How is IT best governed?

How is IT best governed?

What passes for governance is often a one-dimensional effort focused solely on project prioritisation and approval. What do the best organisations do differently?

In the last issue, I introduced the need to come up with better models to manage and govern IT. I also said one of the biggest reasons in my experience for ‘IT projects’ going bad comes down to a lack of definition and/or communication of responsibilities. The question is how should we govern IT? Are there ‘best practices’ we can employ to ensure we have: Appropriate accountabilities in place; processes to ensure accountabilities are met; and oversight mechanisms to deal with ongoing issues of portfolio management, policy and risk management?

Peter Weill, director of MIT’s Center for Information Systems Research, looked at the way 256 organisations in 23 countries govern IT. The findings make for fascinating reading. According to Weill, “An effective IT governance structure is the single most important predictor of getting value from IT.” Interestingly, but perhaps not surprisingly, the best performing organisations tended to govern differently than others in the study.

As Susan H. Cramm, former chief information officer at Taco Bell put it, “At many companies, governance should be called ‘govern-once’.” Although there is broad agreement about what governance should be, in reality what passes for governance is often a one-dimensional, checklist-based and attendance-based effort focused solely on project prioritisation and approval.

What is it the best performing firms do differentl

Weill’s study found the top performers had:

A better understanding of their governance arrangements;

More involvement of senior leaders in IT governance;

Clearer business objectives for IT investment;

Business strategies focused on customer intimacy or product innovation;

Formal exception processes with fewer renegade exceptions;

Fewer changes in governance from year to year.

The other quite striking thing is, the worst performers tend to employ the same kind of governing style across a range of decision domains, and the worst performers tend to pick the same single style. These tend to revolve around what Weill calls a “federal” style of governance where governance rights are shared by some combination of senior executives, business unit leaders, business process owners, IT executives and end users.

The best performers, on the other hand, tend to rely on a variety of governance styles, marrying them to different decision domains as appropriate. In addition, the best performers tend to choose governance styles and patterns to marry with their preferred business metrics.

Read more: Future Focus: Getting IT project governance right

For example, organisations focused on asset utilisation tend to govern in a different manner than organisations focused on profit or growth.

Another way of looking at this is to examine the relationship between governance styles and the maturity lifecycle of an organisation. That is, the governance style that works well for a start-up does not necessarily work well for an organisation undergoing accelerating growth or one that could be considered mature in growth terms.

Organisations in these different phases of life will tend to employ different business metrics and, by using these metrics as proxies for a lifecycle stage, we can perhaps draw some interesting correlations betweens level of organisational maturity and a governance style or pattern. In short, there appears to be no silver bullet for success but, according to Weill’s study, there does appear to be one for failure!

The organisations performing poorly have taken what appears to be ‘the path of least resistance’ – and perhaps least effort – in implementing an IT governance model. The best performing organisations appear to have put more effort into designing an IT governance model and applying it to the unique characteristics of their organisation.n

Aaron Kumove is managing director of Horizon Consulting

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