ROLE OF IT GOVERNANCE AND OUTSOURCING
IT governance exists within the context of corporate governance, and the principles are essentially the same. IT governance is an accountability framework which includes management processes and metrics that define and communicate what must be done in alignment with the annual IT plan agreed to by the stakeholders. It also provides a rigorous oversight ensuring that it is well executed. It drives collaborative interactions and provides feedback mechanisms that encourage communication and desirable behaviors within a defined and agreed upon organization model.
The accountability framework is typically made up of well-defined roles and responsibilities reflecting decision rights among the participants in the IT management process, and is reinforced by effective factual reporting shared with all stakeholders via the organizational committees.
IT GOVERNANCE AND THE OUTSOURCING CONTRACT
Because good IT governance is so essential to establishing an effective IT environment and even more essential to a successful sourcing relationship, it should receive priority attention in the early stages of the negotiation and contracting phase of such a deal. By focusing on governance in the negotiation stage of the relationship, parties can clarify their respective roles and responsibilities to ensure the relationship’s success. Incorporating an IT governance structure, role and responsibility accountability matrix, and reporting mechanisms into the contract increases the likelihood that the IT governance model will be implemented with the required discipline and rigor.
Rather than be a victim of poor IT governance, the outsourcer is in a position to establish through contracting a rigorous governance model that will lead to improved IT effectiveness and continual IT/business alignment. From the client’s point of view, taking advantage of this opportunity is critical to ensuring a successful outcome for both parties.
Indeed, good IT governance can be seen as a principle value of outsourcing. Contracted IT governance should cover four areas in particular:
- Roles and responsibilities
- Defined processes
- Management structure
While companies are now treating IT as a key element of their business, they often fall short in the area of IT governance, especially when outsourcing their IT functions. By making good governance an essential part of the contract, outsourcers and clients can do a better job of setting expectations and significantly increase their chances of creating a win-win situation for all.