CIO Dilemmas: Bridging IT Governance and Business Governance

January 22nd, 2007 |
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In this third podcast in the series examining the changing demands on the CIO, Frank Buytendijk, vice president for corporate strategy at Hyperion, discusses the dilemma of bridging IT governance and business governance. Although a dilemma like this can seem intractable, Frank says that by taking a closer look at the problem in the right way, you can arrive at a true solution.

Transcript:

Host: Paul Lancour – PodTech

Guest: Frank Buytendijk – Hyperion

Paul Lancour – PodTech

I’m Paul Lancour with PodTech.net. In this series of Podcast, CIO Dilemmas, Frank Buytendijk, Vice President for Corporate Strategy at Hyperion says if CIOs are to find real answers for their organization, they need to examine the underlying problems more closely. Frank has distilled this down to four common dilemmas, each one to be examined in a separate Podcast. In this Podcast, we examine the dilemma of bridging IT governance and business governance. To start off, I asked Frank if it’s fair to say that this boils down to the CIO versus the CFO?

Frank Buytendijk – Hyperion

That’s absolutely correct, because the CIO and the CFO tend to have different requirements. The CIO is aiming for IT governance indeed, which means a high level of standardization which we discussed already in the previous Podcast. Going for high level of manageability, trying to preserve a certain situation, trying to create stability, where if you look at business governance, what the CFO and the other business executives are faced with, it’s about flexibility, governance there is meeting the continuously changing requirements of the markets. Now, it’s a dilemma because of software, and actually software in today’s world makes people choose.

So, sometimes the CIO wins, and that means that these huge ERP, CRM, SEM, add your own acronym here, system is wield in and three years later, and more millions of dollars than you care to think about are being pumped in, is then the standard photocopied organization taking care of perfect IT governance. Unfortunately, user friendliness consists of thank you, when you hand in your change request that was just being put at the bottom of the stack, and flexibility means that you can choose in which stack you want to be at the bottom off, and sometimes the CFO wins. That means that a small niche application is being reopened, the fix on the PCs or the local server of the finance organization, and then finance creates a solution for themselves that helps finance, but is completely out of sight of what the rest of the organization does, and also it’s out of sight of the IT department.

That’s a bad thing as well in these days of compliance, where you simply need to have a certain amount of trustworthiness and confidence in the numbers, making sure that everything adds up. So indeed, this is about the conflict between the CIO and the CFO that is actually triggered by technology.

Paul Lancour – PodTech

Is it fair to say also that given that the technology, the software is made by software engineers, it’s generally more IT governance friendly than business governance friendly?

Frank Buytendijk – Hyperion

I wouldn’t really say so actually, the markets traditionally has been divided in two. There are the big systems from the big vendors, and these tend to be very, very IT focused, leading lot of people, leading lot of consultants, creating very centralized and controlled environments, and there has been, over the past, and also today, lots of specialized, in other words, best-of-breed vendors, that have focused on one particular task, and one task only, and service a very particular need with it. So, your first conclusion was, is this dilemma about the CIO versus the CFO? Definitely true. Another way of describing the dilemma would be in terms of technology, the one stop shop versus the best-of-breed.

Paul Lancour – PodTech

Okay. So, we have enlightened CIOs and CFOs at their organizations, they read your Blog at Hyperion.com, and they understand your thinking about dilemmas and how to look at dilemmas, and they want to find an answer. How do they find an answer to this problem of governance?

Frank Buytendijk – Hyperion

Well, this is one of those rare cases where technology actually solves a problem. Usually with technology advancements, many that we have seen, they basically shift a problem from left to right, but I truly believe that the emergence of the service oriented business applications means that this is the synthesis that we discussed in our first Podcast about how do dilemmas work. So, SOBAs, Service Oriented Business Applications provide that synthesis. In the end what it does is it bridges the dilemma between the one stop shop and the best-of-breed. It is a framework, another term for SOBA would be Composite Application Framework. In this framework, they have everything that the CIO needs in order to have a centralized, controlled environment providing IT governance.

So, from a compliance point of view and from a CIO (Inaudible) point of view, that is a good solution. Yet, composing the applications, creating the applications, the screens, the work flows, the interactions, doesn’t have to be driven by IT within that framework, that is why you have the components. The components are being glued together and taken apart and re-glued together by the power users within the organization, and they take care of the business governance.

In the end, you could say that the Composite Application Framework or a Service Oriented Business Application is almost the one stop shop for best-of-breed, and that is what in jargon is called the ecosystem. Ecosystem is an environment in which these components list that service a particular greater need. In that sense, Hyperion System 9 is the Service Oriented Business Application environment ecosystem for what we like to call the management system.

Paul Lancour – PodTech

In this sort of an environment, I understand that best practice has actually emerged in a viral sense from the way that users employ SOBAs in an organization, is that true?

Frank Buytendijk – Hyperion

Yes. Well, first of all, we have to look at it like this. A Service Oriented Business Application is the next step after the Service Oriented Architecture, SOA, I think that’s the term that we’ve all been exposed to. Service Oriented Architectures don’t read — do a lot other than enable creating what we discussed as being the Service Oriented Business Applications. If you have implemented that, it starts to have a spin off to even higher levels in our stack of what we’re trying to achieve, because if we have an infrastructure or an architecture, we have the applications on top of it, it’s going to impact the way how we organize.

What we see in most organizations that are very successful with business intelligence and business performance management is that they have some kind of a BI/BPM Competency Center. If you think in terms of a Competency Center, which is neither a project nor a line organization with a department, it is a small group of resources being there on a continuous basis for the rest of the organization. That is in a sense the organizational forum of a Service Oriented Architecture, you could call it the Service Oriented Organization.

Now, organizations that have learned to think that way perhaps are also to create the Service Oriented Business Model, and that is what is in the manufacturing industry is also referred to as mass customization. So, the components of a products are the same, but it is possible to make endless combinations in particular outcomes of the product. Think of the car that you drive. How many different configurations of the car are there? Think in financial services of the number of — types of mortgages that you can choose. Mortgages these days consist of a number of components that you can glue together to a very unique mortgage, that is perfectly aimed at servicing your particular needs. Does that mean that it is incredibly unmanageable for the particular bank? No, because every particular mortgage consists of those standard components.

You see, these thoughts are all variations on the same thing. There’s a framework in which you can glue components together on the architecture level, on the applications level, on the organizational level and on the business model level, and that is for me true service orientation, solving the CIO, CFO dilemma.

Paul Lancour – PodTech

Great, thank you very much for taking the time to talk about bridging IT Governance and Business Governance, and we look forward to our future Podcast with you, Frank. Get in on the conversation. Check out Frank’s blog at blogs.hyperion.com/frankb. You can also see more at smartbi.hyperion.com. In our next Podcast, the next dilemma in the series, Bridging IT Stability and Business Agility. Subscribe now and thanks for listening.

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