Top Recommendations to Design an

Effective Governance Process

Heather Colella
Research Vice President

April 11, 2013

#GARTNER

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distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
2011 Gartner, Inc. and/or its affiliates. All rights reserved.

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Top Recommendations to Design

an Effective Governance Process
Heather Colella
Research Vice President

April 11, 2013

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other
authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied,
distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
2011 Gartner, Inc. and/or its affiliates. All rights reserved.

Governance Defined
The decision framework and process by
which enterprises make investment
decisions and drive business value.

The Basics of Corporate Governance is

About Risk Management
Financial
Approach

Operational
Excellence

Enterprise
Information
and Privacy
Audit Process
and
Investment
Review

Regulatory
Compliance
and Data
Governance

Business
Process
Improvement
and Maturity

Knowledge
Management,
Skills and
Succession

Workforce
Management

But Real Power Comes When Competitive

Advantage is Added into the Equation
Assess
Business
Opportunities

Take
Calculated
Risks

Deliver
Competitive
Advantage

Manage
an Innovation
Process

Leverage
Emerging
Technologies

Governance is a Framework and

a Process

Corporate Decision Framework

Corporate
Strategy

Corporate
Values

IT Governance Framework
IT Strategy

Management

IT Principles

Business
Model

IT
Architecture

Portfolio
Management

Project
Execution

Benefits
Realization

The Basic Governance Structure

Board of
Directors

Corporate Governance

Senior
Executive
Team

Growth /
Transformation
Decisions

Enhancement
Committee

Manage the
Enhancement Portfolio

The Six Most Commonly Found

Supporting Governance Structures

Board
Governance

IT Investment
Council

Business-IT
Project
Prioritization
Council

IT Architecture
and Standards
Management

Project
Management
Office (PMO)

Financial
Management

Risk
Management

Customize the Governance Process by

Selecting Governance Mechanisms
Permanent Governance Mechanisms

Project Governance Mechanisms

Senior Executive Committee

User Advisory Group

Business-IT Investment Group

Change Management Office

IT Leadership Committee

Service-Level Agreements

Architecture Committee

Chargeback Process

Project Management Office

Stakeholder Meetings

Business Case Process

Communication Plans

Business Process Teams

Mandates and Directives

Technical Process Teams

Performance Management

Escalation-Exception Process

Project Sponsor Role

Benefits Management Process

Relationship Managers

Governance Mechanisms May Be:

Structures

Tools

Roles

Create an Exception Process to Capture

Innovation and Help Adapt Governance
Changes
to
Business
Model
Business
Shifts

Determine
ROI

New
Ideas

Assess
Impact

Decide

Determine
Portfolio
Position

Governance Maturity Model: Delivers

Greater Business Benefits at Each Level
Decision-Making
Style

Business
Outcomes

Strategic Planning
Approach

Leadership
Style

Risk
Approach

Fiscal
Approach

Level 1:
None

Decision making is
random rather than
deliberate and
coordinated

Enterprise is slow to
react to competitive
threats, weak
resource
management and
poor transparency

Minimal to no
strategic planning
taking place

Follows practice or
doctrine of
noninterference
with individuals or
business units

Ignore/deny
risks

Distribution of
budget to
individuals and
groups with
weak central
controls

Level 2:
Isolated
Competency

Decision making is
deliberate for highrisk efforts or crises
only

Performance
improves in distinct
pockets of the
enterprise only

Near-term focused
and limited in scope
to key initiatives

Focused on highpriority or highstress activities

and delegates
other activities

Respond
reactively to
imminent risks
only

Funds
allocated
parochially to a
community or
set of initiatives

Level 3:
Risk
Mitigation

Decisions driven by
constrained
resources or
compliance issues

Reduced costs, and

reduced waste of
resources. Greater
regulatory
compliance

Longer-term focused,
but created in
response to specific
events or immediate
conditions

Control-oriented
and deliberate,
averse to
delegating to
others

Proactively
identify and
manage cost,
compliance and
security risks

Cost
accounting and
cost recovery
focus with little
variability or
agility in
budgets

Level 4:
Benefit
Optimization

Decisions are driven

from the top down;
based on a clearly
articulated strategy
and guiding
principles

Predictable ROI and

growth, and
measurable
operational
improvements

Long-term focused,
based on taking
advantage of
enterprise synergies
and coordinated
efforts

Devolved style with

clear prioritization
and guidance
moving through
enterprise layers

Accept and
manage
business risks
based on an
ROI model

IT portfolio
managed at the
run/grow/
transform level

Level 5:
Competitive
Innovation

Decisions are made

dynamically and at
high speed

Ability to innovate
and deliver
competitive
advantages in spite
of competition or
environment

Strategy iterates
rapidly in response to
competitive
opportunities and
threats

Heavy focus on
experimentation
and problemsolving activities

Take calculated
risks for
competitive
advantage

Venture
capitalist
approach to
financial
management

Maturity Level

Integrate Key Components of the Process

Integrating the three key components of the
investment process
Standardize Project
Investment
Dashboard
Categorize each
potential project
investment based
on business
outcomes.

