Corporate Governance: It's Now Or Never

Ever since the Satyam fraud was reported, corporate governance has been a hot topic of discussion in the Indian business circle. Companies are now being forced into re-evaluating at the effectiveness of their corporate governance practices.

“The experience with Tyco, Enron and Satyam is a wake-up call for enterprises,” says Ajay Dhir, CIO, Jindal Steel. Overall, companies across verticals are going to be more conscious about the governance aspect. One is the statutory and the regulatory aspect. Secondly, the performance of the enterprise itself will be judged by the way it is being governed. Going further, the Governance, Risk and Compliance (GRC) framework at organisations will gain immense importance.

The IT environment of an enterprise also comes under the purview of ‘corporate governance’. Biztech2.com spoke to CIOs on the importance of corporate governance and how it helps to have a governance framework in place.

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Role of IT in Corporate Governance

Corporate governance, primarily from a systems and business process point of view, is about giving the power of information to users and making sure that the same information is not misused. “How this information is governed under a certain domain is very important,” says Avinash Arora, Director (India & SE Asia), IS-New Holland Agriculture (Fiat Group). Information governance includes the setting up of a secured access to the information system, defining proper roles for the people involved and giving role-based access to them. Finally, it is all about providing information to users in such a way that it helps their decision support system. Simultaneously, it must be ensured that this information is not misused by people to act against the organisation.

The CIO, in today’s situation, has to juggle various responsibilities, which include management of Information Systems and technology and ultimately being accountable to the governing board of the company. The CIO’s role also spans the GRC framework where business risk assessment sheds light on the risk that the business can create, pose or mitigate for the company.

“It is a must for any corporate to have the right processes, the right technologies and the right kind of people to control and support these processes to be a successful organisation,” says Sunil Sirohi-VP, NIIT. It also helps to abide and follow the laws of the land, which define a framework for any organisation to operate in.

The other aspect is the concept of cyber security and forensic science. With more and more incidents of information leakage, privacy violation and cyber crime coming to the fore, CIOs need to be forearmed. But whose responsibility is IT security in the organisation, anyway? Is it of the CEO, CFO, COO or the CIO? Security should be everyone’s concern. When everyone is committed, it becomes inclusive for the entire organisation. It is only then that you can bring a broader focus to internal security, external security and ultimately, overall security.

Corporate Affairs Ministry to make Files Available Online

Salman Khurshid, Minister, Corporate Affairs, pointed out notable similarities in his role and that of a CIO’s at the recently concluded CIO Klub meet on ‘corporate governance’ in Delhi. “We have structures in place and take decisions very similarly to the way you do it in business,” he said.

Interestingly, the MCA-21 enabled the Ministry of Corporate Affairs to take a big leap into the digital world. “The project is named MCA-21 as it aims at repositioning the ministry as an organisation capable of fulfilling the aspirations of its stakeholders in the 21st century,” says the Ministry’s official site. However, it remains to be seen whether MCA-21 has achieved all that it set out to do.
Khurshid is hopeful of much more activity on the e-governance front when the second phase of the project comes into play. “It will take us much further as we go digital and learn to mine and use information to create value addition. However, we still have some faith and a certain degree of dependence on the file system,” he concluded.

The Ministry plans to bring in greater awareness about being a paperless office and clearing all company forms online.

Conclusion

Like it or not, the renewed focus on corporate governance after the Satyam episode has jolted many companies out of their slumber with regards to their financial systems. With the advent of many solutions, such as IT Financial Management tools, the CIO is now empowered to tackle business problems using technology, but ultimately it is the collective responsibility of the management to bring greater financial transparency and accountability into the organisation.