Australian firms are exposed to billion-dollar risks due to a lack of alignment of corporate and IT governance strategies, a report has found.

Research commissioned by IT giant HP and law firm Mallesons Stephen Jaques has found that in 39 per cent of organisations, corporate governance and IT governance continue to be treated as separate strategies rather than as one with a single goal. Despite IT’s criticality to most areas of business, IT strategies are not being treated as an integral part of overall business strategy.

According to Jack Gargano, CFO at HP, the report showed that big business was well aware of the problem and that governance frameworks were being initiated to address the issue.

“However, the lack of any real consistency across the board about how organisations are viewing corporate and IT governance is telling,” he said. “It shows that businesses are approaching compliance as a necessary ‘tick box’activity they are singing the right song, but not really understanding the words and this can be the difference between success and failure for a business.”

Indeed, the use of technology is emerging as a key weapon in the compliance arsenal. While many in the US rushed into point solutions for initiatives such as the Sarbanes-Oxley Act and have since paid a hefty price (around US$35 million according to recent estimates), some Australian organisations have taken a more cautious approach.

Those meeting with success learned from US mistakes and have used technology to embed compliance into the business, assisting with the development of compliance culture. But they are in the minority.

According to Patrick Gunning, partner at Mallesons, the lack of alignment was surprising and represented a missed opportunity in compliance terms.

“Technology underpins the day-to-day operations of almost every significant business in Australia and is also essential to creating financial statements on which the market relies,” he said. “Ensuring business continuity and the integrity of financial statements should be key elements of all corporate and IT governance policies and on the agenda for directors, CEOs and CFOs of all listed Australian companies. This is another instance where complying with legal obligations should result in a positive business outcome.”

In addition, the research found that 30 per cent of surveyed organisations (155, with total revenue of more than $38 billion) do not have a complete corporate governance framework in place. Worryingly, 8 per cent accounting for $3 billion in annual revenue have no corporate governance framework whatsoever. Moreover, one-third of organisations focusing on corporate governance view compliance as their main objective in the coming 12 months.

Meanwhile, the research uncovered worrying contradictions with 32 per cent of respondents saying cost or time savings were the main benefit of IT governance, while a further 62 per cent said improvements to IT and business performance was the main benefit. However, cost, resource and time were also seen as the biggest barrier to compliance according to 78 per cent of respondents.