Configurations of Information Technology Governance Practices and Business Unit Performance

Introduction

Although the past ten to fifteen years have witnessed an increasing complexity in the deployment of information technology (IT) and an important rise in IT investments, CIOs are still struggling to justify and sometimes attain success from those IT applications. Measuring and proving the value delivered from IT in general, and as an outcome of having implemented IT governance practices in particular, is not a straightforward task and has been an ongoing challenge in the MIS literature (Neirotti & Paolucci, 2007). Some studies argue that the performance measurement conducted at the organizational level is far from the first-order effects of the implemented IT solutions (Barua et al., 1995). Such level of measurement dilutes the IT effect and makes it harder to see the real value. This represents a stream of calls for conducting further research to move the performance measurement level from the organizational level to the business unit one. Therefore, our research is designed to answer this call by assessing the value of IT governance practices at the business unit level.

It was also highlighted that existing studies are focusing on the short-term financial measurement such as return on investment (ROI) while forgetting that some solutions will only make a difference after two or three years (Peppard, 2005). This uncovers another problematic area of measuring only the financial performance while overlooking other performance facets. To overcome that aspect of measurement, our research will not only capture the financial performance of the business unit but also its non-financial performance.

In response to these research calls regarding the level of analysis and the performance measurement, the main objective of this study is to compile a set of IT governance practices and investigate the relationship of the different combinations of these practices with performance outcomes, including both non-financial and financial, at the business unit level instead of the organizational one. Thus, the main research question is:

To do so, a research model was developed based on the balanced scorecard framework. A Delphi method was conducted to compile a list of essential IT governance practices. A matched-pair survey of 57 organizations was performed, with participants from the IT and business units, to measure the non-financial and financial impact of the compiled list of the IT governance practices.

Literature Review

Most definitions of IT governance as presented in the IS literature can be grouped into two main streams: one that focuses on accountability and decision-making (Sambamurthy & Zmud, 1999; Weill & Ross, 2004; Wilkin & Riddett, 2009) and another one that refers to processes and the how to (Webb et al., 2006 cited in Willson & Pollard, 2009). However, it should be noted that some authors such as Van Van Grembergen & De Haes (2005, p. 3) have combined those two streams into one definition: “IT governance is the organizational capacity exercised by the board, executive management and IT management to control the formulation and implementation of IT strategy and ensure the fusion of business and IT.”