IT Governance & Strategic Sourcing
Autumn 2023
IT Governance ............................................................................................................................................. 2
IT Governance Arrangement Matrix ................................................................................................... 3
IT Governance in Practice ..................................................................................................................... 4
Digital Transformation: Implications for Governance ...................................................................... 5
Digital Transformation ............................................................................................................................... 6
Dealing with uncertainty ....................................................................................................................... 6
The Complexity of Digital Transformation......................................................................................... 7
Paradoxical Tensions of Digital Transformation ............................................................................... 8
Digital (Transformation) Strategy ......................................................................................................... 9
The Building Blocks of the Digital Transformation Process ............................................................ 9
IT Outsourcing .......................................................................................................................................... 11
Transaction Cost Economics/Theory (TCE/TCT) ........................................................................... 11
IT Outsourcing ...................................................................................................................................... 12
IT outsourcing strategies ..................................................................................................................... 13
Relational Dynamics in IT Outsourcing............................................................................................. 15
IT outsourcing risks .............................................................................................................................. 16
, IT Governance
IT Governance describes the decision rights and accountability framework used to ensure the
alignment of IT-related activities with the organization’s strategy and objectives
Key dimensions:
• Focus (what to govern): what IT-related activities and artifacts must be aligned with
organizational strategy and objectives
• Scope (who to govern): which actors and stakeholders are held accountable for ensuring IT’s
contribution to the organization
• Patterns (how to govern): what mechanisms are put in place to ensure ‘desirable’ IT-related
activities and outcomes
IT governance is about systematically determining who makes each type of decision (decision
rights), who has input into a decision (input right), and how these people/groups are held
accountable for their role
Enterprise architecture is the organizing logic for business processes and IT infrastructure,
reflecting the standardization and integration requirements of the firm’s operating model
IT can become proactive if businesses define their operating model
• Operating model: the necessary level of business process integration and standardization
for delivering goods and services to customers
- Diversification: low standardization, low integration
- Unification: high standardization, high integration
- Coordination: low standardization, high integration
- Replication: high standardization, low integration
, IT Governance Arrangement Matrix
Five key IT Decisions
IT principles decisions
High-level statements about how IT is used in the business
IT architecture decisions IT infrastructure decisions IT investment and
Organizing logic for data, Centrally coordinated, shared prioritization decisions
applications, and IT services that provide the Decisions about how much
infrastructure captured in a foundation for the enterprise’s and where to invest in IT,
set of policies, relationships, IT capability including project approvals
and technical choices to and justification techniques
achieve desired business and Business application needs
technical standardization and Specifying the business need
integration for purchased or internally
developed IT applications
• Decisions can flow ‘top-down’ from the principles, the architecture, and the investment
criteria
• Business needs and opportunities identify the need for IT applications, which ‘bubble up’ to
create new infrastructure requirements
• The enterprise architecture translates IT principles into a clear vision of how IT will enable
business objectives
• Many enterprises are shifting business unit infrastructure capability to enterprise level to
achieve business objectives such as a single point of customer contact or economies of scale
• Decision-makers must recognize when architecture sensibly limits business application
choices and when new business opportunities should lead to new architectures or changes
in technology standards
IT governance archetypes
C-level executives Corporate IT and/or Business unit leaders or key
business unit IT business process owners
Business
monarchy
IT monarchy
Feudal
Federal
IT duopoly
Anarchy
• Anarchy: isolated individual or small group decision-making (very rare)
Autumn 2023
IT Governance ............................................................................................................................................. 2
IT Governance Arrangement Matrix ................................................................................................... 3
IT Governance in Practice ..................................................................................................................... 4
Digital Transformation: Implications for Governance ...................................................................... 5
Digital Transformation ............................................................................................................................... 6
Dealing with uncertainty ....................................................................................................................... 6
The Complexity of Digital Transformation......................................................................................... 7
Paradoxical Tensions of Digital Transformation ............................................................................... 8
Digital (Transformation) Strategy ......................................................................................................... 9
The Building Blocks of the Digital Transformation Process ............................................................ 9
IT Outsourcing .......................................................................................................................................... 11
Transaction Cost Economics/Theory (TCE/TCT) ........................................................................... 11
IT Outsourcing ...................................................................................................................................... 12
IT outsourcing strategies ..................................................................................................................... 13
Relational Dynamics in IT Outsourcing............................................................................................. 15
IT outsourcing risks .............................................................................................................................. 16
, IT Governance
IT Governance describes the decision rights and accountability framework used to ensure the
alignment of IT-related activities with the organization’s strategy and objectives
Key dimensions:
• Focus (what to govern): what IT-related activities and artifacts must be aligned with
organizational strategy and objectives
• Scope (who to govern): which actors and stakeholders are held accountable for ensuring IT’s
contribution to the organization
• Patterns (how to govern): what mechanisms are put in place to ensure ‘desirable’ IT-related
activities and outcomes
IT governance is about systematically determining who makes each type of decision (decision
rights), who has input into a decision (input right), and how these people/groups are held
accountable for their role
Enterprise architecture is the organizing logic for business processes and IT infrastructure,
reflecting the standardization and integration requirements of the firm’s operating model
IT can become proactive if businesses define their operating model
• Operating model: the necessary level of business process integration and standardization
for delivering goods and services to customers
- Diversification: low standardization, low integration
- Unification: high standardization, high integration
- Coordination: low standardization, high integration
- Replication: high standardization, low integration
, IT Governance Arrangement Matrix
Five key IT Decisions
IT principles decisions
High-level statements about how IT is used in the business
IT architecture decisions IT infrastructure decisions IT investment and
Organizing logic for data, Centrally coordinated, shared prioritization decisions
applications, and IT services that provide the Decisions about how much
infrastructure captured in a foundation for the enterprise’s and where to invest in IT,
set of policies, relationships, IT capability including project approvals
and technical choices to and justification techniques
achieve desired business and Business application needs
technical standardization and Specifying the business need
integration for purchased or internally
developed IT applications
• Decisions can flow ‘top-down’ from the principles, the architecture, and the investment
criteria
• Business needs and opportunities identify the need for IT applications, which ‘bubble up’ to
create new infrastructure requirements
• The enterprise architecture translates IT principles into a clear vision of how IT will enable
business objectives
• Many enterprises are shifting business unit infrastructure capability to enterprise level to
achieve business objectives such as a single point of customer contact or economies of scale
• Decision-makers must recognize when architecture sensibly limits business application
choices and when new business opportunities should lead to new architectures or changes
in technology standards
IT governance archetypes
C-level executives Corporate IT and/or Business unit leaders or key
business unit IT business process owners
Business
monarchy
IT monarchy
Feudal
Federal
IT duopoly
Anarchy
• Anarchy: isolated individual or small group decision-making (very rare)
