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What is IT Governance

Defining IT Governance: What is it Really?

by Jefferson Co on and last update on August 28, 2020

Businesses are increasingly reliant on complex IT systems. However, to maintain effectiveness and continuously improve, companies need a defined structure to ensure these complex IT systems generate desired results. A formal IT governance program then helps companies align IT initiatives and investments with short- and long-term business strategy.

What Is IT Governance?

IT governance is a defined framework describing how organizations should invest in IT initiatives to meet and support specific business goals. 

IT governance goes beyond the simple reporting of results and compliance. Instead, it is a framework with defined leadership and organizational structures as well as specific processes that allow organizations to achieve and extend their business objectives using technology.

You can also think of IT governance as a policy with set responsibilities and roles that results in:

  • Business value gained through IT resources
  • Risk management and mitigation

Why Do Companies Need IT Governance?

With the advent of various regulations governing data storage, user privacy, financial accountability, and many more, companies need to adopt formal IT governance frameworks. Such frameworks include standardized policies and guidelines with best practices, procedures, and controls describing the use of IT resources in a manner that complies with regulations.

Do All Company Types Need it?

Since IT governance gives organizations a measurable way to track how IT investments translate into business objectives, all company types can benefit from having such a program.

Furthermore, companies that have to be compliant with various technological regulations need IT governance to maintain accountability and transparency. Here company size or type doesn’t matter. However, the comprehensiveness of an IT governance program can vary depending on the degree to which a company is reliant on technology to grow and function.

How Does IT Governance Relate to Corporate Governance?

Corporate governance is a set of rules and practices used by the management and the board to effectively steer an organization. Moreover, by specifying controls and processes regarding IT investment and governance, IT governance is an inherent element of corporate governance.

What Are Examples of IT Governance Frameworks?

There are many ready-made IT governance frameworks available that companies can use and adapt to their individual needs. Some of the most popular frameworks include:

ITIL

The ITIL (Information Technology Infrastructure Library) framework includes five management best practices that define how IT services should support core business processes. The framework helps companies identify regulatory limitations and build a compliant service.

The best practices included in the ITIL comprise design, operation, service strategy, transition, and continual service improvement. Through these, companies can enhance IT service and track effectiveness.

The ITIL lacks a comprehensive set of best practices on risk management, thus, requiring companies to pair it with other frameworks to build a thorough IT governance program.

COBIT

Control Objectives for Information and Related Technology or COBIT, is a solid IT governance framework developed for the management of corporate IT. COBIT gives compliance officers a robust formula for determining strengths and weaknesses in controls in IT services. Because COBIT provides broad support for risk management and mitigation, it can be used together with ITIL to build a comprehensive IT governance program.

CMMI

The CMMI (Capability Maturity Model Integration) is a framework in the past was used only in software engineering. However, the CMMI evolved to include models for service and product development across all industries.

The framework gives companies tools to streamline the measurement, development, and improvement of IT capabilities. The goal of CMMI is to increase customer satisfaction through quality services and products. With its background in software engineering, the model sets out guidance on how to integrate functions and evaluate existing processes. 

The model features five maturity levels that help evaluate a company’s service capability and prioritize improvement initiatives. Furthermore, each level in this framework comprises process goals that strengthen different components in software, product, or service processes. The objective measurement behavior favored by the framework ensures quantifiable risk management.

COSO

COSO (the Committee of Sponsoring Organizations) provides comprehensive risk management to internal controls. It was developed to help companies improve internal processes and achieve sustainable reporting capability.

The framework enables companies to include risk considerations into the strategic planning of internal controls. Furthermore, the COSO framework focuses more on overall enterprise risk management and fraud deterrence rather than strictly on the IT-side of business infrastructure.

Lastly, the COSO framework has five components that provide a complete set of guidelines on risk assessment, continuous monitoring, internal audits, and information sharing.

