Define corporate governance
Ensure that the company is run and managed to achieve the company’s mission and vision, in accordance with the stakeholders’ needs
Define IT governance
Ensure that IT is managed to achieve the company’s business objectives, in the most efficient manner, maximizing the benefits to achieve stakeholders’ needs
What is the code of corporate governance
- Published by MAS, outlines rules and guidelines for publicly listed companies.
- Describes compositions and various functions of the board in the running of the company.
- It provides for accountability, transparency and confidence in the company, whose shares are traded publicly in the stock exchange.
Role of corporate governance
Heavily rely on stock exchanges where public exchanges are run by senior management on behalf of shareholders
There is a need to ensure that these senior management do not act in a way to benefit themselves for the sake of public good
Board of directors appointed to ensure accountability and also define objectives of the company
For private or non-public companies, corporate governance help to ensure that the company is run according to the expectations of the stakeholders, especially its owners.
In governmental agencies, a board of directors are appointed to ensure the organization achieves its stated objectives (as defined by the government)
Need for governance
Governance is needed to ensure that an enterprise is doing the right thing which is to achieve the aims of its owner while ensuring that the interests of the stakeholders remain intact
6 OECD Principles
- Ensuring the basis for an effective corporate framework - Corporate Governance Framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities
- The rights of shareholders and key ownership functions - Framework should protect and facilitate the exercise of shareholder’s rights
- The equitable treatment of shareholders - framework should ensure equitable treatment of all shareholders including minority and foreign shareholders. All shareholders should have opportunity to obtain effective redress for violation of their rights
- The role of stakeholders in corporate governance - Framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active cooperation between corporations and stakeholders in creating wealth, jobs and and the sustainability of financially sound enterprises
- Disclosure and transparency - The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance
of the company. - The responsibilities of the board - The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board’s accountability to the company and the shareholders
Elements of governance
Owners are people / organizations who own the enterprise, in publicly traded companies the owners are those who own the shares
Stakeholders are those whose interests affect or are affected by the activites of the enterprise. Owners are one of the stakeholders. Other organizations, governments and people are able to be stakeholders too
Corporate vs IT governance
- Role of IT is to support the operations of the company in pursuit of its objectives and goals and effective IT governance provides effective and efficient support of corporate goals, therefore IT governance is often an important aspect in achieving corporate governance given the role of IT in today’s environment
- On the other hand corporate governance is a prerequisite of IT governance and IT governance is irrelevant without corporate governance.
Importance of IT governance
Failure of IT governance may mean business disruption or failure given the reliance on IT in companies.
For mild cases, no IT governance may mean ineffective use of IT which results in wastage and lost opportunities
However lack of IT governance may not mean business failure or loss
Digitalization drives IT governance
Disadvantage of IT governance
- Too theoretical in approach
- Largely for management and not for real world ‘tech pros’
- Insufficient details to work with - no specific processes or controls
Governance in Enterprise IT
Leverages technology to support and optimize enterprise needs
Helps senior managers address common pain points such as applicable laws, regulations and compliance
Helps enterprises satisfy internal and external stakeholder needs. IT governance empowers organizations and helps establish and monitor accountability for IT activities to ensure that IT-enabled investments support enterprise objectives.
GEIT can uncover underlying issues that have existed for years. These issues can result in unidentified risk such as revenue loss and services that seldom create value for the business.
