Free: The IT-Business Governance Playbook

THE I T-BUS I NESS GOVERNANCE PLAYBOOK

ELEVATE THE CONVERSAT ION BETWEEN I T AND THE ORGANI ZAT ION

We know that technology is the biggest competitive weapon in business today. But knowing what to implement and how is a different matter altogether. A 2018 survey of nearly 4,000 IT leaders by Harvey Nash and KPMG 1 confirms what many already suspect—that digitalization efforts are not going as planned. 78% of respondents believe their digital strategy is only moderately effective or worst. And only 32% say their organizations have an enterprise-wide digital strategy. desk or the back-office team that runs technology. Sure, business leaders could be educated and engaged, but that’s not enough. There needs to be a way for IT leaders to change the dynamic of how IT works with key stakeholders across the organization. WHY THE RIGHT GOVERNANCE CAN BE A GAME-CHANGER Here’s the problem. In many organizations, IT is still viewed as little more than a service

This is where new IT-business governance comes in.

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WHY T H E R I GH T GOV E RNAN C E C AN B E A GAME - C HANG E R

What can it do for a company?

One, boost IT-business strategy alignment. While it’s true that the IT strategy should follow the business strategy, both IT executives and business leaders should think about technology as a competitive weapon. That might mean advising the business against making small enhancements when an overhaul is required, or steering the business towards more cost-effective solutions and avoiding vendor lock-in. Two, manage demand. There is often too much demand for technology, and IT can’t do it all. An IT-business governance committee would establish organization-wide visibility on the company’s operations and prioritize the right IT initiatives to meet business goals. A governance committee would also review the company’s decision-making processes and remove any unnecessary red tape that may have accumulated over the years. Three, unite the organization. Improving the rapport between business and IT leaders is a good start but serving on a committee where crucial decisions are made will serve to ease business leaders into the idea of thinking about technology. It would also give each stakeholder a sense of shared ownership of technology across the organization, making new initiatives more likely to get funding and support. The best IT-business committees are diverse, with representation from across the organization. The business representative leads the way on business strategy and adjusts business plans as things change. Finance tracks the impact of projects and funds new initiatives. The project management office (PMO) ensures that plans are executed on time and on budget. And IT leads the discussion on architecture, security, and data. To sum up, an IT-business governance model provides a decision-rights and accountability framework to encourage desirable behavior in the use of IT. It ensures that technology positively impacts revenue generation, and helps IT leaders shift their focus from operational excellence to driving business growth and innovation.

1 “CIO Survey 2018”. Harvey Nash/KPMG. www.hnkpmgciosurvey.com

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WHY T H E R I GH T GOV E RNAN C E C AN B E A GAME - C HANG E R

However, IT leaders should tread carefully in implementing governance. Having too many policies will make it bureaucratic and slow; too little and it’s an ineffective free-for-all. This is why governance conjures up images of bureaucracy, inefficiency, and frustration for many. But done right, an IT-business governance model will balance the need for accountability, measurability, and action to enable IT to meet the goals of the business.

T H E E VO LV I NG RO L E AND FO C U S A R E A S FOR I T L E AD E R S

Service delivery management

Customer acquisition & retention

Business growth & innovation

Operational excellence

Cost efficiency

Shareholder value

Digital Transformation Chasm

Current focus

Future drivers

IT effectiveness

IT efficiency

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THE IT-BUSINESS GOVERNANCE PLAYBOOK I 2020 © WAVESTONE

HOW I T-BUS INESS GOVERNANCE MAKES A DI FFERENCE

With effective governance

Without effective governance

/ IT investments may not reflect enterprise-wide priorities and needs / Important IT decisions are made without the benefit of business input and collaboration

/ IT investments are more effectively aligned with business plans and strategies / Requests for IT investments and services are managed, measured, and tracked in a more consistent, repeatable, and flexible manner / IT resources are allocated to highest business-value-add activities such as portfolio investment management / Accountability is established or improved, with clearly defined roles and responsibilities

/ IT initiatives lack accountability for business value and results

/ Overall confusion regarding decision-making authority—lack of decisions or decision by default / IT programs create overlapping capabilities resulting in architectural complexity and other operational impacts / Prioritization across operating units is difficult resulting in an unfocused project portfolio and mediocre execution

/ Organizational performance, responsiveness, reliability, maturity,

staff development, and compliance are improved

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2020 © WAVESTONE I THE IT-BUSINESS GOVERNANCE PLAYBOOK

THE IDEAL I T GOVERNANCE FRAMEWORK

With governance, balance is vital. Too much control and nothing gets done; too little and you have no governance at all. Both extremes are bad and should not be seen as viable governance implementations. A good governance model should enable the organization to make the right IT decisions, in line with the business strategy, in a manner that is repeatable, measurable, and improvable.

