Effective IT governance for public utilities

Technology and infrastructure challenges in public power

As technology evolves, public power utilities face growing operational and corporate technology risks, according to the “Public Power IT Benchmarking Survey” sponsored by the American Public Power Association (APPA) and conducted by Baker Tilly. Community-owned utility respondents cited these technology and infrastructure challenges most frequently:

• Insufficient staffing
• Keeping up with complex technology
• Insufficient resources
• Lacking technical skillsets
• Recruitment and retention issues

With communities relying on public power, these common risks necessitate utility information technology functions have well-established information technology oversight and management practices. Effective IT governance can ease these challenges for your utility.

Effective IT governance – five components

Effective IT governance encompasses the processes, organizational structure and oversight aimed at aligning IT operations with organizational strategy and goals. Five key components drive it: strategic alignment, value delivery, risk management, resource management and performance measures.

The section below defines each component of IT governance and outlines key steps for your utility’s IT function to take. It also explains how these actions will address the common technology and infrastructure challenges identified by the APPA-Baker Tilly survey.

1. Strategic alignment: Provide strategic direction of the IT function and align IT services and projects with the utility’s objectives.
   
2. Value delivery: Confirm the utility is designed to drive maximum business value from IT. Oversee the delivery of value by IT to the organization and assess return on investment (ROI).
   
3. Risk management: Ascertain processes are in place to ensure risks are adequately managed. Include an assessment of the risks posed by IT investments.
   
4. Resource management: Provide high-level direction for sourcing and use of IT resources. Oversee the aggregate funding of IT at an enterprise level. Ensure adequate IT capability and infrastructure to support current and anticipated business requirements.
   
5. Performance measures: Verify strategic compliance including the achievement of strategic IT objectives. Review IT’s performance and contributions to the business functions against promised business value.
   

• Key steps to take
  
• How are the common challenges addressed?
  
• Develop and maintain IT strategy and define objectives aligned with organization-wide strategy and objectives
• Preserve policies and procedures aligned with the IT strategy
• Ensure board level oversight of the IT function
• Enhanced visibility of IT’s value and operations increases potential buy-in for obtaining needed resources and funding
• Key steps to take
  
• How are the common challenges addressed?
  
• Evaluate and optimize the value of IT initiatives and services provided
• Assess ROI
• Dedicate business analysts to specific business areas across the organization to facilitate effective communication between IT and customers
• Manage portfolio of IT initiatives and projects with centralized IT project request and approval process to ensure proper evaluation of business cases, and ability to standardize systems across the utility and utilize economies of scale
• More control over software procurement potentially results in less unexpected systems to support and thus decreased workload and less required resources
• Decreased costs as a result of standardization opportunities that avoid duplication and enable use of bulk license discounts
• Key steps to take
  
• How are the common challenges addressed?
  
• Maintain inventory of risks and define how much risk the utility is willing to accept
• Establish a process to continually identify, assess, respond to and monitor risks
• Assess and manage risks related to existing and proposed IT investments and initiatives
• Awareness of critical IT risks provides clarity and transparency to support significant IT decisions and increases likelihood of adoption of requested technology and resources
• Key steps to take
  
• How are the common challenges addressed?
  
• Oversee and manage IT resources to support current and future business requirements within funding constraints
• Evaluate and prioritize IT projects
• Formalize project management standards and processes
• Plan and manage IT skillsets to align with organizational needs
• Projects undertaken align with available resources
• Understanding how current IT capabilities and infrastructure stack up to future business needs enables advanced planning; skillset and capability upgrades can occur before taking on future and complex technologies
• Formalized project management decreases likelihood of IT project overages and failures
• Key steps to take
  
• How are the common challenges addressed?
  
• Establish and maintain key performance indicators (KPIs) and metrics that measure performance against key IT strategic objectives
• Obtain stakeholder approval of KPIs and targets
• Set challenging but attainable targets
• Develop reporting channels and mechanisms to ensure performance is measured against targets
• Budget or resource allocation is justifiable
• Data capturing training and technical skillset needs exist to support training and hiring requests
• Insight into individual or group performance enables targeted training and distribution of rewards and incentives, indirectly contributing to talent development and retention
• The value of IT efforts and investments are supported
• Assessment of IT project success allows for resource reallocation or project termination to synchronize IT investments with business objectives

Conclusion

Tackle the common technology and infrastructure risks revealed by the APPA-Baker Tilly survey through proven IT oversight and management practices. By employing the five components of effective IT governance, your IT function will become more aware, informed and in control to identify, prepare or even take measures to avoid potential issues. You’ll have more information and data to back up decisions or requests for additional resources. You’ll make smarter IT investments and focus only on projects that align with organizational strategy. As you fully embrace effective IT governance and the value of your IT function increases, you’ll most efficiently and successfully support your utility in achieving its objectives.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.