IT Governance is hampered by poor Corporate Governance

Corporate governance of IT is intended to be for the benefit of all stakeholders. This is usually not understood by the business and it's leaders. Decisions to promote good IT governance are often undermined by the lack of corporate governance across the rest of the organisation. It is typical that business leaders are focused only on their own area of responsibility. Their own business unit's objectives are placed above the rest of the organisation's stakeholders. This behaviour is driven by poorly designed performance management systems that tend to drive the wrong behaviour and reward individuals for the wrong reasons. Unless there is an effective board of directors to keep business leaders in check, IT while have considerable difficulty in getting the necessary change in the behaviour from business leaders in their organisations, particularly when change will result in less benefits to the business units concerned.

The problem with business is that there isn't any understanding of corporate governance, and little motivation to change the way business currently operates. A competent board of directors is required to ensure that the interests of all stakeholders are taken into account and that the value proposition of an organisation takes into consideration the interests of all stakeholder groups.

Unfortunately for most organisations the dominant stakeholder groups are the incumbent senior managers and those providing the financial means for success. If senior managers produce the results the revenue providers desire, these senior managers are handsomely rewarded - regardless of how negatively other stakeholder groups may be affected. It is not surprising that senior managers undermine and are unwilling to implement effective corporate governance.

The purpose of IT governance is to establish accountability for decision-making and to communicate the established authority decision-makers have across the entire organisation. For IT governance to be of value, everyone needs to respect the decision-making authority assigned to the individuals concerned. But it is not unusual for business leaders to completely disregard the assignment of authority to others and to act on their own.

To prevent senior management undermining IT's effort to deliver real value to all stakeholders, the board of directors must actively oversee the behaviour of all business leaders and hold them accountable for both the positive and negatives consequences of the decisions business leaders take on the organisation as a whole and in particular, the IT organisation.

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