Business Innovation: Processes, Techniques and Tools for IT Business Relationship Managers


Shameless Promotion!

Disclaimer: This post is a promotion for my one-day training event in Portland, Oregon on Friday, May 29, 2015, 9:00AM-4:00PM PST. This training session follows BRMConnect, the world’s first and highly anticipated conference for BRMs being held at Cascade Crest Conference Center on May 26-28 in Portland’s picturesque Washington Park on the grounds of the Oregon Zoo.

Act now–this event is being limited to a maximum of 20 participants, and there are only 5 seats left!

Why Is This Important?

To survive today, organizations must be adept at making effective use of IT to support business operations and administration. This has become “table stakes” for organizations of any size or purpose. Only a few organizations, however, reach beyond table stakes to truly innovate business products, services, processes, and business models, even though today’s technology landscape offers a host of innovation enablers, such as:

  • Cloud-based services and solutions with very low barriers to entry
  • Low cost sensors, tag, cameras, etc., with RFID, GPS, bio- and telemetrics, etc.
  • “Big data” analytics for making sense of the environment
  • Social tools for collaboration and engagement with customers and workers
  • Mobile everything; the “Internet of Things”
  • Electronic wallets and payment systems
  • 3-D printing
  • Crowdsourcing
  • Gaming, Massively-multiplayer online gaming
  • eLearning, Massive Open Online Courses

New Processes, Techniques and Tools for the IT BRM

How do BRMs become business innovation catalysts? Innovation research highlights new methods that can be effective in surfacing, evaluating, selecting and exploiting business innovation opportunities, including:

  • Design Thinking
  • Mind Mapping, Heat Mapping and Dialog Mapping
  • Innovation Jams
  • Social Network Analysis
  • Modeling and Simulation
  • Prototyping
  • Sentiment Analysis
  • Prediction Markets
  • Innovation Labs
  • Systematic Inventive Thinking

This one-day course will discuss the BRMs role in business innovation and explore processes, tools and techniques for stimulating, surfacing and exploiting IT-enabled business innovation opportunities.

Course Learning Objectives

Today’s IT BRM must be knowledgeable in the ways of IT-enabled business innovation and skilled in the underlying techniques. Though this one-day course you will learn:

  • The importance of “Innovation Intent” and how to create it
  • Distinguishing between Invention, Innovation and Improvement
  • Innovation lessons from the world of improvisation–an experiential learning session led by improv master, Gary Hirsch, co-founder of On Your Feet
  • Tools and techniques for innovation Discovery
  • Tools and techniques for implementing innovation
  • Key Organizational Principles of innovation and how to assess them
  • Design Thinking and the Innovation Process
  • Enabling the Innovation Process with technology
  • Illustrative Case Studies in IT-enabled innovation

Please click here to find out more about this course. Please visit BRMConnect 2015 Registration page to register for this class.

IT-Enabled Business Innovation: A Missing Link?

Power Information technology is enabling business innovation through new types of product and service, transformed business models and improved lives for customers, consumers, shareholders, employees and citizens.

For example, when Sam Walton famously recognized the competitive advantage Walmart could gain by ‘turning inventory to information’ he was experiencing (and then acting upon) an insight that would innovate supply chain management for big box retailers and, ultimately, for retailing in general. When Max Hopper‘s team at American Airlines recognized (and then acted upon) the power of yield management as a means of dynamically pricing airline seats based upon supply and demand, he created a competitive advantage that put promising low-cost airlines such as People Express out of business. When Jeff Bezos recognized (and then acted upon) the opportunities in reinventing online retailing for an exceptional customer experience, he created a new buiness that today captures $75 Billion per year of retail business and continues to innovate products and services.

These are examples of “big” IT-enabled innovation, but smaller examples appear all the time. Domino’s Pizza reversed its slumping performance in large part by making online ordering a cornerstone of its business through its web-based tools such as voice ordering, Pizza Tracker, 3-D Pizza Builder, and Pizza Hero tools.

Stories such as this appear frequently — though not as frequently as one might hope!

What Limits IT-Enabled Innovation?

