IT Governance: Definition, Frameworks, and Best Practices
IT governance is a set of processes that helps organizations ensure IT investments support business objectives. It helps promote transparency and accountability, reducing the risk of fraud and ensuring IT investments deliver value and performance while reducing risk.
IT governance recently became the top risk for chief audit executives (CAEs), thanks to the rise in remote working and increasing levels of personal information being collected relating to both employees and customers.
Adopting new technologies offers potential productivity and agility benefits, but it also brings new risks. Organizations must consider those IT challenges when implementing new systems.
What is IT Governance?
IT governance is a crucial framework that orchestrates a series of processes designed to optimize the use of IT in achieving organizational objectives. It's about strategically aligning IT efforts with business goals, ensuring adherence to regulations, effectively managing IT-related risks, and rigorously evaluating IT performance.
This holistic approach is fundamental in ensuring IT not only supports but also enhances the broader mission and objectives of the organization.
The Five Domains of IT Governance
IT governance can be divided into five key domains:
- Strategic Alignment: Considering whether the goals of IT are in alignment with the broader organization
- Risk Management: Examining whether risks are being correctly identified, reported, and responded to
- Value Delivery: Determining whether IT delivers sufficient value to the rest of the organization
- Performance Management: Considering how the performance of IT infrastructure is being managed
- Resource Management: Determining whether IT resources are being managed in an appropriate and efficient way
IT Governance vs. IT Management
IT governance takes a strategic outlook on IT, focusing on the organizational structure, processes, best practices, and leadership to ensure IT adds value to the organization. It helps inform decision-making and guide IT strategy on a high level.
While IT governance sets the strategic direction, IT management is all about the tactical execution, handling the day-to-day management of IT resources. This includes overseeing the people, processes, and tools in play and ensuring the smooth delivery of IT services, from infrastructure operations to user support.
Both are critical for the smooth functioning of a SaaS organization. They collaborate closely, with governance providing the roadmap and management handling the journey, ensuring that IT operations are well-coordinated and aligned with the organization's goals.
Why is IT Governance Important?
Establishing a solid IT governance framework is essential because it fosters enhanced accountability and robust risk management, particularly for organizations in the SaaS sector, where cybersecurity and regulatory compliance are crucial.
This framework also serves as a reliable benchmark against best practices and corporate governance, guiding organizations to maintain high operational standards.
Key benefits of IT governance include:
- Ensuring applicable regulatory obligations, such as HIPAA or GDPR, are being met
- Providing reassurance to stakeholders through clear evidence of risk management
- Demonstrating how there's strategic alignment between IT and the organization's overarching goals
- Maximizing any return on IT investment
IT Governance Frameworks
There are several governance frameworks for information technology that SaaS organizations may wish to consider. Some are high-level frameworks, while others focus on process improvement for specific areas, such as software development.
1. ISO 38500
ISO/IEC 38500:2015 is the international standard for corporate IT governance. It provides a high-level framework for organizations of all sizes, covering legal, regulatory, and ethical obligations.
2. ISO/IEC 27000
ISO/IEC 27000 is the international standard for Information Security Management. It provides an overview of information security management and helps organizations implement the right policies to maintain the privacy, confidentiality, and security of their IT services.
3. COBIT
Control Objectives for Information Technologies (COBIT) provides a framework of best practices, models, and analytics tools to assist with enterprise IT management and governance. It's designed to help organizations with risk management and meeting regulatory requirements while ensuring the IT strategy is aligned with the business' broader goals.
There are five fundamental principles of COBIT:
- Ensuring stakeholder needs are met
- Enabling a holistic approach to IT strategy
- End-to-end coverage
- Providing a single, integrated framework
- The separation of governance from management
4. ITIL
The IT Infrastructure Library (ITIL) is a best-practice framework for IT departments. It's an internationally accepted governance framework that offers practical guidance to manage and improve IT services. The guiding principles of ITIL include optimization and automation, taking a holistic approach to IT systems, focusing on value, and promoting visibility.
5. CMMI
The Capability Maturity Model Integration (CMMI) model was initially designed for software development activities but has since been altered, and now it's applicable to hardware-software and end-to-end service development. It helps organizations reduce risks and improve their processes.
There are five levels to the model, indicating the level of maturity an organization is at, from "incomplete," where goals have not yet been established, to "optimizing.".When an organization reaches the final level, it doesn't mean the work is done. It means processes are in place, and the organization is stable, but it's also in a constant state of improvement and review.
6. Factor Analysis of Information Risk (FAIR)
Factor Analysis of Information Rish (FAIR) is a risk quantification methodology. It helps organizations evaluate information risks and is the only international standard quantitative model framework covering this aspect of information security.
FAIR isn't a risk management framework; it helps organizations quantify risks so they can assess them to apply other best-practice-focused frameworks, such as ISO 27000.
IT Governance Structure: Roles and Responsibilities
For IT governance to be implemented effectively, the roles and responsibilities of each part of the organization must be clearly defined. A typical structure is:
| Roles and Responsibilities | |
| Board of Directors | The board of directors sets strategic objectives, supervises IT management, and provides the leadership required to ensure the strategy is implemented within the organization. This group reports to the shareholders. |
| Shareholders | Shareholders are responsible for appointing both the directors and the auditors. |
| The Audit Committee | The Audit Committee is an independent committee that supports the board of directors by assessing the organization to ensure the governance structure is being properly applied and achieving the desired results. |
IT Governance Best Practices
The main goal of IT governance is to ensure the organization's IT infrastructure and systems deliver value and align with any business goals.
It's important to regularly ask questions and consider whether your IT governance is fulfilling this purpose. Consider the following:
- Who is responsible for evaluating enterprise governance?
- Does your organization properly prioritize IT governance?
- Does everyone in the business know what their responsibilities are?
- Do you have controls in place to ensure transparency when implementing IT projects?
IT Governance Software
Once your SaaS organization has an IT governance policy, you can look to implement the best practices and procedures it dictates. Many frameworks place a strong emphasis on monitoring and automation, and there are numerous IT risk management solutions available to assist with this.
Some useful tools for risk management, compliance, and governance include:
- ServiceNow
- HighBond
- Broadcom Control Compliance Suite
You may also wish to look at specialized tools based on your infrastructure, such as cloud governance tools, to help ensure your cloud deployments are secure, compliant, and cost-effective.
The Bottom Line
Managing a SaaS organization effectively demands robust IT governance. This approach not only enhances risk management but also ensures that IT leaders are well-informed during decision-making, guaranteeing that IT investments consistently contribute to business value.
If your organization is yet to adopt an IT governance process, beginning with a standard framework is a smart move. This allows for a swift start, assures coverage of key IT governance elements, and provides the flexibility to customize the framework to align with your objectives.
What else can help you feel confident about your IT skills? Subscribe to The CTO Club's newsletter for insights and IT efficiency-related content.