Monthly News International
Leadership Series: Strategic Planning - Strategies and Guidance for IT/Business Alignment
Alignment is concerned with how well business objectives are incorporated into IT practices and deliverables. Improved IT/Business alignment has been often sought, but difficult to achieve. Recent evolution in the data processing environment is making it possible to find a better solution.
IT/Business alignment is a broad vision, which has been debated endlessly since the 1960s. It embraces a wide range of areas, and, although other terminology has been suggested, the debate remains the same. The business environment continues to evolve, and as part of that evolution, the relationship between IT and business processes must also change. IT continues to grow in importance in every area of business, promoting efficiency, enabling e-business, and integrating different processes across the enterprise. The result is that the relationship between IT and business is constantly shifting, and it is important to refocus from time to time to ensure that requirements are adequately being met.
It is essential to have good business processes, mature management structures, and well-defined IT processes in place before alignment can be successful.
Current Trends
The relationship between business and IT is now changing in important ways as a host of new factors have entered the business environment, and as IT has become inextricably involved with business processes. Factors currently affecting alignment include business regulatory compliance, requirements for transparency and auditable processes; quality programs such as Six Sigma and ISO 9000; a growing need for business agility; plus a need to integrate with frameworks such as CoBit and ITIL. Among the factors which are changing the IT/business relationship are:
- Need for IT processes to incorporate and accommodate global sourcing, including Business Process Outsourcing (BPO). Growing need for outsourcing to be easily implemented, measured and managed;
- Need to ensure that IT processes and controls aid auditability of the organization, and are themselves auditable;
- Increasing concern over, and responsibility for, cost control in IT, including matching of new projects to business objectives and developing cost justification;
- Increasing responsibility to support compliance and security requirements. Many of these new requirements extend across the board but heavily involve IT;
- Need to continually improve productivity of individual workers and processes, becoming increasingly important in troubled economic times;
- Need to support an increasingly modular form of working, resulting from outsourcing, mergers, acquisitions and evolving business processes. This means, for IT, increased pressure on standardization;
- Need to contribute to development of new business models to meet the evolving needs of the organization; many of these new business models being a direct result of information technology.
IT is becoming increasingly integrated with business processes themselves, and this means that it needs to be better focused on strategic objectives.
New Roles Supporting Alignment
As increasing numbers of tasks become integrated with IT, functional workers will also need to develop significant IT skills and in meeting the demands of their jobs. They, too, will need to collaborate with the IT department and follow the procedures that have been set down in IT, effectively creating a matrix management structure.
One of the issues in defining alignment is that IT organizations tend to vary in how they act and how business management perceives them. Sometimes, the IT organization is viewed as a utility, sometimes it's viewed as a supplier of services, and sometimes it is viewed as a partner in the growth of the business. Although most IT organizations would prefer to reach the third area, in reality, many function quite well in the top two. Alignment requires IT to meet the needs of business, and sometimes business expectations extend only to utility functions in continuing to provide a base level of services. This may indeed be satisfactory for certain types of businesses, which are at the level of maturity that does not require wide-scale innovation or tremendous growth. The alignment process must include a definition of the role of IT within the organization, and development of proven capabilities to support that role. That definition is in many cases crucial, as it will have an impact upon costs, hiring and outsourcing as well as flexibility in response to changing business conditions.
Implementation and the Future
The best way to address alignment is to take a careful look at processes and communications and evaluate them from a business perspective. This means maintenance of the effective communication between IT and business managers, ensuring an effective IT governance process is in place, measuring IT value and keeping IT costs contained, developing partnerships between business units and IT, setting up an effective IT infrastructure and ensure it is operating efficiently. Good communication is absolutely essential.
Focusing upon alignment issues alone can create new difficulties. This has been pointed out in a 2007 study from MIT Sloan Management Review entitled “Avoiding the Alignment Trap in Information Technology". The study identified a state where a company aligns a poorly performing IT organization to the correct business objectives, resulting in a situation where IT costs continue to rise and business goals continue to remain unmet. Companies in the “alignment trap” attempt to create good IT policies at the same time as they are aligning IT with business. This can result in tremendous inefficiencies and is likely to be doomed to failure. Companies doing this performed even worse than those having good IT processes, but poor alignment with the business.
It is important to ensure there is a clearly defined IT strategy that supports real company objectives. Establishing an IT steering committee is generally advisable to ensure alignment issues are addressed. IT liaison roles can be created in business units to better represent issues. Finally, it is important to ensure that good processes are in place for ensuring business requests are accepted, managed, and acted upon.
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