To successfully implement IT governance, chief information officers (CIOs) require both leadership and execution, according to Gartner. Great IT leaders master process, and they understand that executing governance programs involve process, discipline and creativity.
“Good governance is about control while great governance is about guidance and competitive advantage,” said Tina Nunno, vice president distinguished analyst at Gartner. “One of the most important functions of governance is to provide controls that prevent chaotic or reckless behavior on the part of the organization and its people. Organizations with good IT governance enjoy benefits such as increased business value of IT-related assets. Strongly governed organizations receive 20 percent higher return on assets.”
However, controls alone do not guarantee competitive advantage, particularly if they stifle the ability to innovate. Leading CIOs incorporate innovation and competitive advantage into their governance systems. “CIOs with great governance create competitive advantage by embracing emerging technologies, innovation and, most important, the concept of calculated risk,” said Ms. Nunno.
Ms. Nunno added: “As governance becomes more mature, it becomes less bureaucratic.” Leading organizations that do governance well, have fewer governance mechanisms and lighter processes because they have learned to work together well and have a shared understanding of the business priorities. Less mature organizations need more controls to create focus and deliver business results.
Gartner analysts said that to deliver successful governance CIOs need to manage two dimensions of governance. First, governance is a decision-making framework that reflects the organization’s goals and priorities, and how the organization intends to achieve them. Second, governance processes, covers the structures and methods the organization uses to execute and institutionalize the governance framework. In essence, the framework is what the organization has decided, while the process is how the organization will institutionalize those decisions.
“If an effective governance framework is implemented effectively it reduces conflict between stakeholders, finance can easily track organization spending against framework priority categories, business performance significantly improves and the organization reacts better to competitive threats,” said Ms. Nunno.
Among the critical standing governance success factors is ensuring that participants occupy optimal roles. The governance role most appropriate for individuals derives from their position in the organization and specific skill set. This approach helps CIOs match stakeholders to their optimal enterprise roles. “Governance is a team sport. Just as an athletic team cannot function unless players master their positions, governance falters when individuals do not fit their roles,” said Ms. Nunno.
CIOs also need to bear in mind that the ability to fill a recommended role varies with an individual’s skills, interests and the enterprise environment, with some people performing adequately and others doing much better. If current roles do not match the tool’s recommendations but governance still delivers expected benefits, CIOs should not make any adjustments—because outcomes always come first.
In addition, integrated communication is important to governance decision input and decision execution. However, failing to communicate is a common governance pitfall. Governance bodies struggle with decision making when they lack appropriate information. Stakeholders, in turn, struggle to comply with poorly communicated decisions. To facilitate and communicate decisions more effectively, governance communications should use the same business outcome metrics, prioritization scoring systems and milestone metrics throughout a project’s life cycle. CIOs also need to inventory their communication tools when they notice lack of compliance with governance decisions or excessive revisiting of established decisions.
“The highest levels of governance maturity produce the most value,” said Ms. Nunno. “While most organizations limit governance to gaining control and eliminating bad risks, the highest-performing organizations also use it to take good risks and gain competitive advantage.”