In any modern organization, the IT department is critical. Businesses rely on technology more each day to achieve their goals. To ensure that these goals are actually reached, organizations should manage IT resources and risks effectively. This is where IT governance comes in, one of the three IT department responsibilities mentioned in our article, The IT department: structure, roles & outsourcing.
In this article, we'll take a deeper look at IT governance and its importance in helping modern technology-driven organizations align their IT practices with their overall business strategy. There are quite a few choices when it comes to governance frameworks, and we'll examine some of these to see how they help organizations manage risks and resources, as well as how to choose the right one for your business.
Let's get started.
Defining IT governance
What is IT governance? IT governance is the set of policies, procedures, and processes that organizations use to align the practices of IT with overall business strategy and guide how IT resources are used. It is part of enterprise governance and ensures that IT resources are used efficiently and securely, and that their use complies with internal and external regulatory requirements.
IT governance guides the entire IT decision-making process, including evaluating, selecting, and prioritizing IT investments, implementing and managing resources, and measuring an initiative's progress. It can be separated into five domains that answer these questions:
- Value delivery: Is IT delivering value to the business?
- Strategic alignment: Are the goals of IT and the organization coordinated?
- Performance management: How is IT performance being managed?
- Resource management: Are IT resources being managed efficiently and appropriately?
- Risk management: Are risks getting identified, reported, and acted on?
The CIO is usually responsible for IT governance, but effective governance requires a collaborative effort between business and IT leaders. Organizations often use an IT governance framework to provide a structure or adapt the framework to fit their goals and needs. We'll take a look at those next.
Overview of IT governance frameworks
IT governance frameworks can help take some of the guesswork out of setting up established processes and procedures for your IT department. They provide a guide for a business to follow when creating an IT management system. Each framework has its own focus and scope, and a business may choose to implement one or more of them. These frameworks include:
- COBIT (Control Objectives for Information and Related Technologies): This framework, developed by ISACA, combines other frameworks and ISO standards to improve IT governance across an organization. It provides globally accepted models, practices, and analytics tools for IT governance. Its five principles are:
- Meeting stakeholders' needs
- Covering the enterprise end to end
- Applying a single integrated framework
- Enabling a holistic approach
- Separating governance from management
- ITIL: This is a framework of best practices for IT service management that the UK government developed. It has five sets of best practices that encompass service strategy, design, operation, transition, and continual service improvement. It is guided by seven principles:
- Focus on value
- Start where you are
- Progress iteratively with feedback
- Collaborate and promote visibility
- Think and work holistically
- Keep it simple and practical
- Optimize and automate
- ISO/IEC 38500:2015: This is an international standard that provides a framework for effective IT governance, emphasizing the importance of IT leadership, decision-making, and performance measurement.
- FAIR (Factor Analysis of Information Risk): This risk management framework helps businesses quantify risks. It provides a standardized approach to assessing cybersecurity and operational risks and enables organizations to make better decisions about risk mitigation.
- CMMI (Capability Maturity Model Integration): This framework was developed by the Software Engineering Institute to improve IT processes in an organization. This process improvement framework uses a scale of 1 to 5 to determine the maturity level of a business's profitability, quality, and performance.
Choosing the right IT governance framework
One of the reasons there are so many IT governance frameworks to choose from is that governance is not one size fits all. Each framework has its own principles and goals, and it is important to select one that aligns with your business goals. Here are some factors to consider:
- Organization size and industry: A business's size and industry will greatly affect the complexity of its IT infrastructure and the IT-related risks it faces. For example, a bank or healthcare company should consider a framework tailored to their industry.
- Compliance requirements: Depending on the data a company works with, it may have to comply with HIPAA, GDPR, CIS, NIST, or other strict regulations and will be fined if it doesn't. These regulations should be considered when choosing a framework.
- Business objectives and strategy: IT governance is all about processes and procedures and can help a business comply with regulations, but it should also provide business value. Make sure to choose a framework that helps align IT investments with business objectives to provide the most value.
- Existing IT infrastructure and processes: Don't forget that you have legacy systems when choosing an IT governance framework. The framework you choose shouldn't require significant changes to existing processes and systems, or it could be out of budget or scope.
With these factors in mind, you can use the following tips to help you select the IT governance framework that best fits your organization:
- Determine relevance: Does the framework fit your industry and compliance requirements?
- Evaluate scope: Does the framework provide the scope and level of detail to provide enough guidance in your organization's IT governance needs?
- Assess complexity: Governance can get complex, and a team will have to manage it. Make sure your business has the necessary skilled resources to implement and manage the framework.
- Gauge flexibility: Your IT governance framework should help and not hinder growth. Consider its flexibility to adapt to changing business and regulatory requirements.
- Get input: Talk to employees. Governance will affect them all, and getting their perspective is important.
Benefits of implementing IT governance
Implementing an IT governance framework can provide organizations with a range of benefits, including:
- Improved strategic alignment: IT governance ensures that IT management is aligned with business goals, which can help organizations make better decisions about IT investments and prioritize projects that are aligned with objectives that matter to the business.
- Enhanced risk management and mitigation: Cyber threats are par for the course in IT. Following the strict processes and procedures provided by IT governance can help everyone involved be more aware of the dangers inherent in IT initiatives, reduce the likelihood of incidents, and provide a safe way to use IT resources.
- Increased efficiency and effectiveness of IT operations: Underdelivery and over-delivery of IT systems can be invisible to the rest of the business or even the IT department without governance. IT governance can help a business optimize IT procedures, reduce inefficiencies, streamline decision-making processes, and improve collaboration by providing a centralized framework everyone must use.
- Strengthened compliance with legal and regulatory requirements: IT governance allows a business to comply with regulations like HIPAA, GDPR, or PCI without continually looking up the information on them. By establishing clear policies and procedures for compliance, organizations can reduce the risk of legal and regulatory penalties and reputational damage.
- Boosted stakeholder confidence in IT decision-making: IT is a hidden department in many businesses that stakeholders usually only have to deal with when they have an issue with their devices. IT governance gives these stakeholders visibility into what is being spent on IT and why.
IT governance is important for any technologically driven organization, which, let's face it, most businesses are, whether they know it or not. IT infrastructure keeps most businesses running, and IT governance will ensure that IT operates transparently and securely and meet legal, regulatory, and compliance directives.
And the right IT governance framework can provide a proven, structured approach to managing IT resources and risks, but there are many to choose from. Businesses should evaluate each platform, keeping their size, industry, compliance requirements, business objectives, and existing systems in mind.
Remember that the benefits of IT governance don't stop at preventing issues or sticking to the rules. Governance can also improve strategic alignment in a business and increase the efficiency of IT operations, leading to performance improvement, lowered costs, and growth.