EGIT Enterprise Governance of IT

Where CobiT is a common used framework, the alignment of business and IT in SME’s is in most cases not done by frameworks. However the concepts of the framework that are used

are reflected in SME’s as well. Independent from size, each company has a business strategy, an IT strategy and both are aligned in a way. In literature an IT strategy is always based as a part strategy of the business strategy (Johanning, 2014, p. 29). IT governance is derived from the Corporate Governance of a an enterprise but also from the IT strategy. This is the reason, why IT Governance should by placed on enterprise top management level, rather than seen as an operational level (Johanning, 2014, p. 205; Maryska et al., 2015, p. 654). de Haes and van Grembergen (2015) choose a different approach for defining the term IT Governance.

Because the term IT Governance relates to IT, de Haes and van Grembergen (2015) prefer to call it “EGIT ­ Enterprise Governance of IT” instead of IT Governance (de Haes & van Grembergen, 2015, p. 3). Maryska et al. (2015, p. 652) and Johanning (2014, p. 205) define the goal ofEnterprise Governance of IT in supplying processes, structures, methods in order to support the fulfilment of the goals of an IT strategy (and this includes also business strategy goals). It organises IT within the enterprise and defines authority to decide in IT matters (Jo­

hanning, 2014, p. 205). EGIT is not affected by the size of an organisation (Chan & Reich, 2007; Wu et al., 2015). In other words, EGIT can be done with any organisation. Only the scale of implementation can vary (Maryska et al., 2015, p. 653). This makes sense, since an SME does not have the necessary resources to implement a full Enterprise Governance of IT.

The result of implementing a EGIT will enable the organisation to align and adjust business and IT (de Haes & van Grembergen, 2015, p. 4).

4.4.4.1 Corporate and IT strategy

Derive an IT strategy from a corporate strategy seems to be an easy task. In practice this tasks often turn out to be more trickier than expected. Too many factors are relevant for alignment of these two strategies. This subsection shall give an overview.

An corporate strategy defines long term and modal goals of an enterprise. Ideally the time frame is about five years. This is important for the IT strategy. According to Johanning (2014, p. 7) a definition of an ICT strategy in order to run an IT landscape profitably, is only possible when a corporate strategy is clear, communicated and for a certain horizon of time robust. Johanning (2014, p. 94) shows in a simple figure how an it strategy derives from a corporate strategy (see figure 4.17).

An interesting blog mentions other important aspects of an IT strategy. An IT strategy is only complete when it gives also an answer to aspects like infrastructure­, innovations­ and investmentstrategy. Johanning (2014)’s approach conflicts with another approach. Ulrich and Rosen (2011, p. 11) explain that business processes do not directly base on the corporate strategy. In their view, business processes base on value streams and value streams base on business capabilities. However business capabilities base on the corporate strategy. This approach is very common and bases on an enterprise architectural view, that has been intro­

duced by Zachman (Zachman, 1987) with the so called Zachman framework.

4.4 The role of IT Governance in digital operating models | 73

Figure 4.17 From corporate strategy to an IT strategy (Johanning, 2014, p. 94) 4.4.4.2 Business Capabilities

According to Ulrich and Rosen (2011, p. 4) many reasons speak for it, that business capabil­

ities are the missing piece between business and IT. Capabilities definewhatan enterprise does and nothow it is to be done. Capabilities are described in the language of the busi­

ness and define all functions, options, features and requirements that can be identified for IT.

This architectural view is the basis of the communication between business and IT (Ulrich &

Rosen, 2011, p. 3). Capabilities are derived from the corporate strategy. Capabilities them­

selves are grouped inCapability Groupsand again group themselves into so calledFounda­

tion Capabilites. Foundation capabilities build the so called Capability Map. A Capability is described in one ore more levels. Figure 4.18 shows the levels in a decomposition of the exampleprocurement management.

Figure 4.18 Capability decomposition: procurement example (Ulrich & Rosen, 2011, p. 6)

In a next step, capabilities are mapped to value streams describe themselfs the business processes (Ulrich & Rosen, 2011, p. 3, 11). That way a value stream defines an end to end process, while steps of an value stream can be shared among processes. It build the basis of a service oriented architecture. In order to build an integral view of all capabilities in an enterprise, all capabilities are organised on a architectural plan, theCapability Map. Based on a corporate strategy and its capabilities, an IT strategy can be developed.

