Transcript CIS 590 IS/IT Policy and Strategy: The Partnership Roles of the CEO and CIO in Governance.

CIS 590 IS/IT Policy and Strategy:
The Partnership Roles
of the
CEO and CIO in Governance
GOVERNANCE: WHAT DOES IT MEAN?
Question
What is the meaning of governance, particularly when associated with IT?
Is it a function within IT organization or merely a set of practices?
Answer
The terms "governance" or "enterprise governance" have been widely used
for a long time, in many different public and private organizations, to
denote the act, process, manner or power of exercising authority and
control. During the last few years, governance has been combined with IT
more and more frequently, giving IT governance. Everybody (CEOs,
CFOs, CIOs, GTOs, etc.) agrees that strategic alignment of business and IT
strategies is critical to attain business goals. The appearance of IT
governance has essentially been driven by the necessity for IT organization
to interact more closely with global enterprises to achieve alignment (see
next slide). That is precisely the key contributing role, or raison d'etre, of
IT governance.
Governance Interplay: Enterprise and IS/IT
Enterprise
IS/IT
Activities
Exchange Information
Activities
Governance
Set Control Objectives & Rules
Governance
Strategies
Common Practices
Strategies
Alignment gap
GOVERNANCES INTERPLAY:
ENTERPRISE AND IT
IT governance may be presented as the organizational capacity to control the
formulation, valuation and implementation of IT strategy, tightly aligned with
business strategy, and as a guide to proper direction for the purpose of achieving
the business goals of the enterprise.
Simply put, IT governance is a combination of processes, practices, rules and
relationships. IT governance may be exercised according to different models ruled
by factors such as organization, culture and existing IT relationships within the
enterprise. However, to be effective and successful IT governance has to be
practiced in all circumstances, with attitudes favoring negotiation, diplomacy and
communication, to be perceived as a true and active facilitator.
When appropriately applied, IT governance brings additional benefits or
contributions, such as:
• It helps organizations move forward by improving their perceptions of IT, from
an enabler of an enterprise's strategy, toward an integral part of a strategy.
• It raises the level of mutual understanding with the business.
• It brings consistency across the IT organization and enterprise, particularly when
acting in a federative or shared mode.
BUILDING THE GLOBAL IT ORGANIZATION:
TWO MODELS, TWO APPROACHES,
TWO CIO LEADERSHIP STYLES
OUR POSITION
Today's companies are running global businesses or trying to make their businesses
more global. In response, IT organizations are expected to become more global.
Two distinct types of global IT organizations:
1. centralized, in which the global CIO has direct authority over all IT resources,
and
2. decentralized, in which IT resources report to local or regional business
management. or a global business unit and have "dotted-line" reporting to a
global CIO.
The different levels of CIO authority and resources require different leadership styles.
In the centralized model, the global CIO retains ultimate accountability over
strategy and budgets, project portfolio, staff, major suppliers and senior executive
reporting.
In the decentralized model, the global CIO has no direct responsibility over the
sometimes numerous local CIOs and their organizations. Here, the only smart
way to lead is through a facilitated leadership style, with the CIO creating forums
where group CIOs can come together to share best practices, debate issues and
agree on common approaches.
PROOF/NOTES
DRIVERS OF GLOBALIZATION
1. Businesses are becoming more global.
2. Mergers and acquisitions (M&As) have created instant global
organizations.
3. The Web makes products, services and customers global. .
4. Businesses need to contain IT costs.
5. There is a trend toward corporate shared services as a way to "force"
synergies on very autonomous business units that do little sharing on
their own. IT is one of these "shared services."
BENEFITS OF GLOBALIZATION
1 .Global technology solutions with worldwide support.
2. IT cost containment.
3. Operational synergies and innovation through collaboration and
knowledge sharing.
ADVANTAGES OF A CENTRALIZED MODEL
The centralized model can more easily deliver on the benefits of globalization
because of the direct control over all IT resources.
