Governance in the ‘new’ world of IT
Would you invest in a business that had compromised corporate governance? What about a supplier of critical products or services?
More importantly, viewed through the eyes of your customers, what value do you put on ‘trust’ – that which results from effective internal c0ntrols?
These and similar questions are frequently posed by investors, Boards of companies and other stakeholders serious about protecting the current and future interests of their organisations – not to mention their customers.
Question is: In your organisation, how well mapped and understood are the relationships between effective corporate governance and the use or adoption of IT ? Not sure?
In most established organisations, there are many interrelated variables and moving parts that need to play nicely together for effective internal controls to be resilient, adaptive and most importantly – effective over time.
Think of governance in terms of the familiar Etch a Sketch line drawing toy – changes using the two controls need to be coordinated in order to draw a sensible image.
Today’s organisations, however, have to juggle considerably more than two variables – and that’s the tricky part.
Effective governance? Now, just add rapid change in the ‘new’ world of IT.
That technology-led innovation, globalisation and increased competition is driving change across every level of society – be that government, enterprise or at an individual level – is nothing new. Adding the impetus for change, is the catch-cry for ‘innovation‘. Countries, Governments, industries and organisations are all attempting to find the holy grail of innovation.
Some organisations are able to quickly exploit and capitalise on the opportunities that change offers. Others have to play catch-up and react to imposed change when its impacts or threaten their interests.
In this fast paced ‘new’ world of IT, innovation, disruption and increased competition, let’s see how enterprise governance models and frameworks are stacking up.
One definition of enterprise governance provided by the Governance Institute of Australia is that it ” …. encompasses the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.”
Published standards and commonly used control frameworks exist for almost every industry and functional area within organisations. These frameworks and standards (which often embody ‘best practice‘) help to ensure that organisations not only comply with legislative and regulatory mandates, but also operate in support of its overall mission.
However, when organisations are subject to rapid change, how effective are these internal monitoring and control processes?. Most frameworks, processes and procedures are in place to ensure processes are working ‘correctly’, are repeatable and auditable – which works well in a slowly changing environment.
Adaptive and effective internal controls in a fast changing world
Organisations have an increasing dependency on technology to operate, let alone drive value and competitive advantage. The challenge facing non-IT executives is in making sure that all IT decisions (made both by IT and within the organisation’s various business units and departments) do not undermine effective enterprise governance.
Other than the well known influence of ‘Shadow IT‘, the real challenge comes when attempts are made at adjusting enterprise governance strategies, policies, frameworks and processes in a timely manner when faced with change – and especially where IT is involved.
The drive to lower IT spend by organisations is an admirable goal, however done without due consideration for the broader impacts on the organisation, has the potential to elevate risk. It all comes down to how this risk is identified and priced. At the heart of this process lies enterprise governance –Not IT governance – enterprise governance.
Winning at the game of change: Adaptive governance.
Adaptive Enterprise Governance is, as the title implies, maintains business relevant and effective controls when faced with change. Most importantly, this adaptive capability is intrinsic to the various governance processes themselves. Because this adaptation is now part of the organisation’s governance DNA it would not require the prevailing governance frameworks to be retired and replaced with another bigger, brighter and better framework (assuming that the current framework is effective for its specific functional area.).
Underpinning this Adaptive capability is an Adaptive Enterprise Architecture capability. This architecture cuts across the entire organisation, and includes IT architecture ( e.g. Infrastructure, cloud, data, applications, etc.) as well as organisational (e.g. Structure, people, processes, strategy, etc.)
If effectively designed and implemented, this adaptive capability will overcome the key challenges of:
- Complexity: Most established organisations are relatively complex systems. Anyone involved with implementing enterprise-wide IT systems (such as ERP systems) will soon realise that optimising the interplay between strategy, people, culture, structure, process, external stakeholders and technology – all while keeping the organisation running – is no trivial exercise.
- Fragmentation: If your enterprise’s internal governance landscape is not effectively cross-linked and coordinated, the systemic risks to the organisation will be remain largely unidentified and unmanaged. Striking the optimal balance between centralised and federated controls requires a clear visibility over the key interactions between siloed departments, business units or functions. Get this balance wrong, and you could either miss key controls over key cross-functional dependencies, or overload the organisation with unwarranted and costly governance processes.
- Managing rapid technology change: Ongoing technology-led disruption and a high rate of change is here to stay. Ensuring your organisation has an effective Adaptive Enterprise Architecture capability is key to ensuring that your enterprise governance processes become a living entity, capable of adjusting to change with minimum cost and effort.
Most importantly, the business relevance and cost-effectiveness of an adaptive governance capability is maintained in the face of change.
It also will allow your organisation to embark on necessary business transformation initiatives by delivering a faster change capability, without staff burnout, destructive disruption, missed opportunities and unnecessary cost.
The business case for building an Adaptive Enterprise Architecture and Governance capability into the DNA of your organisation – and one that is optimised and relevant to your organisation – is a no-brainer when faced with technology-induced change.
You do the math.