IT is still a cottage industry

The finance and manufacturing sectors have a fairly good handle on governance, and have been process-driven for some time. The IT industry, on the other hand, operates more like a cottage industry - lacking processes, control and visibility.

There's much talk about stringent IT management and governance today, but many IT organisations are still only paying lip service to these requirements. It is imperative, however, that they now implement proper processes, manage their resources, track their spend and create visibility for the rest of the business.

A scenario that plays out again and again in many organisations is the following: The business sponsors IT to develop a new initiative so that it can gain competitive advantage. After a time, IT generally goes back to the business, asking for additional budget for the project. When the business asks why there are no funds left, IT is unable to explain. The CIO does not know what he is spending money on as his organisation has no way of accounting for this.

As a result, the CFO has no visibility into IT. It seems to him or her that money is simply disappearing into a black hole.

This cottage industry approach, I believe, is due to a number of factors, including rapid growth, its project-centric view and a lack of internal focus.

The IT industry has had its fair share of 'cowboy' leaders, with scant regard for doing things properly.

Thomas Cronje, Application software quality manager, Middle East and Africa, Compuware South Africa.

IT is the new kid on the block and has had an extremely rapid growth curve. It hasn't learnt lessons from manufacturing, which has been talking about terms like 'zero defect' since the 1900s. In addition, the IT industry has had its fair share of 'cowboy' leaders, with scant regard for doing things properly. So even though the fundamentals of good governance, quality and management are fairly basic, IT still hasn't cottoned on.

To be fair, IT organisations do not typically generate their own funds, and cross charging doesn't happen much in reality. They are typically under the whip working on projects for the business, so have generally not had much time to spend on developing processes for themselves. They therefore have not rationalised the environment - they still use crude spreadsheets and have disparate systems performing the same tasks.

Another main reason for the cottage industry approach is that most IT organisations have a project-centric view. They manage projects very well - tracking them against time and budget - but intangibles, like quality, are seldom tracked.

Reinforcing this project-centric view is the fact that most IT staff are paid incentives based on completing projects on time and within budget.

This creates a situation in which no one focuses on the basics, such as tracking how IT resources are being utilised, measuring return on investment, or questioning whether resources could be better utilised.

IT reporting tends to be centred around projects, instead of covering all the different aspects of the IT portfolio.

Today, it is no longer acceptable for IT to be a black hole. The IT organisation has to prove its value.

Some CIOs are adopting this view, and striving to align their initiatives and objectives with those of the business, so that they can work in partnership going forward. Others, however, are still showing no real commitment to good IT governance.

There needs to be a big mindset change in most IT departments. If they started to track non-project work in addition to projects, they would begin to pick up important trends. They would then be able to plan proactively to improve quality. All this would lead to reduced operating costs, thus freeing budget to create better value for the business.

At the moment, most IT organisations devote 80% of their budget to "keeping the lights on". Only 20% is used for the kind of innovative work that leads to competitive advantage and thus increased shareholder value.

Good IT governance requires management of the IT organisation as a portfolio. This involves managing and reporting on everything from project and application performance, to financials, investments, project planning and non-project work. It means moving from a project-centric to a customer-centric point of view.

Good management is best achieved using automation, but tools should only be introduced when all the hard work of developing processes has been completed. Tool adoption should typically be the last aspect IT organisations should focus on in the area of IT governance.

* Thomas Cronje is application software quality manager for Middle East and Africa at Compuware South Africa.