The global CIO of a centralized IT organization is an executive leader who:
• Has direct report responsibility over all IT staff.
• Sets objectives for his/her direct reports based on the IT strategy, empowers
and coaches them.
• Retains ultimate accountability over IT budgets and operations, project
portfolio, major suppliers and senior management reporting.
• Identifies pockets of best practices across the world and works to ensure their
worldwide adoption.
• Reports into global executive management CEO or CFO).
The typical leadership team composition and other global working groups in a
centralized model consists of a global CIO and regional CIOs (in Europe often titled
"regional IS director") or a global CIO and business unit CIOs.
ADVANTAGES OF A DECENTRALIZED MODEL
The decentralized model is more suited for businesses that require strong local or
regional autonomy or have very heterogeneous business units. This model makes it
harder for the CIO to deliver on the potential benefits of IT globalization.
The global CIO of a decentralized IT organization is a skilled facilitator leader who:
• Reports into senior executive management (CEO or CIO). .
• Has no direct responsibility over IT staff, only a dotted-line reporting relationship (with
the exception of a small corporate IT team).
• Has a carefully scoped mandate to build a group approach in certain areas of IT:
standards and security, telecommunications, global directory, global strategic projects.
• Sponsors group CIO meetings and other initiatives to build a common approach in
these areas or to identify and catalyze other synergies across IT units.
Typical Teams/Groups
• A global CIO who has a small corporate IT staff to support the areas covered by the
CIO 's mandate.
• A constellation of CIOs of different business units or countries/regions report to
business management. They can number up to a few dozen. Each CIO has a different
power base and influence level.
• A few corporate-sponsored working groups consisting of any mix of group CIOs or
senior IT managers in the units, collaborating on areas of common interest.
Organizational Characteristics of Global IT Organizations
Centralized Global IT Organization
Decentralized Global IT Organization
Usually consists of three to four regions: the Americas,
Europe/Middle East/Africa (EMEA) and Asia Pacific.
Large corporations can have a large number of unit CIOs
(We counted as many as 50 in one organization)
Generally a previous centralization wave has yielded regional
consolidation of IT units with consolidated reporting into a
regional, CIO or regional IT director.
There is usually no regional consolidation of IT units or IT
reporting.
The small leadership team consisting of the global and regional
CIOs can agree on IT strategy and management agenda and
work together toward its implementation.
There is some disparity across regions in organizational structure
and technology platforms.
This organizational model of governance makes it possible to:
•
Set a global IT strategy and budget
•
Manage corporate project and supplier portfolios
•
Allocate IT resources across the world as part of career
•
development or in response to day-to-day skills requirements
•
Establish or leverage competence centers anywhere in the
world for design, development, support or operations
•
Centralize the production of IT executive reports
•
Foster consistent practices worldwide
•
Provide staff with inter-regional career development
•
opportunities
IT staff reports into business unit or country/regional
management.
There is wide disparity between the respective IT
organizations In size, operational footprint,
competence levels, corporate culture, management
practices.
ISSUES AND BARRIERS FACED BY CIOs
The main issues for global CIOs of centralized IT organizations are:
• the cohesiveness of the IT global leadership team and the individual
competence of its members,
• the level of customization required by business unit or regional business
management and
• the real-life difficulty of embedding consistent practices worldwide
despite a favorable governance structure.
For global CIOs of decentralized IT organizations, the barriers to effective
globalization of IT stem from:
• the potentially conflicting business-unit driven agendas and needs of all
the local CIOs,
• the lack of centralized governance of budgets and staff and
• the organizational diversity across business or local units (see Table on
next slide).
Issues and Barriers Faced by CIOs
Centralized Global IT Organization
Decentralized Global IT Organizations
The degree of commitment of each regional CIO
to the global strategy and management
agenda
Potentially competing agendas of the different unit
CIOs who represent the priorities of their business
management; these priorities are not necessarily
aligned across business units or countries
The leadership ability of each regional CIO
The degree of customization sought by business
unit or regional business management in their
technology solutions and services
Strong organizational heterogeneity due to the
affiliation with different business units or local
operating units.
