Summary
IT Governance and Strategic
Sourcing
,Table of Contents
Lecture 1: IT governance ......................................................................................................................... 1
Tutorial 1: IT governance..................................................................................................................... 3
Lecture 2: Uncertainty & digital transformation ..................................................................................... 6
Lecture 3: The complexity and strategies of digital transformation ..................................................... 12
3.1. The complexity of digital transformation ................................................................................... 12
3.2. Paradoxical tensions of digital transformation .......................................................................... 14
3.3. Digital transformation strategy .................................................................................................. 15
Lecture 4: IT outsourcing ....................................................................................................................... 20
4.1. IT outsourcing ............................................................................................................................. 20
4.2. IT outsourcing theory & research ............................................................................................... 21
EXTRA: KPMG guest lecture .................................................................................................................. 29
Lecture 5: IT outsourcing in practice ..................................................................................................... 35
Tutorial 5: Managing suppliers .......................................................................................................... 44
Lecture 6: Course review ....................................................................................................................... 47
EXTRA: Atos guest lecture ..................................................................................................................... 48
IT outsourcing partnership elements ................................................................................................ 48
Stakeholders, motives, signals, considerations ................................................................................. 51
Ambitions .......................................................................................................................................... 53
Process to arrive at a partnership: .................................................................................................... 56
Article 1: (Vaia et al., 2022) – Digital governance mechanics & principles ........................................... 61
Exam example ....................................................................................................................................... 63
,Lecture 1: IT governance
IT governance (Gregory et al., 2018): describes the decision rights and accountability framework used
to ensure the alignment of IT-related activities with the organization’s strategy and objective.
Key dimensions of IT governance:
• Focus of IT governance (what to govern): what IT-related activities and artifacts must be
aligned with organizational strategy and objectives.
• Scope of IT governance (who to govern): which actors and stakeholders are held accountable
for ensuring IT’s contribution to the organization.
• Patterns of IT governance (how to govern): what mechanisms are put in place to ensure
“desirable” IT-related activities and outcomes.
About IT governance: IT governance is not about what specific decisions are made, but rather it is
about systematically determining who makes each type of decision (decision rights), who has input to
a decision (input right) and how these people (or groups) are held accountable for their role.
• Managing a key management paradox: simultaneously empowering and controlling.
Importance of IT governance: IT governance matters because it facilitates the benefits received from
IT investments.
• Does IT matter? (Carr, 2003).
• Extracting value from IT requires innovations in business practices.
• IT spending rarely correlates with superior financial results.
• Need to change practices and exploit new capabilities.
• Link it to innovation.
• ROIIT = f(BPI, Governance, matched IT investments).
5 key IT decisions:
• IT principle: high level statement about how IT is used in the business.
• IT architecture: an integrated set of technical choices to guide the organization in satisfying
business needs. The architecture is a set of policies and rules for the use of IT and plots a
migration path to the way business will be done (includes data, technology, and application).
It is the organizing logic for business processes and IT infrastructure.
• IT infrastructure strategies: strategies for the base foundation of budgeted-for IT capability
(both technical and human), shared throughout the firm as reliable services, and centrally
coordinated (e.g., network, help desk, shared data).
• Business application needs: specifying the business need for purchased or internally
developed IT applications.
• IT investment and prioritization: decisions about how much and where to invest in IT,
including project approvals and justification.
1
, IT governance archetypes: indicates the degree of centralization and who holds the decision rights or
input rights for a particular IT decision:
• Business monarchy: an individual or group of business executives (i.e., CxO’s). Includes
committees comprised of senior business executives (may include CIO). Excludes IT executives
acting independently.
• IT monarchy: individuals or groups of IT executives.
• Feudal: business unit leaders, key process owners or their delegates.
• Federal: C level executives and at least one other business group (e.g., CxO and BU leaders) –
IT executives may be an additional participant. Equivalent to a country and its states working
together.
• IT duopoly: IT executives and one other group (e.g., CxO or BU leader).
• Anarchy: each individual user.
