Lateral View

  By Satish Chandra Nayak, Head, Center of Excellence for BPM & ITG, Patni

According to a study which analyzed companies for their IT Management Index, challenges in the management of IT are preventing CIOs from successfully conducting the two activities central to effective IT governance: managing IT like a business and delivering a quality service to the business. The study was conducted by independent research organization MORI. 130 CIOs participated, of whom 30 were from Ireland and 100 from Britain.

The study says that despite 88 percent of CIOs agreeing that management of assets is essential to good IT governance, over a third (35 percent) cannot get a single view of their environment and 43 percent do not have as much information on their assets as they would like.

Further complicating the picture is the number of new technologies being introduced to the IT environment. Over half (53 percent) of CIOs say they have implemented a significant amount of new technology over the last 12 months, and a similar number (48 percent) expect to be doing the same over the next 12 months. Not surprisingly, 36 percent identified the introduction of new technologies as the leading challenge facing CIOs over the next year.

The study notes that the primary reason for these challenges is that organizations do not have an effective IT governance practice in place to manage the organization’s technology needs. The easiest way to ensure that there is no turbulence in the IT function is to ensure the implementation of a strong governance strategy. Especially today, when corporations are just about understanding the benefits of an effective IT governance strategy, and the slate is clean for a governance body to take roots.

An organization must follow three basic steps to establish an IT governance practice.
 

• Before any IT governance strategy comes into play, the decision-making process of the past must be analyzed. An introspective analysis of the current scenario, including the current technology initiatives in the organization, should be undertaken to understand the changes required. 
  
•  A CIO should also be aware of what the IT governance strategy should be in a ‘perfect world,’ and then aim at establishing a governance body that comes as close to perfection as possible. Half-measures in strategy will inevitably create challenges in the implementation.
  
•  Bridging the gap between ‘what is’ and ‘what should be’ is perhaps the most difficult part of planning the IT governance strategy. According to the study, 35 percent often feel it is difficult to gain a single picture of all IT assets and processes. While a new process may be ideal, an older process may be too intrinsically embedded into the organization, and the change may not benefit the organization exponentially. For these reasons the gap analysis is not just about how we get from here to there, but intelligently recognizing the needs of the organization and accordingly changing the processes.

While these steps help in formulating the governance practice, there are some key conditions that must be met for the governance practice to be effective.

i) The definition of guiding principles and goals is the most important factor for the success of IT governance. Together, these form the basis for the operation of IT governance.

ii)  For an effective IT governance process, it is important to involve stakeholders at all levels, including the IT management or CIO’s team, business unit IT team, functional leadership team, business unit leadership team, corporate leadership team and board of directors. Managers seeking to protect or expand their areas of influence, or those with a pre-set agenda, can undermine the purpose and value of IT governance bodies and hence should be excluded.

iii)  Senior management buy-in to a structured governance process is essential to ensure that the company’s technology investments align with the corporate objectives and motivate stakeholders at all levels to participate effectively. Industry reports state that 55 percent of CIOs do not have performance metrics or agreed targets with internal clients.

iv)  Every function within the organization, including IT, must justify its existence in terms of the monetary benefit it offers. It is naturally prudent to ensure that the IT spending is in accordance with the requirements, and yields higher returns than the investment.

v)  After defining the roadmap, ensuring the active participation of the senior management and selecting members for the governance body are two of the most important factors for achieving the cherished goal of IT governance running IT as a business.

vi)  Every organization is unique in terms of its level of maturity and ability to handle change. A phased approach should be used based on the company’s internal project portfolio management maturity level to imbibe the IT governance practices.

Companies today are trying to keep pace with technology and the ever-increasing layers of IT complexity. An IT governance strategy that is implemented keeping the above in mind helps an organization to streamline its IT function and substantially cut down on wastage of resources.

At the end of the day, stricter audit and compliance rules (plus portfolio transparency) ensure that IT investments are delivering the desired business results with an early warning system.