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Issue of January 2005 

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IT governance

Governance makes a difference

Bob Hayward - Bob Hayward, VP - Research Fellow, Gartner Asia-Pacific and Japan says that you need a corporate IT governance framework in order to use IT to it's optimal best in an organization. Soutiman Das Gupta

What is corporate IT governance?

Corporate IT governance can be described as a framework that encompasses an entire system of organizational issues, constructs, committees, councils, various forums, and how often the participants involved meet to discuss and arrive at decisions about what to do with technology.

It's about how you structure the system of management organization and the various constructs you use to make sure that IT is utilized as effectively as possible. Irrespective of the size or industry vertical of an organization, it lays down a system to design or assign decision rights and the accountability framework to encourage desirable behavior in the use of IT.

How is corporate IT governance different from IT management?

IT governance is very different from IT management, which is all about the regular day-to-day duties and responsibilities where you're reporting on project management, recruitment, and motivation and training of personnel. These duties are also necessary and important, but in many organizations this is all that is done. Beyond these activities there is no corporate IT governance in place.

If you ask CIOs of organizations that do not follow corporate IT governance about who actually makes decisions on priority of projects, they're likely to answer that, the decisions are made in an ad-hoc way where a few executives get together for a discussion. If you ask whether the business units and leaders are involved in IT governance, the answer usually is that the IT department is solely in charge of the solutions.

This is not a very good way of doing things. You may be good at managing IT but you must have a framework that binds the rest of the organization into the decisions you make about IT. This makes them a part of the decision.

So in a few years from now, if something fails other business units can't blame IT for the failure. They can't because they were a part of the decision and are a part of the governance framework.

What are the roles played by the other heads of business in corporate IT governance?

The business units and their leaders have to be closely involved in corporate IT governance. This is because large technology projects often fail since they are perceived as 'technology' projects. But they're actually not restricted to IT.

When we asked CIOs of companies where CRM projects have failed, and who was responsible for the project, they'd say that it was the IT department's responsibility. They did not need to explain further because we immediately knew why the project failed.

It is perceived as a technology project because of the CRM software. But CRM is all about changing the way you do business and deal with the customer. CRM will make you deal with the customer in a different and more intimate manner. It will make the company change the way it works with a customer. It's actually a company change management process.

A part of the process can be eased or made better if you use a software tool. It's just a minor part, which by the way should be managed by the chief of sales, chief of marketing, or the chief of operations. It's their responsibility and strategy to be customer-centric, not IT's. It's the company's collective responsibility. So the business unit leaders must be involved and take ownership.

IT will help, contribute, facilitate, and deliver but the ownership and responsibility of making the project a success should lie with the business units. The CEO’s role is also important because even with the best system of governance there will be disputes. And there has to be a decision-maker who'll have to look at two competing business interests, and prioritize based on the limited budget.

What approach must the CIO take to introduce corporate IT governance in an organization?

The CIO has to first convince the rest of the organization that corporate IT governance is important. There will be challenges like a few executives may be resistant and reluctant to be involved. They may be suspicious of the technology or not too comfortable with technology, and perhaps intimidated by it.

The CIO has to work with these executives, if necessary individually, and convince them not be nervous, to have trust, and collaborate. If needed the executive can assign a smart and younger person to understand the technology better. The executives can be taken on a trip to another company perhaps in another part of the world to see how others are using technology effectively. These will help turn skeptics into believers.

What are the salient features of a good corporate IT governance strategy?

We found in a research study that that the ease with which senior executives could describe IT governance was directly related to how effective people were in using IT. If they were ambiguous or confused it was not good.

If they said, yes we have IT governance and it works this way, it was a good sign. The senior executive should be able to easily say things like, we have a committee that deals with these issues and it meets once a month. We also have a forum to deal with those issues, and another team that deals with other issues.

The business leaders should clearly tell you about the people that are involved and those actually responsible for the committees. If personnel can answer these questions easily, these are the signals that the organization is very effective in the use of technology.

Some organizations think that they don't need business personnel to be involved in IT decisions. That may not be a good thing.

To what extent should business unit leaders be involved in corporate IT governance?

Certain functions are best left to the professionals in the IT department. They are selecting a server or PC brand over another, IT architecture technology standards, fundamental solution layers, kinds of knowledge management repositories, and databases. They will make the decisions within the broad guidelines set for them.

If business personnel are involved in these decisions, it may slow down and complicate the process. For instance, there may be different personal agendas due to the various relationships with vendors.

The other decisions regarding investments, prioritization, business applications, and overall philosophy or vision must involve the business leaders and IT executives in a federal system.

How often and under what circumstances should IT governance policies be modified?

I recommend that the policies be modified as little as possible. We came across a few organizations that changed their governance every year. They made radical changes in terms of the members of the various committees, and regularity of meetings and schedules.

If you change the metrics that are used to determine a good business, you will automatically change the metrics needed to calculate the value of IT. And when that changes every year, everybody is confused.

Once you good IT governance try and keep it that way. You can maybe tweak the margins, but not make radical changes. This will need you to start from scratch. The governance should evolve since every company is dynamic, but the change should be evaluated to see how it benefits the organization.

What are the indications that a corporate IT governance strategy has worked?

The biggest indication is the performance of the company in the market. The company will grow in market share and customer satisfaction. Another indication is that every person in the boardroom will have a clear idea what corporate governance is all about.

Are there any tools for IT governance?

There are no tools, because IT governance does not involve areas that can be helped by technology. It involves processes, people, and strategy. There are tools for meeting management, electronic whiteboards, and remote conferencing. But at the end of the day there is no IT governance software.

Soutiman Das Gupta can be reached at:

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