Improve IT Governance to Drive Business Results

Avoid bureaucracy and achieve alignment with a minimalist approach.

ANALYST PERSPECTIVE

Governance optimization is achieved where decision making, authority, and context meet.

"Governance is something that is done externally to IT and well as internally by IT, with the intention of providing oversight to direct the organization to meet goals and keep things on target.

Optimizing IT governance is the most effective way to consistently direct IT spend to areas that provide the most value in producing or supporting business outcomes, yet it is rarely done well.

IT governance is more than just identifying where decisions are made and who has the authority to make them – it must also provide the context and criteria under which decisions are made in order to truly provide business value" (Valence Howden, Director, CIO Practice Info-Tech Research Group)

Our understanding of the problem

This Research is Designed For:

• CIOs
• CTOs
• IT Directors

This Research Will Help You:

• Achieve and maintain executive and business support for optimizing IT governance.
• Optimize your governance structure.
• Build high-level governance processes.
• Build governance committee charters and set accountability for decision making.
• Plan the transition to the optimized governance structure and processes.

This Research Will Also Assist:

• Executive Leadership
• IT Managers
• IT Customers
• Project Managers

This Research Will Help Them:

• Improve alignment between business decisions and IT initiatives.
• Establish a mechanism to validate, redirect, and reprioritize IT initiatives.
• Realize greater value from more effective decision making.
• Receive a better overall quality of service.

Executive Summary

Situation

• IT governance is the #1 predictor of value generated by IT, yet many organizations struggle to organize their governance effectively.*
• Current IT governance does not address the changing goals, risks, or context of the organization so IT spend is not easily linked to value.
• The right people are not making the right decisions about IT.

Complication

• Organizations do not have a governance framework in place that optimally aligns IT with the business objectives and direction.
• Implementing IT governance requires the involvement of key business stakeholders who do not see IT’s value in governance and strategy.
• The current governance processes are poorly designed, creating long decision-making cycles and driving non-compliance with regulation.

Resolution

• Use Info-Tech’s four-step process for optimizing your IT governance framework. Our client-tested methodology supports the enablement of IT-business alignment, decreases decision-making cycle times, and increases IT’s transparency and effectiveness in making decisions around benefits realization, risks, and resources.
• Successful completion of the IT governance redesign will result in the following outcomes:
  1. Align IT with the business context.
  2. Assess the current governance framework.
  3. Redesign the governance framework.
  4. Implement governance redesign.

Info-Tech Insight

• Establish IT-business fusion. In governance, alignment is not enough. Merge IT and the business through governance to ensure business success.
• With great governance comes great responsibility. Involve relevant business leaders, who will be impacted by IT outcomes, to take on governing responsibility of IT.
• Let IT manage and the business govern. IT governance should be a component of enterprise governance, allowing IT leaders to focus on managing.

IT governance is...

An enabling framework for decision-making context and accountabilities for related processes.

A means of ensuring business-IT collaboration, leading to increased consistency and transparency in decision making and prioritization of initiatives.

A critical component of ensuring delivery of business value from IT spend and driving high satisfaction with IT.

IT governance is not...

An annoying, finger-waving roadblock in the way of getting things done.

Limited to making decisions about technology.

Designed tacitly; it is purposeful, with business objectives in mind.

A one-time project; you must review and revalidate the efficiency.

Avoid common misconceptions of IT governance

Don’t blur the lines between governance and management; each has a unique role to play. Confusing these results in wasted time and confusion around ownership.

Governance		Management
IT governance sets direction through prioritization and decision making, and monitors overall IT performance. Governance aligns with the mission and vision of the organization to guide IT.		Management is responsible for executing on, operating, and monitoring activities as determined by IT governance. Management makes decisions for implementing based on governance direction.

The IT Governance Framework

An IT governance framework is a system that will design structures, processes, authority definitions, and membership assignments that lead IT toward optimal results for the business.

Governance is performed in three ways:

1. Evaluate

   Governance ensures that business goals are achieved by evaluating stakeholder needs, criteria, metrics, portfolio, risk, and definition of value.

2. Direct

   Governance sets the direction of IT by delegating priorities and determining the decisions that will guide the IT organization.

3. Monitor

   Governance establishes a framework to monitor performance, compliance to regulation, and progress on expected outcomes.

"Everyone needs good IT, but no one wants to talk about it. Most CFOs would rather spend time with their in-laws than in an IT steering-committee meeting. But companies with good governance consistently outperform companies with bad. Which group do you want to be in?" (Martha Heller, President, Heller Search Associates)

Create impactful IT governance by embedding it within enterprise governance

The business should engage in IT governance and IT should influence the direction of the business.

Identify signals of sub-optimal IT governance within any of these domains

If you notice any of these signals, governance redesign is right for you!

Inability to Realize Benefits

1. IT is unable to articulate the value of its initiatives or spend.
2. IT is regularly delegated unplanned projects.
3. The is no standard approach to prioritization.
4. Projects do not meet target metrics.

Resource Misallocation

1. Resources are wasted due to duplication or overlap in IT initiatives.
2. IT projects fail at an unacceptable rate, leading to wasted resources.
3. IT’s costs continue to increase without reciprocal performance increase.

Misdiagnosed Risks

1. Risk appetite is incorrectly identified or not identified at all.
2. Disagreement on the approach to risk in the organization.
3. Increasing rate of IT incidents related to risk.
4. IT is failing to meet regulatory requirements.

Dissatisfied Stakeholders

1. There are no ways to measure stakeholder satisfaction with IT.
2. Business strategies and IT strategies are misaligned.
3. IT’s relationship with key stakeholders is unstable and there is a lack of mutual trust.

