IT governance on the rise in Japan

Japan’s corporate executives are becoming more aware of the importance of IT governance, according to an annual report on IT trends in corporations released by the Japan User Association of Information System (JUAS) last week.

JUAS is an independent organization, which forms its views from users’ opinions. Most of its 121 corporate members come from the ranks of Japan’s major companies and many have more than 10,000 employees.

With the current poor condition of the Japanese economy, the priority at many corporations is to reduce costs. However, unlike previous years, the report found this does not necessarily mean a cut to IT-related investment. About 73 per cent of the companies responding to the report, said they will increase next year’s IT budget or keep it at the same amount.

This is because corporations have realized that IT is not simply an area in which they can cut costs but a tool with which they can increase competitiveness, the report said. As a result, more companies are seeking to establish a system of IT governance to more effectively manage their IT investments, the report said.

A recent trend is that many corporations are shifting their company’s system development and management to a subsidiary or outsourcing their IT work to companies like IBM Corp. This year’s survey showed that some companies have closed their IT subsidiaries and transferred all work to outsourcing providers, the report said.

Another survey conducted by Japan’s governmental agency last year agrees. It surveyed 1,400 companies and found 41.5 per cent of them see outsourcing as one of the most effective ways to accelerate IT investment over the next three years.

With outsourcing becoming more important, the IT divisions at companies have a small number of skilled engineers and they are being put to work on IT initiatives including, planning, business process reengineering and researching new ways in which IT can be used, JUAS said.

Another trend identified by the report was the increasing number of companies that have a president with IT knowledge or a chief information officer (CIO) position, so that the top management can include IT initiatives in the company’s management and marketing planning. These two used to be planned separately, the former by the IT division and the latter by the top management.

While 35 per cent of companies’ IT managers said their IT initiatives are based on the companies’ management initiatives, 22 per cent said both are planned together as a single initiative, the report said.

Although the top management are getting a knowledge of IT and becoming able to govern IT initiatives for their company, 54 per cent of users surveyed said they do not feel that their opinions are reflected well enough in their company’s IT investment budgets and management initiatives, the report said.

Some of their complaints include: old PCs and applications at work, the company system often causes troubles, and the company system is outdated and inefficient while they are using the latest systems at home.

The report was based on 945 responses from IT managers of corporations to a 24-page questionnaire, 641 responses from IT users at corporations to an eight-page questionnaire and interviews with IT managers at 50 corporations that use IT and 16 corporations that make IT equipment, said JUAS.