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Lines of Authority

Lines of Authority

Companies need smart governance mechanisms that keep IT and the business jointly accountable and responsible for linking technology to the most important company strategies.

When Gil Lithgow joined CitiPower as CIO a little less than four years ago he quickly discovered how little formal IT governance was in place. Sure, the business was meant to put up a business case to justify each and every item of IT expenditure, but there were no checks or tests to show the so-called business benefits of any expenditure.

As a result, Lithgow discovered something like 170 projects that had either started or were slated to start, or that people were trying to get up and running by working on various different forms of justification. The actual business benefit to be gained from many of those projects was so minimal that Lithgow, the executive management team and their direct reports easily culled the number to just 36 projects. In the end, he reports, only 16 were ever done.

The organisation is not suffering a jot for all the culling. In fact, after spending $6.5 million and plenty of energy on building and implementing a rigorous IT governance model, Lithgow says CitiPower is achieving vastly better rigour, discipline and alignment. In each of the three years of the governance program so far CitiPower has consistently achieved everything it set out to achieve in IT, within the original budgets defined. A recent review by PricewaterhouseCoopers concluded that CitiPower has largely delivered on its vision and, as Lithgow says,"it's all been done because we've been quite rigid in following our governance model".

Governance, says Lithgow, is about getting the business to own all of what it does, as opposed to leaving IT with the techos - a recipe that in his opinion practically guarantees expensive outcomes.

Formalised Structures

Recognising that IT today is so critical to the success of the enterprise that it needs intensive oversight by the executive, many organisations see IT governance as the best route to assuring the twin aims of using IT to add value to the organisation and helping it achieve its goals. Governance can deliver valuable prescriptions about control, accountability, responsibility and authority, lay down rules and regulations, and delineate lines of authority.

The IT Governance Institute (www.itgovernance.org) says IT governance is a structure of relationships and processes to direct and control the enterprise in order to achieve the enterprise's goals by adding value while balancing risk versus return over IT and its processes. The relationships are between management and its governing body. The processes cover setting objectives, giving direction on how to attain them and measuring performance. Effectively applied, governance can deliver vastly improved discipline in technology investment. And, to borrow a sporting analogy, it can help eliminate the need for the team captain - the CIO - to double up as umpire.

So far in many Australian organisations governance has been severely neglected, which is unfortunate - indeed tragic - since some analysts believe that a lack of IT governance has played a major part in the downfall of some leading companies, both here and in the US, over recent times.

"One thing that came out about the Ansett crash was that they really had very little good management information, despite having spent large quantities of money on IT," says Kerandan CEO Kate Behan, who organised an IT Governance session for the Australian Computer Society (ACS) last year."Ansett didn't have the same quality of information systems that airlines that have survived had, although admittedly they had a few other problems, like having their guts ripped out of them by corporate raiders.

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More about AGSMAnsettAustralian Computer SocietyAustralian Computer SocietyAustralian Graduate School of ManagementEvolveGartnerHISKPMGPLUSPricewaterhouseCoopersPricewaterhouseCoopersRACVUntangleVIA

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