Is It Governance Meant Only For Large Firms?
Information Technology (IT) is a necessary part of every business today. Even small to medium-sized family owned businesses benefit from the many aspects of Information Technology, including the use of email, internet searches, and digital marketing, added to the ease of organization that a good IT system provides. Complications, however, should always be expected to arise in business, and small and medium-sized business owners are wise to use IT Governance to protect their valuable investments.
Businesses since the 1940’s have become encompassed by Digital Information Technology and all it provides. Information Technology does not only include the use of computers and the internet for the storage and retrieval of data. IT also encompasses communication technologies, such as the telephone, and has a significant effect on other industries, including health care, engineering, and e-commerce.
What Is IT Governance?
Information Technology Governance (IT Governance, or ITG) refers to the processes that businesses use to ensure that the technology that they invest in is used in an efficient and organized way, to maximize profits and reach business goals. These processes are as important to small sized businesses and medium sized businesses, as they are too large corporations, as smaller sized and family owned businesses may have less to invest and the financial security of family members at risk.
In 1996, the Information Systems Audit and Control Association (ISACA) released the framework for what is now known as CobIT – Control Objectives for Information and Related Technologies. These control objectives initially set out to help the community of financial auditors better understand and maneuver around new aspects of Information Technology.
Essentially understood, CobIT allows businesses of all sizes to control and measure their successes and achievements, by identifying the responsibilities of owners. These responsibilities are identified through the examination of five principles, or components: Framework, Process Descriptions, Control Objectives, Management Guidelines, and Maturity Models. Organizations who follow these five principles are better equipped to understand, and take full value from, their IT department.
Another term that refers to the ways in which a business controls and measures success is Enterprise Architecture (EA). Enterprise Architecture is a blueprint, imaginary or tangible; that defines how a business is going to be structured and organized. Owners of small to medium sized businesses can relate their EA to their business’s corporate strategy for success. It has been suggested that this can be done through one of four operating models: coordination, unification, diversification, and replication.
Small to medium sized business owners who want to maximize their profits through IT Governance need to decide whether it is in their business’s culture to be high or low on the spectrum of standardization and integration, and choose an EA operating model to suit their needs, and the needs of those governing their IT department.
Business Operating Models
Standardization takes into account varying opinions to implement a set of professional habits that are meant to maximize quality, operability, safety, or profitability. Standardization is considered to be the solution to problems with coordination that cause adverse effects for any party involved, due to any present inconsistencies. Integration can be described as the process of taking individual components or elements, then desegregating and combining them to make a whole.
On the extreme ends of the spectrum, a unified business model requires a high degree of uniformity, with a significant amount of integration as well, while diversification does not place much emphasis on either standardization or integration.
Coordination (concerning business models), on the other hand, involves a low level of standardization, but high integration, and a business model based on replication places more value on strict standardization practices, and less value on the practice of integration.
Developing An IT Governance Solution
Business owners who want to classify their organization into one of these groups for purposes of developing an IT Governance solution should examine how many business units they currently have in operation if any. Are these business units dependent on one another for the availability and accuracy of data? Do the different business units need to run in the same way, to maintain profit goals?
Business units that can run successfully, with low standardization and integration, can establish their unique IT solutions without hurting the other units. If a small to medium sized business depends heavily on standardization and integration for its success, it is important to examine the needs of every individual business unit, before making any final decisions as to the strategies needed regarding IT Governance.
Information Technology Governance can benefit small and medium sized businesses just as effectively as it does large corporations. They key to organizing the many aspects of IT Governance, is first to look at the many other departments that work together for the common purpose of the business model. Additionally, it is important for business owners to take into account the opinions of all managerial staff, as opposed to only IT managers. An IT manager may suggest the implementation of a new procedure, for example, that he or she may think will benefit his or her department. This manager, however, may not be considering how this new governance procedure affects other units, and as a result, the whole of the company.
The Benefits Of IT Governance
IT Governance embodies all of the processes and structures involving the Information Technology within a company or organization. These processes and structures ensure that the firm’s objectives are met in a strategic and practical way. When properly executed, a good IT Governance plan should include all of the following: an evaluation of the organization’s technology; directions for the proper use of technological equipment; constant IT supervision; regular re-evaluation of policies and strategies that are in place.
Any IT strategy proposal should have the ultimate goals of the entire company or organization in mind. Plans and procedures should benefit all departments and managers, in addition to maintaining consistency with mission statements and business models. Small to medium sized business owners aiming to establish or re-evaluate their IT governance procedures can benefit greatly from the results, as long as they do not devote too many of their resources to the cause.