IT Governance: Does It Need To Be So Painful?

Most CIOs will tell you that the quarterly meetings of their company’s IT steering committee are about as much fun as oral surgery. That may be an unfair comparison.

At least in the case of oral surgery, the patient and surgeon can generally agree on what needs to be done and the patient is generally willing to defer to the surgeon’s judgment in determining how to resolve a particular problem. Steering committees on the other hand frequently struggle to prioritize business needs and consider themselves fully capable of instructing IT professionals about how to plan and implement major technology initiatives.

Innocent bystanders (i.e. IT staff members) believe that steering committee meetings are senior executive forums in which strategic technology plans are established to support their company’s financial goals. In reality, most meetings are ritualistic affairs.

Decisions are largely made behind closed doors prior to committee meetings. The meetings themselves are merely ceremonies in which decisions are formally announced and publicized. In some instances there’s so little discussion during committee meetings that follow-on meetings are required with selected executives to decipher what has actually been decided.

Do you have a broken IT governance process?

In point of fact, many existing steering committees are broken and have outlived their usefulness. Nevertheless, they’ve taken on a life of their own and nobody knows how to fix or replace them.

The following symptoms are key indicators of a decaying or dysfunctional IT governance process.

• Committee meetings are constantly rescheduled due to other, more pressing, demands on the time of committee members.
• Committee business is conducted via email because its executive members can’t find time to meet as a group.
• Committee members delegate meeting attendance to subordinates who aren’t empowered to make decisions and don’t feel it’s their responsibility to socialize decisions that are actually made.
• Delegation initially occurs on a one-time basis but soon becomes semi-permanent, turning committee meetings into information-sharing discussions rather than technology decision-making events.
• More meeting time is devoted to educating members about new technical capabilities, vendor evaluations and contractual procurement issues than business outcomes.
• The committee loses strategic focus and degenerates into wide-ranging discussions of in-flight projects, IT staffing priorities, service desk operations, IT budget performance, etc. In effect, the quarterly meeting becomes a broader review of the entire IT function.
• Committee members fail to engage in a meaningful discussion of business needs and repeatedly make investment decisions based upon the personalities and persistence of individual executives. Members routinely share their skepticism regarding the business cases being used to justify specific IT decisions, but they choose to share their skepticism with selected peers after a decision has been taken rather than during formal Committee meetings.

Is there a cure?

Executives in Fortune 500 companies are constantly encouraging their teams to take a page from agile, fast-growing startup companies. Well, here’s their chance.

Startups frequently employ growth boards to guide their technology decisions. Growth boards challenge their executive members to quantify the incremental revenues or profits that will result from specific IT investments and personally commit to delivering claimed financial outcomes.

In principle, this is what IT steering committees should be doing in larger companies. In practice however, steering committees devote way too much time and effort to the construction of ornate business cases to justify their investment decisions.

Such business cases may include hard and soft cost savings, avoided future costs, customer satisfaction metrics (that may or may not increase future revenues), competitive pressures, etc. Cases constructed on a wide variety of financial and operational outcomes frequently lose their credibility and are inherently difficult to compare with one another.

In smaller startup companies, the commitment of individual executives to deliver tangible financial benefits on the basis of investments in new technical capabilities is much more immediate and visceral. The head of supply chain operations may commit to reductions in inventory working capital through the use of a new AI tool. The head of sales may commit to raising sales quotas across her field organization by employing a new lead qualification application.

Admittedly, it’s easier to move the needle in a smaller company that has 2,000 employees and $300 million in annual sales than in a larger company with 10,000 employees and $5 billion in sales. But the key difference between growth board and steering committee discussions is that Board members are personally demanding the IT tools they need to deliver specific financial results, whereas Committee members are merely endorsing technology initiatives they don’t fully understand.

It’s a subtle difference but an incredibly telling one when the time comes for employees to adopt new work practices based upon the use of new technical capabilities.

Instigating change

As shocking as it might seem, many existing steering committees have no formal charter or established set of operating principles. Like any other ritualistic ceremony, the format and agenda of committee meetings has evolved over time based upon the whims, suggestions and demands of individual executives, many of whom are no longer with the company. A first step towards instigating change under these circumstances might simply be to prepare a written charter and use that document as a pretext for re-engineering existing practices.

In cases where some type of foundational charter does exist, it may be appropriate to sunset that document on the pretext that it was created for a different company – one that was smaller, less complex and far less reliant on technology than the company that exists today. Companies outgrow internal processes all the time. IT governance is simply another process that needs to be revisited to meet the demands of the current business.

Many CIOs would be surprised by the support they’ll receive from their fellow executives to instigate such changes. Business executives want to be involved in strategic technology decision-making, but they don’t want to waste their time discussing long lists of non-strategic projects all justified by elaborate business cases and intuitively unrealistic ROI projections.

CFOs may be a CIO’s greatest ally in overhauling a company’s existing IT governance process. Although some CFOs have a pathological addiction to business cases that predict financial outcomes to five significant digits, most are deeply skeptical of business case projections. They’d much rather have a senior executive put her personal bonus on the line to justify a specific IT investment.

As counterintuitive as it may seem, your CFO may be your best partner in replacing legacy IT steering committees with business growth boards. Who knows? The rebranding alone might drive greater attendance in the future!