Don't Just Lead, Govern: How Top-Performing Firms Govern IT

Abstract

Top-performing enterprises succeed in obtaining value from IT where others fail, in part, by implementing effective IT governance to support their strategies and institutionalize good practices. IT governance involves specifying decision rights and accountabilities for important IT decisions. The goal is to encourage "desirable behaviors" in the use of IT. In studying the IT governance of more than 250 enterprises in 23 countries, we found a wide array of IT governance arrangements. Enterprises assign "decision rights" to different "archetypes" (Business or IT Monarchy, Federal, Duopoly, Feudal, or Anarchy) to govern five key IT decisions (IT investment, architecture, principles, application needs, and infrastructure). Top-performing enterprises govern IT differently from each other and from average enterprises. Firms leading on growth decentralize more of their IT decision rights and place IT capabilities in the business units. Those leading on profit centralize more decision rights; senior business leaders make the major IT decisions. Top performers design their IT governance to reinforce their performance goals and link IT governance to the governance of their other key enterprise assets and desired behaviors. A case study of State Street Corporation illustrates IT governance evolution and a method to diagrammatically represent IT governance.

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