance"
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Inhalt
Content Project-1
IT Strategic Alignment (IT-Governance)
IT Value Delivery (ROI, IT-Marketing, Measurement, Tools)
IT Macroorganisation (Enterprise-Focus)
IT Microorganisation (IT-Focus)
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Strategic AlignmentStrategic Alignment
““IT is there to support people and processes, not the other IT is there to support people and processes, not the other way around.”way around.”
“The only way to justify IT“The only way to justify IT--Investments is by understanding Investments is by understanding how to support the business and get customer satisfaction” how to support the business and get customer satisfaction”
GSE-IT Governance-Team1-17Okt03-DT-dt-VIE2.ppt
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1.1. The Integrated Strategy
Increasing Strategic Relevance of IT in a Company demands for Integrated Business and IT Strategy Development “On demand Services”
Separated Business- and IT-
Strategies
Aligned Business-and IT-Strategy Busin
Business-strategy
IT-Strategy
Business-strategy
IT-Strategy
Integrated ess and IT
Strategy
IntegratedStrategy
Source: IBM Business Consulting Services
Integrated strategy development requires joint planning and controlling boards and processes
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1.1. IT Stakeholder Interaction
IT Governance manages the Interaction of all involved with IT
Board of directors
Central functions (Corporate strategy,
Accounting, Controlling, HR ...)
Business units, subsidiaries,
affiliated companies
External IT service providers
Internal IT service providers(IT organization,
shared services center)
Employees,workers' council Regulatory authoritiesCooperation
Transparency needed: roles, influence and mandate of each involved party
(1) E. g. in Energy/utilities, health care, telecommunications, financial services (2) Source: BCG; GSE Arbeitskreis
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1.3. Frameworks' Overview
Several IT Governance Frameworks with different Focus
ITIL
BCG
GartnerGiga Group
COBITISO
17799
ITIL
IT security management
KPMG
IBMIT decision
structures and processes
Implementation of IT governance
using CobiT, ITIL
Business and IT strategy integrated
Focus on strategy Business and
IT strategy alignment
Structure of global IT
organizations
Each framework can be deployed in different situations accordingly
Business/IT alignmentIT focus
Focus on operations
Primary objective
IT process performance controls
and metrics
CompanyindividualDe factostandard
IT services management
Content
Note: A "framework" is a comprehensive concept describing options, methods, and tools to implement IT governance. If a framework is chosen and adapted to fit a specific companies needs, we speak of a "model"
Source: GSE Arbeitskreis "IT Governance"
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IT Value Delivery
"Instead of valuing something by its cost, figure out howmuch it's worth."
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2.1. IT Benefit
Benefit from IT is derived exclusively via business processes it supports or enables.
ITIT Enterprise Value
Enterprise Valuex
Business Processes
IT Benefit
Strategic ValueDrivers
• market potential• customer value• productivity of resources• resource prices
ProcessBenefit
• enables the process in the first place• increases effectiveness of the process• increases efficiency of the process• reduces risk of the process (e.g. through higher flexibility)• increases competitiveness of the enterprise• increases efficiency of the enterprise• reduces risk of the enterprise
Source: Wigand
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2.2. Levers of IT Value Management
IT Value-Added can be managed using 3 Levers
EffectivenessEffectivenessStrategicStrategicAlignment EfficiencyEfficiencyAlignment
„Requesting the rightIT services“
„Delivering the right IT services“
„Delivering IT services right.“
Source: IBM Global Services
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2.2. Three Levels of IT Optimization
The right sequence of optimization is crucial to avoiding „doingthe wrong things more efficiently“!
Source: IBM Global Services
Type of ServiceType of Service Requirementsnot met
Unknown IT Potential
User User RequirementsRequirements
Specific Customized Standardized
StrategicOptimization
StrategicStrategicOptimizationOptimization 111Business Business StrategyStrategy
Optimizing
EffectivenessOptimizingOptimizing
EffectivenessEffectiveness 222
Optimizing
EfficiencyOptimizingOptimizing
EfficiencyEfficiency 333
CurrentCurrent IT ServicesIT Services
IT IT SourcingSourcingRequirements
not metUnknown IT
Potential
Self Sourcing Strategic Partnerships Market
Non-strategicIT Services
Unknown IT Potential
Requirementsnot met
Unknown IT Potential
IT Servicesnot required
IT Services not required
„Delivering the right IT services“
„Delivering IT servicesright“
„Requesting the rightIT services“
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2.2. IT Portfolio Alignment
The overall optimum for the organization is achieved byaligning user requirements with the strategic guidingprinciples.
Functional & Service Level Requirements of IT usersFunctional & Service Level Requirements of IT users
Optimum Functionality and Service LevelOptimum Optimum FunctionalityFunctionality and Service Leveland Service Level
Additional Requirementsfrom Strategic Guiding Principles
(e.g. Security or Integration Requirements)
Requirements Cut-offfrom Strategic Guiding Principles(e.g. 80/20 Rule of Functionality)
Source: IBM Global Services
Communicate and explain the rules for additional requirements and cut-offs!
