IT Business Alignment STILL Critical to Enterprise Success

Is your IT Organization aligned with the Business? IT-Business Alignment is the first and foremost f the five principles of IT Governance. The remaining principles: Value Delivery, Risk Management, Resource Management, and Performance Management are impossible to realize if IT is not aligned with the business. Despite this absolute prerequisite to the success of any IT organization, the term “IT-Business Alignment” is often ridiculed if not dismissed outright. I keep hearing it is so “passé.”

A number of pundits whom I respect suggest the phrase “IT-Business Alignment” should be banished from our lexicon. I read a post today suggesting that perhaps it is the “dumbest phrase ever spoken” (inspiring me to revisit this article on the subject). These pundits contend the term is meaningless, pointing out that talking about “aligning” IT with the business implies they are separate enterprises.

It might “imply” this, but only when people don’t understand the spirit of the term. Yes, all IT organizations are part of the overall enterprise, but few of them are purposely designed and optimized (through business-driven reason and rationale) in their construct (IT Archetype) to serve the Enterprises in which they are contained. I say consciously because many IT organizations are the correct construct, but appropriate expectations are not established and managed because the business did not drive or at least participate in the establishment of that construct. And though the IT Archetype is likely correct (what I call “archetype by accident”) the decision-making (governance) and associated processes are seldom designed and optimized for the enterprise strategies they are intended to support.

I think the lack of IT-Business Alignment is epidemic. I refuse to stop focusing on the need to address this pervasive problem simply because many people can find fault in the literal interpretation of the words being used. Many propose we use different terminology. In 2009, I participated in a blog-inspired conversation calling for IT-Business “Integration.” I heard the suggestion that IT-Business Alignment should be replaced by “Business-IT Fusion.” To both my response was the same, “YES!” (Though I think I was being generous in accepting the fusion term. Fusing many IT organizations in their current construct is the LAST thing I want to do because so many of these existing constructs are not “aligned with the biz.”)

I continue to encounter the argument that in most organizations, IT is the business. This is based on the fact that IT is the way most businesses interact with suppliers, partners, and customers. I agree that IT is the way most businesses interact with suppliers, partners and customers, but that does necessarily mean that IT is the business. I use Forrester’s 3-tiered IT Archetype model to make this point.

Forrester contends there are 3 IT Archetypes:

• Solid Utility - IT organizations expected to provide cost-effective, dial-tone reliability with transparent, constantly declining costs.
• Trusted Supplier - IT organizations expected to deliver application projects on time and on budget, based on operating units’ requirements and priorities — plus, being a Solid Utility
• Partner Player - IT organizations expected to create unique and competitive solutions with customers, suppliers, and internal users — plus, being a Trusted Supplier.

I propose it is possible to interact with suppliers, partners and customers with commoditized infrastructure applications – focusing solely on speed, availability, accuracy, integrity and low-cost (Solid Utility). Forrester completed a study in 2008 showing North American and European enterprises fell equally into each of their 3 IT Archetypes. Using the Forrester model, the organizations where “IT is the business” require the “Partner Player” archetype. Their research showed 1 out of 3 organizations fell in this category – not “most.” I have not seen subsequent research, but I am sure there are still plenty of valid Trusted Supplier and Utility archetypes around.

Even though the term is getting old, I will continue to be a passionate advocate of IT-Business Alignment. So how do you align IT with the Business? My answer to this will always be the same, IT Governance. This is because sound IT Governance provides a systematic approach to ensure IT is aligned with the business, in addition to delivering appropriate value, managing risk, managing resources and managing performance. IT Governance provides the framework for organizations to:

• Define the appropriate IT Principles and choose the correct IT Archetype
• Define, establish and manage the appropriate IT Architecture
• Define and manage the appropriate IT Infrastructure strategies
• Understand and respond to Business application needs
• Choose and prioritize IT Investments and ensure the realization of value

From an IT Governance perspective, there are two dimensions to ensuring the above decisions align IT with the business:

• IT must support the Enterprise Strategy – this includes positioning IT to support future Enterprise Strategy
• IT Operations must be aligned with Enterprise Operations 

Though they sound simple enough, these two IT-Business Alignment goals require sophisticated governance constructs and supporting processes. The effectiveness of these governance mechanisms to align IT with the business is determined by IT’s ability to meet the following “easier said than done” objectives:

• Establishing a direct correlation between Business Strategy and IT Strategy
• Balancing IT investments between systems that support the enterprise as is, and transform the enterprise to create an infrastructure that enables the business to grow
• IT investments add appropriate value to Enterprise products and services
• IT investments improve customer satisfaction and customer retention
• IT assists in competitive positioning
• IT increases managerial effectiveness
• IT contains costs and improves administrative efficiency

Of all the bullets listed above, the last in the list is the only one I see consistently targeted and measured by IT organizations. Most IT organizations insist it is very difficult if not impossible to measure its ability to meet the other objectives. I agree. The only time it is easy to prove these objectives are being met, is when IT is aligned with the Business. And take another look at the third, fourth and fifth bullets on the above list. I am sure you have read the “new” calls for IT and the CIO to be more directly connected to the business – showing how IT delivers business value. I first saw those bullets 10 years ago and I have been delivering that list in presentations for more than six years now. The idea of the need for IT to be more directly connected to the business is not new.

I am glad I saw the post today ridiculing the notion of IT/Business alignment. It inspired me to dig up and revise this past post – one I wrote almost two years before I published my book, “Eliminating ‘Us and Them’ – Making IT and the Business One” – the ultimate IT Business alignment.

~ Steve ~

Comments

[cash gifting]

Yes, It business is always a critical matter to all business enthusiast.

[Jana]

Whatever they may be called, IT-Business needs to be aligned as there are many failed IT projects due to the absence of alignment. I wouldn't be too worried with the terms to be used and people ridiculing them. At the end of the day, we are still talking about alignment.