The Concept of Assessing Information Technology Governance Performance - Coursework Example

The Concept of Assessing Information Technology (IT) Governance Performance Student’s Name Institution Tutor’s Name Course Date The Concept of Assessing Information Technology (IT) Governance Performance Introduction Information technology (IT) is one of the most important tools that organizations use to compete effectively with one another in today’s unstable business environment. However, the IT concept and how it is controlled continue to become a challenge to many organizations as a result of the high dependence and pressure they placed on it. As a result of the over-dependency of organizations on IT, there is a need to draw a line between IT entities and how strategies for business direction can be achieved. It is evident that the strategic goal of the IT sector is the alignment between business and technology. Consequently, it is important for managers to identify factors that affect their organizations to be able to implement full IT governance in the firms. So far, no definite factors have been proven to exist that can be relied on to ensure that IT governance goals are successfully achieved. Consequently, the objective of this paper is to discuss the concept of assessing IT Governance performance and establish the factors that affect successful attainment of IT governance goals. This paper is divided into sections to help explain all the major aspects concerning the concept of assessing IT governance performance. The sections include: definition of key concepts regarding IT governance, the concept of IT governance performance, the importance of assessing IT governance, factors influencing the assessment of IT governance performance, and IT governance performance assessment approaches. Definitions of Key Concepts Information Systems: Refers to a professional discipline comprising managerial, operational, and strategic activities that deal in the processing, distribution, and application of information. Information Technology (IT): Refers to the engineering department that deals in the application of computers and other telecommunication devices to store, retrieve, and transmit data. Information Technology Governance (ITG): Refers to the section of an organization’s corporate governance that is concerned with performance of IT systems and IT risk management. Performance Measurement: This is a subject within the field of IT governance that is concerned with how IT performance is measured. IT Resource Management: This is a subject within the field of IT governance that deals in how IT resources are managed within an organization. Value Delivery: Refers to a subset of the concept of IT governance that is concerned with how value is delivered within an organization through its IT systems. Strategic Alignment: This is a subject within the concept of IT governance that is concerned with how an organization’s business strategic goals are aligned with its IT strategies. Risk Management: This is a subject within the concept of IT governance that is concerned with how risks are controlled by an organization by means of its IT systems. The Concept of IT Governance Performance IT governance, usually abbreviated as ITG, is considered one of the most important technological concepts ever invented. IT governance refers to a framework of how IT and all IT-related processes should be governed to enable organizations to achieve their IT-related goals. The concept of IT governance does not exist on its own, as it depends on the organizations’ corporate governance and other IT programs (Ali & Green 2012, p. 180). The most common business goals that organizations use IT governance to achieve include strategic alignment, risk management, value delivery, performance measurement, and resource management. For an organization to achieve the best IT governance, it should ensure that its IT governance processes are properly aligned with its business strategy objectives (Tallon 2008, p. 22). The successful implementation of IT governance to attain the intended IT governance goals is important given the current growth in IT content in business processes as well as the complexity of corporate IT environments. It is speculated that IT governance will be extremely important in the future as requirements for risk control, management, and governance continue to increase on a daily basis (Tallon 2008, p. 26). IT governance and investments are considered a centralized part within organizations’ managements despite the fact that the two IT aspects are controlled by all enterprise parts. It is evident that IT governance and investments are critical to the success of an organization; for that reason the two IT concepts need to have an effective overall structure and should be properly integrated into the intact organizational structure (Ali & Green 2012, p. 183). IT governance is now regarded as an element that every organization must have to enable it to enact new changes based on IT processes and strategies. IT governance constitutes the accountability of IT processes in an organization and the decisions regarding these processes reached within the organization. In most cases, the proper alignment of IT governance and business objectives may lead to the realization of such goals. When IT processes and investments are well aligned with business objectives, IT governance becomes easy to implement and consequently, effective (Tallon 2008, p. 22). Importance of Assessing IT Governance Performance IT personnel, before carrying out an effective IT governance assessment, need to understand the main purpose for which IT governance is intended. The main