In an earlier post, The Future of IT, I mentioned the Strategic Governance Framework, introduced in the Afterword of the revised edition of The Information Paradox, and that over the next few months, I would be introducing this framework (which I now refer to as the Strategic Enterprise Governance Framework). Well, it has taken much longer than I had intended, but in this post, one that I must admit is somewhat drier than my usual posts, I introduce the Framework, and briefly describe each of the ten major elements that it comprises. In subsequent posts, I will describe the individual elements, and the relationships between them in greater detail.
Although more than a decade has passed since the The Information Paradox was first published, the nature of enterprise value—and how to achieve it—continues to be a subject of much discussion. It is clear that the failure to realize business value from investments in IT-enabled change described in the book is a symptom of a wider malaise—one that presents managers with significant new challenges. The fact is, the track record for implementing any major change successfully continues to be terrible. Although arguably more visible with IT, the same applies to any large-scale investment or change.
One of the root causes for this poor track record is the woeful inadequacy of current governance approaches to manage what is, in most cases, “an uncertain journey to an uncertain destination.” All too often, current practice results in a lack of understanding of the desired outcomes, and the full scope of effort required to realize the outcomes, not knowing what to measure, not surfacing and tracking assumptions, and not sensing and responding to changing circumstances in a timely or well-considered manner.
In the Afterword, I described how our thinking and practices had evolved beyond the Benefits Realization Approach introduced in the first edition, to a broader strategic governance framework – a framework for overall enterprise governance. Since that time, I have further extended the framework, as illustrated below, from the original seven elements to ten.
The first, and overarching element of the framework is Strategic Governance – governance being traditionally defined as the system by which enterprises are directed and controlled and as a set of relationships between a company’s management, its board, its shareholders and its other stakeholders which. Strategic Governance establishes how direction and control is accomplished within and across the other 9 elements of the framework which I refer to here as “management domains”. This direction and control will have both compliance and performance aspects, both of which must be considered. From a performance standpoint (and to some extent compliance in the case of risk) I add the dimensions of cost, benefit and risk across the Strategic Governance framework to show that these factors have to be taken into consideration when decisions are being taken in or across the management domains.
The nine “management domains” are:
- Strategy Management – Defining the business…mission, vision, values, principles, desired outcomes and strategic drivers to provide direction and focus for understanding, configuring and managing assets to deliver the greatest value.
- Asset management – Managing the acquisition, use and disposal of assets to make the most of their service delivery potential and manage the related risks and costs over their entire life (source: Vicnet, State of Victoria, Australia).
- Architecture Management – Understanding, communicating and managing the fundamental underlying design of the components of the business system, the relationships between them and the manner in which they support the enterprise’s objectives.
- Programme Management – Managing the delivery of change around business outcomes through a structured grouping of activities (projects) designed to produce clearly identified business results or other end benefits.
- Portfolio Management – Managing the evaluation, selection, monitoring and on-going adjustment of a grouping of investment programmes and resulting assets to achieve defined business results while meeting clear risk/reward standards.
- Project Management – Managing a group of activities concerned with delivering a defined capability required to achieve business outcomes based upon an agreed schedule and budget.
- Operations Management – Managing the production of goods and/or services efficiently – in terms of converting inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services) using as little resources as needed, and effectively – in terms of meeting customer requirements.
- Management of Change – A holistic and proactive approach to managing the transition from a current state to a desired state.
- Performance Management – The definition, collection, analysis and distribution of information relevant to the management of investment programmes and assets so as to maximize their contribution to business outcomes.
While the framework may at first look intimidating, it should not be seen as such. Many, if not all functions within these domains are already being done to a greater or lesser extent in enterprises today, often in many different ways, with little communication between them. It is the management of the critical relationships between these “management domains” which, if managed well, can provide tremendous strategic advantage to enterprises, but which, if not managed well, can have serious, if not catastrophic consequences. If enterprises are to maximize the value from their investments in IT-enabled change, or any form of change, these relationships need to be understood, and managed within a dynamic, “sense and respond” governance framework.
In subsequent posts, I will describe each of these domains, and the critical relationships between them, in greater detail. In the meantime, I encourage you to think about the state of governance in your organization, or in organizations that you are working with, and consider:
- Are all the management domains included?
- How completely and effectively are they covered?
- Are they dealt with holistically, or within silos?
- How well are the relationships between the management domains, or between the silos covered?
- How effective is the governance of these domains and relationships in sensing and responding to changes in today’s complex and rapidly changing environment?