RMIT School of Accounting, Information Systems, and Supply Chain
Posted: August 26th, 2021
RMIT School of Accounting, Information Systems, and Supply Chain
INTE2412 Assignment Submission Sheet
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Table of Contents
1 IT Governance Case Analysis. 3
1.2.1 IT Governance Frameworks. 4
1.3 IT Governance Analysis – A Critical Analysis of the Issues. 5
1.4 Effective IT Governance – An Explanation of the Rationale. 7
1.5 Conclusion and Recommendations. 10
1 IT Governance Case Analysis
1.2 Introduction
IT governance involves aligning Information Technology approaches with business techniques, implementing policies that measure IT performance, and ensuring tracking of the business objectives and goals (Pearce, 2020, p.220). In other words, IT governance takes into consideration all stakeholder’s interests. Information Technology (IT) governance structure can give essential information on the performance of different business sectors. The drivers of IT governance includes the need for upholding best practices to support financial and technology led objectives (Borja, et al., 2018). Furthermore, shareholders and customers put pressure on these business firms in embracing IT governance: hence, it accounts for the necessity of Information and Technology.
Lately, there are rising instances of cyber threats from hackers. This follows a regular report by the Auditor General for Western Australia that examines controls associated with information technology in government departments and related authorities. The audit measures the extent to which various security procedures have been complied with. As such, these audits reveal some aspects of the prevailing character of IT governance in the state (Borja, et al., 2018). The report underpins various failures in IT governance across government agencies and organizations, which has made the West Australian government departments increasingly worried over the trend. Accordingly, organizations must distinguish information systems as critical areas that require security through strong corporate governance (Watkins and Calder, 2020). IT governance is viewed as either a success or failure in information economy in the modern operational environment. This is because stakeholders rely upon information frameworks than before for adequate protection and future investments. Thus, the report purpose of explaining to the state government about the improvement of IT governance. The primary interest is on whether to implement a principle-based approach or adopt other frameworks. The government has been made aware of the ISO/IEC 38500, which provides guiding principles for the governing body to ensure appropriate utilization of information technology with a keen focus on security. The paper begins with a discussion on IT governance frameworks before analyzing the governance structure. This is followed by a section on particular challenges facing IT governance and recommendations to address such challenges.
1.2.1 IT Governance Frameworks
There are a variety of IT governance structures accessible to organizations. Some organizations can create their Information Technology governance system while others utilize government provided IT governance frameworks. In this case, State Government can adopt the Information Systems Audit and Control Association (ISACA) framework, the CoBIT structure for Information Technology governance, which is acceptable worldwide (Watkins and Calder, 2020). CoBIT is a toolset and has guidance for IT governance. CoBIT auditors have found it valuable to incorporate innovation for control measures to meet specific business goals and missions (Watkins and Calder, 2020). Therefore, it serves business firms to oversee, mitigate, and manage risks.
The Australian government runs the Australian Standard for Corporate Governance of Information and Communication Technology (AS 8015-2005) standard. The committee provides a model, principles, and vocabulary as an essential system for applying effective corporate governance within any organization for information technology (Pearce, 2020, p.220). Further, AS 8015-2005 has rules on the executives concerning areas of ICT infrastructure, security, application, business perspectives, software assets, service support, and service delivery management. For internal controls, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) was created. COSO gives strategies in reporting, procurement, operation, the enterprise, financial, risks, information technology, legal issues, logistics, marketing and sales, external resources, and human resources management (Sabrina, 2020). The COSO system tends to be better for business compared to IT governance.
Capability Maturity Model Integration (CMMI) is another IT governance framework. CMMI has around twenty-two areas that target at improving, such as evaluation, structural, and appraisal areas (Kargas, Kanellos, and Varoutas, 2020). Hence, CMMI is helpful for application improvements, improving administrations, and controlling life patterns of items. Many business firms prefer CoBIT and AS 8015 IT governance systems (Kargas, Kanellos, and Varoutas, 2020). Nonetheless, some organizations advocate combining various systems to serve explicit objectives like development and operation. Therefore, it is essential to utilize systems that line up with stakeholders’ demands and organizational culture.