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IT MaIT Maccroorganisationroorganisation
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3.1. Principles of IT Control
Principles of IT Control
StrategicIT-Management
synergies
Enterprise-wideIT-Strategy, Architecture
and Infrastructure
federal
Scale effects („Economies of Scale“)
Critical mass at skills
Enterprisestandards
Systems partially in responsibility of
BUs
Good coverage of BU-specific demands
priority of demands user-controlled
Reinventing the wheel
Excessive total costs
Different standards und competences
No synergies and integration advantages
local
Low customer orientation
Bad coverage of BU-specificrequirements
Low transparency and possibility of control
of central IT-costs by BU
central
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3.2. Sourcing Strategy
Choice of Optimal Sourcing Model … … Depends on a Sourcing StrategyThe Sourcing Strategies Space and the Sourcing Models:
Make or Buy
CompetitionLevel
As part of their externalization strategies, worldwide and European organizations are using, and willcontinue to use, not only outsourcing but also different intermediate models !
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3.1. Governing Bodies
High Level Governing Bodies Steer and Monitor Implementation and Performance of IT Governance
High (leaders) Roles/responsibilities
Governance Committees:5–7 most senior people (usually CEO, CFO, BU presidents, CIO)
Provides strategic oversight to corporationIT is only one dimension of their scope
Aligns IT to business strategy
IT Working Groups:CIO and senior IT manager from each BU
IT Councils:CIO and 5–7 well respected BU managers
IT Advisory Boards: 3–5 IT specialistswith 1–2 IT Council members
Provides IT coordination across BU’sEstablishes IT policies and enforce standardsPrioritizes IT projects
Chartered by IT CouncilDevelops policy recommendations for IT CouncilFocused on a specific IT topic
Provides BU perspective to CIODebates IT strategyInput on IT project prioritization
Seniority of members
Top-down Balanced AutonomousLow (technical experts)
Corporate IT and BU IT
groupsCorporate IT only(no BU IT groups)
BU IT groups only(no corporate IT)
Degree Of Centralization Drives Which Bodies are Deployed for Which Tasks !
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2.3. IT Benchmarking
Benchmarking – used correctly – can deliverimportant information for IT controlling
BENCHMARKINGBENCHMARKINGBENCHMARKING= structured comparison for better performance= = structuredstructured comparisoncomparison forfor betterbetter performanceperformance
Own PastOwnOwn PastPast
periodic comparison of relevant measures of IT
performance
periodicperiodic comparisoncomparison of of relevant relevant measuresmeasures of IT of IT
performanceperformance
StandardsStandardsStandards
standardized „Best Practices“ –
e.g. ITIL, ITPM, COBIT
standardized standardized „„Best Best PracticesPractices““ ––
e.ge.g. ITIL, ITPM, COBIT. ITIL, ITPM, COBIT
Other CompaniesOtherOther CompaniesCompanies
comparable key metrics(Problem: How to get
relevant and comparablefigures from others?)
comparablecomparable keykey metricsmetrics(Problem: (Problem: HowHow to to getget
relevant and relevant and comparablecomparablefiguresfigures fromfrom othersothers?)?)
with
Hint: Do not neglect „internal“ benchmarking in favour of external Benchmarking!Source: IBM Global Services
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ITIT--MiMicroorganisationcroorganisation
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4.1. Gestaltungskriterien IT-Organisation
Different solutions for the organisation of the IT-Department
Function oriented IT-Process oriented• Organisation aligned with IT-Processes • E.g. Project Office for Project-
management, Applicationssupport, Relationship Management, Help Desk, Operation, Engineering
• E.g. Oracle-Group, Java-Group, SAP-Group
Customer oriented• Aligning the IT-Organisation with
organisational Structures on Customerside (divisional Structure)
• E.g. Boards, Divisions, Departments, ..
• Aligning the IT-Organisation withCustomer Businessprocesses
• E.g. Finance, HR, …
Businessprocess oriented
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4.1. Zentralisierung vs. Dezentralisierung
Centralisation versus Decentralisation
Centralisation for cost reasons.Enabled by Technologie (Broadband, Internet, Mobile Computing) Decentralisation enables Focus on specific Topics and supports a closerrelationship with the customer. Operation with the same Know-How-Basis in decentral Structures results in lower efficiency and professionality and will result inhigher costsCalculation of the relevant pro‘s and con‘s, lead in our days mostly to centralisation of – at least – mission critical functions.
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4.3. Innovator - Adopter - Follower
Technology Adoption
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4.2. Motivationsfaktoren
Climate, Culture and Teamspirit are Keyfactors to influence the motivation of your staff
Performanceoriented
Salary
Quality of
Leaders
Continouseducation
Flexibilityof the
workingscenario
Workingenvironment
Motivation
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How will „On Demand“ change the classicalIT-Governance model ?
ITIT--GovernanceGovernance Project 2Project 2
HowHow will „On will „On DemandDemand““changechange thethe
classicalclassical ITIT--GovernanceGovernance modelmodel ??
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Forget how it‘s called ……
On Demand Business
Adaptive Enterprise
Agile Enterprise
Realtime Enterprise
Zero-Latency Enterprise...
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Three important Steps
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Four keyquestions
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Summary/1
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Summary/2
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Not every presentation is successful ........……. I hope you enjoyed this one