Strong IT governance boosts return on assets

Well-governed organisations receive 20 per cent higher return on assets than organisations without, according to industry analysts Gartner.

While good governance of management policies and process comes about by a CIO having control mechanisms in place, Gartner argues that great governance is centred around guidance that leads to competitive advantage.

"One of the most important functions of governance is to provide controls that prevent chaotic or reckless behaviour on the part of the organisation and its people," said Tina Nunno, VP distinguished analyst at Gartner.

"Organisations with good IT governance enjoy benefits such as increased business value of IT-related assets. Strongly governed organisations receive 20 per cent higher return on assets."

But controls alone do not guarantee that an organisation has a competitive advantage because they risk stifling the ability to innovate. Leading CIOs incorporate innovation and competitive advantage into their governance systems.

"CIOs with great governance create competitive advantage by embracing emerging technologies, innovation and, most importantly, the concept of calculated risk," said Nunno.