2
IT Governance and Strategic
Sourcing
,Table of Contents
Lecture 1: IT governance ......................................................................................................................... 1
Tutorial 1: IT governance..................................................................................................................... 3
Lecture 2: Uncertainty & digital transformation ..................................................................................... 6
Lecture 3: The complexity and strategies of digital transformation ..................................................... 12
3.1. The complexity of digital transformation ................................................................................... 12
3.2. Paradoxical tensions of digital transformation .......................................................................... 14
3.3. Digital transformation strategy .................................................................................................. 15
Lecture 4: IT outsourcing ....................................................................................................................... 20
4.1. IT outsourcing ............................................................................................................................. 20
4.2. IT outsourcing theory & research ............................................................................................... 21
EXTRA: KPMG guest lecture .................................................................................................................. 29
Lecture 5: IT outsourcing in practice ..................................................................................................... 35
Tutorial 5: Managing suppliers .......................................................................................................... 44
Lecture 6: Course review ....................................................................................................................... 47
EXTRA: Atos guest lecture ..................................................................................................................... 48
IT outsourcing partnership elements ................................................................................................ 48
Stakeholders, motives, signals, considerations ................................................................................. 51
Ambitions .......................................................................................................................................... 53
Process to arrive at a partnership: .................................................................................................... 56
Article 1: (Vaia et al., 2022) – Digital governance mechanics & principles ........................................... 61
Exam example ....................................................................................................................................... 63
,Lecture 1: IT governance
IT governance (Gregory et al., 2018): describes the decision rights and accountability framework used
to ensure the alignment of IT-related activities with the organization’s strategy and objective.
Key dimensions of IT governance:
• Focus of IT governance (what to govern): what IT-related activities and artifacts must be
aligned with organizational strategy and objectives.
• Scope of IT governance (who to govern): which actors and stakeholders are held accountable
for ensuring IT’s contribution to the organization.
• Patterns of IT governance (how to govern): what mechanisms are put in place to ensure
“desirable” IT-related activities and outcomes.
About IT governance: IT governance is not about what specific decisions are made, but rather it is
about systematically determining who makes each type of decision (decision rights), who has input to
a decision (input right) and how these people (or groups) are held accountable for their role.
• Managing a key management paradox: simultaneously empowering and controlling.
Importance of IT governance: IT governance matters because it facilitates the benefits received from
IT investments.
• Does IT matter? (Carr, 2003).
• Extracting value from IT requires innovations in business practices.
• IT spending rarely correlates with superior financial results.
• Need to change practices and exploit new capabilities.
• Link it to innovation.
• ROIIT = f(BPI, Governance, matched IT investments).
5 key IT decisions:
• IT principle: high level statement about how IT is used in the business.
• IT architecture: an integrated set of technical choices to guide the organization in satisfying
business needs. The architecture is a set of policies and rules for the use of IT and plots a
migration path to the way business will be done (includes data, technology, and application).
It is the organizing logic for business processes and IT infrastructure.
• IT infrastructure strategies: strategies for the base foundation of budgeted-for IT capability
(both technical and human), shared throughout the firm as reliable services, and centrally
coordinated (e.g., network, help desk, shared data).
• Business application needs: specifying the business need for purchased or internally
developed IT applications.
• IT investment and prioritization: decisions about how much and where to invest in IT,
including project approvals and justification.
1
, IT governance archetypes: indicates the degree of centralization and who holds the decision rights or
input rights for a particular IT decision:
• Business monarchy: an individual or group of business executives (i.e., CxO’s). Includes
committees comprised of senior business executives (may include CIO). Excludes IT executives
acting independently.
• IT monarchy: individuals or groups of IT executives.
• Feudal: business unit leaders, key process owners or their delegates.
• Federal: C level executives and at least one other business group (e.g., CxO and BU leaders) –
IT executives may be an additional participant. Equivalent to a country and its states working
together.
• IT duopoly: IT executives and one other group (e.g., CxO or BU leader).
• Anarchy: each individual user.
2