Heterogeneous corporate cultures across units, and
technological diversity (platforms, infrastructure).
The degree of organizational heterogeneity or
differences in corporate culture left over from
preglobalization and/or pre-M&A days
Difficulty to implement a global IT strategy
The real-life difficulty of embedding consistent
managerial and technical practices worldwide
Inability to allocate IT resources across the world or to
manage suppliers globally.
The degree of technological diversity (technology
platforms, infrastructure)
Inability to centralize the production of IT executive
reports since each IT unit reports to its own
business or local management
The degree of localization vs. the degree of
commonality in the development of new IT
solutions
Inability to set a corporate IT budget and manage a
corporate project portfolio.
Few incentives to establish or leverage competence
centers anywhere in the world
Few levers to foster consistent practices worldwide,
and difficulty to provide staff with interregional
career development opportunities
RISKS
The two types of CIOs face different risks in their jobs. We've observed two main
risks for the CIOs of centralized organizations:
1. not going far enough in the pursuit of technical, managerial and organizational
standardization, not fully leveraging their authority and thereby not achieving
the full benefits of globalization, and
2. not being tightly aligned with local and regional business management, with a
perceived lack of proactivity and responsiveness in meeting needs.
The two main risks for the corporate CIOs of decentralized organizations we've
observed include:
1. being too directive in their leadership style by pushing unilateral corporate
strategy and decisions, which generates unnecessary push-back from unit CIOs
due to the lack of open debate and
2. not being consistent, innovative or bold enough in the creation of frequent
forums where all the unit CIOs can come together to work through issues.
CRITICAL SUCCESS FACTORS FOR CIOs
1)
2)
3)
Keeping corporate headcount very light, and hiring only outstanding, seasoned
and multilingual professionals with excellent interpersonal and facilitation skills.
Managing the team tightly is important, since most of what they do has worldwide
impact.
Setting aside a significant travel and meeting budget for face-to-face interaction
and agreement on the mix and role of preferred virtual collaboration media.
Making sure all global projects have the following characteristics:
-A global budget with clear contribution from local units or, alternatively, clearly
agreed local budgets.
-A global project manager with clear business unit or regional/local unit face-offs.
-Cross-regional design and development teams.
-Clear process to collect local/regional requirements, validate choices.
-Clear resource allocation and accountability for development and rollout.
Chaos results when these rules are not applied to global projects.
CRITICAL SUCCESS FACTORS FOR THE
CORPORATE ClOs IN THE CENTRALIZED MODEL
Global CIOs of centralized IT organizations will succeed if they take
advantage of the centralized governance structure to achieve the full benefits
of globalization.
• Maintain a team of regional IT directors:
• Set clear objectives for the regional CIOs and corporate staff, empower and
coach them, implement consistent and formalized monthly reporting.
• Organize frequent working sessions of the global leadership team to build
intimacy and trust among the regional IT directors and between them and
corporate staff. Quarterly face-to-face meetings and biweekly conference
calls allow them to work through issues jointly and review progress on the
shared management agenda.
CRITICAL SUCCESS FACTORS FOR THE
CORPORATE ClOs IN THE CENTRALIZED MODEL
Jointly, with your leadership team of regional CIOs, define a global IT
management agenda for the year consisting of managerial and
technical tracks:
• The managerial track seeks to achieve global collaboration and
consistency in all areas of IT management, including the yearly IT
plan, the regional steering committees, project management, balanced
scorecard, organizational issues, core IT process improvement,
executive reporting and all HR-related issues.
• The technical track addresses global projects, architecture, technology
standards, new technologies and innovation, technical efficiencies,
security and disaster recovery procedures. This track is led by the
corporate senior technical manager and is characterized by the
establishment of interregional working groups on these subjects.