Chaos

Ideal

Bureaucracy

• Free for all • Unrepeatable

• Balanced • Repeatable processes • Measurable • Documented and used • Continuously improved

• No room for creativity • Slow and inefficient • Too many metrics • Policy and procedure excess • Often ignored and undermined

processes • No metrics

• No documentation • Reliance on “heroes”

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T HR E E QU E S T I ON S TO A S K FOR

What decisions must be made to ensure effective management and use of IT?

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E F F E C T I V E I T GOV E RNAN C E

IT-governance is about prioritizing IT decisions, but which ones? A small change request might not be worth discussing, but a large, organization-wide implementation would definitely warrant attention. The governance committee needs to define the threshold. Decisions should be prioritized by business value, narrowly defined as increased revenue, decreased cost, or risk reduction. If a decision doesn’t lead to one of these outcomes, then it shouldn’t be taken. It’s also worth narrowing types of initiatives which the governance committee will entertain. For example, cost reduction, digital transformation, technologies related to the company’s competitive advantage should be prioritized. On the other hand, if the organization has a no-offshoring policy, then it would be easy to rule it out when it pops up.

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T HR E E QU E S T I ON S TO A S K FOR

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Who should make these decisions?

E F F E C T I V E I T GOV E RNAN C E

The key here is diversity and balance. The governance committee should consist of representatives from the business, IT, the PMO, and architecture. Generally, the best person to de- cide on any issue should be included in the discussions. IT should not decide alone, nor should business units dominate the conversation. The choices made by the committee will impact many areas of the company and should not be taken by any one department. Critical decisions in areas such as business strategy alignment, technical competency, financial impact, executability of the PMO, architecture soundness, and more should all be equally weighted.

How should these decisions be made and monitored?

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The PMO should take the lead in monitoring the outcomes. But more importantly, leading indicators should be immediately monitored as it may take a while before any results are produced. Again, the committee should be mindful not to make the process too complicated or risk slowing down the process.

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HOW S T RONG I S YOUR I T- BU S I N E S S GOV E RNAN C E ?

We’ve analyzed the IT-business governance attributes of top-performing companies and distilled them into eight questions. Have a go at the list below to see how you fare.

1 Can your executives accurately describe your IT governance procedure?

Are decisions made on time?

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3 Is accountability for IT-decision-making known and followed? 4 Is governance performance measured and assessed as good? 5 Are project ROIs captured and closely correlated with project business cases? 6 Is your IT portfolio management effective (prevents duplication, focused on high-value initiatives)? 7 Is IT governance seen as enabling the business and IT strategy, as opposed to red tape that needs to be circumvented? 8 Does IT governance balance enterprise needs with BU needs? If you answered “no” to any one of these questions, it’s time to take corrective action and realize the full potential of IT-business governance.

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CON C L U S I ON

In today’s competitive digital business landscape, no company is safe from disruption by a tech-native competitor. IT leaders need to recognize the urgency of the situation and implement a decision-making framework to drive technology- enabled business improvements. It’s no wonder that top-performing companies have well- defined IT governance models as they’ve been proven to orient the organization towards achieving a common goal and help ease the tensions in IT decision making. Before, a project with the potential to produce significant cost savings to fuel digital transformation might get sidelined for political reasons, but no longer with proper IT-business governance. Ultimately, IT-business governance is about prioritizing what IT does. Better prioritization will boost the company’s capability in generating revenues, cost savings, and most importantly—value creation.

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MAKE AN IMPACT WI TH I T-BUS INESS GOVERNANCE

Visit us at wavestone.us or give us a call at (610) 854-2700 to speak with an IT-business governance expert.

About Wavestone US

Wavestone US provides a peer-to-peer approach to IT optimization and transformation. As the North American arm of Paris-based global management and IT consulting firm Wavestone, it has supported the transformations of more than 200 Fortune 1000 companies across a wide range of industries. Wavestone US is unique in that it offers a practitioner’s perspective on IT strategy, cost optimization, operational improvements, cybersecurity, and business consulting. It is the company’s mission to help clients successfully deliver their most critical transformations and achieve positive outcomes. Driving businesses forward through digital transformation is what we call “The Positive Way”.

www.wavestone.com

In a world where knowing how to drive transformation is the key to success, Wavestone’s mission is to guide large companies and organizations in their most critical transformation projects, with the ambition of a positive outcom for all stakeholders. That’s what we call “ The Positive Way ”.

Wavestone brings together 3000 employees across 8 countries. It is a leading independent player in the european consulting market. Wavestone is listed on Euronext Paris, and recognized as a Great Place To Work®.

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