Importance of IT Governance for All Enterprises

In the early 1960s, it was a new business technology and many companies were offering competing computer hardware and software products to major corporations. Companies at all levels wanted to get up to speed with this new technology, and massive investments were made in installing new systems and hiring and training the programmers and analysts to build and launch them. Despite some failures along the way, we are all using and benefiting today from these types of computer hardware and software products.

IT systems supported by ever-changing and improving technologies are a major component of almost all business activities. IT activities have not been supported by some of the same standards and procedures found in other business areas. Ex. Accounting systems and financial standards are supported by recognized accounting principles that are reviewed by independent auditors and follow governmental financial accounting rules. Similar best practices rules and standards exist for other areas of business activity, such as in many aspects of marketing and quality control.

Despite the fact that IT operations are facing increasing governmental and professional compliance requirements and face a wide range of systems-related risks, there is an ongoing need for better IT governance practices today.

Enterprise governance from the roles and activities of senior management and the board of directors, but IT functions in those earlier enterprises were just viewed as very important support functions and not as major business activities.

Senior managers, IT managers, and practitioners think of IT governance in many varying but different ways. Some see IT governance as “command and control” rules over IT initiatives imposed by internal auditors, non IT executives, and outside consultants; other consider it a corporate mechanism that implements a Big Brother approach to apply top down constraints to overall IT activities.

1.     IT Governance

Good IT Governance is a set of policies and best practices that should serve as a strategic enabling force to improve enterprise business operations. Good IT Governance aligns an enterprise strategically to support the evolution of an IT architecture that delivers consistent an scalable business value. IT Governance helps measure a business’s growth and success, including its financial health. IT Governance is about way an enterprise accomplishes the delivery of mission critical business capabilities using IT strategies, goals and objectives. IT Governance is concerned with the strategic alignment between the goals and objectives of the business and the utilization of its IT resources to effectively achieve the desired results.

2.     IT Governance Concepts

EXHIBIT 1.1 IT Governance Concepts

Exhibit 1.1 shows this IT governance concept and how it fits in with overall enterprise strategies. It shows IT governance concepts in the center but within overall enterprise strategies and operations. Although IT operations are usually critical to overall business operations, they must fit into overall business activities and strategies. Although the head of IT, the enterprise CIO may feel that he or she has the best idea for some change or improvement in IT operations, that idea should be subservient to other corporate activities. Ex. If senior management does not like the idea, CIO should accept senior management’s direction and go forward and make other improvements where possible. Enterprise IT architecture sets the overall big picture rules for enterprise activities and IT governance.

3.    Important for Improving IT Governance

IT governance disseminates authority to the various layers in the organizational structures within the business, while ensuring appropriate and prudent use of that authority. Network structures allow for specialization, teaming and building infrastructure to support teams in corporate operations. Network structures allow for specialization, teaming and building infrastructure to support teams in corporate operations. IT governance is not only for large organizations. Smaller enterprise have a need for good IT governance practices. IT governance affects business performance, and it ideally helps an enterprise to outperform its competition. A key theme is that IT governance defines business performance, specifically the performance of IT resources as they are applied to the business’s strategies objective. Good IT governance leads directly to increased productivity, higher quality and improved financial results.

Poor IT governance, often leads to programmatic waste, bureaucracy, lower morale, and diminished overall financial performance. To underscore the importance of good IT governance practices, consider the production of goods or services for typical enterprise business customers whom have visibility into a business only where they interface for the purpose of ordering or making requests, receiving value through the sale or production of products, or providing information through surveys or marketing analyses.

The efficiency and coordination of internal business processes that compare end to end customer experience, this is an aspect of business performance and should be measured and improved. In order to positively impact business performance, IT governance process must have focus and visibility on these overall end to end business processes with which customers interact. Poor IT governance loses sight of customer in favor of satisfying regulations, standards, and policies in isolation. Good IT governance addresses whole end to end business processes and coordinates the activities of the enterprise over time and across organizational boundaries.

Whether enterprise IT governance processes have grown unintentionally through evolving process improvements or grown intentionally through a deliberate project. The questions a senior manager should ask include: “How good are my IT governance processes at effectively delivering strategic business value year after year?” and “Are my processes repeatable, predictable and scalable, and are they truly meeting the needs of my business (outside of IT) and my customers?”

A number of IT governance related processes must be considered, which this integrated collection of available IT governance processes we describe as IT governance landscape. IT governance is a subset of enterprise governance, which at the highest level drives and sets what needs to be accomplished by improving overall management processes. IT governance itself encompasses systems, the overall IT infrastructure and communications. Product development governance, like IT governance is a subset of enterprise governance and overlaps with IT governance. Product development governance is targeted for enterprise that develop products (as opposed to IT service delivery) . IT development governance should be applied to development organizations and programs, and is a subset of IT and product development governance.

4.     Frameworks and Concepts

Many important frameworks and concepts with names such as COBIT or ITIL that are well understood by many IT professionals but may be less familiar to the senior enterprise exclusive. In our IT centric world today, the senior enterprise executive should understand why IT governance and the related concepts of IT related compliance activities and risk management are important.