CUSTOMatrix™ Insights Newsletter

The 5 Keys to IT Governance

Bruce Maches, Principal, IT Services, CUSTOMatrix, Inc.

Managing the IT function and ensuring that an organization is realizing proper value from its investments in computerized systems, applications, and architecture has been an issue since the inception of the computer age. As processes become more computerized and systems more complex managing the objectives and direction of IT investments is critical for any organization to be able to achieve its strategic goals and objectives.

What is IT governance?

Basically it involves putting defined processes around how organizations align IT efforts with business strategy. An IT governance framework should answer some key questions, such as how the IT department is functioning overall, what key metrics management needs and what return the organizations IT investments are providing.

Do all organizations need IT governance?
Every organization needs a way to ensure that the IT function supports the organization’s strategies and objectives. The sophistication applied to IT governance varies by company size, industry, and level of regulation. In general larger and more regulated organizations require a greater level of IT governance. 

The 5 keys to successful IT governance

While there are a number of factors that contribute to a successful IT governance function there are 5 key areas of primary importance.

1. Strategic alignment: Ensuring the linkage between the business and IT so they work well together. Typically, the main tool for this is the strategic planning process, and true alignment can occur when the corporate side of the business communicates effectively with line-of-business leaders and IT leaders about project costs, progress reporting and business impact.
2. Value delivery: Making sure that the IT department does what’s necessary to deliver the benefits promised at the beginning of a project or investment through developing a process to ensure that there is an appropriate value proposition and a means to measure the business impact.
3. Resource management: The IT function can consume a significant amount of company resources in terms of capital, human resources, and facilities. Ensuring proper utilization and management of these resources is a key component of IT governance.
4. Risk management: Instituting a formal risk framework that puts some rigor around how IT measures, accepts and manages risk, as well as reporting on what IT is managing in terms of risk to the organization.
5. Performance measures: Putting structure around measuring business performance. This can take several forms such as measuring ROI for IT investments or using an IT balanced scorecard which examines, in both quantitative and qualitative terms, how IT makes a contribution in terms of achieving business goals, being a responsible user of resources and developing people.

If the IT governance framework isn’t implemented properly, it can impact how IT is perceived within the organization. Lack of effective implementation also can cause continued issues with project overruns and poor value to cost measurements, not to mention stakeholder dissatisfaction. Companies that effectively manage their IT function operate with a higher level of certainty that they are receiving an appropriate level of value from their investments in Information Technology.

Authored by Bruce Maches, IT consultant with over 30 years experience in IT management, systems selection, design, and implementation. He has worked with or consulted with such firms as IBM, SAIC, EDS, Pfizer, Lilly and Lucent.  Bruce Maches currently serves as the lead for the CIO Services practice for CUSTOMatrix.

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