Federation des Experts Comptables Méditerraneens Bucharest May 2003 Challenges Facing the Profession Information Technology: Enterprise Innovation & Risk Robert S. Roussey Professor, Leventhal School of Accounting University of Southern California President, IT Governance Institute

Leventhal - IT Governance Institute2 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

Leventhal - IT Governance Institute3 Technology in 2003: An Example Major Supply chain Collaboration Opportunities Collaborative Logistics Planning Transportation Services Distribution Center Services Manufacturers Multi-tier Suppliers Synchronized Production Scheduling Collaborative Product Development Source: AMR Research Collaborative Demand Planning Retailers Distributors Wholesalers

Leventhal - IT Governance Institute4 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

Leventhal - IT Governance Institute5 IT & Enterprise Paradigm Shifts  Enhanced Business Reporting, as described by Al Andersen  Web Services and the Connected Enterprise, as described by Paul Druckman

Leventhal - IT Governance Institute6 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

Leventhal - IT Governance Institute7 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

Leventhal - IT Governance Institute8 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

Leventhal - IT Governance Institute9 ? Why focus on IT Governance? l IT is strategic to the business l IT is critical to the business l Expectations and reality don’t match l IT involves huge investments and large risks l IT hasn’t gotten the attention it deserves l “Due diligence” by Board of Directors

Leventhal - IT Governance Institute10 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 4alignment with the business 4value delivery 4risk management 4Performance measurement IT Value Delivery Stakeholder Value Drivers Performance Measurement Risk Management IT Strategic Alignment

Leventhal - IT Governance Institute11 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)

Leventhal - IT Governance Institute12 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)

Leventhal - IT Governance Institute13 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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