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IT Governance
1. CSZ QUANTUM LEAP – Vic Falls
Peter Doona
Finance Director BAT Zimbabwe
2.
Corporate and Enterprise Governance
IT Governance
Shareholder Value Equation
Signs & pitfalls of bad IT Governance
IT Governance to support the Business
Delivering a Business Focussed IT
Organisation
Don’t forget the basics
3.
Corporate governance models may vary but
principles are the same
Corporate governance is vested in a
supervisory board that is responsible for
protecting the rights of shareholders and
other stakeholders (e.g. employees,
government, customers, creditors)
The board works with a senior management
team to implement governance principles to
ensure the effectiveness of organisational
processes
5.
“Governance of enterprise IT focuses on
delivering services to support top line growth
while moving operational savings to the bottom
line”
“Value from IT investment is not limited to the
financials (discounted cash flow analysis and
others)”
“Defining the value of a project must connect the
investment with its contribution to strategic
goals. Simple monetary returns are necessary but
not sufficient.”
6. • Sustainable future growth
through optimal strategy and
execution
Future
Cash
Flows
• Innovation and Speed to Market
Productivity
• Maximise Return on Investment
through effective decisions
• Control of cost base and
working capital
Cost of capital +
Business Risk
• Predictability of business
performance
• Quality of governance and
controls
• Risk mitigation procedures
Growth
7.
IT is seen as impeding rather than
strategically enabling corporate strategy and
objectives
Executive doubts the value derived from IT
investment
Application silos emerge (HR, Marketing, etc)
with no enterprise architecture
IT projects run late and are over the budget
(more often than not)
Poor management of conflicting goals
8.
IT investments benefits not tracked
IT investment not aligned to corporate objectives
Frequent project failure
Multiple non enterprise wide applications
Uncontrolled IT TCO
Focus on technology, not business objectives
No discipline in standardisation of business
processesses and technical solutions
Breakdown in controls
Missed business opportunities
9. •
Value Focus
Strategic
alignment
Visibility of
benefits
Efficient control
IT Managers “know their numbers”
•
Initiatives focussing on cost efficiencies and productivity
enhancement across the business
•
IT Managers are fully connected to the Business Strategy
•
IT investments are prioritised and selected based on
business goals
•
Clear Business Cases for IT investments
•
Costs of investments and benefits delivered tracked and
made visible to the Business
•
Technical solutions which enhance the control
environment across the business without slowing it down
10.
Starts with the whole business leadership team
Participation in strategy formulation and business
risk assessment
Full understanding of business operations
Alignment of IT initiatives with business objectives
Line of sight from the Board Room to the Computer
Room
Clear performance measures – shared with other
Functions
Drive for visibility – don’t hide
11. IT Organisation
Focus
Objectives
•
Strategy
Robust and rapid information
for decisions: growth and
productivity
Speed of business operations
•
Operational &
Technical
Excellence
•
Innovative solutions in
marketing (emerging
technologies)
•
Access controls
•
Records management
•
Data protection
•
Backups / BCPs
Maximising
Future Cash
Flows
Firewalls
•
Delivering
Shareholder
Value
Minimising
Business Risk
Strategy to address harmonised business objectives is developed at functional level.HR , IT, Marketing, Production, etc will develop appropriate strategies to address the growth agenda set by the business.If Marketing strategy is change in RTM, IT and other functions come to the party to enable this otherwise the strategy may be thwarted by IT and other support functions
The more senior management embraces IT governance the more value from IT investment.The infrastructure may be the wrong one if IT becomes a barrier to business strategy.Good governance does not change with every small strategic change. It should be robust enough from the beginning and be able to handle minor changes in strategy e.g. new product range or line, new route to market strategy. The business was always going to have new products or RTM strategy!Good project governance ensures resources (human and financial) are in place before the project starts.Ways to manage conflicting goals must be design in the governance model chosen by the enterprise.
Overinvesting in infrastructure, or worse the wrong infrastructure results in wasted resources, delays and system incompatibilities with business partners.On average infrastructure accounts for 55% of IT TCO Investment therein must therefore be in line with business objectives and approved at the right level.
