Effective Governance - Funding Structures
Many organisations utilise budget ownership as a governance tool. Whilst fundamentally there is nothing wrong with that, the devil is in the detail of how they go about doing this. The division of labour approach - first devised during the industrial revolution - doesn’t actually work particularly well in modern, integrated organisations.
Budget ownership tends to be allocated based on systems and applications rather than business services and/or processes. For example, Jane may be the owner of application XYZ and Joe may be the owner of application ABC. The rub comes in when processes are delivered across a mix of ABC and XYZ. Nine out of ten times the investment plan plans for XYZ and ABC are developed independently - unless Joe and Jane are the exception to the norm and employ some excellent ‘systems thinking’. Good on Joe and Jane if they do, I’d hire them any day.
The more I look at the issue the more I think the concept of process ownership has been overlooked too quickly by most organisations. N.B. Let me be clear here; by process I don’t mean some abstract flow charts on huge sheets of paper but rather the actual, practical workings of an organisation.
Identifying and understanding the processes of the organisation has many benefits including the ability to identify & eliminate duplicate effort, reduce any activities which don’t add customer value and reduce the number of information sources within an organisation.
Each process - or process set (see service) - should have a clear, cross-functional owner who is responsible for the day-to-day management and development of the respective process(es). All too often I see notional ownership which serves more as a compliance exercise (we have owners) than a organisational performance improvement tool. I think organisations are missing a fantastic opportunity in that respect. Ownership isn’t just a budgetary control thing - owners need to actively engage with the users of their processes to refine and improve them.This of course comes down to your people - picking the right ones to be process owners.
I would suggest that allocating control of the IT budget to process owners is a good way to reduce diversity and cost by allowing all changes to be vetted by the process owner - in consultation with the users - before being implemented.
Shared infrastructure should be funded from a common pool (often overseen by a capital committee) and the processes that run on top of this infrastructure are governed by process owners who represent the interests of the end-to-end business users.This more naturally loans itself to managing programmes of work and portfolio of investments in a more integrated manner.
I think this is a goldmine of efficiency & effectiveness which most business have not explored and which is definitely enabled by IT.