With the emergence of all sorts of innovation enablers, such as the “Internet of Things“, inexpensive ways to identify and locate objects, people and places, powerful analytical capabilities, wearable technology, agile methods, smart phone apps, and so on, why does it seem that most businesses, government agencies and organizations of all sorts are stuck in the last century? Why does IT-enabled innovation always seem to refer to “over there?”

I’ve been fortunate in my career to be involved in IT Management research and learn from many talented academics and practitioners. One multi-company research study into IT-enabled innovation about ten years ago highlighted three key success factors:

  1. A clear and compelling ‘innovation intent.’
  2. An effective channel and structures that bring together business need/opportunities with IT capability/possibilities.
  3. An effective process for filtering, refining, testing and deploying innovation opportunities.

Business Relationship Management — A Missing Link for IT-Enabled Innovation?

The skilled and properly positioned Business Relationship Manager (BRM) can help inject the success factors identified above.  For example:

  1. As ‘demand shapers’ the BRM helps stimulate the business appetite for innovation. The skilled BRM uses techniques such as Value Network Analysis, Scenario Planning, Appreciative Inquiry, Competitive Intelligence, Bibliometric Analysis, and Capability Gap Analysis to help establish innovation intent.
  2. As ‘demand surfacers’ the BRM discovers innovation opportunities using techniques such as Design Thinking, Brainstorming, Knowledge Café, Synectics, Why-Why Diagrams, Behavioral Prototyping, Mind Mapping and Storyboarding.
  3. With their focus on business transition and value realization, the BRM helps deploy innovation opportunities using techniques such as Design Structure Matrix, Force Field Analysis, How-How Diagrams, Stakeholder Mapping and Analysis, Organizational Change Management, Business Experiments, Rapid Prototyping and Agile Development.

So, if you are in a BRM role, become knowledgeable in Design Thinking (see my 3-part post on Design Thinking here, here and here) and the disciplines and techniques of business innovation. Understand how innovation can create business value in your context. Of course, this means truly understanding your business partner’s business model, business processes, marketplace, competitive strategies, and market forces. It also means knowing the key stakeholders and influence leaders — where is innovation thinking taking place in your organization? How well connected are you with the innovation thought leaders? How are you learning about innovation in your industry? How are you keeping up with IT-enabled innovation?

So much to do — so little time — no time to waste!


Image courtesy of Business 2 Community

Design Thinking and Emerging IT Roles


This is the third and final part in a multi-part post inspired by Robert Pirsig’s masterwork, Zen and the Art of Motorcycle Maintenance.  In Part 1 (titled “Reflections on ‘Zen and the Art of Motorcycle Maintenance’ 38 Years Later “) I discussed the implications for IT professionals of Pirsig’s musings on ‘classic’ versus ‘romantic’ worldviews, and his struggle to resolve these.

In Part 2, (titled “Zen, Motorcycle Maintenance, Design Thinking and Information Technology”) I teed up my observation that this classic-romantic balanced approach is embodied in the “design thinking” movement, popularized by Tim Brown and Ideo and exemplified by companies as diverse as Apple, Proctor & Gamble, Herman Miller and GE.  I discussed why Design Thinking is becoming increasingly important to the IT profession.  Among the reasons for the rising importance of Design Thinking in IT:

  1. Thanks to the likes of SAP, Oracle, et al, and the growing base of cloud-based ‘applications as a service,’ most of the opportunities to improve or automate transactional business processes have been exploited.  Today, businesses are increasingly searching for product, service and business model innovation.
  2. As we accelerate the move from custom development to personal apps, reuse, and “mash-ups,” much more emphasis is placed on synthesis rather than analysis – leveraging widgets and components rather than coding solutions from scratch.

I will pick up in this final part where I closed Part 2, with a discussion of three roles that are key to instilling Design Thinking in an IT organization.

Key Roles for Design Thinking in IT

Achieving the classic-romantic balance in discovery and solutioning involves many IT roles, but there are three roles that I believe are key:

Roles – Not Necessarily Jobs!