FAIR

The FAIR (Factor Analysis of Information Risk) framework is aimed at evaluating cybersecurity and factors contributing to IT risk. FAIR helps organizations quantify risk and measure the probability and severity of data loss. To enable them to analyze and understand risk, companies can also integrate the FAIR framework into existing information security programs and risk management strategies.

Additionally, FAIR compartmentalizes risk factors and facilitates the definition of the risk model. With a defined risk model, companies can then make better, data-based decisions on cybersecurity.

ISO 27001 & 27002

ISO (International Organization for Standardization) certifications are a set of rules that help companies establish a defined and organized method for doing a variety of activities. For example, ISO standards let organizations build cohesive IT systems and maintain compliance. For instance, ISO 27001 provides requirements in IT security matters. ISO 27002, on the other hand, gives guidance on the implementation of requirements described in ISO 27001.

That said, participation in ISO programs is voluntary. Companies engage in different ISO certification to increase credibility and transparency. Certification is then accredited after a company successfully goes through an audit.

NIST CSF

The NIST CSF (National Institute of Standards and Technology Cybersecurity Framework) framework comprises standards, guidelines, and best practices for organizations to manage cybersecurity strategies. Additionally, the NIST CSF framework holds at its corea set of five functions designed to help companies identify, protect, detect, respond, and recover assets.

NIST CSF also includes Implementation Tiers that aid in the evaluation of an organization’s existing cybersecurity programs based on risk management programs and processes. The first cybersecurity maturity tier is partial (limited awareness and informal practices) and is followed by risk-informed tier (increased awareness and defined risk management process); repeatable tier (regular coordination and broad awareness); and adaptive tier (IT security is an inherent part of company culture and evolves with the business environment).

How Do You Implement IT Governance Frameworks?

With so many IT governance frameworks to choose from, it might be difficult to decide which one to integrate into the IT governance program. 

The best way to begin the implementation is to determine what is the primary goal of IT governance. Frameworks should then be chosen based on the identification of specific areas in need of improvement. For example, COBIT, COSO, and FAIR help in the evaluation of risk and employed cybersecurity measures. ITIL and CMMI, on the other hand, facilitate the organization of processes and services, from their development to delivery.

One of the main objectives in employing any of the frameworks should be to evaluate the level of maturity of existing controls, processes, and services to determine the overall level of IT governance.

As IT governance matures, other standards might become more important and a different framework will provide value. Regardless of which framework you choose, it has to fit in with your organization’s corporate culture. At the same time, include your stakeholders in the discussion on which particular framework they think could bring value.

Note: IT governance frameworks can and even should be combined to achieve the optimum level of standardization across different areas of business infrastructure.

What Do You Need for IT Governance?

In order to develop an effective IT governance program, you first need to understand what role exactly IT governance will play in the company. Ultimately, all IT governance plans should directly help achieve long- and short-term business objectives and strategies.

Other elements necessary for the successful implementation of IT governance:

  • Executive buy-in. The board and top management should drive the creation of the IT governance program.
  • Clear strategic goals. Without defined goals, it’s close to impossible to pick IT governance frameworks that support their execution.
  • Regular review of governance practices. To ensure the right IT governance program is in place, you should regularly review its performance at meeting goals.
  • Defined responsibilities. There should be a committee with IT and business acumen responsible for the implementation and evaluation of IT governance initiatives.

Multiple Benefits of IT Governance Translate into Successful Companies

IT governance programs help companies build a structured plan for:

  • Value delivery for customers and business
  • Performance management
  • Long- and short-term strategic alignment 
  • Improved resource management
  • Risk management and risk awareness

Above all, with the growing reliance on complex IT systems and the digitization of work and business processes, IT governance programs ensure these IT initiatives support strategic goals and objectives. 

At Azeus, we develop our products with utmost care. As a CMMI Level 5 accredited company, we can assure clients that we consistently deliver quality solutions and services. Learn more about our ISO 27001, 27017, and 27018 accredited board portal here.

Governance and Leadership
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