Picking winners: shrewd investing in IT assets through IT governance.

• Author: Kavanagh, Shayne
• Position: Cover story

The current economic slowdown is making technology dollars dearer. A national survey conducted by the Public Technology Institute shows that 38 percent of local government information technology budgets will decrease over the next two years. (1) Even for those whose budgets are not decreasing, there will likely be increased pressure to show more rapid and tangible returns on the dollars spent. However, there is no silver-bullet technology that fits any budget and unfailingly pays back the investment. The key to getting value from technology investments is information technology (IT) governance. IT governance defines how planning, investment, and prioritization decisions will be made and who will make them. IT governance also establishes the accountability framework needed to encourage desirable behavior in the use of IT--namely those behaviors that are necessary to realize value from IT investments. (2)

IT governance helps an organization maximize the value of its IT investments by engaging stakeholders from across the organization in the decision-making and accountability processes around IT assets. Given the significant amount of resources spent on IT and the wide array of operational areas across which this spending occurs, a robust governance structure is important for: 1) creating consensus on the broader, strategic business objectives technology investments should fulfill; 2) identifying the criteria for evaluating technology investments; 3) directing spending toward the highest priority areas; 4) evaluating the results of technology spending and providing accountability for those results; and 5) realizing economies of scale and synergies from IT spending across the organization.

GOVERNANCE STRUCTURE

Successful governance does not occur spontaneously; rather, it is designed and implemented consciously. IT governance structures should be used to address a number of issues relative to the effective use of technology in the organization, but this article focuses on its role in project planning, evaluation, and resource allocation in particular. Critical design features characteristic of good governance in this role are described below.

Joint Decision Making. Good IT governance in the public sector is characterized by joint decision making between IT and business professionals. (3) IT professionals provide insight into technical issues such as consistency of new projects with past investments and project management techniques. Input from business professionals ensures that 1T investments align with business needs; in fact, business needs should always be the focal point of technology investments. When both groups make decisions together, they both own the resource allocation process. Formal committee structures are a particularly useful forum for joint decision making.

This is not to suggest that IT professionals have no useful insight into business issues or vice-versa. In fact, systems analysts and project managers with significant experience in one or more business areas can be key contributors to the decision-making process. Likewise, business professionals with some technical knowledge, or insight from other jurisdictions, may be able to help bridge any gaps between IT and business professionals. This kind of synergy is crucial to good IT governance.

Involvement of Top Decision Makers. The involvement of top executives such as the chief executive officer (CEO), chief investment officer (CIO), and chief finance officer (CFO) legitimize and provide momentum for the governance structure. Their involvement is most crucial when final funding decisions are being made.

Standard Evaluation Method. Good IT governance in the public sector is also characterized by communication. (4) When projects are being planned and evaluated, everyone involved should have a shared understanding of the standards by which projects will be judged. Therefore, IT governance should include explicitly defined criteria that decision makers will use to evaluate projects. Successful governance structures recognize that the evaluation method should be broadly based on a number of factors, not simply cost and resources. Other factors that influence overall value might include policy mandates, integration with other projects, or the ability to provide long-term support.

Screen for Technical Considerations. The project planning and evaluation process should be used to screen proposed projects for technical considerations such as conformance with technology standards and to identify projects proposed by different business units that present possible synergies. This design feature can be especially valuable in organizations that tend toward decentralization in their IT decision making, since they have greater potential for duplicative or overlapping investments.

Technical considerations should be applied to all proposed projects, not just the ones that feature new or transformative technologies. As governments seek incremental improvements using current investments, it is tempting to skip technical evaluations of software upgrades or expansion of existing platforms, for example, since there is rarely any new technology involved. Good governance structures recognize that these projects can cause significant downstream effects and should be evaluated.

Formal Business Case Made. The business case is a vital communication vehicle for the project planning and evaluation process. The business case describes the rationale for the project, including anticipated cost and benefits. The business case is also used to form the foundation for good project management (should the project be approved). The business case also reminds the organization of the project's stated goals during the implementation phase, and it provides the basis for evaluating results after the project is completed.

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