In light of digital transformation, many boards recognize the need for greater involvement in the governance and surveillance of IT. Accordingly, many board members are seeking guidance and advice on how to achieve this type of board-level engagement. Antwerp Management School focuses on Board Level IT Governance in a research program iin conjunction with the University of Antwerp, Cegeka, KPMG Belgium and Samsung Belgium. One of the cases is the University of Antwerp, a relatively young organization that encountered several constraints in setting up IT-related policies but adapted their board level IT governance mechanisms accordingly to create more IT expertise in the board.
In the past, the IT department of the university was overwhelmed with many questions. Because there was no formal portfolio management process, too many applications were not checked against the university’s strategy. In addition, the new rector had a strong focus on the long-term vision and wanted to ensure a forward-looking approach regarding digital matters.
When the University of Antwerp decided to act on the growing need for IT governance mechanisms, a set of guiding principles was agreed upon, as the university wanted to increase transparency in investment criteria, the investment budget, individual investments and the investment portfolio. These guiding principles were used as a basis to create their board level IT governance structures and processes.
Three measures to increase IT-involvement
A widely acknowledged strategy to increase and improve the involvement of the board in IT-related decision-making and control, is to enhance its IT expertise. However, due to the nature of the board of directors at the university, there are barely any options to alter its composition. The university’s election procedure sees various board members chosen by different university entities.
When the University of Antwerp initiated more board level engagement in digital strategy and oversight, only 6 of the 25 members of the board were external directors. From the 6 external members, the university could appoint only 3. As a result, there is little room to thoughtfully compose the board on the basis of the university’s needs and increase the IT expertise on the board. Therefore, the University of Antwerp decided to (1) establish a more formal IT portfolio management process that includes all relevant stakeholders, (2) increase the involvement of the board in this process and (3) ensure a more forward-looking approach.
Three new governing structures
Due to the limited level of IT expertise on the board, the university believed that IT-related debates should be held in other structures that report to or advise the board. Therefore, three new structures were created that assist the board in IT-related decision-making and control: the IT governance committee, the investment office and the digital think tank.
The IT governance committee is responsible for short-term decisions and portfolio management of IT-enabled investments. Their main goal is to manage the IT-enabled investment portfolio more effectively and transparently, and make sure it is in line with the overall organization strategy. As the heads of the IT department are included in the committee, a certain level of IT expertise is present. However, the aim of the committee is not to go into technical details, but to discuss investments from a business perspective.
Of course, the details must be taken into consideration. Therefore, the university decided to establish an additional preparatory committee that supports the IT governance committee: the investment office. The investment office prepares investment proposals to be presented to the IT governance committee and lays the foundations for the investment decision process. It evaluates these investments from a business, technical and risk perspective, using a scoring model. It does not make any concrete investment decisions, though.
The other ‘committee’, the digital strategy think tank, is tasked with discussing digital developments in the long run from a more outside-in perspective. The board of directors is represented in the think tank; the rector and one other board member are included. The difference with the IT governance committee is that they specifically opted to include a board member with IT expertise in the think tank.
Three-stage governing processes
Each IT-enabled investment must follow a process that consists of three stages: (1) investment description, to get a basic idea of what the investment is about, (2) investment scoring, to evaluate the investment objectively and (3) the investment decision, when a decision is made on whether or not to execute the investment. The goal of this process is to create an IT-enabled investment portfolio that is consistent with the organization strategy.
Every investment needs to have a dedicated business initiator who signs off on the investment description. In order to fully grasp the idea and corresponding workload of an investment, this initiator needs to complete a standard form or mini business case. When the standard form is completed, the investment is presented to the investment office. Here, the risks and the expenditure will be evaluated based on a scoring model, enabling a fairly objective quotation of the investment. At the end of this exercise, a scorecard is created, showing the benefits, risks and expenditure of each investment. Finally, the IT governance committee decides on whether or not the investment will be executed.
This case illustrates that even with primarily elected members, the board can actively participate in the digital debate. Their solution to support the board consists in the creation of three committees that include adequate IT expertise and directors as members, which is rather unique.
Additionally, it shows that the tone at the top, in this case through the rector, can significantly impact the governance structures. The rector strongly believes that the university should be more forward-looking, thinking about long term developments. “I need to think about the university in 20 years, IT in 20 years and society in 20 years.” This vision was also translated to IT, with the creation of the digital strategy think tank.
So, as you might have noticed: all good things come in three. The University of Antwerp established several structures and processes at the level of the board of directors in order to increase the involvement of the board in IT governance, establish a formal and transparent IT portfolio management process and ensure a long-term view on digital aspects.
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