IT Governance and IT Strategy are related processes. However, each has a distinct role in business value creation. Confuse them and lose business value.
There is confusion between IT Governance and IT Strategy. To be sure, they are related but distinct processes. IT Strategy creates business value. IT Governance ensures this value creation.
IT Governance is often thought of as “creating” business value. Its definition often makes this claim. Nothing could be farther from the truth. How can governance – IT or otherwise – create value? For example, take the US Government. Does it create Gross Domestic Product (GDP)? It is the business and industry in the country that creates economic output and value. The role of the government, through its policies their governance or “policing”, is to facilitate the creation of this value. In the absence of this governance this value might not be created or not maximized. But it is a huge leap, indeed a misstatement, that it “creates” economic value.
Is this difference semantic? Absolutely not. For if we do not understand the objective of a process we will fail in its design – incorrect process leads to incorrect results. More importantly, with this incorrect cause and effect equation we will be looking for things in a direction they are not going to come from. So we will stand under the tree waiting for the fruit to fall and all we will get is bird droppings.
Under the circumstances, corrective action is also not possible. There is nothing that will move us from under the wrong tree. The search for the correct tree will not begin. The quest for value will have to wait.
So what is the relationship between IT Governance, IT Strategy and Business value?
IT Strategy identifies, selects and funds the “right” investments to maximize business value. IT Governance is the feedback, monitor and control process that makes sure that IT Strategy picked the right investments and their execution is on track.
Both processes are critical to business value. One creates it and the other ensures it.
This is far from a complete picture. There are other processes in this mix. IT Strategy has more depth than described and so does governance but I hope we get their respective objectives and relationship now.
With this knowledge, the rest of the picture can be easily painted.