Before we examine these roles and how they work together, I want to emphasize I am talking about roles, as opposed to jobs.   The distinction is important in that the notion of organizing around roles imparts flexibility and variety for a workforce, whereas jobs tend to constrain people in boundaries defined in job descriptions.  An individual typically will hold only one job, but may fill multiple roles.  For example, my job is Principal in a consulting firm.  In some engagements, I am the Engagement Lead.  In others, I might be a Subject Matter Expert.  In still others, I am the Client Relationship Officer.  Beyond engagements, I might be a Research Program Leader or a Research Associate.

Also, these roles are typically instantiated with all sorts of labels – rarely the label I’m using here.  For example, I’ve worked with Business Relationship Managers (BRM’s) who were called Business Partner Director, Account Manager, Client Relationship Manager, IT Business Partner, Business IT Partner, IT Demand and Account Manager, Client Engagement Director, and so on!  And the specific missions, visions and implementations of the BRM role has been as varied as their titles!

Nevertheless, let’s drill into these roles and how they relate to each other and to moving IT to more of a Design Thinking philosophy.

Business Relationship Manager

I’ve posted extensively on this role in the past – it’s the role that sits between the IT organization and its business clients.  As such, it both represents the business clients to IT, and IT to the business clients.  This role has surfaced over the last 10 years or so.  I don’t know what percentage of IT organizations have this role today, but as an indication, LinkedIn hosts 2 groups dedicated to the role.  One group – IT Business Relationship Management – currently boasts over 1,800 members.  The other group, Professional Business Relationship Managers currently has over 2,600 members!  (In the interests of full disclosure, I co-manage the latter group.)

As the bridge between the business and the IT organization(s), the BRM plays a key role in moving above and beyond the traditional “requirements analysis” to an approach to discovery and solutioning that is more:

  • collaborative
  • abductive
  • experimental
  • integrative
  • outside-in
  • human-centric
  • innovation-biased approach

As such, the BRM has to understand Design Thinking, and ensure that the qualities listed above are brought to the table and play together effectively and efficiently.  The BRM herself does not have to be expert in these qualities, but must be an effective “broker” ensuring that people with the needed competencies and incentives are at the table.  These competencies will often be found in the other two emerging roles – those of Enterprise Architect and Product Manager.

Enterprise Architect

As with BRM’s, Enterprise Architects (EA’s) come in all sorts of flavors with a variety of titles.  The major distinction I would make is with what are generally called IT Architects.  Enterprise Architects are clearly focused on the business, business models, major business processes, business-IT platforms and the ecosystem within which the business operates.  IT Architects, by contrast, are focused on the technologies, their standards and how they inter-operate.

Wikipedia defines Enterprise architecture (EA) as:

… the process of translating business vision and strategy into effective enterprise change by creating, communicating and improving the key requirements, principles and models that describe the enterprise’s future state and enable its evolution.

Practitioners of EA call themselves enterprise architects. An enterprise architect is a person responsible for performing this complex analysis of business structure and processes and is often called upon to draw conclusions from the information collected. By producing this understanding, architects are attempting to address the goals of Enterprise Architecture: Effectiveness, Efficiency, Agility, and Durability.

As with BRM’s, the EA role has been growing in prominence over the last 10 years or so.  Typically, it is complementary to the more technical roles of IT Architect, Information Architect, and so on.  Also, as with BRM’s there is little that is ‘standardized’ about the EA role, and by many measures it is something of a stretch to use the term “profession” when talking about EA’s, in spite of the efforts of bodies such as The Open Group Architecture Framework (TOGAF®), and my old friend, John Zachman and his Zachman Framework for Enterprise Architectures.

Again, as with BRM’s, LinkedIn is home to an Enterprise Architecture Network, with an astounding 85,000+ members!  As an example of the passion exhibited by this group, a recent comment that stated, “EA is often left in IT because it can only handle tame problems” garnered 572 comments!

At its best, the EA helps bring to the business-IT discovery and solutioning table some of the competencies from my bulleted list above.

Product Manager

The third role in the triad that can help IT organizations introduce more Design Thinking into their activities is that of Product Manager.  This role is far more scarce in IT organizations than either BRM or EA.  It is, however, universal in product companies, including information technology product companies.  Wikipedia defines Product Management as:

…an organizational lifecycle function within a company dealing with the planning, forecasting, or marketing of a product or products at all stages of the product lifecycle.