reason for IT governance is to assist organizations’ IT departments to provide an incorporated view across information technology, which normally runs from demand management, to architecture, to process activities, to service management, and finally, to other operations comprising operating systems and databases (Haes & Grembergen 2009, p. 124). IT governance provides organizations with a way to check and confirm that IT-related investments, processes, and decisions are strategically aligned with their organizational objectives. It is important to stress that IT governance is not a stand-alone procedure, but a combination of integrated processes and arrangements that enable organizations to make proper oversights for all their IT-related activities (Ko & Fink 2010, p. 663). This implies that organizations should insert IT governance to everything relating to IT functions. This is where most IT personnel normally go wrong when conducting IT governance for their organizations; such IT experts fail to understand the appropriate points where IT governance should be incorporated within the organization’s enterprises (Haes & Grembergen 2009, p. 127). Another issue that affects IT governance in many organizations is the lack of clearly defined IT decision-making roles and responsible authorities. Many organizations do not have clearly defined procedures for making IT-related decisions and lack well-defined authority levels that should be responsible for making such choices and roles. In fact, some organizations still struggle to integrate more strategic IT processes into their enterprises. Organizations without properly defined IT decision-making roles tend to make IT-related decisions when needs for IT-related activities arise. In such cases, the organizations are more likely to make wrong decisions than if such decisions are made in advance (Ko & Fink 2010, p. 670). For that reason, the most important things in IT governance are to understand IT decision making processes, and the responsibilities and accountability for such decisions. Business strategies and objectives can only be aligned with IT processes if well-made decisions are made and by assigning qualified IT experts to monitor the decision-making processes. The objective of IT governance is to establish decision-making processes that the organization’s IT functions need to develop with regard to its strategic goals (Haes & Grembergen 2009, p. 124). This implies that the desired levels of these IT-related decisions should be outlined within the organization’s operation procedures. Factors Affecting IT Governance Performance There are numerous factors affecting the performance of IT governance in an organization. These factors are the aspects all organizations should put into consideration when integrating IT governance into their enterprises. When these factors are well taken care of, organizations can effectively achieve its strategic goals via IT governance. The main factors known to affect IT governance performance include: value delivery, strategic alignment, performance measurement, IT resource management, and risk management. Value Delivery Value delivery refers to the execution of all IT processes in the entire delivery cycle, which ensures that IT value is realized in the organization within an appropriate budget and in the right time. The execution should also ensure that the right IT value is delivered with the right qualities to enable organizations to achieve their IT-related goals, such as cost optimization. The items contained in the strategies for attaining value delivery are subjective and as a result, difficult to measure. However, items can be transformed into business measurable elements, such as elapsed time for service attainment, competitive advantage, employee productivity, and customer satisfaction (Haseley & Brucker 2012, p. 57). To achieve effective IT value delivery, managers and directors should ensure proper management of the actual costs and all the returns on investment. IT value delivery greatly affects the way IT governance is performed in every organization. It is argued that when IT value is well delivered, IT performance becomes easier to perform. There are expectations that affect IT value delivery, consequently affecting IT governance performance. Some of those expectations include security, resilience and ease of use of the available IT processes, flexibility of the IT processes to allow for future requirements, and integrity and accuracy of the available IT processes (Lee, Chu & Tseng 2009, p. 172). Consequently, it is recommended that these expectations be considered properly to realize a better IT governance performance. Strategic Alignment Strategic alignment is an IT strategy that talks about the integration of future IT changes and expected business modifications within the organization. As a result, strategy alignment enables organizations to establish whether their IT investments are in line with their current strategy and enterprise objectives. The main objective that an organization can attain with strategy alignment is the possibility of moving in the right direction with regard to IT processes and governance performance (Lee, Chu & Tseng 2009, p. 174). Organizations rely on strategy alignment to define, validate, and maintain the IT value proposition within their enterprises. There are several factors that organizations need to consider to realize effective strategy alignment of the IT processes with the organizational objectives. Most of these factors are important since they help organizations to make better IT-related decisions. Some of these factors include business strategic goals and competitive