CIO 007 I.T. - The Harshest Judge of Governance Created by James on 6/13/2013 3:41:40 PM
Professor Mervyn King SC, former High Court Judge and author of the King reports on Corporate Governance, was the keynote speaker at the recent I.T. Governance and Strategy Summit. He defined governance as being "care".
He also stated that the Board is responsible for I.T. Systems and posed the question as to whether the Board had effective control of I.T. as "part and parcel" of a strategic view.
Another speaker at the Summit, Professor Rossouw von Solms from Nelson Mandela University, quoted Professor Richard Nolan of Harvard Business School as saying that:
-- "This [I.T.] is an area where boards of directors will be named in stockholder suits"
-- "Senior management is not engaged enough in strategic information technology decisions and situations that could put the company at risk."
-- "I.T. is the next corporate disaster waiting to happen"
I have been suggesting for some years that I.T. failures would, in time, result in Enron like corporate failures and that executive and I.T. professional accountability would ultimately become a statutory matter. This conference confirmed this view.
It is only a matter of time before a major I.T. investment failure results in a damages claim of millions if not tens or even hundreds of millions of Rands against a major I.T. service provider or software house and / or legal action against executives.
I recently came across a successful E.R.P. system implementation where the client organization spent a year developing the business case and included an attorney on their project team -- the project came in on time and UNDER BUDGET, an exceptional outcome!
I have been reporting for over a decade that 70% of all I.T. investments fail outright. Professor von Solms reported a number of failures in high profile international corporations running to over one hundred million dollars each!
I.T. investment failure or non-delivery is at epidemic proportions.
The three most significant factors in I.T. investment failure are "I.T. mythology" (30%), lack of executive custody (20%) and lack of strategic alignment (16%).
I.T. mythology is the tendency of people who do not understand computers, and even those who do, to ascribe human like or even supernatural attributes to computers.
Frequently, this expectation represents a serious abdication of authority and responsibility by executives.
A computer is only a binary adding machine -- even the most powerful and sophisticated computer is very simple and very stupid -- its power comes from its ability to add or switch binary code (0's and 1's) very rapidly and to execute instructions that activate complex electronic components and processes very rapidly.
And, computers only do what human beings tell them to do.
A complex computer based solution today comprises layer upon layer of human intellect and ingenuity engaged to create solutions that, when viewed in ignorance, seem magical or superhuman yet which are infinitely inferior to human ability in many respects. If human beings use the tool (computer) inappropriately, they can damage or destroy the organization.
Effective strategic capability (analysis, design and execution) coupled with effective strategic corporate governance are essential to creating effective business solutions using information technology.
Since computers are so reliably and dependably insistent on doing ONLY what they are told to do, they are the harshest possible judges of corporate governance under-performance or failure.
Inadequate corporate governance frequently results in inadequate corporate I.T. outcomes and points to the need for executives to become more directly involved in the effective use of information technology and to develop more effective and more reliable corporate governance.
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