What is Enterprise Governance? In simple terms it is a framework which is used to manage risk and provide control in an organization. The most common areas which are covered under the umbrella of enterprise governance are risk management, strategic management and regulatory compliance. This article shall define enterprise governance as a set of policies, and practices defined by an executive and board of directors with the aim of providing strategic management, ensuring compliance with regulatory and legislative requirements and ensuring that a company develops in a manner consistent with its business model.
Risk management is an essential component of enterprise governance. It is implemented through systems engineering and involves the identification, assessment and prevention of risks. Most often companies employ a risk management process together with the development of strategies for attaining specific outcomes. The areas of risk management are mainly financial, operational, and external. Financial risk occurs in the areas of liquidity and credit risk. Operational risk can pertain to the performance and integrity of the day-to-day operations of the enterprise.
Strategic management focuses on the attainment of desired outcomes. There are two general perspectives on the approach towards strategic management and these are known as product, and portfolio management perspectives. Product perspective refers to the methods and procedures that are applied in order to improve and increase the output of an enterprise. Portfolio management views the whole of an organization as a set of products or services, which in reality are developed and marketed in accordance with organizational objectives. Therefore enterprise governance requires a strategic approach towards managing risks and achieving desired outcomes.
Major benefits of Enterprise Governance
The key benefits of an enterprise-wide approach to systems engineering are that it increases productivity, reduces cost and improves quality. An important aspect of a systems engineering activity is risk management. This helps in improving the quality of the enterprise. A major part of the success of an enterprise lies in the ability to successfully implement and maintain its systems. Therefore an effective enterprise governance structure is vital in ensuring that the systems are implemented and maintained effectively.
The system must have the capacity to allow for contingency plans, which can be modified and altered as per the need of the situation. The system should include the ability for controlling access, assigning roles and controlling resources. In order for organizations to achieve success, they need to perform an ongoing analysis and evaluation of their business processes and practices. Systems engineering helps in identifying the existing shortcomings and identifying ways in which these can be improved. It helps organizations to adapt to new technologies and application procedures and to design and build the networks and software applications.
Implementing enterprise governance solutions help to establish a baseline of best practices and help in the determination of future enhancements and improvements. It also facilitates coordination between the different functional departments and between the various stakeholders in an organization. The process of system engineering helps in designing and building the most appropriate and functional network and also develops the application and software requirements needed by organizations. It helps in identifying and obtaining the requirements for designing and building the most suitable IT portfolio for an organization. It helps in maintaining and upgrading the systems that are developed. It also helps in the maintenance of the systems that are already existing in an organization and helps in the better utilization of the available IT resources and in the efficient use of the existing technology.
The application of an enterprise governance program focuses on the identification of key risks and opportunities in the enterprise and how to mitigate them. The program looks into the different threats and opportunities and how these can be controlled, analyzed, prevented and mitigated through the application of the framework. The application framework includes various risk assessment techniques and uses several forms of modeling and planning. Based on the identified risks and opportunities, the framework lays down different solutions that can help in mitigating the risk and improving the productivity and profitability of an organization. The application of the framework involves defining and building the IT portfolio management that includes building a technology portfolio that consists of hardware, software, firmware, documentation and test technologies.
Enterprises may look forward to long-term benefits from the application of IT governance and its associated practices. These include improvement of internal controls and the continuous improvement of processes. These improve the quality of the services that get delivered to the users and help in the timely management of the enterprise's outcome and attainments.