Abstract

Background: Digital acceleration coupled with unprecedented work disruption (e.g., a Pandemic) have amplified the need for mature IT governance practices to generate planned value from organizations' digital investments. Although the pairwise relationship between mature governance practices, value derived from IT investments, and organizational performance have been examined previously, all three have rarely been simultaneously investigated. Therefore, this paper examines the role of value in the relationship between IT governance mechanisms and organizational performance.

Method: A research model that comprehensively conceptualizes the governance mechanism construct is developed and validated. The model is examined using data collected from 250 United States organizations that have invested in cloud computing for over a year.

Results: The results reveal that the value generated from an IT investment is germane to understanding the relationship between governance mechanisms and organizational performance. Specifically, the result explains that governance mechanisms help improve organizational performance through cost reduction in IT services, create agility through flexibility in technology service, strengthen IT security and privacy, and effectively redirect IT resources. The results show the more critical role of the relational mechanism and practices related to IT security and privacy in the cloud computing context.

Conclusion: The study contributes to IS literature by providing a more unified conceptualization of governance mechanisms and theoretically establishing the importance of governance in effectively governing cloud computing. By providing a guideline to help organizations achieve more value from cloud computing, the study provides implications for practice. The findings empirically show the relational mechanism has the most critical role in creating value from cloud computing. The governance practices help bridge the gap between business and IT, gradual transformative change in the roles and responsibilities, control cloud expenses, security and privacy risks. The findings show that competency is more likely to be achieved from cloud computing investment.

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