IT Governance for a Diversified Business Group
Implementing IT Governance is a straight forward process for a business which is in a single industry. However, the rules of the game change significantly if you need to Govern IT at a corporate level for a diversified Group, supporting multiple companies. A common challenge CIO faces in this scenario is how to align IT with aspirations of multiple business heads, all of whom with varied expectations from IT.
Having successfully Governed IT in both single vertical and diversified companies, I am sharing some unique insights from my experience which can help an IT Leader manage complexities while developing enriching CXO relationships in a diversified group.
- Insight 1 – Know your Dominant Vertical – In a diversified group, it is a possibility that a large chunk of revenues come from a single Vertical. While the newer companies might have larger promise for future. It is unlikely IT Leader will be able to rollout standard IT policies by excluding the needs of dominant vertical. For example, if your group is in Mining and Retail business, wherein Mining business is revenue leader, having a credit policy of 120 days, the same is likely to be applied for IT purchases for other companies in the group.
- Insight 2 – Have a differentiated service catalogue – It is important to have a clear service catalogue which differentiates common IT services (e.g. Bandwidth, Security, Compute, Helpdesk, Storage, Printers) from company specific IT services (e.g. CRM, Specialized ERP, Business Specific Software etc.). Publish this service catalogue on the company intranet and make sure each business heads know exactly what services their company and other companies are getting from IT. Having transparency about IT service offerings will reduce conflicts among demand of IT resources within businesses.
- Insight 3 – Charge companies on the actual use of IT – Business leaders in group companies are very cautious about overheads from other companies. If Group IT has a chargeback mechanism, then it is best to charge companies on actual users for each line in service Charging companies based on % revenues or fixed fee will result in frequent conflicts as smart business heads will consume more IT if they know they will be charged a fixed fee.
- Insight 4 – Common IT Steering Committee for project prioritization – Each business head will want to maximise profits for his company. Hence he will push for priority execution of his IT projects. Group IT will always have limited resources and needs to balance between IT needs of all business units. It thus becomes very important that an IT leader calls for a joint IT Steering Committee(ITSC) where all conflicting projects are prioritized in full transparency with presence of all business heads. A common ITSC will relieve CIO from “biasness blame” and allow him/her to focus on their core KPI of delivering IT services.
- Insight 5 – Technology Architecture flexibility – In a diversified group, all businesses will not grow at same levels, nor will they have same speed of digital transformation. To support businesses at different technology maturity, it is recommended that IT Leader makes technology investments which offer flexible architectures for all companies. For example, an application with proprietary database, could present significant integration challenges vs an application which uses predetermined APIs. Moreover, if the company using proprietary application downsizes, then complete IT investments will have to be written-off as the same will be unusable in other companies.
A diversified group has it’s own unique IT Challenges. While centralizing IT function across group can yield in some savings, these savings tend to be short-lived without adequate investment in IT governance capabilities. Unless there is a dedicated effort to align IT expectations of business leaders, centralization and shared services efforts can misfire and lead to creation of shadow IT groups.
IT Governance for a Diversified Group is currently very niche discipline and there is not much research available for IT Leaders and vendors. Feel free to comment, like and share this post with your friends in IT, and contribute to building knowledge in this area.
Written by Abhinav Mittal, Abhinav is Author & IT Productivity Coach based out of Dubai, He has a more than a decade of experience in helping business leaders get more value from their IT investments