Current Economy Means Time is Ripe for IT Governance

There are many encouraging signs that the economy is on the mend, but the recent downturn has also provided some important lessons in the way we manage IT projects. That is, IT governance is a good thing in any type of economy.

I like the way Ron Schmelzer of ZapThink consulting summarized the delicate balance that often needs to be maintained between too much control and not enough control in IT environments: “Everyone wants governance, but no one wants to be governed.” When companies attempt too tight of a reign over IT projects, end-users figure out ways to get around it. Not enough governance, and IT projects fail to live up to business expectations.

But the current economic environment has tipped the balance toward more governance. In this month’s issue of Insurance Networking News, I explore some of the ins and outs of governance, with interviews with experts and carriers on what governance approaches work best for them.

In researching the article, I had a chance to chat with Celent’s Jeff Goldberg, who says there has been a Sea change in attitudes toward governance.

“With budgets getting tighter, and regulation expecting to increase, we’re seeing a shift toward more companies adopting IT governance practices that hadn’t before,” he points out. “We’re seeing fewer companies that don’t have at least some kind of process for making decisions before starting IT projects and doing IT expenditure, which is a good thing.”

While IT budgets in the insurance industry were not slammed as hard as in other types of companies, Goldberg says there is more scrutiny of how IT dollars are being spent.

“Even if there’s a budget for something, it takes more time to get an IT project approved,” he says. “It has to go through a much more intense scrutiny. I think at the end of 2009, you’ll see many companies have come in under their IT budgets because projects that had been put into budget were just never given the okay, or postponed until 2010 or beyond.”

This means project proponents need to be able to better demonstrate the business advantages of their initiatives. The best way to do this is a strong, formalized, ongoing relationship between IT and business leaders. The companies I spoke with for the article had such close alignment in place. However, many carriers have yet to move in this direction, Goldberg observes. He recommends, a mix of formal and informal processes to move projects forward. Formal approaches include “pre-built documentation that needs to get filled out per project, and regularly scheduled meetings at different levels, quarterly meetings with the CIO, monthly meetings with VP levels, and a specific set of forms and spreadsheets that need to get filled out, that include ROI and security audits.”

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology. He can be reached at joe@mckendrickresearch.com.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.