An Overview of Corporate Governance of Information Technology

It used to be that a corporate board of directors and its top executives trusted decisions concerning Information technology to those running their IT departments. But without the necessary oversight and clear guidelines to follow, often, their goals especially in the short term would be in direct conflict with those of other stakeholders.

IT governance involves everyone from the corporate board of directors, executives and staff to customers, communities, investors and even regulators. As such, all are aligned in an effort to determine ways which some refer to as a framework that establishes proper oversight on the use of information associated technology that not only creates value but manages the risks that can result from using information and technology.

Definitions

While there are acceptable and similar definitions of IT governance both in business and academia one without the other leaves something missing and why each is such an important part of the equation.

In a business environment, the emphasis is on managing performance and creating value whereas in academia, governance boils down to identifying and being accountable for decisions that encourage preferred behavior in the use of IT.

Distinctions

Different countries have similar definitions and some varying nuances in the language but for all practical purposes the intent is the same no matter what. It’s all about making sure objectives are clear as to how an organization or an entity goes about creating value and is accountable in the use of information and technology.

At the same time, and in no uncertainty, it serves to establish that the governing body or corporate board has the final responsibility and not the chief information officer or other C-level business executives.

Goals for IT Governance

The framework for governance of information technology first started gaining traction in the early 1990’s as an extension of corporate governance after a run of corporate failures in the 1980’s.

At the time, three specific goals were outlined for inclusion in evolving measures:

1. Ensure that any use of information and technology will generate business value
2. Watch and have control over the performance of management
3. Limit associated risks that can occur from the use of information and technology

Accomplishing the goals of corporate governance of IT can often be done through the direction of the board. In fact many companies now put in place organizational structures that show the accountability for decisions that have a direct impact in achieving certain strategic goals. Corporate boards also institute good practices and define processes and carry out activities whereby outcomes can be clearly determined.

Efforts in establishing more cohesive and improved corporate governance initiatives for information technology have shown that IT has facilitated corporate governance but has also proven to be a significant value creator even with needing greater governance.

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