The Information and Communication Technology market is one of the largest industries in the world, with projections that it will reach a market size of almost six trillion by 2023. With the rising integration of technology into our everyday lives, the demand for IT projects is growing exponentially. However, at the same time, a survey shows that 75% of respondents lack the confidence that their IT projects will succeed and are doomed to fail.
Project governance is one of the critical tools that help secure a greater chance for project success through repeatable and consistent structures and frameworks. Yet for many, the traditional governance frameworks and their typically rigid structure are seen as inherently incompatible with the open-ended nature of IT projects.
In this blog, we discuss the reason why this aversion to governance in IT may be misguided and how expanding our understanding of governance allows us to better adapt IT governance to better serve organisations and their strategic objectives.
Governance and IT Projects: Are they really incompatible?
For a long time, project governance has become synonymous with stage-gate processes and bureaucratic rules that dominate projects run on traditional Waterfall methodologies. Unlike traditional projects that often have a clear start and end date with a high emphasis on managing traditional project controls (time, scope, and cost), IT projects tend to be more open-ended in nature with a focus on customer value over project controls alone. These differences have led many to believe that governance and IT projects have an inherent incompatibility.
However, many are mistaking the mechanics of project governance with its purpose or function. While structure and accountability are a dominant component of project governance, it is not the entirety of its function. In project management literature, project governance is often defined as “the system by which a project is directed and controlled and held to account” (McGrath & Whitty 2015: 781).
No matter if it is a building project or a new software project, all projects need a framework that makes sure projects are being directed and controlled in the most effective manner and that the right people are held accountable to project success or failure. So why would IT projects not need governance? We believe that this misunderstanding of governance as mere control practices has negated practitioners from the inherent value and purpose of governance.
In the end project governance is not a one-size-fits-all framework that can be arbitrarily applied to every project. Project governance and its practices can be shaped, adapted and reimagined to better suit the specific needs and contexts of IT projects to increase strategic value for the organisation.
What is IT Governance?
Stone and Ekinci define IT Governance as
“ the process and structure that ensure that organisations deploy their IT investments appropriately to ensure that the resulting activities – whether programmes, projects or operations that they fund –are carried out properly and achieve the desired results.”
Proper IT governance is integrated into many different aspects of IT management and covers all assets that may be involved in the IT itself – from human, financial, physical, or data and intellectual property and more. The critical focus of IT governance is not merely to control project assets, but to ensure that the key principles of the organisation’s IT strategy and the organisations greater values are ingrained in everyday practices, decisions and activities.
Why is IT Governance important?
Organisations often place significant emphasis on IT strategies and budgets but fail to recognise that without good governance, those strategies are unlikely to achieve the expected results. Here are a few ways proper IT Governance is important to organisations.
Enhances organisational transparency and decision-making
Traditionally, IT departments and their projects are separated from the other functions of the organisation, often turning them into an independent silo running with their own practices. With an emphasis on value and their often open-ended nature, IT projects do not fit in well with the typical measures and controls of other departments leading to critical information gaps across the organisation.
A proper IT governance framework will be able to capture and translate information across the organisation to then create a clearly defined and repeatable process that can be applied to all decisions made within the organisation. The lack of transparency regarding IT project progress, success and value can not only lead to departmental distrust but can also hamper effective decision-making.
Strengthens the strategic alignment between the enterprise and IT
One common problem with IT projects is that they often run over budget and out of scope, becoming a resource black hole for an organisation without a clear indication of its strategic value over time. What often happens here is that projects have been justified based on their benefits rather than their value to the organisation.
For example, a new software funky software update targeting youth may have helped increase the market share and brand perception of that specific customer segment. However, if the organisation’s strategy was geared towards an older demographic, the strategic value of the specific project would be minimal.
Proper IT governance helps make sure that all activities within IT projects can be traced back to a strategic objective of the organisation and ensure maximum value-adding. The alignment also makes sure that the enterprise and the IT department are not functioning as separate silos.