The role consists of product development and product marketing, which are different (yet complementary) efforts, with the objective of maximizing sales revenues, market share, and profit margins. The product manager is often responsible for analyzing market conditions and defining features or functions of a product. The role of product management spans many activities from strategic to tactical and varies based on the organizational structure of the company.

While involved with the entire product lifecycle, the product management’s main focus is on driving new product development. According to the Product Development and Management Association (PDMA), superior and differentiated new products — ones that deliver unique benefits and superior value to the customer — is the number one driver of success and product profitability.

Of particular note, Wikipedia goes on to note that:

Product management often serves an inter-disciplinary role, bridging gaps within the company between teams of different expertise, most notably between engineering-oriented teams and commercially oriented teams. For example, product managers often translate business objectives set for a product by Marketing or Sales into engineering requirements. Conversely they may work to explain the capabilities and limitations of the finished product back to Marketing and Sales. (Emphasis added.)

The Design Thinking Triumvirate

So, the keys to getting more Design Thinking into Business-IT solutions lies in the triumvirate of Business Relationship Manager, Enterprise Architect and Product Manager, with the BRM as the broker and orchestrator of these roles.  There are, of course, other roles played – e.g., business analyst, project manager, program manager, and so on, but I wanted here to focus on those roles which are less common but in the ascendancy.

Graphic courtesy of Green Hat Group

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Do You Approach Strategy Formulation as an Event or a Continuous Process?

I find that most strategy efforts aren’t very strategic.  Nor do they have much real impact, or lead to significant change.

The Problems with Traditional Strategy Formulation Approaches

I think the supporting evidence for my findings lies in the fact that most companies either:

  1. Don’t undertake strategy formulation initiatives unless they feel they have to (e.g., 5 or more years have passed since they last conducted a strategy session, or the current strategy is clearly not working!)
  2. Do undertake strategy formulation regularly and rigorously (typically annual), with a detailed process spanning many weeks and taking lots of time.  When they are through the effort, everyone breaths a big sigh of relief, and gets back to work – and to executing against the original strategy!

Those in camp 1 above often engage strategy consulting firms.  Nothing inherently wrong in that, except that it can be a high cost route that ends in a good strategy that either:

  • Does not fit the firm’s capabilities particularly well, or…
  • Does not get sufficient engagement with those in the firm who must understand, buy into and execute against the new strategy.

Those in camp 2 above usually have a full time strategy organization – a small, but expensive group of bright folk who need to justify their existence.  Nothing inherently wrong in that, either, except that:

  • The results are often less than inspiring.  They do a good job going through the motions, but the thinking isn’t really very strategic, nor the goals very ambitious.
  • The results typically do not get sufficient engagement with those in the firm who must understand, buy into and execute against the new strategy.

Strategy Formulation as a Continuous Process

I believe much better results can be achieved if strategy formulation becomes:

  1. A continuous process.
  2. A firmwide capability – a strength, even!
  3. A collaborative process.

We are living in unprecedented times.  Uncertainty and change are everywhere.  Market conditions can change overnight.  The globally interconnectedness of everything creates a complex environment that behaves in unpredictable ways.

New Possibilities Enable Continuous Strategy

At the same time complexity has increased and predictability decreased, information technologies create new possibilities for a very different approach to strategy formulation:

  • From an event to a continuous process enabled by the Internet
  • From a “canned” exercise for the select few to a “social” exercise for the many – employees, customers, suppliers, partners
  • From lengthy “big bets” with high uncertainty to rapid “business experiments” with low risk
  • From a dearth of data to help evaluate strategic options to a plethora of powerful business analytics, predictive modeling and simulation tools to help bring strategy formulation and execution together into a rapid learning model

Some of today’s fastest growing companies have figured this out and are quietly, but aggressively honing their continuous strategic capabilities.  Meanwhile, the large majority of companies are stuck in the old paradigm – afraid to open up the strategy process – just when the need for a shot of innovation and fresh thinking are matters of survival!

