1. A new perspective on
IT Governance in SMEs
Dr. ir Jan Devos
ECCF 2012 Conference Skopje MK
Jan Devos - 8/11/2012 pag. 1
Faculty of Engineering and Architecture – Campus Kortrijk

2. Outline of the presentation
- Corporate Governance and IT Governance
- Why IT Governance?
- Is IT Governance a concept for SMEs?
- New findings
- Conclusions
Jan Devos - 8/11/2012 pag. 2
Faculty of Engineering and Architecture – Campus Kortrijk

3. Corporate Governance
IT Governance
Strategic Information Systems
Weill, 2004; Van Grembergen, 2000
Jan Devos - 8/11/2012 pag. 3
Faculty of Engineering and Architecture – Campus Kortrijk

4. IT Governance
• Separating Governance from Management
• Meeting Stakeholders needs
• IT-Business Alignment
• Benefits Management
• Risk Management
• Compliance
GRC (Governance, Risk, Compliance)
Jan Devos - 8/11/2012 pag. 4
Faculty of Engineering and Architecture – Campus Kortrijk

5. IT Governance
Separating Governance from Management
Governance:
 Board of directors under leadership of chairperson
 Evaluate, Direct and Monitor
Management:
 Executive management under leadership of CEO
 Plan, Build, Run and Monitor
Jan Devos - 8/11/2012 pag. 5
Faculty of Engineering and Architecture – Campus Kortrijk

6. IT Governance
• Meeting Stakeholders needs
• IT-Business Alignment
• Benefits Management
• Risk Management
• Resource Management
Jan Devos - 8/11/2012 pag. 6
Faculty of Engineering and Architecture – Campus Kortrijk

7. Outline of the presentation
- Corporate Governance and IT Governance
- Why IT Governance?
- Is IT Governance a concept for SMEs?
- New findings
- Conclusions
Jan Devos - 8/11/2012 pag. 7
Faculty of Engineering and Architecture – Campus Kortrijk

8. Why bring IT on the agenda of the board?
• 1980s: IT Failures (Lyytinen, 1987)
• 1990s: IT productivity paradox (Brynjolfsson, 1998)
• 2000s: IT doesn’t matter (Carr, 2003)
• 2012: Cloud, BYOD, Mobile, Security, …
Still 70% of all IT projects do not deliver on
time, on budget or with all defined
requirements…
Jan Devos - 8/11/2012 pag. 8
Faculty of Engineering and Architecture – Campus Kortrijk

9. Outline of the presentation
- Corporate Governance and IT Governance
- Why IT Governance?
- Is IT Governance a concept for SMEs?
- New findings
- Conclusions
Jan Devos - 8/11/2012 pag. 9
Faculty of Engineering and Architecture – Campus Kortrijk

10. Jan Devos - 8/11/2012 pag. 10
Faculty of Engineering and Architecture – Campus Kortrijk

11. What usually gets lost is that more than 99% of all European businesses
are, in fact, SMEs.
They provide two out of three of the private sector jobs and contribute to more
than half of the total value-added created by businesses in the EU.
Moreover, SMEs are the true back-bone of the European economy, being
primarily responsible for wealth and economic growth, next to their key role in
innovation and R&D.
What is even more intriguing is that nine out of ten SMEs are actually micro
enterprises with less than 10 employees. Hence, the mainstays of Europe's
economy are micro firms, each providing work for two persons, in average.
This is probably one of the EU's best kept secrets!
Source: website Europe (http://ec.europa.eu/enterprise/policies/sme)
Jan Devos - 8/11/2012 pag. 11
Faculty of Engineering and Architecture – Campus Kortrijk

12. Is IT Governance a concept for SMEs ?
 Theoretical Foundations of  Small and Medium-sized
IT Governance Enterprises
- Control Theory - Theory of the growth of the
(Coase, 1937, Eisenhardt, 1989) firm (Penrose, 1951)
Alignment of interests - Resource Based Theory
- Agency Theory (Jensen & - Less separation between the
Meckling, 1976)
right of ownership and the
Moral Hazard / Adverse Selection right to control
- Mistrust in human behavior - People centric (CEO):
(Ghoshal, 2005) - Amoral trust, empathy
theories ?
→ Large organizations
Jan Devos - 8/11/2012 pag. 12
Faculty of Engineering and Architecture – Campus Kortrijk

13. Independency
• Not owned by a larger firm; family firms, start-ups
• Not depended for decision-making
• Entrepreneurial risk ≠ Risk Management
• Less separation between the right of ownership
and the right to control
• Weak concept of Corporate Governance
Jan Devos - 8/11/2012 pag. 13
Faculty of Engineering and Architecture – Campus Kortrijk

14. Personal Influence of the CEO
• Two arms, two legs and a giant ego (Levy, 2005)
• Influence of CEO is paramount for success
• Personal beliefs
• Does the CEO believe in IT as an enabler for
innovativeness?
Jan Devos - 8/11/2012 pag. 14
Faculty of Engineering and Architecture – Campus Kortrijk

15. Flexibility and Innovation
• Influence of CEO is paramount
• Lack of innovativeness due to cost
• Lack of managerial and technical capabilities due
to low maturity and resource poverty
Jan Devos - 8/11/2012 pag. 15
Faculty of Engineering and Architecture – Campus Kortrijk

16. Outline of the presentation
- Corporate Governance and IT Governance
- Why IT Governance?
- Is IT Governance a concept for SMEs?
- New findings
- Conclusions
Jan Devos - 8/11/2012 pag. 16
Faculty of Engineering and Architecture – Campus Kortrijk

17. New Findings
- Call for chapters: ‘Information Systems and
Small and Medium-sized Enterprises – State of
art of IS research in SMEs’
- Focus: IT Governance
- 33 contributions from 22 countries
- 16 developed / 17 developing
- Findings will be published in 2013 by Springer
Jan Devos - 8/11/2012 pag. 17
Faculty of Engineering and Architecture – Campus Kortrijk

18. New Findings
- IT driver for innovation? Yes but…
- Is IT important? Yes but…
- Where are the benefits of IT ? Hard to measure
- Outsourcing is common in SMEs (constructs: trust, empathy, …)
- Government support for SMEs needed, but difficult
- Idiographic nature of SMEs with respect to IT
- Strategic thinking about IT ? or a bottom up approach?
Jan Devos - 8/11/2012 pag. 18
Faculty of Engineering and Architecture – Campus Kortrijk

19. Outline of the presentation
- Corporate Governance and IT Governance
- Why IT Governance?
- Is IT Governance a concept for SMEs?
- New findings
- Conclusions
Jan Devos - 8/11/2012 pag. 19
Faculty of Engineering and Architecture – Campus Kortrijk

20. Conclusions
- Existing IT Governance principles too much grounded in a
mechanical view of an organization
- An SME is not a cybernetic machine that can be controlled
accordingly
- Is there a need for a formal control system for IT?
- Is a top-down, linear approach appropriate?
- IT Governance too generic and too much based on ‘What
must be done’ and too less on ‘How it should be done’
- IT Governance for SMEs should focus more on people
Jan Devos - 8/11/2012 pag. 20
Faculty of Engineering and Architecture – Campus Kortrijk

21. Questions?
Jan Devos - 8/11/2012 pag. 21
Faculty of Engineering and Architecture – Campus Kortrijk