Making IT Governance Work in a Sarbanes-Oxley World

307 Pages·2005·3.213 MB·English

by  Jaap Bloem, Menno van Doorn, Piyush Mittal

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Making IT Governance
Work in a
Sarbanes-Oxley
World
JAAP BLOEM
MENNO VAN DOORN
PIYUSH MITTAL
John Wiley & Sons, Inc.
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Making IT Governance
Work in a
Sarbanes-Oxley
World
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‘Man is an animal that overestimates itself’
—John Gray, Professor of European Thought,
Government Dept., London School of Economics
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Making IT Governance
Work in a
Sarbanes-Oxley
World
JAAP BLOEM
MENNO VAN DOORN
PIYUSH MITTAL
John Wiley & Sons, Inc.
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This book is printed on acid-free paper. ∞
Copyright © 2006 by Sogeti Nederland B.V. All rights reserved.
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Library of Congress Cataloging-in-Publication Data:
Bloem, Jaap, 1957-
Making IT governance work in a Sarbanes-Oxley world / Jaap Bloem,
Menno van Doorn, Piyush Mittal.
p. cm.
Includes index.
ISBN-13: 978-0-471-74359-0 (cloth)
ISBN-10: 0-471-74359-3 (cloth)
1. Information technology—Management. 2. Corporate governance
—United States. 3. Corporations—Accounting—Law and legislation
—United States. I. Doorn, Menno van, 1964- . II. Title.
HD30.2.B564 2005
658.4’038—dc22
2005016636
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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Contents
FOREWORD ix
PREFACE xi
PART ONE
Management: Governance and Its Human Dimension 1
CHAPTER 1
Types of Governance, Business Performance, and Common Sense 3
From the Separation of Powers to Sarbanes-Oxley 4
Corporate Governance Is Good Management 7
Governance in Corporations: All about Business Performance 9
Essentials of IT Governance 10
Plain Common Sense 14
CHAPTER 2
Impact and Challenges of Betrayed Trust 16
Progress and Its Crisis of Faith 17
The Role of IT and the Internet 23
The American President Intervenes 26
Eight Challenges Plus the Millennium Problem 28
Insight as the Basis of Realism 35
PART TWO
Accountability: An Economic-Based Business Focus for IT 41
CHAPTER 3
A Basis for IT Management 45
IT Measurement: Turning a Three-Leaf into a Four-Leaf Clover 46
IT Is Infrastructure and E-Business 48
v
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vi CONTENTS
Where Are We in Terms of the Micro- and Macro-Economics of
E-Business? 53
E-Business and the Shift from Decree to Dialogue 57
The IT Democracy 59
Not Dialogue but Babble 61
Limits to the Babble, but Almost Any Governance Structure Will Do 63
exT: Death of IT 68
Keep It Simple, Stupid! 72
Money Makes the World Go Round: Rapid Economic
Justification and Total Economic Impact 76
The Strategic Role of the CIO 79
Strategic Focus and Alignment 85
IT Governance: From Structures to Mechanisms and Techniques 87
CHAPTER 4
IT Portfolio Management 91
What Is Involved in a Portfolio Approach? 93
An IT Portfolio Approach in Practice 95
IT Portfolio Management Begins with Outlines, Architecture,
and Calculation 98
Maturity and IT Portfolio Management 104
Governance, Projects, Programs, and Performance 108
The Portfolio Approach as an Aggregation of Balanced Scorecard,
Activity-Based Costing, and Economic Value Added 111
After 50 Years of Portfolio Thinking, IT’s Turn Has Come 115
Thou Shalt Practice IT Portfolio Management 123
Nine Initial Practical Lessons, Plus One 126
Portfolio Management? By All Means, but... 131
CHAPTER 5
Activity-Based Costing, Economic Value Added, and Applied Information Economics 137
Charting Costs 138
Hence ABC, but How? 143
ABC: The Right Price and IT 150
Real Economic Value and the ROI of IT 153
Some Critical Remarks 158
Applied Information Economics 161
The Human Measure of Ambition and Limitations 164
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Contents vii
PART THREE
Supervision: Stimulating Desirable Behavior 169
CHAPTER 6
Take Action When Necessary 171
Desirable Behavior as a Blind Spot 172
Economics of Governance 174
Supervision: A Lot or a Little? 176
Good Mores or Good Laws? 178
Our Limitations 179
Our Intentions 182
Arguments and Misunderstandings 184
Keep IT Governance Simple and Make Goals Apparent 185
The Balance of Supervision and Intervention 186
CHAPTER 7
Leadership: Overseeing Change 190
IT Governance and Leadership 191
From Control to Distributed Leadership 193
People No Longer Put up with Control 197
Eight Leadership Roles 203
Realists at the Helm 206
Cooperation instead of Coercion 207
No Prospects without Building Trust 210
Management as Institutionalized Mistrust 212
Back to IT Governance and Leadership 214
Leadership and Language 215
The Charisma and Leadership Paradox 216
CHAPTER 8
Issuing Rules Is Maintaining Supervision 220
The Legislator as Supervisor 221
The IT Management Reform Act of 1996 (Clinger-Cohen Act) 223
Public Company Accounting Reform and Investor
Protection Act of 2002 (Sarbanes-Oxley) 227
European Legislation: Comply or Explain 229
A European Example: Dutch Legislation 231