4.4.4.3 IT strategy

As described, an IT strategy is part of the corporate strategy with a stable long term time horizon (Johanning, 2014, p. 94). An IT strategy ideally contains five partial strategies such as application strategy, infrastructure strategy, sourcing strategy, innovation strategyand investment strategy. It also includes aspects of Enterprise Governance of IT, organisational aspects such as IT organisation and IT roadmap (Johanning, 2014, p. 7). However the last, the IT roadmap exists for each of the partial strategies. Nowadays it is important to understand that in the age of digital business models an IT strategy can only deliver sustainable success, if ICT is understood as an strategic asset to the enterprise. It has become to the power to enable new business models. The role of IT changes fundamentally because it has become the key to new business models as many share economy examples show (Johanning, 2014, p. 9). Business challenges very often can be answered with innovations from ICT (Johanning, 2014, p. 7, 118). The benefits of an aligned IT strategy is evident.

4.4.4.4 IT operating model

Before we come to an IT operating model, we should put it to the context of ITG. Figure 3.1, show the relationship between the so called governing body and the management systems for the use of IT. Maryska et al. (2015, p. 654) explains that ISO 38500 does address only the top management level while other methods and standard address lower levels of management. It is the governing body that defines the structure and organisation of the management of IT.

We should distinguish between the newer term management systems for the use of IT and ICT operationsas it has been called in first draft of ISO38500. Management systems for the use of IT refer to all operating models that exists for managing IT. In that case, a company may define an IT strategy and IT operating model with neither running an ICT operations nor making ICT projects. This is a new element of digital transformation. In example we could say that taxi call centres have become obsolete with models like www.uber.com or www.didiglobal.com. Why should a taxi centre run their own IT. Assumed all taxi companies would switch to such a service provider, it will not free them from having an IT strategy and an IT operating model.

So the IT operating model can be seen between IT management (the governing body) and the IT provider (internal or sourced externally). There will be a definition of IT principals and directions from IT management derived from governmental considerations. Therefore these directions are from strategic nature. It will contain IT processes, IT organisational instructions, IT policies and performance measures to automatically monitor and measure

4.4 The role of IT Governance in digital operating models | 75 IT (Fröhlich & Glasner, 2007, p. 227). The requirements, based on the capabilities of the company build the basis of the IT operations model. These requirements build a common understanding and view onto goals of an corporate strategy and can always be defined from performance or compliance point of view. These views can contain requirements of measura­

bility and steering of the IT or regulatory requirements such as data protection laws (Fröhlich

& Glasner, 2007, p. 231). Fröhlich and Glasner (2007, p. 228) mentions six elements of an IT operating model. These elements areorganisation, humans, technologies, processes, controlsundmeasures.

From operational point of view, the explained frameworks ITIL (for processes) and CobiT (for controls metrics and alignment) are well defined standards in order to implement an integral ICT operations to ensure«availability, trust, integrity of data but also efficiency and effectiveness of the IT organisation or provider» (Fröhlich & Glasner, 2007, p. 229). All findings of this section do conclude in the next subsection Business­IT­Alignment.

The simple model let understand, that communication differs from dimension to dimen­

sion. Different subject matter experts and knowledge domains (competency) speak different languages. Subject matter experts speak another language among their peers. Stakeholders (authority) have other interests than members of the supply chain (competency, enabling).

Defining new digital business operating models needs to understand, that markets (capacity) will be addressed different. For future management, it implies that future digital business models will link a business operations model and an IT operations model tight. The models may easy become congruent. We also saw in all recent studies, that IT business alignment can be achieved high levels of communication. Understanding each other is a prerequisite of that fact. This also implies that the knowledge (competency) in information management will become a mandatory skill set of any future management. The introduced general operat­

ing model is generic and let understand the basic difference of different knowledge domains of communication. But communication between business and IT is just one of many com­

munications styles. Mastering different communication styles will become a key asset to future management to compete with digital business models. As the Digital Switzerland Ru­

oss (2015) study showed, established structures of big companies are not that agile as for small enterprises. Enterprise Governance of IT is not widely­used although benefits are ev­

ident and proofed science­based. Many authors therefore see the digital transformation as a chance for SME’s to reinvent their business strategy and business operating models (Kager­

mann, Österle, & Jordan, 2011).