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Corporate Governance Vs IT Governance

April 09, 2012 | Comments: 0 | Views: 204

A business is an organic whole where all business units have an important role to play to achieve success. For the organization to flourish, appropriate direction and control over all business units must be exercised by its Board. Effective Corporate Governance procedures must be deployed.

Traditionally, the Board has had a set of Corporate Governance responsibilities, which include:

Setting the company's strategic goals, creating a long term strategy, taking into account present and future opportunities and threats.

Appointing and directing the management of the business to ensure their actions drive the achievement of goals in the best and most appropriate way to benefit the shareholders.

Supervising and monitoring performance, to ensure goals are met and corporate officers are properly managing the business.

The main objective is always to represent the interest of shareholders to the best of the board's abilities.

IT governance has been traditionally defined as specifying the decision rights and accountability framework to encourage desirable behavior in the use of IT. The emphasis for IT governance has been the need for governance principles and strategic directions, as well as the necessary organizational structures, joint processes and relationship management functions. Also IT governance matters have rarely been a priority for a company's Board.

However, times have changed quite significantly. The nature of contemporary business has made organizations heavily reliant on IT. As a consequence, effective IT Governance is having a greater impact on the overall effectiveness of Corporate Governance, and requires greater attention from the Board. That is why it never ceases to cause wonder in my mind when I think about how few people who serve, or have served, in a CIO or CTO role are represented on a company's board of directors.

The IT landscape in enterprises have become extraordinarily complex. They have also become more expensive because the complexity of internal and external structures and relationships are also increasing. In this new IT dominated world, traditional Corporate & IT Governance could both benefit from evolving into more Agile models and focusing on prioritizing:

Individuals and interactions over governance processes and tools

Working governance over comprehensive documentation

Collaboration over contract negotiation

Responding to changes in the business and technology environment

The ever-increasing necessity to pay attention to IT to increase a company's competitive advantage when compared to the scarcity of deep IT expertise at Board Level is a cause for concern. The issue has become widely acknowledged. In a recent PWC Survey, company directors have quoted among top Board Governance issues the need to "include directors with some expertise in social media and cloud computing or...hire outside advisors with IT experience. Recent surveys show only 8% of directors have IT expertise and only 15% use outside IT advisors.

In conclusion, today's business climate requires a paradigm shift: it is not really a matter of Corporate Governance versus IT Governance, but of Organic Organizational Governance, with an increased focus on Information Technology at the board level.

Source: EzineArticles
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