IT Governance Information Technologies (IT)

IT Governance

Information technologies (IT) governance is defined as a series of decision rights and accountability framework specifically designed to enable high effective, profitable decisions and behaviors related to the used of IT (Weill, Ross, 2004). IT governances' greatest contribution is ensuring limited and potentially costly information systems' resources are invested in the projects that most contribute to the attainment of strategic plans and objectives of the company (De Haes, Van Grembergen, 2009). The frameworks used for defining IT governance are most effective when they provide guidance into which of the many potential projects a Chief Information Officer (CIO) can invest in make the most sense from a risk and return standpoint (Weill, Ross, 2004).

Best practices in IT governance are able to correlate the investments in projects back to a positive impact on the financial performance of the firm (Ko, Fink, 2010). Studies indicate that the top-performing enterprises generates up to 40% greater return on their IT investments compared to their competitors (Weill, Ross, 2004). This significantly greater level of performance on IT investments relative to competing firms has been attributed to a better aligning of business strategies and IT investments to attain them (Nfuka, Rusu, 2011). Another factor that has contributed to the success of IT governance as a means to attain higher levels of financial return on strategy investments is the rapidly maturing level and sophistication of analytics used to measure risks and optimize performance management goals (Posthumus, von Solms, King, 2010). Successful IT governance frameworks also have the ability to quickly accumulate knowledge and learn quickly, in effect capturing the many lessons and insights learned, transforming them into a sustainable competitive advantage over time (Rozek, 2008). As the book illustrates, successful IT governance can also lead to greater customer-based focus and a more synchronized series of strategies to capture, keep and grow a base of profitable customers (Weill, Ross, 2004).

The state of IT governance has drastically improved over the last decade, led by the rapid advances in reporting, compliance and auditing procedures driven by the Sarbanes-Oxley Act of 2002 in the U.S. And comparable legislation throughout Europe and Asia (Weill, Ross, 2004). IT governance has also progressed beyond simple frameworks to rules- and constraint-based models that provide CIOs and their teams with the ability to quickly gain insights into which investment will deliver the greatest potential return (Wilkin, Chenhall, 2010). These models also have the ability to define the optimal return on investment based on the constraints of a given IT organization as well (Wilkin, Chenhall, 2010). Analytics, rules- and constraint-based IT governance framework tools are making it possible to control for risk and optimize financial rewards of IT strategies today. This has saved many organizations literally millions of dollars by averting investments in IT programs that would have not delivered a sufficient enough return to make they valuable (Weill, Ross, 2004).