A majority of organizations experience significant alignment gaps

The majority of organizations and their key stakeholders experience highly visible gaps in the alignment of IT investments and organizational goals.

88% of CIOs believe that their governance is not effective. (Info-Tech Diagnostics)

Leverage governance as the catalyst for connecting IT and the business

49% of firms are misaligned on current performance expectations for IT.

• 49% Misaligned
• 51% Aligned

67% of firms are misaligned on the target role for IT.

• 34% Highly Misaligned
• 33% Somewhat Misaligned
• 33% Aligned

A well-designed IT governance framework will hep you to:

1. Make sure IT keeps up with the evolving business context.
2. Align IT with the mission and the vision of the organization.
3. Optimize the speed and quality of decision making.
4. Meet regulatory and compliance needs in the external environment.
(Info-Tech Diagnostics)

Align with business goals through governance to attain business-IT fusion

Create a state of business-IT fusion, in which the two become one.

Without business-IT fusion, IT will go in a different direction, leading to a divergence of purpose and outcomes. IT can transform into a fused partner of the business by ensuring that they govern toward the same goal.

Firefighter Delivers lower value Duplication of effort Unclear risk profile High risk exposure

Business Partner Increased speed of decision making Aligned with business priorities Optimized utility of people, financial, and time resources Monitors and mitigates risk and compliance issues

Redesign IT governance in accordance with COBIT and proven good practice

Info-Tech’s approach to governance redesign is rooted in COBIT, the world-class and open-source IT governance standard.

COBIT begins with governance, EDM – Evaluate, Direct, and Monitor.

We build upon these standards with industry best practices and add a practical approach based on member feedback.

This blueprint will help you optimize your governance framework.

Use Info-Tech’s approach to implementing an IT governance redesign

The four phases of Info-Tech’s governance redesign methodology will help you drive greater value for the business.

1. Align IT With the Business Context
   Align IT’s direction with the business using the Statement of Business Context Template.
2. Assess the Current Governance Framework
   Evaluate the strengths and weaknesses of current governance using the Current State Assessment of IT Governance.
3. Redesign the Governance Framework
   Build a redesign of the governance framework using the Future State Design for IT Governance tool.
4. Implement Governance Redesign
   Create an IT Governance Implementation Plan to jumpstart the communication of the redesign and set it up for success.
Continuously assess your governance framework to ensure alignment.

Leverage Info-Tech’s insights for an optimal redesign process

Leverage both COBIT and Info-Tech-defined metrics to evaluate the success of your redesign

These metrics will help you determine the extent to which your governance is supporting your business goals, and whether the governance in place promotes business-IT fusion.

Benefits Realization

1. Percent of IT-enabled investments where benefit realization is monitored through the full economic life. (COBIT-defined metric)
2. Percent of enterprise strategic goals and requirements supported by IT strategic goals. (COBIT-defined metric)
3. Percent of IT services where expected benefits are realized or exceeded. (COBIT-defined metric)

Resources

1. Satisfaction level of business and IT executives with IT-related costs and capabilities. (COBIT-defined metric)
2. Average time to turn strategic IT objectives into an agreed-upon and approved initiative. (COBIT-defined metric)
3. Number of deviations from resource utilization plan.

Risks

1. Number of security incidents causing financial loss, business disruption, or public embarrassment. (COBIT-defined metric)
2. Number of issues related to non-compliance with policies. (COBIT-defined metric)
3. Percentage of enterprise risk assessments that include IT-related risks. (COBIT-defined metric)
4. Frequency with which the risk profile is updated. (COBIT-defined metric)

Stakeholders

1. Change in score of alignment with the scope of the planned portfolio of programs and services (using CIO-CXO Alignment Diagnostic).
2. Percent of executive management roles with clearly defined accountabilities for IT decisions. (COBIT-defined metric)
3. Percent of business stakeholders satisfied that IT service delivery meets agreed-upon service levels. (COBIT-defined metric)
4. Percent of key business stakeholders involved in IT governance.

Capture monetary value by establishing and monitoring key metrics

While benefits of governance are often qualitative, the power of effective governance can be demonstrated through quantitative financial gains.

Redesign IT governance to achieve optimal business outcomes

CASE STUDY

Industry: Healthcare
Source: Info-Tech

Situation

The IT governance had been structured based on regulations and had not changed much since it was put in place. However, a move to become an integration and service focused organization had moved the organization into the world of web services, Agile development, and service-oriented architecture.

Complication

The existing process was well defined and entrenched, but did not enable rapid decision making and Agile service delivery. This was due to the number of committees where initiatives were reviewed, made worse by their lack of approval authority. This led to issues moving initiatives forward in the timeframes required to meet clinician needs and committed governmental deadlines.

In addition, the revised organizational mandate had created confusion regarding the primary purpose and function of the organization and impacted the ability to prioritize spend on a limited budget.

To complicate matters further, there was political sensitivity tied to the membership and authority of different governing committees.

Result:

The CEO decided that a project would be initiated by the Enterprise Architecture Group, but managed by an external consultant to optimize and restructure the governance within the organization.

The purpose of using the external consultant was to help remove internal politics from the discussion. This allowed the organization to establish a shared view of the organization’s revised mission and IT’s role in its execution.

The exercise led to the removal of one governing committee and the merger of two others, modification to committee authority and membership, and a refined decision-making context that was agreed to by all parties.

The redesigned governance process led to a 30% reduction in cycle time from intake to decision, and a 15% improvement in alignment of IT spend with strategic priorities.

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Info-Tech offers various levels of support to best suit your needs

Diagnostics and consistent frameworks used throughout all four options