A Model to Support IT Infrastructure Planning and the Allocation of IT Governance Authority

• In Event: IT Control Weaknesses, Auditor IT Experience and IT Governance
  In IS Paper Session: IT Control Weaknesses, Auditor IT Experience, and IT Governance

Abstract

Information technology (IT) costs are a significant expense for most firms and can consume as much as 10.5% of total revenue according to a 2008 industry survey by CIO magazine. Those charged with IT governance seek to minimize technology costs while ensuring that the IT infrastructure can accommodate increasing utilization, new software applications, and modifications to existing software applications. The governance and subsequent control of IT investments is made more challenging by the fact that many firms operate in multiple geographic markets and may have a different competitive position, and face different challenges, in each of those markets. While centralized governance and control can provide cost reductions through economies of scale, it can also decrease the ability of subsidiaries to adapt quickly to local market conditions. Based on interviews with IT executives at multinational Global 1000 firms, we develop a discrete-time, finite-horizon Markov decision model to identify the most economically beneficial IT infrastructure configuration from a set of plans under consideration. We show that applying our decision tool enables firms to evaluate the costs and benefits associated with various IT infrastructure designs with varying degrees of centralized and de-centralized IT governance and control.

Authors

• Steven Thompson, University of Richmond

• Peter Eckman, Mardalen University

• Daniel D. Selby, University of Richmond

• Jonathan Whitaker, University of Richmond