If all these governance mechanisms sound like extra layers ofbureaucracy, you're right. However, "large company bureaucracy is notalways a bad thing," says Balagna. "It can keep you from doingknee-jerk technology projects."

But CIOs need to be careful. As layers of governance build up,innovation and flexibility suffer. Companies with highly formalizedstructures for investing in IT, for example, tend to invest only inprojects that support current business. In a survey of 40 companies,MIT's Weill found that companies that do well in terms of return onassets tend to have tight, centralized governance mechanisms, whilecompanies looking to maximize their market caps tend to push ITdecision making out to the local business unit or end users.

All the committees and rules that come with good governance tend tolead to investment decisions short on risk or creativity. So companieshave to be willing to devote a certain percent of the budget toexperimentation5 percent seems to be average for companies thatmaintain this innovative edge, according to Ross. At UPS, for example,Lacy has an advanced technology department that works with UPS's majorvendors to test new technologies. And the department has the power tocommission small-scale pilots from scratch. "There isn't a whole lotof off-the-shelf technology you can buy for transportation," Lacysays. To change that, UPS also has a Strategic Enterprise Fund thatinvests in small or startup vendors that could eventually deliver thefunctionality UPS is looking for.

The end of governance

At 3M, Drew says IT is surviving just fine without his supergroup. Thecompany still has a corporate council, composed of all the functionalheads, that talks about enterprise IT strategy on a regular basis. AndIT projects over $3 million still pop up to the executive committee,which gives Drew a forum to talk IT strategy with all the top execs.Beneath this level, he has built steering committees in each businessunit and an IT operating committee, composed of the different businessunit IT leaders, that meets regularly to talk strategy and prioritizeinvestments.