Casting a vote for sound IS governance

If you ask senior executives in large organizations what they think of their IT department, many are bound to describe them as off in their own little world, speaking their own language, and mostly out of touch with the mainstream business.

No one is more sensitive to this assessment than Janet Wilson, Vice President, Business and Information Technology Services Branch at OMERS, the Ontario Municipal Employees Retirement System. Headquartered in Toronto, OMERS is one of Canada’s largest pension plans with 360 employees and approximately $43 billion of pension assets under management.

Early into her tenure at OMERS, Wilson recognized that the IT department was not making the contribution the organization needed, and could do much better. Specifically, she could see that almost every corporate initiative now included an IT component, and that the IT department needed a much higher level of integration with the rest of the organization.

“IT departments of the past have been tactical and reactive,” says Wilson. “Granted, part of our function still needs to keep the machines running, the network up and the problems fixed. But these days, people from all over the organization are coming up with ideas for systems-based initiatives. All they really know is where they want to end up and they expect us to be able to deliver them there. Our best chance of doing this is to be included in their earliest meetings, providing the strategic input that can make their projects successful.”

According to Wilson, OMERS is achieving this with the help of an effective IS governance model. “I think of governance as setting a table,” she explains. “Everyone knows their place at the table, and what they own sits right in front of them. Everybody knows the rules of engagement, including the etiquette.”

Wilson’s table symbolizes a formal model for interacting with other decision- making groups and individuals in the organization. She rejects the old role of IT as a ‘business enabler’, aiming instead to be a player on equal terms. “What we have done with IT at OMERS gives us a seat at the table,” she says. “No one resents us for that – it’s exactly where they want us to be. One of the best things about making the change has been joining the business.”

Four areas key to IS governance

Yvon Audette, KPMG’s Canadian service leader for IT Effectiveness, worked with Wilson on the governance model. Audette says OMERS has addressed four key areas in their approach: business alignment, performance management, risk management, and investment.

Business alignment. Business align- ment examines the organization’s priorities in light of external factors such as technology trends, and then gets down to practical matters such as restructuring the org chart to best support those priorities. This transformation is captured in a written IS strategy that is aligned with the business strategy and its key initiatives.

Business alignment was responsible for the most dramatic changes OMERS made in its IT strategy. The OMERS organization is divided into three basic business units: pension administration, investment, and corporate. The IT department organized itself into the same three groups and attached itself to each business unit as a support team headed by a relationship manager. A fourth relationship manager serves as a liaison with key IT vendors. The IT support teams are accountable to their respective business units, but report ultimately back to Wilson in a matrix arrangement.

She speaks enthusiastically about the early results of this shift. “I think this gives us more than alignment; it also gives us integration. Our people spend time on the floor that houses their business unit, attending their meetings and providing strategic input as it relates to technology. Also, IT gets a better understanding of the business direction which we can translate into a more targeted IT strategic direction.”

Performance management. Performance management involves a review of people, process and technologies to develop an accurate picture of overall effectiveness. Some of the important attributes include efficiency, flexibility, reliability, capacity and skills. At OMERS, one of the main objectives was to gain the benefit of consistent benchmarks. Because IT is dealing with three individual business units, the performance management approach is not necessarily the same for each.

“On the pension side, for example, we help them run a huge proprietary administration system that is much like an enterprise management system,” Wilson explains. “We’ve been able to build in performance benchmarks that are not only consistent, but mean something to both IT and its business partners. This means everybody knows what they’re going to get. You not only get efficiency, but you also get focus.”

Risk management. On the risk management side, IT governance calls for a predictable review of controls, followed by a process of identifying, prioritizing and mitigating risks.

But Wilson has an unorthodox take on IT risk management at OMERS. “Business is about creating success rather than preventing failure, so I believe the best way to approach risk is to measure the good and repeat it,” she states. “Our performance benchmarks help us do this, and we do identify and deal with risks along the way.”

Recently, Ontario Bill 206 has given OMERS a measure of autonomy beyond its former crown corporation status. The IT department must assimilate and automate a revised set of compliance standards if the risk of noncompliance is to be avoided. OMERS is much more confident about handling tasks like this with a governance structure in place, because IT can understand, divide and conquer the issue in a routine manner.

Investment management. The final pillar of a well-rounded governance structure is investment management, a consistent approach to budgeting money and managing money. At OMERS, the high degree of IT integration with the rest of the organization makes investment management an enterprisewide matter as well.

User satisfaction a key concern

To study the dynamics occurring in the IT function, KPMG’s Canadian Advisory practice commissioned a survey from Ipsos Reid in the last quarter of 2005. Read more

When discussing value for money, Wilson takes the opportunity to talk about her department’s communication plan. “When we began these changes in IT, we spent a lot of time on the communication plan. In fact, we believe that communication is the core of what we’re doing here. Real value is transferred through things like understanding and agreement. The business units understand now that we’re working with them.”

Business response to IT changes

How has OMERS’ business organization responded to these changes in IT?

“It’s really a non-reaction,” Wilson smiles, “and that’s the best reaction of all. It’s because we’re part of the process now. It’s never perfect, but there are fewer power plays and a lot less politics.”

As KPMG’s Audette explains it: “Every organization is different, and there is no such thing as a one-size-fitsall approach to IS governance. Once a CIO has identified the important areas for governance and the level of maturity required for each area, the gaps will have to be identified, mea

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Jim Love, Chief Content Officer, IT World Canada

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