James B. Kirk
CASE ASSIGNMENT #3
Introduction and Organizations as Socio-technical Systems
Dr. Mina Richards
31st August, 2013
Research show the top–performing companies generate returns on their IT investments up to 40% greater than their competitors. The top-performing companies proactively seek value from IT in variety of ways: business strategies and IT achieving that, and they assign accountability for the organizational changes required to benefit from new IT capabilities. Top-companies succeed where others fail by effective IT governance to support their strategies. For example, firms with above-average IT governance, had 20 % profit than firms with poor governance following the same strategy (Weill & Ross, 2004, p.5). With the above-mentioned para-phrased quote on IT governance and the value it creates within a strong enterprise, it behooves us to do a good analysis on the value of IT governance and how it relates to the challenging job of a modern day IT manager. As an added nuance during the analysis, we are going to see how the dynamic part IT manager plays in IT governance, why is IT governance necessary, and what is the exposure that companies can have if it completely ignores any standards for IT governance. Weill had stated that most senior executives in effective companies, up to 80 % in some cases, are aware how important IT governance is and the possible failure for the company if it ignores IT governance (Weill & Ross, 2004, p.4). In the latter part of this analysis, we are going to look at the whole system and mechanisms of function under examples of case studies for Sarbanes–Oxley (SOX) and the Bank Secrecy Act (BSA). A good modern definition IT governance would be helpful during this analysis: the allocation of power among the board, management and shareholders. But today it also encompasses an array of actions my management, from senior level to management ranks (Steinberg, 2011, p. 1). So let’s look at the first component, what dynamic role do IT managers play in IT governance.
II. DYNAMIC ROLE THAT IT MANAGERS PLAY IN IT GOVERNANCE
The IT manager of today has a lot more responsibilities than that of his predecessors of the 60s, 70s and 80s, and the one of the biggest is to effectively manage the IT resources he has and that directly involves IT governance. The following diagram illustrates how important IT governance is by dynamic IT managers:
Image 3 (Selig, 2009, p. 2).
Because most corporations are beset by competition on the global level, the IT manager must be incredible dynamic and resourcefully in order to assist in accomplishing the corporate’s goals. By instituting an IT governance policy, most of the IT goals can be judicially administrated and aligned with that of the corporation’s goals in the business environment. Let’s look at why IT governance is necessary?
Image 4 (Mueller & Phillipson, 2007).
III. IS IT GOVERNANCE NECESSARY?
Not that we understand how IT managers views IT governance, what are some of the factors that make IT governance relevant in today’s corporation. With the amount of government oversight in today’s business environment, IT governance has becomes a strategic resource for corporations to use and to protect it from governmental sanctions. IBM this to say about the importance of IT governance:
1. Establishes chains of responsibility, authority, and communication (decision rights), and
2. Establishes measurement, policy, standards, and control mechanisms to enable people to carry out their roles and responsibilities (Mueller & Phillipson, 2007).
So in fact, with the added governmental liability put upon by the government on corporations, IT governance has become a strategic resources for corporation to use during daily