on January 13, 2020 in Investment Governance

The Digital Investment Governance Imperative (Part 1 of 3)

a man sitting at a desk with one hand on the computer, the other on the mouse

The landscape for assessing, prioritizing and managing the strategic investment process is rapidly changing. The typical organization must deploy capital while balancing requirements spanning a range of competing priorities from regulatory, to corporate compliance, to meeting growth and profitability guidance, along with other high-priority mandates.

At the same time, management approaches are constantly evolving with generational changes in leadership and in response to broader trends. These dynamics include structural changes in industry segments and social/societal aspects that continue to create expectations and demands in a number of areas.

Interactions in recent months with a number of segment leaders illustrate the fundamental nature of the challenge organizations are seeking to navigate in a manner that helps provide market leadership and sustainable competitive advantage.

Evolving management best practices are signaling continued decentralization of decision making and a move away from command and control for some organizations. Lines of business are being empowered with the flexibility required to support continuous planning and the ability to strategically focus on developing the capabilities to drive required business outcomes. So, the traditional centralized management and control across approval to budget versus approval to spend is sometimes supplanted with a business unit managing a “wallet” of capital to fund one or more investment portfolios to meet goals. This does not signal a move away from stage gating or agile funding, but rather places this discipline at the business unit level, making consistency vertically and horizontally throughout the enterprise more important than ever before.

Structural shifts in some industries are driving significant changes to the scope and range of initiatives that must be mastered and clearly understood in order to make the right decision. For example, the healthcare insurance segment continues to experience disruptive developments, such as the need to evolve from payers to providers of digital healthcare financial services. These seemingly simple few words create a seismic shift from traditional focus on optimization of internal operational and administrative processes, such as resources required to process a claim. Now, there are additional demands for interaction across the entire ecosystem, including providers and especially, the insured, with needs for more personalized, digital interaction creating expectations and opportunities holding promise of better outcomes for all.

Underlying these shifts is the need to provide business, finance and IT professionals with the insight, skills and tools required through new systems that drive best-in-class governance through streamlined processes and ease of use.

What has not changed is the requirement for accountability at the mid and executive levels. Evidence shows the drive for accountability has intensified around expectations with respect to a grasp of an increasingly complex level of detail, agility and ability to respond rapidly to a steady stream of issues and opportunities.

Meeting these demands requires a new approach founded on a governance model that complements and extends existing project execution frameworks. New governance models must deliver a high level of integration and visibility for initiative planning and feasibility assessment. They must provide a means to help ensure robust evaluation and strategic alignment, along with the tracking of outcomes to measure benefits realized against benefits contemplated. These capabilities need to work in unison to provide a collaborative means of continuous planning, as well.

A comprehensive digital governance framework goes well beyond electronic data capture of structured and unstructured information in spreadsheets, narrative documents and presentations. Digital governance offers breakthrough capabilities by transforming the strategic investment process, providing high fidelity actionable analytics to allow executives to make timely decisions that impact outcomes.

Key elements in a digital governance framework include:

  • Institutionalization
  • Automation
  • Standardization
  • Closed loop processing
  • Portfolio and actionable analytics
  • Enterprise-wide integration
  • Robust initiative analysis
  • Traceability
  • Adherence to governance and audit compliance

A brief survey of each element follows in the next two parts of this series.

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