Let’s face it – many people believe governance is boring. It’s all about compliance, following arcane rules and paying attention to details. There is nothing transformational, customer-experiential or disruptive about it.
Businesses today are focused on implementing digital technologies and intelligent automation and transforming the way they manage their IT and business operations. But the trouble is that in the process, they’re often ignoring the task of governance – and doing so at their peril. Boring though it may seem to some, governance is essential to ensuring quality service delivery, adherence to industry regulations and alignment between multiple suppliers.
Traditional approaches to governance – in addition to being perceived as boring – are largely ineffective. Processes and activities are driven by people (rather than technology) and are largely ad hoc, reactive and reliant on multiple data sources that are difficult to integrate. As a result, enterprises struggle to gain operational transparency, making performance management and improvement a constant struggle.
Research shows that poor governance – along with weak leadership and cultural misalignment – is a key contributor to ineffective initiatives and failed sourcing relationships. Lack of governance at the beginning of a project is particularly lethal. A governance framework is essential to enabling operational transparency and to establishing a foundational understanding of how tools, processes and people interact. Absent that foundation, the root cause of even the smallest problem is shrouded in mystery. As a result, actions taken to fix problems are based on sketchy data, leading to poor outcomes and more sketchy data. A vicious cycle of bad data, bad decisions and bad outcomes gains momentum and the classic “garbage in garbage out” environment emerges.
Despite its importance, governance has traditionally been neglected or seen as a necessary evil akin to eating your vegetables or cleaning out your garage every spring. That negative perception is reinforced by the current preoccupation with digital innovation and automation. Moreover, there’s a common and dangerous misperception that digital technologies are inherently transparent and seamless and therefore don’t really require governance. In fact, the opposite is true. Implementing digital tools and automating business processes involves dramatic organizational change and a fundamental redefinition of how work gets done and how people collaborate with technology. Elegant and seamless as these digital models may appear in theory, reality inevitably offers some unpleasant surprises. As such, a methodology that can effectively resolve issues and manage, analyze and continually refine the new operating environment is more important than ever.
Whether the environment is traditional or digital, governance essentially involves using documentation to ensure that projects are properly implemented and, once implemented, properly managed. Take, for example, a project to develop a new mobile application, launch a cognitive-enabled chat bot for customer service or implement a cloud-based server. Each of these projects involves a wide range of detailed and specific requirements and processes around schedules, budgets, financial approvals, SLAs, plan adherence, release dates, QA testing, communication plans, contract validation, etc.
Traditional governance relies on paper-, spreadsheet- and human-based processes to document these myriad requirements and activities. While governance processes are clearly and specifically defined, the opportunities to introduce error arise early and often. People invariably make mistakes, take short-cuts or work around existing rules. However, missing even a minor step in the process can have significant downstream repercussions. Data sources can be missing or inaccurate – this eventually leads to governance by guesswork and assumption. Once compromised, the governance model inevitably deteriorates over time, weakening the foundation of enterprise operations and eroding the relationship between buyer and supplier.
The good news is that digital technology can be applied to the governance function itself, so that processes and activities related to documentation, compliance, contract management and verification are streamlined and largely automated. Processes and activities are documented via digital inputs and intelligent tools that drive accurate and consistent records as well as autonomous checkpoints, milestones and verifications. When exceptions arise, alerts are issued automatically.
Under the resulting model, customer/supplier workflows are transparent, orchestrated and focused on Key Performance Indicators. Multiple data inputs are consolidated to identify deviations and enable trend analyses, providing executives with a critical tool to support quick and effective decisions. By shifting the focus from a tactical view of IT operations to a strategic perspective of business performance, these insights establish a foundation for driving transformation and managing the new operating model.
For governance teams, a digital approach creates an opportunity to evolve from a role of compliance police to one of value-adding strategic partner that identifies and measures specific ways that technology can contribute to business performance. And by driving transparency into people, processes and technology, digital governance delivers fact-based accountability that can dramatically improve sourcing relationships. Rather than debating the accuracy of data or nit-picking the details of what constitutes contractual compliance, buyer and supplier teams can focus on resolving issues and optimizing performance.
If you’ve ever watched Formula One car races or the Indianapolis 500, you’ve probably noticed the remarkable speed and skill with which pit crews change tires and refuel the race cars. The coordination and collaboration between people and tools that you see on the racetrack are analogous to the potential we see today with digital technology. Think of it this way – the difference between digital and traditional governance is like the difference between a Formula One pit crew and the neighborhood garage where you get your oil changed.