Analysing the Impact of Enterprise Governance of IT Practices on Business Performance

Analysing the Impact of Enterprise Governance of IT Practices on Business Performance

Steven De Haes (University of Antwerp – Antwerp Management School, Belgium) and Wim Van Grembergen (University of Antwerp – Antwerp Management School, Belgium)
Copyright: © 2012 |Pages: 23
DOI: 10.4018/978-1-4666-1779-7.ch002
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Abstract

Enterprise governance of IT (EGIT) is about the definition and implementation of processes, structures and relational mechanisms 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. In this field, practice-oriented guidance like COBIT and Val IT are often promoted as broad frameworks to implement enterprise governance of IT, but very little academic research is available that empirically supports the assumption that implementing EGIT practices, as defined by COBIT and Val IT, improve business performance. This article explores the relationship between Enterprise Governance of IT practices and business performance, and finds little support to identify a direct link between EGIT practices and business performance. However, clear empirical evidence is revealed demonstrating that the implementation of EGIT practices impacts the achievement of specific IT goals, which in turn impacts the achievement of specific business goals. A three-layered cascade is proposed to demonstrate the impact of EGIT practices, through IT goals, on business performance.
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From It Governance To Enterprise Governance Of It

The concept of IT governance, as it is understood these days, emerged during the late nineties. Gartner introduced the idea of “Improving IT governance” for the first time in their Top-ten CIO Management Priorities for 2003 (ranked third). Some years before that, in 1998, the IT Governance Institute (www.itgi.org) was founded to spread the IT governance concept. In academic and professional literature, articles mentioning IT governance in the title began to emerge from 1999, for example Sambamurthy and Zmud (1999) with “Arrangements for information technology governance: A theory of multiple contingencies”, and Van Grembergen in (2000) with “The IT balanced scorecard and IT governance”. In the past decade, many academics and practitioners conducted research and developed theories and best practices in the emerging knowledge domain. This resulted in a variety of IT governance definitions of which some are formulated in Table 1.

Table 1.
Definitions of IT governance
“IT governance is the responsibility of executives and the board of directors, and consists of the leadership, organizational structures and processes that ensure that the enterprise’s IT sustains and extends the organization’s strategy and objectives” (ITGI, 2003).
  “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 in this way ensure the fusion of business and IT” (Van Grembergen, 2002).

Both definitions clearly make reference to the importance of aligning business and IT, as one of the ultimate goals of IT governance. This reveals that the concepts of IT governance, as we understand them now, may have emerged during the late nineties, but it should be noted that many of the underlying elements, such as business/IT alignment, attracted attention many years before (e.g., Strategic Alignment Model from Henderson & Venkatraman, 1993).

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