What do you think?  Are you in a company that is successfully moving to a more continuous approach to strategy?  Should your company be doing more to make strategy continuous?  How can you help achieve this?

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Innovation and Web 2.0 – A Compelling Relationship?

I had a very interesting and exciting week!  I was a speaker at an nGenera Senior Executive Summit, which drew about 60 top executives from mostly large companies – CEO’s, CIO’s, CFO’s, HR and shared service heads, and even a couple of Lawyers and Platform/Brand managers.  It was an auspicious group – both in terms of participants and presenters/session leaders, which included Jim Collins, Michael Treacy, Don Tapscott, Tammy Erickson and Dartmouth’s Tuck School Professor, Chris Trimble.

I introduced my ideas about leveraging Web 2.0 (broadly defined) to significantly drive up the value of business innovation – specifically by following the principles and processes of Design Thinking.  I’ve been getting to this point in my last series of posts (Part 1, Part 2 and Part 3.)  In fact, those posts were largely written as I was developing my session materials.

Does ‘Design Thinking’ Have Legs?

Part of my thesis built upon the success of the Design Thinking movement that has gelled over the last 5 years.  I have found the success stories compelling, and the underlying principles resonate with my own experiences and values over the last 30 years in trying to leverage IT for increased innovation.  However, I was troubled by the recognition and acceptability of the term ‘Design Thinking’ – especially in the US.  The text of a 2007 speech by BusinessWeek‘s Bruce Nussbaum given in London tipped me off that there might be a problem here.

Nussbaum’s Banana…

In his 2007 speech to the Royal College of Art, Nussbaum noted:

In the US, CEOs and top managers hate the word “design.” Just believe me. No matter what they tell you, they believe that “design” only has something to do with curtains, wallpaper and maybe their suits. These guys, and they’re still mostly guys, prefer the term “innovation” because it has a masculine, military, engineering, tone to it. Think Six Sigma and you want to salute, right? I’ve tried and tried to explain that design goes way beyond aesthetics. It can have process, metrics all the good hard stuff managers love. But no, I can’t budge this bunch. So I have given up. Innovation, design, technology—I just call it all a banana. Peel that banana back and you find great design. Yummy design. . The kind of design that can change business culture and all of our civil society as well.”

One of the first to make the Web 2.0 connection, Nussbaum went on to say:

Innovation is no longer just about new technology per se. It is about new models of organization. Design is no longer just about form anymore but is a method of thinking that can let you to see around corners. And the high tech breakthroughs that do count today are not about speed and performance but about collaboration, conversation and co-creation. That’s what Web 2.0 is all about.”

I tested the waters of my Summit attendees, first by asking how many in the room had some familiarity with the term ‘Design Thinking’?   Three hands shot up, and a couple sort of hovered around shoulder level (presumably meaning, “I’ve heard of it, but please don’t call on me to talk about it!”).  Of the three hands, two were from companies for whom I had Design Thinking case studies about and who were listed in my very first slide (I had not at this point turned on the projector.)  The third hand was from a senior executive at a major Industrial Supply company that I had not expected to be particularly Design Thinking literate.  So, test 1 indicated that the term is not widely known.  Of course, this does not necessarily mean that Design Thinking is not widely practiced – perhaps all 60 companies in the room do in fact excel at Design Thinking, but refer to what they do as some variation of Nussbaum’s ‘banana’?  However, I truly doubt this.  In fact, the many one-on-one conversations that I had with the executives at this summit during the reception and dinner following my presentation supported my sense that explicit efforts to drive up the value of business innovation are relatively few and far between.

Are Design Thinkers Web 2.0 Enabled?

To the larger part of my thesis, there was little evidence at this Summit that any form of Web 2.0 was being explicitly leverage to support Design Thinking (or innovation, or the banana!)  There were a few ‘accidental experiments’ and emergent social networks – both internal and external – but nothing claimed as part of a deliberate, holistic effort to increase innovation through Web 2.0 technologies.  This for me was the big surprise.  The Senior Vice President of Strategy from one of the Design Thinking literate companies told me at the reception, “When you first connected Design Thinking and Web 2.0 in your presentation, I thought you’d completely lost it!  But as you gave examples, the light bulbs began to turn on – I think you are onto something!”  This was gratifying indeed – well worth the price of admission!