Read more: Project Benefits vs. Project Value
Improves resource allocation and management
Often, the open-ended nature of IT projects leads to excessive long-term demand on resources for an organisation. Without a proper way of evaluating the value of a project, organisations may fail to properly prioritise the right IT projects they need to generate the most strategic value. Additionally, without a consistent, tested and repeatable process, IT project teams can waste a significant amount of time setting up foundational frameworks, protocols and processes from the ground up for every iteration of their product.
Read more: Guide to Resource Management
Enhances performance management
As mentioned, performance measures in IT project contexts can be different from the measures of traditional projects. With proper IT Governance, an organisation can make sure that IT projects are meeting appropriate performance benchmarks based on their specific context but also translate this on an enterprise-wide level to ensure transparency and strategic alignment.
Encourages greater collaboration
IT departments and teams often end up functioning in their own distinct silos and other departments often leave them to their own devices. However, as IT becomes increasingly integrated with all aspects of an organisation, separating them in their own corner does little to ensure projects are addressing the right problems and achieving the intended results across the organisation.
IT governance can help encourage greater horizontal and vertical collaboration and communication throughout an organisation to facilitate better decision making and strategic alignment.
Ensures standards, compliances and policies are met
As the demand for ITC grows, so are the policies and regulations safeguarding them. Different nations and regions abide by and implement different rules and regulations surrounding data security and intellectual property rights. Effective IT governance enables organisations to keep up with all necessary compliances, particularly for products that are used on a global scale and gives IT project teams the boundaries and foundations they can safely operate within.
What makes IT Governance different from other governance?
Many organisations have realised that traditional project management and project governance approaches are not well-suited to the needs of IT projects. The three key issues IT project professionals often have with traditional approaches include:
- The lack of agility and flexibility in traditional approaches
Traditional approaches are top-down, have long-winded planning processes and inadequate periodic monitoring schedules that are not able to keep up with the fast-paced nature of the ICT industry.
- Overemphasis on tracking and milestones
Traditional projects, with their distinct start and end dates, are often monitored and controlled through predetermined milestones. However, IT projects are often conducted in an iterative and open-ended manner that makes setting distinct milestones difficult.
As a result of these challenges, there has been a distinct shift from project management towards a more product-focused approach with a Gartner report showing that 55% of organisations have been making the shift to product delivery. Where a project is confined periodically and is typically focused on achieving internal strategic value, products are solutions that are crafted to solve problems for both the customer and the business with a primary emphasis on achieving customer or market-based value.
Additionally, this changing focus towards building and governing projects through ongoing processes rather than one-off projects has resulted in IT governance drawing increasingly from change management practices and philosophies.
IT project contexts are becoming increasingly complex and their increasing importance to an organisation’s strategy means that seemingly minor changes can have significant effects on higher-level decisions and strategies. Change management disciplines are being incorporated into IT governance to produce standardised policies that can handle changes in an efficient and timely manner without being overly constrictive and time-consuming.
IT Governance is different but should not be separate from Organisational Governance
We have talked about how IT projects are different from traditional projects and thus must have governance structures that reflect those differences. However, what ends up happening is that IT departments build up their governance frameworks in isolation from the greater organisational governance structure and strategy.
It is important to acknowledge that IT governance, while different, is merely a subset of organisational governance. Organisational governance helps distinguish the underlying why behind all decisions made within the organisation and is meant to be inherently tied to the organisation’s strategic objectives. IT governance is the next step that provides the necessary practices and structure for IT project professionals to make decisions that consider their unique context but are also aligned with the greater strategic objectives
Read more: Organisational Governance
Learn more about IT Governance
There is no one-size-fits-all approach to IT governance. As a function that is inherently tied to the greater organisation, effective IT governance always adapts to the unique context of the organisation. Make sure to chat with our PPM experts to learn how to build your IT Governance framework that matches your needs.