1.3 IT Governance Analysis – A Critical Analysis of the Issues
A team of technical experts and business managers must be present for a successful presentation of IT governance (Pearce, 2020, p.220). It is essential to convince senior stakeholders and management that IT governance is vital for business success and efficiency. Hence, this team needs to create an IT governance guideline that clarifies the organization’s future aspirations and current position (Kargas, Kanellos, and Varoutas, 2020). For instance, the government can adopt the following structure to enhance adherence to IT security measures;
Figure 1: IT Governance Framework
The framework begins with the setting of objectives for each organization, which is compared against other frameworks to strengthen a focus before being utilized in providing direction concerning IT activities target institutions. The performance of the respective IT objectives is measured to check if they would achieve the desired goals. Appropriate adjustments are against made continuously depending on the underlying circumstances.
Furthermore, this should include the benefits related to enhancement of accountability and reduction of business risks. Nonetheless, IT governance is costly; thus, an organization should acknowledge such expenses and assess the profitability after implementation. The IT Governance Institute categories five critical aspects of IT governance: First, IT governance should concentrate on strategic alignment, aiming at business efficiency, cost-effectiveness, and achieving organizational goals (Watkins and Calder, 2020). Second, IT governance must focus on value delivery that is essential for the IT office. Third, IT governance should highlight the necessity for resource management, which can occur through retaining skillful employees. Fourth, IT governance must oversee, manage, and report all organizational risks. Finally, IT governance needs to focus on business performance in ensuring a balance between IT strategies and business strategies.
1.3.1 Challenges
Most organizations mistake other IT control approaches and management practices with IT governance. IT governance is an administration framework that managers use (Watkins and Calder, 2020). According to ISO 38500, IT governance represents Information Technology assets and shareholders who need returns on their investment. Further, the cost is one of the main challenges facing IT governance in many organizations. Additionally, organizations luck with capable corporate governance instruments, which comply with SOX principles (Pearce, 2020, p.220). Thus, SOX guideline requires sustainable corporate governance and financial regulations to protect investments.
1.4 Effective IT Governance – An Explanation of the Rationale
Many organizations lack efficient IT governance frameworks; since they introduce these systems to address specific issues. Hence, this strategy limits the adequacy of IT governance. In this way, an organization ought to have an IT governance plan that focuses on performance goals and organizational objectives.
Some organizations, such as Anglo American, BHP, and Glencore, have redesigned their IT governance frameworks to meet changes in alluring practices (Aprilinda, Puspa, and Affandy, 2019). Therefore, IT governance is a technique for making synergy in the organization. Therefore, the Anglo Americans utilized the IT governance to achieve transparency, global management and information sharing, as well as fostering change operation management.
Organizations that have efficient IT governance have effectively associated their senior managers. Therefore, Chief Information Officers must take part in IT governance discussion and implementation. Other executives need to give performance reviews and support the entire process. Anglo Americans depend on the board committees to upgrade IT governance to accomplish improved cooperative energies over the whole organization (Aprilinda, Puspa, and Affandy, 2019). According to Woolworths Group, it is the role of executives to support IT governance strategies and implementations. Usually, top management helps in the decision-making process; since they are vital objectives, organizations need to convey an incentive to stakeholders. Therefore, such choices become crucial decisions to the CEO.
Successful IT governance requires an explanation of some exceptional procedures. These demands may target to address the necessities of the business (Aprilinda, Puspa, and Affandy, 2019). BHP has remarkable techniques that provide guidelines, exceptional demands. BHP ensures that unique case forms be evident to all stakeholders. The procedure is linear and dispenses with all phases that can prompt postponements. Therefore, these outstanding requests fill in as learning aspects to the organization.
Additionally, effective IT governance requires the right motivators for its prosperity. Organizations do not adjust their incentive and reward frameworks to IT governance. Incentive and reward frameworks improve various manners. Consequently, when an organization neglects to alter its incentive and reward frameworks to its objectives, management becomes less viable. An organization that utilizes IT governance to drive synergy, self-sufficiency or both combination between various departments should adjust its reward and incentive frameworks. Therefore, managers can cooperate to structure prize and incentive frameworks that intrigue to the whole units of the business.