Graphic courtesy of RI Nexus

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Design Thinking 2.0: Enabling Innovation with Web 2.0 – Part 2

In my first post in this series, “Design Thinking 2.0: How Web 2.0 Might Foster and Enable an Innovation Revolution” I summarized the concepts of Design Thinking and raised the question of how Web 2.0 might enable increased innovation.  (For an interesting perspective on Design Thinking by Business Week’s Bruce Nussbaum, see his excellent essay based on his 2007 speech to the Royal College of Art in London.)

In my next post I will  drill down and suggest ways to use Web 2.0 technologies and approaches to increase innovativeness and business success, but for now I want to examine the Core/Edge distinction in order to focus us clearly on Edge capabilities, where innovation tends to surface – without being encumbered by the Core.

“Core” and “Edge” Capabilities

Identifying the best ways to leverage collaborative technologies for innovation require an appreciation of the distinction between “Core” and “Edge” business capabilities.  The notions of “Core” and “Edge” I think were first articulated in June 2005 by John Hagel III, a former McKinsey consultant, and John Seely Brown, former chief scientist of Xerox in a Wharton Summary interview titled “Can Your Firm Develop a Sustainable Edge?”  In that interview, Hagel noted:

The… edge… has to do with the notion of competitive advantage, but it also has to do with the view that the ability to develop capabilities involves operating at the edge. Of course, “edge” has multiple meanings as well. It means the edge of the enterprise, the edge of business processes, geographic edges in terms of emerging economies, demographic edges in terms of younger generations coming in with different mindsets – it’s a whole set of edges that create the opportunity for accelerating capability building.”

Seely Brown noted in the same interview:

… being able to listen deeply and participate on the edge, you can pick up things before anybody else picks them up, and you can use that to accelerate your own capability building… This puts a new spin on why distributed collaboration around the world might be critical in creating this sustainable edge.”

My colleagues and I picked up this theme in our multi-company research at nGenera and I covered it in some depth starting in March 2008 with my “Surfing and IT Innovation” post, followed in July 2008 with my “Edginess and IT Innovation” post.

The reason this Core/Edge distinction is so important for IT professionals in the corporate environment is that the Core exerts enormous gravitational pull – innovation activities such as business experiments at the edge tend to get pulled into the core where standards and rigid processes rule.  The Core typically consumes 70% to 90% of IT resources, starving edge activities of the resources and focus they need to flourish.

Requirements of Core Capabilities

Core Capabilities exist to support exploitation of existing business opportunities.  As such they tend to be ‘locked down’, complex and hard to change – in fact, they are designed to prevent ‘bad change.’  Core processes are intended to be highly stable and predictable, typically built on proprietary and relatively fixed architectures.

Requirements of Edge Capabilities

By contrast, Edge Capabilities exist to stimulate and support the exploration of new business opportunities. As such they must be open, agile, transparent and adaptive.  While Core capabilities must ‘prevent bad change’, Edge capabilities are designed to stimulate ‘good change.’  They leverage open, emergent architecture and open sourcing. This, of course, is the realm of Web 2.0 – social media, open source, open innovation, cloud computing, etc.

Balancing Core and Edge Capabilities

The table below further highlights the differences between Core and Edge capabilities and shows example of each type.  My point here is that most IT organizations have many years of experience in perfecting Core capabilities but have relatively little experience with Edge capabilities.  The IT leaders’ natural preference is to control rather than facilitate, to direct rather than stimulate.

In Part 3 of this series, we will look at a generic Design Thinking process and see how each step can be enabled by Web 2.0 “Edge” capabilities.

Image courtesy of Larval Subjects

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Exploring an IT Operating Model for Enterprise 2.0 – Part 4: IT Governance

In Part 1 of this series, I suggested that the implications of Enterprise 2.0 for the IT organization are dramatic.  I also suggested that the ways of designing and executing an IT Operating Model in a Web 2.0 context are quite different from traditional approaches.  In Part 2, I outlined the major elements of an IT Operating Model as being:

  • Processes – how we perform activities that deliver predictable and repeatable business results through competent people using the right tools.
  • Governance – how we make and sustain important decisions about IT.
  • Sourcing – how we select and manage the sourcing of our IT products and services.
  • Services – our portfolio of IT products and services.
  • Measurement – how we measure and monitor our performance.
  • Organization – how we structure and organize our IT capabilities.

