IT Governance in the Age of Digitalization

Ari Sagett, Managing Director IT Audit

Sustaining an effective business model in the face of digital disruption requires a strong foundation of IT governance able to scale and adapt to modern enterprise needs. These needs, though unique to each enterprise, are generally shaped for four key drivers — innovation, meeting customer expectations, data-based decision-making and improving business performance — and enabled by a convergence of technologies such as cloud and mobile, social apps, the Internet of Things (IoT), artificial intelligence (AI) and robotic process automation (RPA).

All of these factors, combined with an explosion in connectivity and data and the globalization of IT, give rise to a new set of enterprise risks. These risks cannot be effectively managed ad hoc. In the age of digitalization, a “strong” model of IT governance increasingly means that companies must be even more focused on being adaptable, scalable and proactive. Here’s a look at how the components of such a model might be organized:

Strategic alignment — IT organizations should play an integral role in helping businesses achieve strategic objectives. In a mature IT governance model, IT adds value by proactively developing and presenting IT solutions to the organization’s top strategic challenges. These projects are identified according to consistently applied criteria, in consultation with business units, with full transparency and leadership from executive management and the board.  IT strategies must be aligned with enterprise strategies.

Value delivery — As a strategic partner, IT should feel culturally obligated to deliver solutions on time, on budget, and within the original scope. Communication — both horizontal and vertical — is frequent and structured, to confirm that business requirements are being met and budget goals are achieved.

Risk management — In addition to foundational technology risks, such as cybersecurity, data privacy and availability, a strong IT risk management program must proactively address emerging (and evolving) risks such as digitalization, broadening data governance and incident/breach response. Risk management should be a continuous process, coordinated by the board and management consistent with the organization’s risk priorities and tolerance. This is a key differentiator, necessitated by the speed of change. Annual assessments, combined with preventive controls and continuous monitoring, are critical to ensuring that key risks are mitigated.

Resource management — When the IT organization is operating at optimal levels, assets — not only applications and infrastructure, but processes and skill sets — are integrated and evaluated for efficacy and are deployed strategically, considering both internal and external models.

Performance management — Mature IT governance leaves nothing to doubt. IT must fully understand the operational levers driving the business and ensure that these levers are measured, monitored, summarized and reported regularly to stakeholders in an easily digested format, such as a balanced scorecard. Regular measurement and reporting sets expectations, drives behavior and provides a basis for measuring value delivery and improvements.

The journey to mature IT governance is an evolutionary process, with each step building upon the previous one. Put simply, the journey begins with an inventory of risks and resources, and progresses with prioritization, communication and alignment with senior management and the board to ensure that IT efforts are aligned with enterprise strategies, goals and objectives. As governance processes mature, IT governance becomes more structured and managed. Communication increases, and IT gradually becomes more of a strategic partner with management and the board, identifying and applying IT solutions that mitigate risks and add value to the organization.

While all this may have been considered a “nice-to-have” level of performance in the past, mature IT governance is a “must have” in the age of digitalization. We are always open to an exchange of insights on this topic. Begin the conversation by leaving us a comment here or on our website.

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