Wednesday, April 2, 2014

Is IT Governance the most Neglected Aspect of Corporate Governance

IT governance is higher up on the radar of corporate boards

As the world moves into the digital era, businesses make the final step on a journey for IT transformation - from where IT is merely automated parts of the back office, to where IT is the business and nothing happens without the IT. It's now a non-negotiable situation - business leaders and Board directors must address IT as an integral part of business, and brainstorm upon how to enforce the weakest governance link –as some say, IT governance is the most neglected aspect of corporate governance.

Establishing global trends & standadization is one of the key considerations that boards must do: IT prevalence and ubiquity in public, private and business life can neither be undermined nor ignored. The crucial issue is to understand the USE of IT in the organization and in its market ecosystem. IT gets insufficient attention in the boardroom because IT still talks about it in technology terms rather than in business terms, and because IT leaves the talking to the technologists who supply and operate the technology and communicate through IT jargon, when the talk should come from the business executives and IT leaders who, by managing the business, manage the use of the technology.

IT governance is higher up on the radar of corporate boards; as more often, IT governance is the most neglected part of corporate governance. The alarming feature of that is IT governance is a critical part of corporate governance. A moment of honesty on whether the Board truly understands the relationship between the IT functionality of your operations and the company's strategic directions is crucial. As the number of stories coming out about compromised IT systems and bad infrastructure oversight suggests strongly that there's not enough budgets being allocated to tighter systems and better training of the cadres of IT engineers in charge of critical IT systems. You can't just implement a monitoring system and think that you're done. Board directors should be spending a little more time to understand the extension of the platform on which their business processes depend and how to secure that.

Make the management and the board aware of the blunder of not involving IT in important decisions and in not implementing IT Governance formally. If the Board does not understand that, think of the potential cost to the company if corporate strategy and IT strategy are not aligned. The cost of one person who can ensure that alignment will be small cheese compared to the cost of non achievement of strategic goals due to not having strategy and IT in sink with one another and working in the same direction, with appropriate power and capacity to meet demand. From communication perspective, the point about talking IT in the board language is only partly correct. The talk about IT should not just be in business language, it should be in business context and IT should be discussed in exactly the same way as other critical resources - finance, people, marketing., etc. And the head of IT must take on a similar role to the heads of finance and HR - being trusted advisors to executive and board, rather than the leaders of the charge into technology enabled change.

The trend of converging business governance and IT governance will accelerate IT transformation from back office to front office, from cost center to value creator; from isolated function to integral part of business, and steer business right up to the digital journey with improved business maturity overall.


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