PERTEMUAN 7

IT GOVERNANCE
NAMA: ANANDA VICKRY PRATAMA
NIM: 11160930000007
KELAS 4A SI ‘16
IMPACT OF ITG ON FIRM PERFOMANCE
INTRODUCTION
Following a growing dependency on IT, an increased focus on the business and risk of IT
investments lead to an increased interest in the governance and management of these assets.
Can be achieved by implementing a holistic set of structures, processes, and relational
mechanisms.
The leading practitioner food-practices framework for the governance and management of IT,
COBIT 5, builds on these ideas by specifying a holistic set of seven enablers that should be
considered whe implementing governance and management.
This provides a nice way to take the industry context into account in the area of enterprise
governance and amnagement of IT, as the IT strategic role within an industry can be:
hypothesized to influence the way in which the IT assets are governed and managed, without
taking each individual industry into account.
Proposed that industries can be classified in three groups according t the strategic role that IT
plays for the industries within a group (Chatterjee et al. 2001).
Automate industries replace human labor by automating business process (e.g metal
manufacturing).
Informate industries provide data/information to empower management and employees (e.g
food services), and
Transform industries fundamentally after traditional ways of doing business by redefining
business process and relationships (e.g airlines).
An underlying assumption is that the role of IT of different industries can very significantly
(Kobelsky et al., 2011; Zmud et al, 2010).
A certain industry, where products, services and processes are highly digitizable can show
higher propensity of IT deployment compared to other industries where such a possibility is
limited (Sambamurthy Bharadwaj, & Grover, 2003, Zmud et al, 2010).
Taking into consideration such a varying role of IT at industry level, it is plausible that the
demand for IT governance migh also vary in accordance to the strategic role of IT (Nolan &
Mcfarlan, 2005).
The term “Industry IT strategic role” describes the leading role IT plays for competing firms
at the industry level
The strategic role of IT differs acroos industries because of competition, business processes,
and specific IT infrastructure requirements (Klbelsky, Richardson, Smit, & Zmud, 2011;
Zmud, Shaft, Zheng & Croes, 2010).
The role of industry can provide an important contextual space to develop new information
system theory (Chiasson & Davidson, 2005).
In relation to IT governance, prior research sugests that high operational reliance on IT is
positively associated to board-level IT governance (Jewer & McKay, 2012).
Proposed that organizational size should be considered when dealing with IT governance that
take regional differences into account when studying IT governance (e.g Aagesen, van
Veenstra, Janssen, & Krogstie (2011); Fink & Ploder (2008))
Consider the industry -setting, e.g by focusing on a specific industry
Studying different industries and comparing the results
CONTINGENCY VIEW AND INDUSTRY IT STRATEGIC ROLE AS A CONTINGENCY
FACTOR
Already in the early days of IT governance research, scholars recognized the need for
considering contingency factors when studying the IT governance construct (e.g Brown
(1997), Prasad et al (2012), Sambamurthy & Zmud (1999)).
Researchers are agreeing that a single best IT governance implementation, sometimes
referred to as a “silver bullet” does not exist (De Haes & Van Grembergen, 2015).
Researchers attempt to understand which option is best for which organization, through an
analysis of factors that affec individual IT governance framework success (Brown & Grant,
2005, p.307).
Prior academic research also indicates that process are the most IT governance mechanisms,
as well as perceived to be the most difficult to implement (De Haes & Van Grembergen,
2009).
As these processes prove difficult to implement, it migh also be interesting to study how the
level of process enabler implementation varies across different industries that exhibit
different strategic requirements for IT.
COBIT indetifies 37 process spread over one governance and four management domains. The
governance domain covers process that are the boards responsibilities in IT (e.g risk
appetite).
In the management area, four domains of processes are defince: Align, Plan, Organize
(APO), Build, Acquire and Implement (BAI), Deliver, Service and Support (DSS), and
Monitor, Evaluate and Assess (MEA).
SEVEN ENABLERS ARE PART OF COBIT 5
1. Principles, policies and frameworks (e.g acceptable use policies).
2. Processes (e.g portfolio management).
3. Organizational structures (e.g IT steering commiteers).
 4. Culture, ethics and behavior (e.g tone at the top).
5. Information (e.g quality of the IT strategy document).
6. Services, infrastructure and applications (e.g tools to support the project management
process)
7. People, skills and competencies (e.g skill set of the CIO).
Guidelines on how IT governance can be implemented have emarged from academia.
Literature has also shown a significant role of best practice-based IT governance frameworks
and standards in implementing affecive IT governance practives. The most extensive
framework that can be used as a toolkit for enterprise governance and management of IT is
Control Objectives in Information and Related Technologies (COBIT), develop by ISACA.
ENTERPRISE GOVERNANCE OF IT
“An integral part of corporate governance that addresses the definition and implementation of
processs, structures and relational mechanisms in the organization that enable both business
and IT people to execute their responsibilities in support of business/IT alignment and the
creation of business value from IT-enabled business investments.” – Deh Haes & Van
Grembergen (2009, p.3).
IT GOVERNANCE AND THE COBIT 5 FRAMEWORK
Enterprise governance of IT (EGIT), or mainly referred to as ‘IT governance’ is an integral
part of corporate governance. Its focus is on governing IT-related assets (Weill & Ross,
2004).
It can be implemented by establishing structures, processes, and relational mechanisms to
govern IT assets, there by achieving strong business/IT alignment, and ultimately improving
the return on IT-enabled investments (De Haes & Van Grembergen, 2015).
An issue that surfaced many times over the years of research towards IT governance is
related to several contingency factors (e.g firm size decision making structure, industry etc),
that influence its implementation, or even favor one IT governance approach over another
one.
Brown & Grant (2005) proposed IT governance contingency analysis as one of the two broad
research streams in their extensive literature review on the IT governance concept.