In a nutshell: What is IT governance?
The purpose of IT governance is to align all activities within a company that relate to IT with the company's objectives. IT governance also includes the constant monitoring of IT activities in order to optimize their contribution to achieving the company's goals. Examples of objectives that are promoted by means of IT governance include compliance with the legal framework and the efficiency of IT processes.
IT governance: definition and components
According to the Gabler Business Dictionary, IT governance refers to "the legal and factual regulatory framework for the management, organization (procedural and structural) and monitoring of a company's IT. The purpose of IT governance is to ensure that corporate goals are supported and advanced through the use of IT." (Prof. Dr. Lackes, 2024) This definition contains important terms that are explained in more detail below.
Legal and factual framework of the company
A company's actions are subject to laws on the one hand and self-imposed rules on the other. While the laws form the legal framework, the self-imposed rules provide the factual framework.
Examples of obligations resulting from the law include data protection and the obligation to retain documents. The extent of the legal requirements varies depending on the industry and the type of company.
There are some basic obligations that must be complied with regardless of the company and its sector. These include the fact that third parties have no access to customer data and that companies may only use the data for the agreed purposes.
In addition to the legal framework, IT governance also forms the factual framework for actions within a company. It is defined by the self-imposed rules. There is a wide range of rules that can be self-imposed:
- Sustainability and social justice within our own production
- Fair, open and transparent communication
- Equal rights for all employees
- Use of certain working methods
IT governance lays the foundation for monitoring and compliance with self-imposed rules - especially those related to IT.
Management, supervision and organization of the company
All IT activities should be carried out in accordance with the legal and factual framework conditions. Once the management of a company has acquired the necessary knowledge of the legal framework and defined the company's internal guidelines, the company can be managed, monitored and organized within this framework.
Both the processes (e.g. exchange of data affected by data protection) and the structure of the organization (e.g. number of employees and their responsibilities within the organization) are aligned with the framework conditions. This approach helps to ensure compliance.
Monitoring is set up to ensure that the framework conditions are adhered to in all IT systems. It includes measures and personnel to monitor the IT systems. Preventive measures are initiated if there is a risk of a breach of the law or regulations. If a breach of law or regulation has already occurred, the appropriate measures are taken to rectify the problem.
Alignment of IT with corporate goals
The competitiveness and survival of a company depend on achieving its corporate goals. One of these goals is undoubtedly to make a profit. Accordingly, IT must be aligned with the company's operational goals.
Expanded to include the alignment of IT with corporate objectives, IT governance serves not only to ensure compliance with legal and self-imposed guidelines, but also to support corporate objectives. In addition, IT governance checks whether the objectives are being achieved efficiently. The more efficiently objectives are achieved, the fewer costs companies have to bear and the higher the profits they generate.
Overarching goal of IT governance and other benefits at a glance
The overarching goal of IT governance is to align information technology with the company. In particular, this includes the areas of corporate strategy, corporate processes and corporate objectives. This ensures that the company receives greater added value from IT resources such as IT infrastructure, software and IT personnel.
In addition, there are the following other important objectives of IT governance:
- Optimization of processes in various areas (e.g. internal communication, production, customer service)
- Making everyday working life easier (e.g. by automating processes using digital tools, enabling people to work from home)
- Mitigation of IT risks (e.g. individual concepts for cyber security, management of access rights for users)
- Performance measurement (e.g. recording employee activities, visualization and collection of data on work processes)
- Target-oriented management (e.g. support of the corporate strategy through IT systems, monitoring of progress in achieving targets)
- Greater added value for beneficiaries (e.g. relief for employees through digital tools, satisfaction of shareholders)
IT governance must be clearly distinguished from corporate governance. While IT governance only relates to the IT activities of an organization, corporate governance concerns all areas of a company.
Following on from the definition mentioned at the beginning, corporate governance therefore forms the framework for the management, organization (both procedural and structural) and monitoring of a company's entire business activities.
The objectives and benefits of IT governance described in the list therefore apply purely in the context of corporate IT. However, in view of the fact that information technology is integrated into almost all processes and areas of companies in the age of digital transformation, IT governance has several points of intersection with corporate governance.
This fact and the enormous potential of digitalization in companies mean that more and more companies are focusing on IT governance.
Best practices for the consistent implementation of IT governance
A strategy is required for the consistent and successful implementation of IT governance. In the course of strategy development, interfaces are formed between the IT department and other specialist areas of the company. To establish interfaces, it is essential to set up communication channels and appoint those responsible for managing IT governance.
As a core prerequisite for the development of an IT and IT governance strategy, the business objectives as well as the legal and other obligations within the company must be defined in advance. Only then can a strategy with communication and decision-making channels be created that is aligned with these objectives.
1. definition of KPIs and performance measurement
KPIs is the abbreviation for Key Performance Indicators. An example of a KPI is the percentage of employees who have completed a task within the specified period. Such a KPI can be used to check how effectively employees are contributing to the achievement of company goals.
The more digitized companies are, the better they can measure key figures and metrics. As a service provider for digitalization in companies, we at innobit advise our customers according to their needs and help them to digitalize processes, communication, collaboration and other areas of everyday working life.
With our IT services, we contribute to the development of individual strategies and IT solutions that benefit companies and employees in the long term.
Cloud computing offers a fast and easily scalable way to digitalize various processes. We are happy to show companies how they can use cloud strategies to implement highly efficient IT governance and obtain extensive options for measuring the performance of all IT activities.
Based on the performance measurement, IT performance and IT governance can be successively optimized.
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2. use of IT governance frameworks
Frameworks are frameworks that are used as instructions and guidelines for enforcing IT governance . They help in the development of strategies for maintaining, reviewing and optimizing IT governance. Frameworks also help with the implementation of strategies.
There are several IT governance frameworks on the market that are standardized and can be applied to almost any company. Here we provide a compact overview of five of these frameworks, which you are welcome to find out more about for yourself:
- COBIT as a framework with a focus on IT risk mitigation and risk management
- CMMI for measuring IT performance, IT profitability and IT quality
- FAIR as a framework for mitigating IT risks and optimizing cyber security
- ITIL as a framework for aligning IT services with general operational processes
- CIS to increase the resilience of the IT infrastructure
3. appoint an IT governance manager
It has proven to be efficient for companies to manage IT governance systems if there are clear points of contact for various issues. Although company management can assume responsibility for IT governance, it usually already has enough areas of responsibility. For this reason, it makes sense to appoint an IT governance manager as a central point of contact or to bring them into the company externally.
In addition to the manager, depending on the size of the company, other managers should also be appointed who have specialized areas of responsibility and take over tasks from the governance manager. In this way, they can deal more efficiently with fundamental decisions and the management of overall IT governance without having to deal with details that other people can also handle.
Conclusion: Clearly formulate IT governance objectives and promote corporate success
In times of increasing digitalization, IT governance has the potential to comprehensively promote business success. By developing a clear strategy including an implementation plan and defining key performance indicators, IT governance contributes to the continuous and detailed evaluation of IT processes in companies.
In addition, IT governance provides informative insights into the holistic optimization of information technology in companies through the performance measurements generated.