In Part 3 we looked at how Web 2.0 approaches could transform the way IT processes are defined and managed.  I now want to look at IT governance, and the implications of Web 2.0 for this ever important aspect of IT operating models.  Due to the depth of this topic, I will discuss the facets and domains of IT governance in this post, then deal with the Web 2.0 implications in a subsequent post.

Facets of IT Governance

There are many definitions and descriptions of IT Governance, and frameworks such as COBIT that attempt to bring ‘best practices and processes’ to the domain.   The two definitions I have landed on in my years of research and consulting in this space, are:

  1. A framework of decision rights and accountabilities to encourage desired behavior to realize maximum value from information technology.
  2. Aligning IT decision-making with enterprise governance and business unit objectives through an interrelated set of processes, policies and decision-making structures with clear goals, roles and functions, sponsored by the CEO, with clear consequences for compliance or lack thereof.

I like the first definition for its simplicity, getting to the heart of both ‘decision rights’ and ‘accountabilities’ through the lens of ‘behaviors’ all focused on maximizing the value realized through IT.  This is pragmatic – you can define the types of behaviors you would like to see (e.g., business takes ownership for the business outcomes to be enabled by IT initiatives), or behaviors you are seeing but would like to eliminate (e.g., people see IT as a ‘free’ resource, and therefore use it with little or no regard as to its cost or value.)

I like the second definition in contrast for its recognition that IT governance is an extension of enterprise governance, and for its reference to ‘processes’, ‘policies’, and ‘decision-making structures.’  I also like the emphasis on CEO sponsorship and consequence management – i.e., governance with ‘teeth’.

I’ve come to view IT governance as a means to achieve balance between the competing forces of innovation versus standardization and business unit autonomy versus collaboration.  I also see IT governance as a way to manage IT investments and assets as a  resource that is shared by the enterprise.  Finally, good IT governance provides a “transmission chain” for the highest level enterprise strategy, from senior executives on down through the organization. As such, IT governance is a critical alignment mechanism.

IT Governance Domains

Peter Weill and Jeanne W. Ross, in their excellent book, IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, call out five decision domains of IT governance:

  • IT Principles (strategic choices between competing perspectives.  For example, ‘We will optimize IT investments for the enterprise rather than for individual business units.’)
  • IT Architecture (“the organizing logic for data, applications, and infrastructure captured in a set of policies, relationships and technical choices.”)
  • IT Infrastructure (“Centrally coordinated, shared IT services that provide the foundation for the enterprise’s IT capability.”)
  • IT Investments and Prioritization (“How much and where to invest in IT, including project approvals and justification techniques.”)
  • Business Application Needs (“Specifying the business need for purchased or internally developed IT applications.”)

While these domains may each be handled by different processes, policies and decision-making structures, all of these domains must be covered in ways that support a coherent strategy and set of beliefs about IT.

IT Governance, In Other Words…

IT governance deals with how the business makes decisions about the deployment and delivery of IT.  When sound IT Governance is in place, senior executives not only know their organization’s IT plans and policies, they also know how they are made.  IT governance is about the specification of decision rights and responsibilities required to ensure effective and efficient use of IT.  As such, it deals with organizational power and influence, and therefore  must be approached with care!

IT Governance 2.0

The implications of Web 2.0 on IT Governance are dramatic and far reaching!  On the one hand, with ‘transparency’ a watchword of good governance, 2.0 capabilities offer several important mechanisms to bring transparency both to the design of effective IT governance processes and structures, and to their ongoing execution and management.  On the other hand, dealing with decision rights and accountabilities in the types of highly diverse, distributed and fluid information environment enabled by social networking tools can become quite complex.  We will dig deeper into the implications of Web 2.0 for IT governance in a subsequent post.

Image courtesy of The ERM Current

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