Put in place a single budget structure with consistent line-item definitions,
similar spending approval process and common tracking of actuals and
forecasts. .
SETTING UP A CORPORATE STAFF
Fill the following Corporate Positions at corporate headquarters:
• IT financial controller to help build and manage global and regional
budgets.
• Project managers to lead global projects such as, Intranet, ERP, data
warehouse (unless highly qualified resources exist in the regions, but this is
seldom the case).
• Architects to facilitate a common architecture definition and technical
directors to oversee global infrastructure and act as "hit men" in cases of
high-visibility technical problems.
• Supplier management to establish the basis for global supplier
management.
• HR management to support local HR in recruiting, career paths and
development.
• Optionally, strategy facilitation to prepare and facilitate steering committee
meetings, solicit bottom-up strategy inputs from the regions, document
strategy.
SETTING UP A CORPORATE STAFF
Working with business and senior management:
• Visit the regions frequently (more than 50 percent of the time), bond with regional
business management.
• Establish a standard and agreed way to justify, prioritize and approve projects
worldwide.
• Establish effective regional IT steering committees that are managed consistently
across regions.
• Consolidate regional reporting into a global IT activity report and carefully stage
manage that within-the global executive team.
• Hire consulting help if a change program is required to embed consistent
practices worldwide.
SETTING UP A CORPORATE STAFF
Globalizing the broader IT organization:
• Sponsor the establishment of competence centers in high-impact areas,
Competence centers can be of two types:
– operational, where critical activity is entrusted or 'outsourced" to a
particular region or set of regional resources (e.g." Web
development) and
– knowledge based, with the main objective of achieving consistency
and sharing best practices in IT methods or technologies (e.g.,
project management).
• Cross-fertilize across regions by introducing interregional career paths
for senior IT managers and high-potential staff. Move people across as
key positions open up or unforeseen challenges call for special
competencies. Plan successions for key jobs globally.
CRITICAL SUCCESS FACTORS FOR GLOBAL ClOs
IN THE DECENTRALIZED MODEL
Global CIOs of decentralized IT organizations will succeed if they adopt a
facilitated leadership style, take a more incremental approach that builds on
their wins and focus on relationship building with both unit CIOs and senior
business management.
• Adopt a facilitated leadership style for the global CIO, in particular, but also
for all corporate IT staff. Avoid the common mistake of adopting the executive
leadership style. Facilitated leadership is the preferred leadership style when
there is no direct or reporting control over people. This leadership style is
characterized by the seeking of true win/win for all parties through conflict
resolution, building teams with shared objectives and common approaches,
open and honest debate of issues and consensus building instead of
parliamentary voting as the preferred group decision-making model. This is
the best way to build trust with the unit CIOs.
• Create regular and frequent value-added discussion and decision forums to
identify possible synergies and address shared problems.
• Define principles of corporate IT strategic direction and key initiatives but do
your best to elaborate the strategy with the full participation of all group CIOs.
• Sponsor only high-impact, high-visibility initiatives within the scope of your
mandate (such as worldwide roll outs, articulating a group IT strategy).
CRITICAL SUCCESS FACTORS FOR GLOBAL ClOs
IN THE DECENTRALIZED MODEL
•
•
•
•
Ensure buy-in from the most powerful unit or local CIOs into IT strategic
direction and corporate-sponsored initiatives.
Respect the autonomy and accountability of the different unit or local CIOs
and appreciate their competence and experience..
If the budget allows, host special value-added events for unit CIOs such as
new technology awareness and management development seminars.
.Lobby business unit and country management to create awareness of the
potential for IT synergies and the ensuing benefits.
Over time, after successful delivery of some key initiatives and having built some
trust both within senior business management and group, CIOs:
• Should seek to create a group IT management agenda with a set of agreed
strategic statements, initiatives and resource commitments that all group CIOs
can buy into and work toward.
• Periodically test the readiness of executive management to centralize IT
resources and reporting under the authority of the corporate CIO.
