Organization transformation proceeds along an “Organizational Ladder” as follows:

There will always be more demands than company resources can bear, so making good decisions about how and where resources are allocated is a huge challenge. A good governance process can be an effective tool for managing this challenge. IT Governance covers subjects including the strategy of how IT will be used to address business needs, which projects will get done and which ones will not, total spending on IT, and the performance and accountability of the IT function.

Without proper governance structures and processes in place, business functions begin to freelance, satisfying their own requirements with minimal or no IT support, often contrary to the company direction. Company strategy can become misaligned and people begin working on the wrong things. This can lead to internal conflict and a chaotic environment resulting in a non-standard infrastructure with poor operational maintainability. In most cases, the organization suffers from reduced quality on projects that are delivered.

Source: Transition Partners’ Governance 2006.