uGovernIT

A Practical Approach for IT Governance

A Political View of IT Governance

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We can classify IT Governance using three models:  The Communist Model, the Socialist Model and the Capitalist Model. Wikipedia defines IT Governance as a subset discipline of corporate governance focused on information technology (IT) systems and their performance and risk management.  For the purposes of this blog, we assume that the scope of IT Governance includes all technology components (IT infrastructure, telecommunications, purchased software custom software applications, products) and resources (IT personnel, user-IT teams) necessary to effectively develop and manage technology initiatives and resources within the Enterprise.  The goal of IT Governance is to verify that I.T. dollars are spent on the right projects, and just as importantly, at the right time.

The Communist Model treats IT as a cost center and is characterized by centralized autocratic management perhaps in a corporate culture that is also very autocratic.  Such models are often focused on cutting IT costs and near term gains.  Small to Mid Sized Enterprises where the executive leadership often micro-manage IT tend to adopt this model.  The focus is to keep the “business running as usual” for the least cost possible.  The major drawback of this model is the lack of emphasis on organization culture and innovation.  Nevertheless, there are benefits as well.  From a technology perspective, the focus is on developing cost-efficient services, using proven low-cost IT solutions, and a from a business perspective, the services grow to meet the Enterprise needs while meeting user SLAs (Service Level Agreements).

The Socialist Model treats IT as a core functional unit and is characterized by totally de-centralized (federated) management perhaps in a corporate culture that is also very democratic.  Such models are often focused on expanding IT use and long term gains.  Very large enterprises where budgets are in the hundreds of millions tend to adopt this model. Typically, the leadership team often identifies a senior business executive to lead the IT effort.   Internal staff are typically focused on new projects that are strategic whereas running the business and non-strategic projects are typically outsourced.  The major drawback of this model is the lack of efficiency leading to extraordinary wastage.  Nevertheless, this is the most prevalent model for IT in many of the Fortune 1000 Enterprises.  From a technology perspective, the focus is on new products and services, and from a business perspective, the emphasis is on innovation that will help the Enterprise gain competitive advantages.

The Capitalist Model treats IT as a business unit and is characterized by a balance of centralized and de-centralized management perhaps in a corporate culture that treats IT as an investment, and thus expects return on the investments.  Such models typically use very customized Governance frameworks.  Mid-Sized Enterprises where budgets are in the millions tend to adopt this model. Typically, the leadership team often identifies a senior technology executive with a good knowledge of the enterprise’s business processes to lead the IT effort.   The focus is on getting value and treating IT as a business.  Sourcing is typically on-demand and the core capabilities usually retained with internal staff.  The major drawback of this model is the lack of tools to help customize the Governance leading to inconsistencies in managing IT.  However, this is the most prevalent model for IT in many of the mid-sized Enterprises.  From a technology perspective, the focus is on using proven but state of the art solutions, and a from a business perspective, the emphasis is on getting value that will help the Enterprise use IT effectively to meet its needs.

Written by Subbu Murthy

February 24, 2013 at 2:02 am

Posted in IT Governance

One Response

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  1. very nice post!! Please visit data protection regulation


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