Used by companies to help manage risk, control IT costs and ensure their IT operations function to their best; IT governance is a formal framework created in the aftermath of a slew of high-profile corporate fraud cases that affected names such as Enron.
Broadly speaking, organisations can approach their governance on an ad-hoc basis and create their own frameworks, or they can adopt standard frameworks honed by the skills and experience of organisations over time. Through opting for a standard framework, companies open themselves up to numerous benefits, which we’ll take a look at here in greater detail, along with the importance of IT governance and how to implement it into your operations.
Quick Links
- What is IT governance?
- Why is IT governance important?
- What are the frameworks of IT governance?
- What are the benefits of IT governance frameworks?
- Effectively implementing IT governance
What is IT governance?
Governance addresses the proper management of organisations. IT governance, therefore, applies these concepts and approaches to an organisation’s IT operation.
A more thorough definition comes courtesy of the IT Governance Institute, which states IT governance is “the responsibility of executives and the board of directors, and consists of leadership, organisational structures, and processes that ensure that the enterprise’s IT sustains and extends the organisation’s strategies and objectives.”
So, what kinds of organisations use IT governance? Both public and private sector organisations have to ensure their IT functions support business objectives. Thus, any organisation in any industry that needs to comply with regulations that relate to financial and technological accountability should consider a formal IT governance programme.
Whereas smaller companies may only practice the essential IT governance methods, the goal of larger and more regulated organisations should be a more fully-fledged IT governance programme.
Why is IT governance important?
IT governance lets both customers and organisations achieve the outcomes they most desire. In terms of the former, IT investments are considered, and each procurement is associated with the expected return on customer satisfaction, productivity or resource management.
By aligning their IT spending with their business priorities, IT governance allows organisations to improve cost savings, reduce redundancies and let customers fully benefit from new products or services.
IT governance planning also leads to better alignment and responsiveness in terms of the organisation’s objectives. By clearly outlining company priorities, both the company and managed service provider (MSP) can be transparent about their IT needs and expectations, setting standards in response to any workflow bottlenecks or implementation challenges. Through standardising such processes and platforms, operations can be more readily streamlined as a result.
Governance also allows for objective decision-making for MSPs investing their resources in various IT solutions. An IT governance model can help an MSP make decisions about managing and controlling IT activities across their customer base. With these guidelines, MSPs are in a position to better manage their critical resources, passing such benefits to their customers.
What are the frameworks of IT governance?
In order to benefit from IT governance, choosing the appropriate model or framework is important. A framework can help an MSP implement policies and procedures, allowing them to maintain their programme year after year.
The most common IT governance frameworks that organisations use include:
- COBIT, or Control Objectives for Information and Related Technologies: Created by the Information Systems Audit and Control Association, COBIT is specifically designed for enterprise IT and is considered the industry-standard best practice IT governance framework.
- ITIL, or Information Technology Infrastructure Library: A framework that considers how IT service strategy, design, transition, operations, and service improvement can support core business practices.
- COSO, or the Committee of Sponsoring Organisations of the Treadway Commission: A framework that focuses on internal controls rather than on IT-specific functions, integrating other frameworks like risk management and fraud prevention.
- CMMI, or the Capability Maturity Model Integration framework: With a focus on performance improvement, CMMI uses a scale to evaluate an organisation’s performance, quality and profitability.
- FAIR or Factor Analysis of Information Risk: The newest framework, FAIR helps organisations quantify their level of cybersecurity and organisational risk, and is the only international-standard quantitative model for the latter.
What are the benefits of IT governance frameworks?
Why should a business adopt a standard IT framework, instead of creating their own?
They’re time effective: Time is precious. Why take up your schedule trying to develop a framework based on your limited experience when there are internationally-developed and recognised standards that already exist, and are proven to work.
They provide structure: The framework of models is such that they provide a structure that organisations can follow, allowing everyone to be on the same page since they know what’s expected.
They follow best practices: Because they’ve been developed over time and assessed by a worldwide collection of people numbering in the hundreds, the cumulative experience of a single organisation’s efforts to develop their own framework simply doesn’t compare to those who have developed existing standards.
Knowledge can be shared: By following standards, people can share ideas between organisations, profit from user groups, and contribute to both print and web publications. Those who favour a company-specific approach are much more niche in comparison, and so do not have the same opportunities to share their own knowledge.
They’re auditable: Without standards, it’s harder for auditors to effectively assess control. Their goal is to at least certify the organisation against at least one base standard and then make recommendations above the standard where appropriate. Trying to do the same for a non-standardised framework results in ad-hoc auditing practices.
Effectively implementing IT governance
Outline your organisation’s course on IT governance
Your first step should be to identify and describe strategic and tactical IT governance roles through:
- Ensuring the organisation possesses documented roles and responsibilities of the board, the executives and the IT strategy committee
- Denoting how priorities are set, how resources are allocated (and by whom), and how projects are tracked
- Incorporate senior managers from both IT and business divisions; these will distribute and foster the adoption of IT governance procedures within their divisions
Establish an IT governance implementation plan
The organisation requires an action plan that links specific circumstances with their needs. In doing so, senior management formulate their decisions by:
- Making certain that IT issues, plans and wins are kept in mind
- Assisting managers with aligning IT initiatives with business needs
- Emphasising the impact that IT-related risks might have on the business
- Ensuring IT performance is measured and reported back to senior management
- Establishing an IT strategy committee responsible for informing senior management of IT issues
- Insisting that the company uses a singular methodology of employing a management framework for IT governance
Establish an IT governance road map and plan for long-term strategies
IT governance needs to be coordinated with broader strategic enterprise governance objectives. Doing so assists the board and management to comprehend the importance of IT, supporting the company’s broader operations and executing the strategies needed to grow.
Aim for short-term IT governance objectives and wins
After establishing a road map, identifying short-term IT governance issues that can create quick wins, and jump-start its IT governance regulation requirements, is important. Such wins can reveal what barriers should be addressed before long-term strategies can be put in place, while also helping to provide evidence that IT governance can help and protect the organisation – both of which provide the implementation of IT governance policies with greater credibility.
Recognise IT-related risks
What do users require and how do these requirements influence how IT is used within the organisation? By doing so, it’s possible to discover IT-related risks and opportunities, informing the company of what needs to be dealt with through its programme of IT governance.
Re-evaluate your IT governance on a regular basis
Once an organisation has built a set of IT governance mechanisms, governance can stay in place until re-evaluation leads to more requirements. However, opportunities can sometimes crop up that haven’t been addressed in the company’s IT governance policies and procedures. When this happens, the IT governance policies must be revisited to deal with said opportunities.
Enhance IT governance transparency
The more employees can accurately describe a company’s IT governance policies, the better. Make it a point to inform and educate other teams about IT governance to ensure its policies and procedures are a success.
Make exceptions to your IT governance processes clear
When opportunities emerge that aren’t addressed by a company’s governance policies, it’s because IT governance might deny specific actions, or its approaches are out of date. It’s important to create a procedure for the company to follow if the need emerges to upgrade or provide an exception to current policies.
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