Instead of starting with technology and trying to find an opportunity or problem to solve, enterprises are now seeing the benefits of starting with business strategy and requirements to execute strategic objectives. The bottom line is that Business Technology (BT) enables your business to develop the agility to remain competitive in an increasingly dynamic global marketplace. However, with such seismic changes in the IT demand and supply, there are also implications for IT governance.

At its simplest, IT governance is about the decision rights around IT investments. While BT and IT governance are essentially the same thing, the former requires a mature and robust governance framework that is driven by executive and business leadership. Unfortunately, in many of today's organizations, IT governance remains immature, fragmented, and still driven primarily within IT.

Organizations with incomplete or immature governance framework will find it difficult to transition to BT. Years of effort and investment to build a standardized IT infrastructure, and provide for robust security and business continuity could easily fail if individual business units pursue BT in isolation. To ensure that this doesn't occur, Forrester recommends that organizations consider these four BT governance imperatives:

  1. IT decision rights must be explicitly communicated and enforced. Develop an IT decision rights matrix describing five key IT governance decision domains – IT principles, IT architecture, IT infrastructure, business applications, and IT funding and prioritization. Anticipating these decision rights removes any ambiguity and ensures that IT decisions will be optimized to return the maximum benefits.
  2. Enterprise architecture provides the blueprint. BT requires state-of-the-art enterprise architecture (EA) to define a set of standardized business processes and services that support agility. To make sure that EA is not circumvented, its involvement should be made explicit at all levels in the organization.
  3. Governance structures have to operate at the highest levels. BT steering committees should operate at the enterprise level, reporting to the CEO and board of directors, as well as the business-unit level to be aligned with the business strategy and enterprise architecture. To prevent steering committees from becoming bureaucratic barriers, they should focus only on investment proposals exceeding a threshold amount, or that span the business.
  4. Portfolio management must be mature. BT requires holistic demand management to bring all demand under a single overall process, providing visibility to the business, communicating uniform value measurements, and making clear the resource tradeoffs at the business-unit and enterprise levels.

Portfolio management is not commonly used to manage applications, infrastructure assets, and the services provided to business. At best, these functions are only loosely linked. For instance, the impact of projects on the application portfolio, or of infrastructure assets on the services portfolio. To provide transparency to spending and provide clarity on risk, BT needs to integrate the management of these separate portfolios.

Craig Symons is a Vice President and Principal Analyst at Forrester Research, where he helps Forrester's clients implement improved IT governance to drive strategic alignment and maximize the value of IT-enabled business change investments.