Hi, and welcome. My name is Gautam Ray and we will be talking about IT alignment. I have three goals in this module. My first goal is to define IT governance and explain its significance. My second goal is to provide a framework for IT governance. IT governance means making decisions about IT, deciding who will make those decisions and then laying out how they will make those decisions. My third goal is to provide a mechanism or a tool to align IT with the business strategy and goals of the organization. I'm going to use the construct of an operating model and the notion of the maturity of an enterprise architecture to achieve this IT business alignment. So, three goals, define IT governance, a framework for IT governance and an operating model and a maturity of enterprise architecture to achieve IT business alignment. So, the first question is, why do we care about these things? So, here, I have a graph that shows IT investment made by US organizations. So, Society for Information Management is an industrial organization and since 1980 it has been surveying IT executives about many things. This slide provides the response to the question about IT spending in this organization. What this graph says, is that, a typical organization that responds to this survey spends about 6 percent of their revenue on IT. So, you are a billion-dollar company, that would mean that annually, you spend about $60 million on IT. This survey also found that for three-quarters of these organizations, the investment in IT has been increasing. So, this graph and the previous graph show that US organizations are making significant investments in IT. However, the returns from these investments have been less than stellar. So, a McKinsey study so, here, we see a McKinsey study which looked at the performance of over 5,000 IT projects. What this Mckinsey study found was that, a typical project is 45 percent of a budget so, they expected to spend $100 a project but they ended up spending one $145. A typical project is also seven percent behind schedule. So, they are seven percent behind schedule. This study also found that a typical project has a 56 percent shortfall in expected benefits. They expected to realize $100 from a project but they only realized forty $44. This McKinsey study also found that the primary reason for the shortfall in project performance, is missing focus, that is these projects didn't have clear objectives or if they had clear objectives, these objectives were not aligned with the business goals and strategy of the organization. This misalignment is actually very well illustrated by the Society for Information Management study that I alluded to earlier. This Survey, the Society for Information Management Survey, has been asking senior IT executives about the most important the management issues that they face and remarkably, for the last 10 years, alignment of IT with the business has been one one the top two IT management issues. So, remarkable consistency that senior executives think that alignment of IT with the business is one one the two two important issues they face. This brings us to the question of IT governance. IT governance is a response to this problem that firms are making significant investments in IT but they are not realizing the expected payoff. So, IT governance deals with what can organizations do to make sure that their IT is aligned with and is contributing to the organization's goals and strategies. The Institute of internal auditors, defines IT governance as the leadership organizational structures and processes that ensure that the enterprises information technology supports the organization strategies and objectives. Likewise, Gartner defines IT governance as the set of processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals. In the next lesson we will dig deeper into these definitions. Thank you.