IT Governance with an Impact
With all the recent focus and press on the election and government, I find myself reflecting on the effectiveness of IT governance in companies, which can be as interesting to watch as the national political scene. I have had the opportunity to watch IT governance in action in many different companies of all various sizes and industries. IT governance is often the responsibility an IT Steering Committee, Executive Committee, or Governance Body that is accountable for the decision-making and performance of IT. Ironically, when IT is not performing, it is often the CIO that is replaced rather than reviewing and improving the overall IT governance process.
A study was published by Peter Weill and Jeanne W. Ross in “IT Governance” which found that “firms with above-average IT governance … had more than 20 percent higher profits than firms with poor governance following the same strategy”. Effective IT governance can have a significant impact on the performance of both IT and the business. Yet, I’ve seen many companies where the IT Governance Body is more like a “rubber stamp” approving every request, or addressing tactical issues rather than the strategic issues, or just continually receiving information without taking any action or responsibility.
If you need to breathe new life into your IT Governance Body, review the following critical areas as defined by the Governance Institute to make sure your company is properly managing and governing IT through your governance process. If they aren’t already, these areas should be the topics of conversation of your IT Governance Body.
- Strategic alignment: Is IT doing the right things? Are projects aligned and converged with the business goals and objectives? Are technology opportunities proactively identified? Rather than viewing IT as a cost center or continually reducing costs, does the company look to IT and technology for opportunities to add value? This could be improving products and services, improving customer satisfaction, improving the touch points for all stakeholders, increasing the speed and effectiveness of processes, as a vehicle to gain on competition, increase market share and reach, or enable innovation.
- Value delivery: Is IT delivering true business benefits? Are projects completed on time, within budget, meeting the business requirements and scope, and meeting the time-to-market needs? Is priority given to the right projects? Are IT and the business strong strategic partners? Does the business have accurate information to make business decisions? Is there a regular and consistent flow of communication between IT and all areas of the business?
- Risk management: Are risks properly managed relative to the risk appetite and tolerance of the company? Are risks actively identified, understood, and proper mitigation actions taken?
- Resource management: Are the right resources used for the right tasks? Is there a complete inventory of assets, knowledge, and resources? Are resources effectively optimized (e.g. IT and business employees, applications, hardware, software)? Do employees have appropriate development plans with training opportunities and sufficient back-up of knowledge?
- Performance metrics: Is IT and the business performing well? Are meaningful metrics defined and published? Is a balanced scorecard identified with business value metrics, operational & process metrics, and service level agreements? Is IT performing better today than a year ago? Are the goals of IT clearly identified? Are executive management and the Board of Directors aware of the IT performance?
Assess and improve the effectiveness of your IT governance process today as it can have a positive impact on the performance of IT and the business. Governance is an important pillar in the overall performance of optimum IT. Ensure your governance process is transparent, accountable, active, and responsive with optimum results and effectiveness.