Federation des Experts Comptables Méditerraneens

Bucharest - 26-27 May 2003

Challenges Facing the Profession

Information Technology: Enterprise Innovation & Risk

Robert S. RousseyProfessor, Leventhal School of Accounting

University of Southern CaliforniaPresident, IT Governance Institute

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What is the New Business Model? Concentrate on business

processes that have a competitive advantage

E-Business – use technology to create new business processes or re-invent existing processes

Partner (collaborate) with others who have a competitive advantage for other business processes

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Technology in 2003: An ExampleMajor Supply chain Collaboration Opportunities

Collaborative Logistics Planning

•Transportation Services

•Distribution Center Services

ManufacturersMulti-tierSuppliers

SynchronizedProductionScheduling

CollaborativeProduct

Development

Source: AMR Research

Collaborative

DemandPlanning

Retailers

DistributorsWholesalers

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Change Agents in the New Business Model

Customer empowerment Advances in Information

Technology Globalization of markets Visionary leadership:

Dramatic cost reductions Reduced time-to-market Improved logistics and delivery

Partnering in the Extended Enterprise

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IT & Enterprise Paradigm Shifts

Enhanced Business Reporting, as described by Al Andersen

Web Services and the Connected Enterprise, as described by Paul Druckman

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New Business Models Combined with Enterprise Paradigm Shifts Creates Significant New Values for Enterprises,

Creates New Technology Risks, and Creates the Need for New Concepts of

Governance over Information Technology

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Technology Risks Significant costs New implementation problems Security breaches:

Financial loss Stolen information and intellectual property rights Operating disruption from hacker virus attacks

Continuance of business: Loss of technology advantage Destruction of knowledge from terrorist attacks

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What is IT Governance?

A focus on:

1. the leadership, organizational structures and processes of an enterprise

2. to ensure that IT sustains and extends an entity’s strategies and objectives

3. in the creation and preservation of values and wealth for stakeholders

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Why focus on IT Governance??

IT is strategic to the business IT is critical to the business Expectations and reality don’t match IT involves huge investments and large risks IT hasn’t gotten the attention it deserves “Due diligence” by Board of Directors

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What should Boards do about IT Governance?

be driven by stakeholder value adopt an IT governance

framework ask the right questions focus on IT’s

alignment with the business value delivery risk management Performance measurement

IT Value Delivery

Stakeholder Value Drivers

Performance Measurement

Risk Management

ITStrategic

Alignment

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What Should Management Do About IT Governance? Align IT strategy with business goals Cascade strategy and goals down into the organization Set up organizational structures that facilitate strategy

implementation Adopt an IT control and governance framework Provide IT infrastructures that facilitate creation and

sharing of business information Focus on important IT processes and core IT competencies Embed responsibilities for risk management in the

organization Measure performance (Balanced Business Scorecard)

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What should Accountants do about IT Governance? Develop your knowledge and understanding about IT and IT

Governance

Get the Board and Management to focus on the issues in the previous two slides

Recommend the adoption of an IT control and governance framework, such as Control Objectives for Information Technology (CobIT) issued by the IT Governance Institute

Set up organizational structures in your own business areas that facilitate a strategic implementation of such a framework

Measure your own performance (Balanced Business Scorecard)

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Resources for IT Governance

Open Architecture Publications – Download Free of Charge – www. ITgovernance.org

• IT Governance: Executive Summary• IT Strategy Committee• Board Briefing on IT Governance• Information Security Governance: Guidance for

Boards of Directors and Executive Management• Control Objectives for Information Technology

(CobiT)

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Governance in the Extended Enterprise

Bridging Business and IT Strategies

Copyright 2002 by the IT Governance Institute (ITGI). Reproduction or storage in any form for any purpose is not permitted without ITGI prior written permission. No other right or permission is granted with respect to this work.