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How does governance drive closer ties between IT and lines of business?
The question really relates to alignment between IT and the business -- how to improve the state of affairs.
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9 Answers
Mike, this is such a great question!
At a high level, the goal of governance is to establish operating “norms” so that IT can better anticipate and meet the needs of the business. One of the biggest drains on an IT organization is excessive diversity in overlapping products and systems.
I happen to be a staff architect for a very large, heavily diversified company. We have four major lines of business with significantly different business models. Worse, each major line has several subsidiaries that are further diversified. Their business strategies and roadmaps are not likely to ever line up but we have to architect an IT organization that can serve them all efficiently. Ours may be a particularly extreme case, but in this age of mergers and acquisitions it’s not that uncommon.
Further complicating the problem of diversity of business lines, IT has a major power problem when it comes to governance. The business lines are generally profit centers while IT is generally a cost center. This puts IT in the difficult position of telling people making the money where they can and can’t spend it. It’s a tricky prospect and the people making the money generally prevail.
All that said, I’ve found that the best place to start to approach governance is through careful business analysis. Before anyone starts throwing around the “G” word, there needs to be a solid understanding of the current business structures and needs. A good business architect is an invaluable asset here. Once this is completed, some real-world projections need to be made around cost savings and cost avoidance potential. This can pique the attention of the business units and help cozy them up to the idea of restraint and standardization.
Finally, the PMO is where the rubber meets the road. The PMO is the ordained gatekeeper of product implementations. They receive requests, prioritize, and execute. In my experience a close partnership with the PMO helps keep “shadow IT” in check. Strategic alignment with procurement also helps.
Hi Michael, once again, you ask a question that I could talk about for days. My answer is incredibly short (if not terse), but it will require some explanation I will attempt keep succinct.
My answer: "Governance (IT governance) drives closer ties between IT and lines of business WHEN IT IS DONE CORRECTLY."
And IT governance can only be done correctly when the enterprise realizes that IT governance is a function of the business - and not of IT. (It should have been called business governance of IT.) The business must be at least be a partner in IT governance for the enterprise to have any chance of success. (I say "at least a partner" because IT governance is almost always led by IT - due to a pervasive misunderstanding of the critical discipline - which places it at an extreme disadvantage from the onset.)
IT governance is all about decision-making in the use of technology. The business must realize it has a role in that decision-making - without exception. When the business realizes it is accountable for technology, the act of governing IT locks them arm-in-arm with IT.
The years of delegating (though it is likely more to be a case of relegating or even abdicating) technology decision-making to IT-alone must come to an end. When the business realizes it is accountable for ensuring technology is aligned with enterprise purpose, delivers value, and appropriately manages risk, resources and performance (the five principles of IT governance), then the business will assume a shared role in decisions about the IT archetype, enterprise architecture, infrastructure strategies, fulfilling of business needs (applications) and IT investment (the 5 major decision areas of IT governance).
I hope my explanation is succinct. If anyone wants to see my 250-page answer to your question, they can read my new book, "Eliminating 'Us and Them' - Making IT and the Business One." The first half of the book focuses on how IT governance enables IT and the business to act as one.
Mike, indeed that's a very good question!
Nowadays it’s quite common to see organizations going for the extreme positions, meaning that or they forget that IT is extremely important and tend to relegate this issue, or they treat IT as something almost separated from the firm decisions.
As a military officer, I have to agree with Mr. McCoy. A comprehensive approach is crucial if one wants to see governance working for a better IT and vice-versa. Therefore, from my stand point, it’s quite clear that if you have a good Strategic Planning, and the organization, as a whole, tries to follow its directions, closer ties between IT and lines of business will emerge almost naturally, fixing problems and improving good relations in a daily bases. The Knowledge Management, if already implemented here, would be wonderful!
Nevertheless, as I said before, a good Strategic Planning probably will lead to a good governance and, therefore, to good IT governance as well. Of course, it’s easier to say then to execute this mission, so, if the organization really wants to get a good strategic alignment in order to reach a good level of internal synergy, it would be a good approach to listen not only the professionals from the “profit centers”, but the guys that really know the business lines of the organization, as project managers, PMO, business analysts, and so on.
Governance doesn't drive closer ties unless the structure of the governance is agreed upon between IT and stakeholders. Governance can only be effective if it's the result of active and open dialog between IT and business stakeholders to jointly define the rules of the road, with clear agreement about the negative effects of working outside of the established framework. If this is in place, governance processes can be extremely effective in bringing IT and business functions together because there is an established set of roles and responsibilities, there is a path for conflict resolution, and there is an open mechanism for dialog.
Kevin, how does a company that wants to establish governance even begin? It can be a daunting task when they are first starting out.
You are all insightful observers of this issue. It still seems to me that establishing governance is a chicken and egg problem -- the organizations that really need it are the last to adopt. From that perspective, isn't governance really preaching to the choir?
I'm also going to send Steve Romero an email to to join us in this discussion, because his book on the topic was just published!
Mike, I realized in reading your follow-up that I kind of went off on a tangent and barely touched on your original question.
Governance drives closer ties between IT and lines of business by enabling IT to be proactive instead of reactive. Without governance, the business states its immediate needs and IT meets those needs individually in a reactive manner. With good governance, the business states it’s direction and objectives and IT can put solutions and capabilities in place ahead of time. This moves IT from the position of simple service provider to integrated partner.
Governance provides a methodical and consistent mechanism for ensuring the alignment of the business needs by way of technology acquisition and deployment.
Proper governance can't help but result in closer alignment of business and technology.
As for governance on SAP projects it is built in to the project phase through the steering committee. Unfortunately, like with most major IT projects, JUST as the steering committee has gained invaluable skills and insight the project is concluded and they are disbanded.
I've covered quite a bit of this issue and am looking for additional ways to create what I call Business IT Convergence.
http://www.r3now.com/steering-committee-governance-for-an-sap-center-of-excel...
http://www.r3now.com/sap-steering-committee-for-business-transformation
http://www.r3now.com/1/BeyondTechnologyAlignment.pdf
This is a particular area of interest for me... I'm always looking for ways to create that synthesis.
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