Create Portfolio
Views
Create portfolio
views and
options using
business
outcomes.

Deliver Business
Scorecard
Track milestones
and report
business results
based on
business
outcomes.

Use the same business outcome metrics at each

stage in the process to ensure decision-making
consistency and clear communications.

Business Outcome Metrics are Highlighted

in Gartners Business Value Model

13

Use Portfolio Views to Help Decision Makers

Analyze Investment Patterns and Options
Tool: Sample portfolio views

Integrate Standing and Project Governance:

Estee Lauder Case Example

Consistently Report Results Using

a Business Benefits Scorecard
Tool: Sample business benefits scorecard

Develop a Standard Project Investment

Dashboard With Business Outcome Metrics
Tool: Project investment dashboard

Develop a Charter to Define Create the

Bounds of Governance
Group Purpose

Group
Membership

Roles and
Responsibilities

Decision making or advisory body?

Expected business performance outcomes (cost
reduction, risk management and growth targets)?
Type: permanent, temporary or project/goalspecific?
Revision of charter schedule? Exception process?

Chair of the group?

Positions of voting members?
Positions of nonvoting members?
Roles of specific members (business process,
industry, technology, legal or financial expertise)?

Funding sources and financial authority?

Guiding principles and policy scope?
Audit responsibilities or accountabilities?
Portfolio of assets or investments responsibility?
Scope of approvals or advice?
Responsibility for minutes and communications?
Subcommittees and relationship to other
governance bodies?

Use Principles to Guide and Shape

Investment Decisions
Enterprise

Strategic Success Driver

IT Principles

Sampension

Agility in the face of regulatory

change

[We] can disengage from any vendor

within two to three years.

Helphire

Excellence in absorption-style
acquisitions

The enterprise architecture must be

able to grow on demand, possibly in
large steps.

TravelCo

Growth through cross-sales

where business units don't like to
collaborate

Everything is decentralized until we

agree it is a commodity.

Tesco

Operational excellence

We will converge to a single

operating model.

DFID

Need to support extremely

remote sites

All DFID systems used overseas

must deliver acceptable performance
over satellite connections.

Regularly Assess the Effectiveness

of Your Governance Process
Are the Best
Investment
Decisions
Being Made?
Does the
Organization
Know the
Decisions?
Are Expected
Results Being
Achieved?

Talk to key stakeholders first and then the

governance committee to determine where the
problem might lie
Refine the charter to ensure the scope and authority
of the committee are appropriately defined

Refine business case criteria

Create a communications plan
Target to key stakeholders

Deliver consistent messages to the organization

Measure benefits
Refine measures and business case criteria as
required
Communicate results to the enterprise

Core Governance Tools

Governance charter
Agreed to business case criteria that include
strategic value and are used to compare all
investment proposals in the same way
A picture of the supply side or resources of the
equation, which refines demand prioritization
Reporting views: One-page strategy or
business capability map, project investment
dashboard, implementation road map, benefits
realization scorecard
Communication plan to deliver consistent messages to
the enterprise

Recommendations
Less is more with governance, design the least
amount of governance required to make great
decisions. Constantly review governance
processes and streamline regularly.
Imperfection is perfect start with "good enough"
tools and use them to facilitate the conversation.
Governance in action.

Great governance is about agility and competitive

advantage. Develop an approach and tools that
focuses on the outcomes your enterprise needs.

Related Gartner Research

Practical Governance
Tina Nunno, Cathleen Blanton and Heather Colella
(G00209451)

Capability Assessment Tool for "Practical Governance"

Tina Nunno, Cathleen Blanton, and Heather Colella
(G00212672)
Effective Communications: How to Develop a
Communications Plan
Heather Colella (G00170368)

Defining IT Governance: The Gartner IT Governance

Demand/Supply Model
Michael Gerrard (G00175053)
IT Governance Must Be Driven by Corporate Governance
Julie Short, Michael Gerrard (G00172463)
For more information, stop by Gartner Solution Central or email us at solutioncentral@gartner.com.

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