Do all of the above in a sincere spirit of service to the operating unit CIOs and
any mistakes on the corporate CIO's part will be Quickly forgiven.
FINDINGS
In the centralized model, global CIOs face two main risks:
(1) not achieving the full benefits of globalization by not going far
enough in the pursuit of technical, managerial and organizational
consistency and
(2) not being responsive enough to the needs of local and regional
business management.
In the decentralized model, global CIOs face two main risks:
(1) being to directive in their leadership style, which generates
unnecessary push-back from unit CIOs, and
(2) not providing frequent and regular forums where all the unit
CIOs can come.
RECOMMENDATIONS
There are some common approaches for success in both models. including:
• Keep corporate headcount very light, hire only outstanding, seasoned
and multilingual professionals.
• Set aside a significant travel and meeting budget for face-to-face
interaction and agreement on the mix and role of preferred virtual
collaboration media.
Make sure all global projects have:
• A global budget with clear contribution from local units or,
alternatively, clearly agreed local budgets.
• A global project manager with clear business unit or regional/local
unit face-offs.
• A cross-regional design and development team.
• A clear process to collect local/regional requirements, validate choices
clear resourcing and accountabilities for development and roll out.
RECOMMENDATIONS
•
•
•
•
Global CIOs in the Centralized Model can achieve the benefits of
globalization but must also consider the following:
Set clear objectives for the regional CIOs with full accountability and
appropriate coaching; bring them together face-to-face at least
quarterly.
Define a global IT management agenda for the year consisting of two
tracks: managerial and technical.
Put in place a single budget structure with consistent line-item
definitions, similar spending approval process and common tracking of
actuals and forecasts.
Build a small corporate team of multilingual heavyweights in key
functions, e.g., financial controller, project managers, senior technical
manager, supplier manager, HR manager.
RECOMMENDATIONS
•
•
•
•
•
•
Global CIOs in the Centralized Model can achieve the benefits of
globalization but must also consider the following:
Visit the regions frequently (more than 50 percent of the time) and
build strong relationships with .regional business management.
Establish a standard and agreed way to justify, prioritize and approve
projects worldwide (project initiation process).
Establish effective regional IT steering committees that are managed
consistently across regions.
Consolidate regional reporting into a global IT activity report for the
global business executive team.
Sponsor the establishment of either operational or knowledge-based
competence centers in high-impact areas.
Introduce inter-regional career paths for senior IT managers and highpotential staff.
RECOMMENDATIONS
Global CIOs in the decentralized model should take heed of the following
recommendations:
• Adopt a facilitated leadership style and focus on relationship building
with both unit CIOs and senior business management.
• Avoid the common mistake of adopting the executive leadership style.
Facilitated leadership is the preferred leadership style when there is no
direct or reporting control over people. This leadership style is
characterized by the seeking of true win/win for all parties and builds
consensus.
• Create regular and frequent value-added discussion and decision
forums to identify possible synergies and shared problems. Be
respectful of local or business-unit constraints and priorities.
• Elaborate the IT strategy with the full participation of all group CIOs.
The process will be longer but you'll be able to implement the strategy.
RECOMMENDATIONS
Global CIOs in the decentralized model should take heed of the following
recommendations:
• Sponsor high-impact, high-visibility initiatives within the scope of
your mandate. Deliver those successfully before trying to expand the
scope. Sponsor the creation of working groups on different areas of
interest to all IT units (technology standards, security procedures, etc.).
• Ensure buy-in from the most powerful unit or local CIOs into IT
strategic direction and corporate-sponsored initiatives. Lead them as a
"core team."
• If your budget allows, host special value-added events for unit CIOs
such as new technology awareness and management development
seminars.
• Lobby business unit and country management to create awareness of
the potential for IT synergies and the ensuing, benefits to create a more
favorable environment for the unit CIOs.
• Once trust and credibility has been built, test the readiness of executive
management to centralize IT resources