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Blog: Six Questions For Governance

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MIT Professor Erik Bynolfssen expresses it perfectly: "in the long run productivity is everything". An organization that consistently wastes two-thirds of its project expenditure will simply be incapable of competing with organizations that succeed 85 per cent of the time. The boards and management teams that take up the challenge of avoiding such waste, says ISACA director Raymond Young, will be the winners in the next decade. Young has been teasing out the implications for corporations of the release of Australian Standard AS8016 (for corporate governance of projects involving IT investments) for comment. The release follows the international adoption of AS8015 as ISO38500 on the corporate governance of IT, and the release of Young's handbook HB280-2006 to advise boards and top managers on how to influence projects to succeed.

Almost certainly, Young says, the standard expected of boards and top management has altered significantly as a result of those releases, even at this stage, when the draft standard may merely be considered as offering guidelines.

And he suspects a precedent may already have been set when the CFO, CEO and chair of the audit committee resigned after an IT project failure at Australian Pharmaceutical industries in 2006

"The Customs fiasco was probably another turning point," Young says. "The NSW T-card project is another disaster created by the leaders rather than the technology. People are tired of project failures and are starting to see through weak excuses." Boards are well aware of the problem of project failure, Young says, but his recent interviews with board members have left him convinced that until now it has been a secondary issue for most, because compliance has been addressed as a "must do" item, and efficiency/productivity as a "should do" item.

"Boards are bedding down the compliance effort of the past couple of years and 'are looking for ways to maintain compliance without taking up all their thinking time'.

"The Australian Institute of Company Directors (AICD) specifically notes that 'more shareholder value has been destroyed as a result of strategic mismanagement and poor execution than was lost in all the recent compliance scandals combined'," Young says.

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More about: Australian Institute of Company Directors, Australian Pharmaceutical Industries, AUSTRALIAN PHARMACEUTICAL INDUSTRIES, BPI, Evolve, MIT

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