IT governance establishes a framework for aligning IT and business strategies. Organizations can produce measurable results toward achieving their strategies and goals by following a formal framework. A formal program also considers the interests of stakeholders, as well as the needs of employees and the procedures they follow. Thus, IT governance is an essential component of overall enterprise governance.
Why Is IT Governance Important for Organizations?
Nowadays, many regulations govern the protection of confidential information, financial accountability, data retention, and disaster recovery, among other things. Shareholders, stakeholders, and customers are also putting pressure on them. Therefore, many organizations implement a formal IT governance program that provides a framework of best practices and controls to ensure they meet internal and external requirements.
Furthermore, IT governance enables organizations to:
1. Show measurable results in relation to larger business strategies and goals
2. Comply with applicable legal and regulatory requirements
3. Assure stakeholders that your organization's IT services are reliable
4. Comply with certain corporate governance or public listing rules or requirements
5. Facilitate an increase in the return on IT investment
How Can Organizations Implement IT Governance?
The simplest way is to start with a framework developed by industry experts and used by thousands of businesses. Below are the most common IT Governance frameworks.
• COBIT: Designed for enterprise IT governance and management, COBIT is a comprehensive framework of globally accepted practices, analytical tools, and models published by ISACA.
• ITIL: ITIL is an acronym for Information Technology Infrastructure Library, which focuses on IT service management. Its goal is to ensure that IT services support the company's core processes.
• COSO : The Committee of Sponsoring Organizations of the Treadway Commission developed this model for evaluating internal controls (COSO). COSO is less IT-focused than the other frameworks, focusing instead on business aspects such as enterprise risk management (ERM) and fraud prevention.
• CMMI: The Software Engineering Institute's Capability Maturity Model Integration method is a performance improvement approach. The CMMI maturity model rates an organization's performance, quality, and profitability on a scale of 1 to 5.
• FAIR: Factor Analysis of Information Risk (FAIR) is a new model for quantifying risk in organizations. With the goal of making better-informed decisions, the focus is on cyber security and operational risk.
The 5 Domains of IT Governance
• Value Delivery
Value delivery is an important part of IT governance because it ensures that the value of information technology investments is realized. It entails making sound investment decisions and managing them throughout their entire life cycle, from inception to retirement, ensuring that IT delivers appropriate quality on time and on budget, as well as investigating how actual costs are managed and ROI is calculated. Value deliver includes:
1. Identifying project value drivers
2. Identifying service value drivers
3. Project management
4. External benchmarking
• Strategic Alignment
Strategic alignment is concerned with how IT supports the enterprise strategy and how IT operations are aligned with current enterprise operations. Strategic alignment is how IT supports the enterprise strategy and how IT operations are aligned with current enterprise operations. Strategic alignment includes:
1. Understanding the needs of the business
2. Developing IT strategy and objectives
3. Resource allocation – portfolio management
4. Demand management
5. Communication
• Performance Management
Performance management examines how IT tracks and monitors implementation strategy, how project success is determined, resource utilization, and the resulting process and service delivery. Performance management includes:
1. Customer satisfaction
2. Service level management
3. Business value measurement
4. Process improvement
• Resource Management
Resource management refers to how IT optimizes and manages critical IT assets. Resource management includes:
1. Hardware and software asset management
2. Third party service providers & Outsourcing
3. Standardized architecture
4. Financial management – service costing
• Risk Management
Risk management is concerned with the protection of IT assets, disaster recovery, and business continuity - including information security and integrity. Risk management includes:
1. Organizational risk appetite
2. Project and investment risk mitigation
3. Information security risk mitigation
4. Operational risk mitigation
5. Compliance regulatory mandates
6. Audit
IT governance is important because it ensures that organizations’ desired outcomes and behaviour are achieved. The link between IT governance and effective value creation from IT investments has long been recognized as a reason for IT management excellence, making IT governance more crucial to be implemented.
Learn more about IT Governance at Multimatics!
Reference:
IT Governance Ltd. (n.d.). What is IT Governance? Definition & Best Practices. https://www.itgovernance.co.uk/it_governance
Christian, F. (2014, February 22). 5 Domain dari IT Governance. Daya Cipta Mandiri Group. http://blog.dayaciptamandiri.com/2014/02/5-domain-dari-it-governance.html
