IT Governance. The Ambiguity Term Paper

Pages: 11 (2922 words)  ·  Bibliography Sources: ≈ 11  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business - Management

And, firms with superior IT management and governance enjoyed at least twenty percent higher profits than firms with poor governance, given the same strategic objectives.

In yet another study by the Center for Business Practices (Value of project management in IT organizations), average overall return on investment from implementing project portfolio management (another name used for IT management and governance) was found to be 27.9%. Results of the Center's survey showed that improvements were achieved in twenty IT measures, with average percentage improvements of 21.7 in time to market, 37.6 in customer satisfaction, 37 in alignment to strategic business goals, 32.5 in time and budget to date, 31.9 in quality, 25.6 in labor hours performance, 32.1 in schedule performance, 23.8 in cost performance, 12.9 in defect rate, 3.9 in component size, 11.9 in defect per peer review, 22.8 in staff productivity, 23 in response time, 11.8 in average time to repair defect, 38.6 in schedule estimating, 32.8 in cost/hours estimating, 12.9 in defect rate estimating, 5.1 in component size estimating and 7.6 in quality estimating.

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The Center for Business Practices also identified characteristics of top performers vs. poor performers (Value of project management in IT organizations). It discovered that areas where to performers are better than poor performer include having a central repository to capture project information, having information available on resources, optimizing the project portfolio, planning from a portfolio perspective, actively balancing resource capacity and demand and making changes based on optimizing the portfolio. Top performers use ranking methods for project selection and prioritization more than poor performers and consistently use project portfolio management to make go/kill decisions for projects far more often than poor performers. Finally, top performers were far more likely to know the return on investment of projects than poor performers and were more likely to have executive support and a business case for project portfolio management.

Case Studies

Term Paper on IT Governance. The Ambiguity in Assignment

Harrah's Entertainment has used what it refers to as a synchronized IT portfolio management process to fundamentally change its IT operations (Jeffery and Leliveld, 2004). Every projects must have a business case describing the business need, what the investment should be provide, and the change in business conditions that the investment will facilitate. Next, on the basis to the total cost of ownership of putting the investment in place, they determine the required support and infrastructure. To further tune its IT portfolio, Harrah's conducts after-action program review. It surveys customers after implementing any service-improvement initiative and analyzes customer satisfaction scores. The company has quantified the value of increasing the satisfaction level of a customer by one level. For example, it knows that moving a customer from a B. To an A rating represents an annual increase in revenue of about six percent for that customer. As a result, Harrah's is one of the few companies that can objectively measure the value of customer-satisfaction IT initiatives and tie the results back into the IT portfolio management process.

Xcel Energy is another example of a company that has used IT management and governance to transform its IT services (Xcel energy runs IT as a business with Mercury IT Governance Center). Xcel's goal was to shift IT discretionary spending toward strategic, value-creating solutions for the business and gain real-time visibility into the policies and status of the decision making and delivery processes. The first steps Xcel took to achieve its objectives were creating a program management office and implementing an IT management and governance solution to put business gates into its IT processes so that it could quickly identify projects that were unaligned with business goals or redundant of other projects. Xcel state that standardizing its IT business processes allowed it to combine separate customer service groups into a unified delivery model, yielding a thirteen percent reduction in operating expenses. The company was also able to obtain full participation by the company's business units to translate their strategic and operating requirements into an enterprise-wide technology strategy to keep business users involved in IT program and projects, thus maintaining alignment with evolving business goals and priorities. Xcel estimates that it derived the following quantifiable benefits:

10 million in avoided capital investments

3.7 million in avoided investment in non-viable projects

4.6 million contributed to earnings-per share

Twenty-one percent reduction in project change requests

Milestone delivery increased from fifty-six percent to eighty-three percent

IT Management and Governance Market

The market for IT management and governance software is experiencing growth, but from a customer and a new market entrant perspective (Gaughan and Durocher, 2004). Businesses are demanding that IT organizations do more work than their resources, time, budge and staff) allow. Companies are turning to products to help them run their IT operations as efficiently as possible and to help them determine what projects will deliver the best return on investment and align with business objectives.

According to industry analyst firm, AMR Research, the market for IT management and governance solutions is converging (Gaughan and Durocher, 2004). Best-of-breed suppliers include Artemis, Business Engine, ITM Software, Niku, Pacific Edge, PlanView, Primavera, ProSight, Systemcorp and Tenrox.

These vendors are being challenged by newer market entrants that include IT-focused infrastructure companies such as Mercury and Compuware as well as ERP players such as Lawson Software, Peoplesoft, Oracle and SAP. And, industry giant Microsoft remains a leader in more simplistic project management implementations.

IT Management and Governance Obstacles

During the Kellogg School of Management study of 130 Fortune 1000 chief information officers, Jeffery and Leliveld (2004) found that eighty-nine percent were aware of IT portfolio management and sixty-five percent believed that the approach yields significant business value. Yet, only seventeen percent of their organizations were realizing the full potential of IT portfolio management.

Why aren't executives adopting the practices that they believe in? Jeffrey and Leliveld (2004) offer several reasons. First, they theorize that IT people have poor financial skills to make them successful. Therefore, developing a business case in partnership with business-unit executives is difficult. Another issue is that business units often don't realize how critical their involvement is to be successful. It has been difficult for many CIO's to reach out to business units that have the "Call me if you have a problem" kind of attitude. Resistance to a centralized IT portfolio management process sometimes comes from an IT manager's fear of losing budgetary ownership and their desire to avoid corporate transparency.


Looking ahead, IT's impact on enterprise performance will continue to grow because it serves as the foundation for most new business strategies (Weill and Ross, 2004). In today's business environment, the demands faster responses and increased agility require that IT is an enabler of, not an obstacle to organizational change. This means that IT must support standardized process components, shared knowledge, instantaneous communications and electronic linkages. IT management and governance is an important new discipline for allowing IT to improve these elements. The benefits of IT management and governance are well documented, showing impressive results in company surveys and customer implementations. Just as companies have taken advantage of enterprise applications to transform their business operations, organizations will now seek to achieve the same level of discipline and efficiency in their IT operations. Off-the-shelf IT management and governance applications abound and will serve as the new ERP paradigm for IT, automating and coordinating key IT activities.


Conrad, K. And Beck, J. SGML, Hytime and organic information management models. Retrieved July 2, 2004 from Web site:

Gaughan, D. And Durocher, C. (2004, June 23). IT portfolio management software: clear benefits, converging marketplace. AMR Research Report.

McNurlin, B. And Sprague, R. (2002). Information systems management in practice, sixth edition. Upper Saddle, NJ: Prentice Hall.

IT governance executive summary. IT Governance Institute. Retrieved July 1, 2004 from Web site:

Jeffery, M. And Leliveld, I. (2004, Spring). Best practices in IT portfolio management. MIT Sloan Management Review.

Mercury Web site: Retrieved July 1, 2004 from Web site:

Nageshwar, N. (2004, June 29). Doing IT right. Fiji Times Online. Retrieved July 1, 2004 from Web site:

Value of project management in IT organizations. Center for Business Practices.

Weill, P. And Ross, J. (2004). IT governance. Boston: Harvard Business School Press.

Williams, P. (2002, February 8). Value vs. cost governing IT on a reduced budget. Computer Weekly. Retrieved July 2, 2004 from Web site:

Xcel energy runs IT as a business… [END OF PREVIEW] . . . READ MORE

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