environments, costs, risks, and benefits of current IT, expected changes in IT, and lessons experienced as a result of IT failures in the past. When these factors are properly taken care of, aligning IT processes with business strategic goals becomes easier (Haseley & Brucker 2012, p. 57). Consequently, IT governance performance becomes effective in those organizations that optimize the above named factors. Performance Measurement To remain relevant in today’s competitive and unstable business environment, organizations should mobilize both tangible and intangible assets. This may give organizations the power to also compete effectively in the information-based world economy. The main need in performance measurement is for organizations to track and follow closely major business activities, such as project completion, strategy implementation, process performance, resource application, and service delivery, through the use of balanced scorecards and other measurement criteria that can transform strategy into actions that can help the organizations achieve objectives, which are measurable beyond predictable accounting (Hung & Tang 2008, p. 552). There are also other aspects that affect performance measurement, which in turn influence IT governance performance. These aspects need to be checked in order to ensure that performance measurement remains effective. These aspects include financial perspectives, which greatly depend on the organization’s ability to satisfy stakeholders, learning perspectives and the firm’s innovation capacity, customer perspectives, including achievement of financial objectives through better customer services, and internal processes perspectives, which comprise the satisfaction accorded to shareholders (Haseley & Brucker 2012, p. 57). IT Resource Management IT resource management has been a real problem to many organizations in today’s business environment. Most organizations find it difficult to optimize the costs of their IT investments, while at the same time maximizing their efficiency. These organizations do not know the places where to outsource for IT services and how to manage their IT services to help them deliver value as promised with satisfactory prices (Hung & Tang 2008, p. 557). It is difficult for such organizations to attain optimal investment with their IT services. It is argued that for effective expenditures to be made on IT operational governance, effective evaluation of cost bases is a pre-requisite. In IT governance, the resource management should be a responsibility of the directors and managers who need to find ways of effectively attaining resource management goals by considering the relevant factors. Some of the factors that the management may need to consider when establishing how to achieve resource management goals include ensuring improved recruitment and hiring of workforce, which result in retaining highly skilled IT personnel, ensuring that the IT personnel are trained and understand their responsibilities within the organization’s IT systems, and availing the appropriate facilities needed by workers to carry out their responsibilities (Hung & Tang 2008, p. 559). Risk Management Risk management is considered appropriate in IT governance following the fact that IT is, in itself, rather vulnerable and as a result, requires close monitoring. The main factor that increases risk management in most organizations is the quest to demonstrate effective enterprise governance of the shareholders and other partners. Apart from the usual financial risks, enterprise risks may also come in other forms, such as information security and technology risks. For organizations to manage risks effectively, their senior corporate officers need to embed risk management duties within their organizational structure (Lee, Chu & Tseng 2009, p. 179). Risk management within an organization mainly depends on the organization’s needs to control and protect its current and future IT assets and investments. There are several benefits that organizations enjoy when they manage risks effectively. Some of them include proactive and transparent methodologies, which can be used to establish utilized competitive advantages, improved ability to formulate cost-efficiency, improved capacity to respond to any changes in IT, and increased transparency regarding significant risks as well as ways of addressing them (Haseley & Brucker 2012, p. 57). Major IT Governance Performance Assessment Approaches Studies show that many organizations take a lot of time before they conduct assessments on their IT governance to check how best their information technology services work. This is mostly due to the fact that these organizations lack the one-size-fits all approach, which can enable such firms to carry out comprehensive IT governance assessments. Another reason that makes some organizations delay in assessing their IT governance is due to the time spent in assessing IT governance (Chari, Devaraj & David 2008, p. 225). This may become worse if the internal audit team of a given organization does not know what to do or even where to begin the assessment process from. The requirements of IT governance normally vary from one organization to another, since different firms certainly have different needs and strategic goals, which, in turn, require different IT products and services. Consequently, it is upon individual organizations to ensure that they deign the most appropriate approaches that can ensure that their IT-related decisions are in line with their enterprise strategic goals. This way, the organizations are unlikely to encounter a lot of difficulties when conducting IT governance assessments (Jeffers, Muhanna & Nault 2008, p. 707). However, organizations can make the processes of assessing IT governance and evaluating how effective the governance is if they put the necessary steps in place. The two processes are not as complex and resource-consuming as some organizations perceive them to be. Organizations stand to gain a lot if they ensure that their internal audit teams are well trained to conduct a proper assessment of their IT governance. As a result, the organizations can be in a better position to align their IT governance and investments with their enterprise objectives and goals (Sanders 2008, p. 351). This move can also help the organizations to ensure that the selected IT governance assessment approaches are ‘integrate-able’ with their current corporate governance structures and operations. The one-size-fits-all assessment approach can be supplemented by an enterprise-level governance assessment approach for organizations that want to carry out an in-depth IT governance assessment. The latter assessment approach, which is an enterprise-level governance review, is the most effective assessment method used to establish the current state of IT governance in an organization. This assessment approach enables organizations’ internal audit teams to conduct a comprehensive assessment that examines all the major areas that affect their IT governance performance (Jeffers, Muhanna & Nault 2008, p. 713). The enterprise-level IT governance review, also known as top-down approach, is quite beneficial as it allows auditors to conduct a thorough assessment of the firm’s IT governance performance. However, the top-down method is time-consuming and quite expensive sometimes, since it involves an intense, full assessment of IT governance. This method can be overwhelming and extremely taxing to the audit departments of the organization. The method may become overwhelming as a result of the limited availability of IT-specific auditing resources in most organizations (Chari, Devaraj & David 2008, p. 227). As a result of the limitation of IT-auditing resources, organizations need to control the frameworks, research, and previous audit operations to ensure that the problem of lack of enough resources does not affect the auditing processes. However, there are several ways by which the numerous processes involved in the enterprise-level governance review approach can be minimized. Firstly, the audit team needs to identify areas within the organization’s IT operations that might have been audited in other processes before they begin assessing its IT governance performance. There is always a possibility that many areas that ought to be appraised in an IT governance assessment could have been evaluated in other recent past audit activities (Jeffers, Muhanna & Nault 2008, p. 719). For instance, organizations, as a result of their compliance to Sarbanes-Oxley compliance assessments, are likely to undertake risks assessments and controls, which are related to their financial systems. For that reason, when planning to carry out IT governance performance assessment, the audit teams should identify the areas that might have already been audited to ensure that no time and resources are wasted in redoing what has already been done. Secondly, the enterprise-level IT governance assessment can be simplified through the reduction of the internal audit review process by examining a specific process, function, or service area within information technology, in a given organization. The main factors that the audit team of the organization needs to consider, when selecting governance risk areas to examine, are its IT activities and strategic goals (Chari, Devaraj & David 2008, p. 230). Through this comprehensive assessment method, an audit team can effectively establish how the focus areas are incorporated into other strategic IT processes. The method also allows an audit team to ensure that an organization’s IT goals are properly aligned with the way it manages its resources, including human resources (Sanders 2008, p. 356). Conclusion The concept of IT governance helps business organizations to maintain their strategic goals on check, while, at the same time, ensuring that their IT delivery remains well balanced and easily predictable. The main factors that influence an organization’s IT governance approaches are the uniqueness of its business setup, and its IT needs and compliance. Despite these factors, which seem to complicate the IT governance assessment process, the process of evaluating IT governance performance should not be complex in any way and should not be too resource-intensive if it is well planned for. The most effective way to ensure that IT governance processes do not become complex is by ensuring that business processes are properly aligned with IT governance and that any unnecessary areas within the governance processes are exempted from the assessment. Business organizations, with assistance from their IT internal audit teams and IT leadership, need to upgrade their IT governance approaches on a continuous basis to ensure that the IT-related decisions they make produce the most desired business goals. IT governance assessment should not be taken as a one-time activity, but as a continuous process that needs to be undertaken regularly. The business environment and information technology are unstable fields, which keep on changing with time. For that reason, it is only through the implementation of effective IT governance assessment approaches that organizations can effectively adapt to the ever-fluctuating business environment and the current changed in technology. 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