Value nets are the architecture of sourcing agreements and alliances that firms implement to gain complementary resources and capabilities from other firms. They are a source of innovation, growth, and competitive success. However, governing value nets is challenging, and the IT support needed to enable them depends on the governance mode a firm chooses. Based on case studies of three Fortune 100 firms, we define three governance modes—prescriptive, evaluative, and collaborative. Prescriptive governance specifies partners' activities and retains decisions rights. It is effectively supported by dashboards that monitor the status of partners' activities, alerts that surface exceptions and errors, business rules that automate activities and handling of errors, and extended enterprise architectures that protect intellectual property. Evaluative governance delegates decision rights to partners for operational execution and assesses their capabilities through periodic evaluations. It is effectively supported by loosely coupled processes that provide partners with limited autonomy, periodic reporting of performance on service level agreements, and data and process mining directed at improving partners' capabilities. Collaborative governance promotes peer-to-peer collaboration with value net partners. It is supported by metadata architectures that control repositories of information and process resources, by consistent business rules to coordinate processes, by monitoring of the total costs of the relationship, and by business intelligence for predictive monitoring. CIOs and senior IT executives can apply these findings to choose an appropriate governance mode and enable it with appropriate IT applications and processes.
Rai, A., Sambamurthy, V., and Agarwal, R., How CIOs Can Enable Governance of Value Nets, MIS Quarterly Executive, 7 (4), 2008, 193-204. http://misqe.org/ojs2/index.php/misqe/article/view/215.