IT governance guide for CIOs

Meta Group Inc. recently reported that more than 80% of Global 2000 firms do not have a formal governance committee in place, but the analyst firm predicts that 50% will improve their governance policies within a year. So why is IT governance such a mounting issue? 

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Experts agree that a structured IT governance committee or policy can help enterprise leaders ensure that IT is aligned with the business and therefore delivering value. IT governance also allows companies to institute formal project approval processes and performance management plans. Check out the various resources and case studies in our Executive Guide for more information on evaluating and implementing formal IT governance plans.

This Executive Guide is part of the SearchCIO Executive Guide series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of topics covered to date visit the Executive Guide section.

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  Expert's corner
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BMC Software Inc. CIO Jay Gardner launched an IT governance council more than a year ago to align his internal organization with the goals of the business. Gardner told us in an interview how moving to a business-funded IT model helped streamline the IT approval process and ultimately saved the company millions. Here are some excerpts and advice from Gardner's CIO interview with SearchCIO.com:

You recently created an IT governance council at BMC. Can you tell us a little about it?
Jay Gardner: We call it our IT Executive Board. It came into existence last June when we had a little shortfall in our numbers and were asked to adjust our expense plan for the rest of the year. We went through how to cut $8 million to $10 million for the rest of the year. It's hard for it to affect that much of the budget without basically walking everyone out the door. So I went to the senior team and said here's how we make this number: We turn off all of these projects. They said we can't do that; we need to keep these [certain projects]. And that's when they decided to fund [those projects] out of the business operations.

So in the middle of the year, we went to a business-funded IT model. [This model] shows a real statement of accountability to deliver because the business units were now paying for it all. The question was, how do we go forward and manage new projects and initiatives? We realized top senior executives didn't want to get involved in that level of operational detail. We found that the next level down was a good level. This included each senior person from the group -- one level down from the top. The group consisted of the vice president of R&D, sales, customer support, HR, the CFO and me. We figured they they'd pay it the right attention and give it enough strength to get things done.

How often do you meet, and what have you achieved so far?
Gardner: Initially, we met monthly. Then weekly during budget time, which was basically February through April. April 1 is the start of our budget year.

When we started, we had 155 projects that were on the table for fiscal 2005. We did a value proposition for each project, based on cost, resources and scope. This narrowed that list down to 23 projects; it has now grown to 27. We've only had about 10 projects brought back to the table. The other 120 just weren't that important. It was a great exercise. If a project needs to get done, [the business units] have to come before our IT Executive Board. That's still the model. Although we've switched to a business-funded IT model, [IT] still do manage and budget for "keeping the lights on" -- general maintenance.

Jay Gardner is CIO of Houston-based BMC Software. Read the full interview in "A CIO Conversation: BMC's Jay Gardner."

  Analyst and expert findings
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  The effects of governance on the CIO
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  Examples of IT governance
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  Governance and compliance
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This was first published in October 2005

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