Cloud computing and the consumerisation of IT have the potential to create significant value for organisations in every industry. By adopting these mechanisms, organisations now have the ability to reduce costs, create more agile IT capabilities, simplify procurement and accelerate the delivery of IT functionality.
In short, IT capabilities are becoming crucial for organisations to achieve their overall vision. However, the growth of technology and increased importance placed on IT puts pressure on organisations to ensure their IT strategies are aligned to their overall business strategy.
When it comes to making decisions about business applications, the onus is shifting from the IT department to line executives. While this shift can help organisations to increase speed to market and become more agile in responding to opportunities, it can also disrupt traditional IT governance processes. Organisations now need to think about how to manage IT in a coherent, comprehensive and cost effective way. In addition, they need to take a considered approach to choices relating to technology, application and services to ensure business value is maintained.
In order to achieve innovation and concrete business growth, it is essential for organisations to consider proper governance procedures to ensure a solid alignment between IT and strategy. Today’s business strategy leaders need to work with IT to create greater efficiencies and new ways of working together.
For instance, Shenhua Group — a Chinese state-owned mining and energy company engaged in coal mining, power generation, railway transportation, shipping and the coal chemical industries — recently partnered with Accenture to optimise its governance structure and set up its enterprise IT planning and architecture. Accenture supported Shenhua to create a strong program management office within an accelerated three-year timeframe, which ultimately led to improved business services, higher technical standards and enhanced IT capabilities.
In order to become a true service organisation that operates like a business within the business, the IT team needs to work with the Chief Strategy Officer and top business leaders to establish new IT governance models that ensure IT initiatives are closely aligned with corporate priorities.
In principle, IT governance is an issue of alignment: it involves aligning the IT strategy with the business strategy, having the right people lined up to make the necessary decisions, and aligning IT spending with critical business priorities.
At the core of this governance structure is the IT steering committee, which allows decision makers to determine which technology is going to be provided to support the business. The value of the IT steering committee structure lies in its ability to get senior managers involved. With this structure, each major initiative has a sponsor responsible for the entire business case. Since IT change usually involves process redesign and organisational changes as well as changes to the underlying technology, the business sponsor must be responsible for the entire change process.
Sound IT governance has been an indispensable pillar in many organisations’ transformational approach to IT. Combined with other actions, such as IT strategy, building a managed services approach, setting and tracking key metrics and communicating with customers, IT governance has helped to fundamentally improve the efficiency and effectiveness of many organisations, while significantly lowering costs.
The real deciding factor in the era of intelligence will be a company’s ability to evolve its corporate culture to not only take advantage of emerging technologies but also, critically, embrace the new strategies driven by those technologies. Governance, and ensuring IT is able to work with the overall strategy of the business, is the key to unlocking these new strategies.
