IT Project Governance Structure for ERP Finance Systems

Introduction

Project governance is an important component of every IT project implementation process. Project governance refers to the infrastructure and processes that an organization puts in place to steer its functions and ensure compliance. This paper presents an elaborate governance structure that will oversee the entire System Development Life Cycle (SDLC) process of an Enterprise Resource Planning (ERP) finance system throughout an organization that operates domestically. The governance structure examined here comprises three levels: executive, program implementation, and ongoing operations.

Project governance is noted by BIS (2010) to be a management framework within which various project decisions are made. It forms a critical component of any project because the accountabilities and responsibilities associated with an organization's business activities are laid down in its organizational governance plans. For instance, organizational charts clearly indicate who in the organization is directly responsible for any given operational activity. Therefore, unless an organization has a clearly outlined project governance policy, no such chart can exist for the purpose of project development activity.

Importance of Governance Structure for IT Projects

The role of the project governance component is to provide a clear, robust, logical, and repeatable decision-making framework for governing an organization's investments. In this manner, an organization adopts a highly structured approach to managing its business and everyday activities, thereby encouraging accountability and transparency.

According to Klakegg, Williams, Magnussen, and Glasspool (2008), the decision-making framework of any project governance initiative rests on three pillars: structure, people, and information.

Structure refers to the nature of the governance committee. Both a Project Steering Committee and a Project Board must exist. The broader governance environment must also include several stakeholder groups and user groups.

The effectiveness of any committee structure is largely dependent on the individuals who occupy the governance committee. Membership is determined both by the nature of the project and by other organizational factors.

The Three Pillars of Project Governance

Information is concerned with the data that informs decision makers. It is made up of regular reports, issues, and risks that the Project Manager escalates, as well as key documents that fully describe the project.

The governance structure used to oversee the entire SDLC process of an ERP finance system within a domestically operating organization comprises three levels: executive, program implementation, and ongoing operations. The roles and components of each level are described below.

The Project Executive plays a significant role in the governance of any given project, as it is the party ultimately held responsible and accountable for realizing the benefits of the project for the organization. In other words, the Project Executive owns the business case. This role is also known by several titles, including Steering Committee, Project Owner, Chairperson, and Project Sponsor, and its primary function is project governance. The executive sponsor is identified by Lynn and Cooke-Davies (2012) as pivotal in ensuring project governance is achieved.

According to Crawford et al. (2008), it is the responsibility of project or organizational directors to ensure that accountability and transparency are maintained throughout project operations, to provide a structure through which the objectives of the organization are appropriately set, and to develop the means of realizing those objectives while monitoring project performance (OECD, 2004). Visibility and control must be maintained throughout all ongoing operations.

Conclusion

Pratt, E. M. (2011). Applying a life cycle framework to implementing a governance model. PMI Virtual Library. Available at