IT-Governance and Why it is Important

Introduction: What is IT governance and why it is important

It is not enough for corporations to have IT systems and expect them to deliver strategic value to them. Instead, there needs to be a mechanism in place to regulate, monitor, and govern the value creation efforts of the IT systems. This governance mechanism of IT systems deals with the performance and risk management of those IT systems in a manner that would create value for the organizations and ensure that the intended alignment of the IT and business objectives is on track. Hence, IT governance deals with identification, establishment, and linking of the mechanisms of the IT systems to both manage risks and at the same time ensure that their performance is in tune with the stated objectives.

The need for IT governance is felt because the interests of the organization and those managing the IT systems can be at odds or in other words, there is a conflict between these two imperatives. Thus, IT governance is needed to ensure that the IT systems are doing their assigned duty and that the objectives of the CEO and the CIO are the same. Indeed, it can be said that IT governance includes all the key stakeholders in the organization starting with the executive management and the boards and including the staff, customers, and ending with the regulators and investors.

There are many definitions of IT governance and for the purposes of this report, the definition that is closest to our discussion is that IT governance is the alignment of leadership, organizational structures, and processes to actualize and sustain the organizational objectives through the use of IT. Further, IT governance is also defined as the governance of IT in a manner that would be directed and controlled and consists of evaluation and monitoring the plans for the IT systems so that they are in alignment with the objectives of the organization.

Apart from this, it also needs to be mentioned that corporate governance and IT governance must not be viewed in isolation but must act and move in tandem. Indeed, many experts point to the fact that IT governance is a subset of corporate governance and that both must be framed in a mutually dependent manner.

Broadly speaking, the objectives of IT governance can be summed up as assuring the creation of value through the use of IT; oversight of the management’s performance; mitigation of the risks associated with the use of IT; and a general tendency to have oversight over the IT systems so that there is alignment between the organizational goals and the goals of the IT systems.

Key terms explained

The terms IT governance, IT management, and IT controls are often used interchangeably though this is fallacious as each of these terms refers to different aspects of organizational imperatives. The primary objective of IT governance is the marshaling of the IT resources available to the organization and the stewardship of the IT systems in a manner that would create value for the organization. On the other hand, IT management is all about the plans to operationalize the use of IT resources, directing and controlling the use of such resources, and organizing the management of such resources. Similarly, IT controls are the mechanisms put in place to ensure that the organizational IT systems are being monitored and tracked. Thus, as we can see, there is a difference in each of these terms, which is more than semantic and instead, extends to the scope as well as the depth of the organizational mandate for each of these terms. We have used the term organizational mandate, as IT governance is a higher-level business imperative whereas the other terms are more micro-managerial in nature.

The best way to think about IT governance is to ask the question as to what can be achieved through the use of IT and how well the existing IT resources can be leveraged for the benefit of the organization. In other words, IT governance can be seen as a superstructure that encompasses the other terms defined above. Moreover, IT governance is itself a substructure in the overall superstructure of corporate governance and business governance. This means that IT governance is effective only when there is a vertical and horizontal alignment between these various elements of the organizational structure.

Framework of IT governance

There are many IT governance frameworks that are used by organizations worldwide and the most widely used framework is COBIT or the Control Objectives for Information and Related Technology). This framework prescribes a set of 37 different IT processes and the means of managing these processes through identifying the inputs and outputs along with key process activities, performance measures, and process objectives to ensure that the IT systems are indeed delivering business value.

The key reasons why organizations use the IT frameworks are to ensure that they use the IT systems in an efficient and effective manner. Further, risk mitigation and performance management are key business imperatives, which the organization must follow so that there are no surprises for its operations and that the business objectives are being met.

Conclusion

IT governance has emerged as a key imperative for organizations as during the 1990s there were several corporate failures and disasters arising out of poor corporate governance as well as lack of alignment between business objectives and the IT objectives. To conclude this report, it would be pertinent to note that to avoid such instances of business failure, organizations would be well advised to actualize effective and efficient IT governance along with responsible and reliable corporate governance.


❮   Previous  Article Next  Article   ❯


Authorship/Referencing - About the Author(s)

MSG team comprises experienced faculty and professionals who develop the content for the portal. We collectively refer to our team as - “MSG Experts”. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

Management Information System