Wednesday, September 23, 2015

IT Governance as a Fundamental Business Necessity: How to Get it Right?

One of the most important aspects of any governance discipline is to optimize decision making.

IT plays a pivotal role in leading organization’s digital transformation. IT Governance is like a steer, to ensure IT running with the right speed smoothly. IT governance is no longer just a theoretical concept, it is a fundamental business necessity, and an iterative process which requires senior management commitment over the long term in order to see results. IT governance also shouldn't stifle innovation and performance, so how to get it right?

Understanding business as a dynamic and adaptive complex system is the starting point. Consider that: unpredictability, uncertainty and the probability of surprising emergent properties increase with the complexity of the systems. Complexity is a measure that depends on the number of system components with interdependencies and their interactions. And complexity is, in itself, a source of risk. That, unidentified is, at best, unmanaged and, at worst, mismanaged by the application of knowledge that, however well-intentioned, results in 'unintended consequences. Unmanaged endogenous risk does not dissipate but is communicated and amplified through multi-scalar interactions.

One of the most important aspects of any governance discipline is to optimize decision making. For if the effective IT governance put in place, they would be capable of doing agile decision-making. "Optimal" decision-making mechanisms ensure decisions occur as fast as they possibly can - with the speed being in perfect balance with cost and risk for the given decision situation. The problem is, governance is almost always associated with compliance and control. Given many organizations don't view governance as "decision-making optimization," their governance efforts usually devolve into time-consuming, costly, overbearing bureaucratic constructs.

IT governance comprises "value delivery to the business" and the "governance of risk management." The management of risk could be organized around business risks, but better still, it should be aligned to the corporate balanced scorecard. By implementing a centralized IT governance program, corporations can deliver immediate benefits to the entire organization. From a measurement perspective, IT governance Scorecard is an important contribution to reinforcing the concept that financial focus myopia is now superseded by the additions of a balanced scorecard combined with finance benchmarking.  

Governance is like a steering wheel, to keep business toward the right decision; high effective IT governance must create good IT performance, not only for keeping the light on but especially for the long run business growth. Further, IT governance is converging with corporate governance. The companies which have great performance must have good governance structure and behavior as well.


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