Organizations need strategic, secure and cost-effective as well as compliant, and reliable IT governance structures to succeed in their performance (Aprilinda, Puspa, and Affandy, 2019). Information Technology either can or not perform to business mostly according to business systems. In this manner, individuals who own IT governance must assume liability and give accountability of procedures that intrigue to all specialty units (Kargas, Kanellos, and Varoutas, 2020). Most organizations leave responsibility for IT governance to their CIOs. Furthermore, CIOs delegate these procedures to specialty units and other applicable divisions to
IT governance is required at various operational management levels for every large organizations. Thus, this ensures that IT governance is an undertaking-wide approach that depends on multiple business units for vital objectives (Kargas, Kanellos, and Varoutas, 2020). Organizations having a variety of IT functions and global presence in terms of geographies and divisions, as well as departments require various IT governance aspects. For instance, Wesfarmers infers both synergy and autonomy from these layers. Managers create independence, while business units impact synergy through IT governance. Therefore, effective IT governance should concentrate on big business comprehensive governance because of its consequences for different levels.
Effective IT governance relies on transparent processes and education (Watkins and Calder, 2020). Individuals believe in open governance strategies. For example, the success of IBM and Google is based on the use of intranet platforms for internal communications. Thus, the executives should express interest in adopting IT governance by consistently communication and providing supporting. Additionally, this applies to people that own IT governance in an organization (Kargas, Kanellos, and Varoutas, 2020). Therefore, a reliable and viable connection improves IT governance in organizations. Formal communication is more influential than informal ones that help actualize functional IT governance and helps document it (Katz and Towsend, 2000). Senior management, which shows an away from IT governance’s comprehension, may explain IT governance issues. Consequently, organizations must audit their methodologies and strengthen them using education and communication.
1.5 Conclusion and Recommendations
IT governance only makes synergy, which relies on several organizational resources. Therefore, top executives should concentrate on governance issues, including Information Technology, when addressing business challenges. As such, a principle-based approach should be undertaken to enhance IT governance in public administration that considers the following aspect.
The West Australian government departments needs to ensure the coordination of Information Technology governance to make a collaboration for the organization. Hence, this implies that an organization must align its operation processes with increasing stakeholders’ value.
IT governance should make compelling procedures. The public entities may facilitate IT governance with specialty units yet neglect to do so undertaking wide prompting insufficient framework (Katz and Towsend, 2000). In this way, IT governance should be dominant undertaking comprehensive with the goal that an organization can quantify the performance and return on investment of the Information Technology speculations.
Public entities can use various structures of IT governance for multiple purposes. This should prompt the formation of incredible value for the organization. Nonetheless, the focus between specialty units ought to be over the whole organization for making of significant worth to stakeholders.
Reference List
Aprilinda, Y., Puspa, A.K. and Affandy, F.N., 2019, November. The Use of ISO and COBIT for IT Governance Audit. In Journal of Physics: Conference Series (Vol. 1381, No. 1, p. 012028). IOP Publishing.
Borja, S., Kim., Yoon, H. and Hwang, J., 2018. IT Governance Effectiveness and Its Influence on Innovation Product and Process. 2018 Portland International Conference on Management of Engineering and Technology (PICMET).
Kargas, A., Kanellos, N., and Varoutas, D., 2020. Digital Industry Maturity Model Based on Capability Maturity Model Integration with Intellectual Capital Methodology. Available at SSRN 3565887.
Katz, J. and Towsend, J., 2000. The Role of Information Technology in the “Fit” Between Cultire, Business Strategy and Organizational Structure of Global Firms. Journal of Global Information Management, 8 (2), pp.24-35.
Langford-Smith, J., Aslam, K., Almeida, W., and Cordoba, K., 2020. Information Systems Audit Report 2020 State Government Entities – Office Of The Auditor General. [Online] Office of the Auditor General.
Pearce, G., 2020. Digital transformation governance: What boards must know. Governance Directions, 72(5), p.220.
Sabrina, B., 2020. Climate Change and the Organization of Corporations in the Light of the New Text of Article 2086 of the Civil Code. Banca Impresa Società, (1), pp.47-66.
Watkins, S., and Calder, A., 2020. IT Governance: An International Guide to Data Security and ISO 27001/ISO 27002. Kogan Page.
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