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Erstellt / Aktualisiert 18.05.2021 / 27.06.2021
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Governance matrix (Weil and Ross) 

Definition & strategic implications

Framework to illustrate how decision rights are allocated. Tool to structure and define IT decision making on the corporate level. Consists of 5 domains and 6 archetypes

Domains:

  • IT principles, IT architecture, IT infrastructure, Business application needs, IT investments

Archetypes:

  • Business monarchy, IT monarchy, Federal, IT duopoly, Feudal, Anarchy

 

Strategic implications

Firms may differ in their IT governance approach (centralized / decentraliced), but can still perform equally well if they follow a consistent system. In contrast, firms that mix different decision making patterns in a seemlingly unsystematic way, are often performing poorly.

  • Firms need to centralize the IT governance if they pursue competitiveness through cutting cost (defender, cost leadership strategy). Bundle IT infrastructure

    • Governance mechanisms: Executive committees, capital approval

  • Firm that seek steady growth (prospectors, differentiators) should rather decentralize the IT governance. Use shared services only selectively

    • Governance mechanisms: local accountability, budget approval, risk management

  • Asset utilisation (could be analyzers) balance contrast between governance for profitability and governance for growth

    • Governance mechanisms: BITA managers, SLA & Chargeback, IT leadership decision-making body

However, in times of digital transformation, esp. through shadow IT, the governance matrix should not be followed rigidly. There is no one-size-fits-all solution as the governance matrix implies, system by system should be distinguished, and give responsibility to business users as its not always a bad thing (fosters innovation)

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Governance mechanisms

3 grovernance mechanisms that are used to implement and complement shared decision making patterns between business and IT units and within IT units. Are a tool to reason about the relationship between IT and business units, or demand and supply IT, but can also be used to look into a specific IT organisation, e.g. bimodal IT organisations

Structural:

  • temporary groups, task forces, shared decision making in committees, hierarchy structures

Procedural:

  • formalize the flow of the interaction between different individuals, roles and those committees
  • strategy definition process, portfolio management and IT investment decision process, project controlling procedures, SLA, chargeback

Relational:

  • aim at integrating stakeholders informally, creating a shared mindset and culture
  • communities of practice, interdepartmental events, culture of innovation
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Shadow IT

Any information technology artifact (i.e., hardware device, software application) acquired or used by business managers or users without required approval or oversight through corporate IT units.

Shadow IT is a challenge for IT governance schemes, due to innovation and innovative users.

Problems:

  • Security risks, inefficiencies, loss of control, data inconsistency, resource conflicts, application integration issues

Benefits:

  • Productivity gains, business innovation

Reasons for shadow IT:

  • History of bad IT delivery
  • Lack of IT alignment
  • Low trust in IT
  • Tech-savy business users
  • Cloud-based tools, small systems, need for fast time delivery (no long portfolio process)

Identification:

  • IT inventory audit
  • network analysis
  • critical failures

Outcomes:

  • Discontinue (phase out)
  • replacement
  • continue as IT managed tool
  • continue as business managed tool

 

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IT service management

Definition: The implementation and management of quality IT services that meet the needs of the business (customer-focused). A good IT service should be customer oriented, standardized, proven, professional, and continually improved.

Proven. best practices emerged e.g. ITIL

 

 

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Service-dominant logic (Vargo & Lusch)

Theory that contrasts goods-dominant logic

Claiming that there are two spheres that overlap, whereas the supplier can never enter the customers sphere entirely and value is only created in the sphere of the customer

Foundational premises:

  • Service is the basis of exchange
  • Goods are distribution mechanism for service provision
  • The customer is always a co-creator of the service
  • All actors are resource integrators
  • Value is determined by beneficiary
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ITIL

Framework that provides good practices on IT service management and IT processes.

Motivations:

  • Improve operational efficiency and costs
  • Improve service orientation and service quality
  • Improve alignment with customers

 

ITIL follows a life-cycle and has multiple domains: Service design, Service transition, Service operation, Service strategy

Each domain consists of multiple subprocesses

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IT outsourcing

IT Sourcing is the process of choosing or procuring information technology resources from a party outside of the organization

Traditionally, single large deals, now trend rather towards smaller, short-term, cloud-based solutions

Motivators:

  • Transaction cost theory: to acquire non-specific and non-core and non-uncertain IT resources more efficiently, for less transaction cost
  • Offshoring landscape: labour arbitrage as a major driver

True, but other benefits:

  • Costs reduction such as hardware procurement, rent, electricity
  • Improvement of service quality
  • Access to better technology, innovation

Outsourcing for only reducing cost (financial reasons) not the ideal driver, but looking for achieving the dual goal of reducing costs while improving the service. (e.g. provider might be more specialized and skilled to do that)

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Vendor selection process (Sourcing)

4 phases

1. Pre-selection

  • Long list creation through market studies, references

2. Request for information, vendor presentation

  • Creation of shortlist through high level presentations about capabilites, references

3. Request for proposal, vendor selection

  • Invitation of shortlisted vendors to give a concrete offer with detailed proposal, letter of intent

4. Due diligence and contract negotiation

  • Last negotiation, SLA, prices, change request flows, inspection of client