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CIOs told to polish up their governance

Crete competitive advantage by taking calculated risk

CIOs require both leadership and execution to successfully implement IT governance, according to analyst Gartner.

At an IT governance summit in London the analyst is outlining how CIOs can improve their credentials. "Great IT leaders master process, and they understand that executing governance programmes involves process, discipline and creativity," says Gartner.

While most organisations limit governance to gaining control and "eliminating bad risks", the highest-performing organisations also use it to "take good risks and gain competitive advantage", Gartner said.

Tina Nunno, a Gartner analyst, said, "Good governance is about control while great governance is about guidance and competitive advantage. Organisations with good IT governance enjoy benefits such as increased business value of IT-related assets, and strongly governed organisations receive a 20 percent higher return on assets."

Nunno added, "CIOs with great governance create competitive advantage by embracing emerging technologies, innovation and, most important, the concept of calculated risk."

Gartner said that organisations that do governance well have fewer governance mechanisms and lighter processes because key staff have learned to work together well and have a shared understanding of the business priorities. Less mature organisations need more controls to create focus and deliver business results.

CIOs needed to manage two dimensions of governance. First, is governance as a decision-making framework that reflects the organisation's goals and priorities, and how the organisation intends to achieve them. Second, are governance processes that cover the structures and methods the organisation uses to execute and institutionalise the governance framework.

Gartner said the framework is what the organisation has decided, while the process is how the organisation will institutionalise those decisions.

If an effective governance framework is implemented effectively "it reduces conflict between stakeholders, finance can easily track organisation spending against framework priority categories, business performance significantly improves and the organisation reacts better to competitive threats", said Nunno.

Failing to communicate is a common governance pitfall. Governance bodies struggle with decision making when they lack appropriate information. Stakeholders, in turn, struggle to comply with poorly communicated decisions. CIOs need to check their communication tools when they notice lack of compliance with governance decisions or excessive revisiting of established decisions, said Gartner.

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