CIOs can use this step-by-step guide to improve business IT alignment
Business IT Alignment is the holy grail of IT Value. Yet, no business will ever reach the goal of “business and IT alignment”. Let me explain.
Why is Business IT Alignment Hard to Achieve?
The goal of perfect alignment is unachievable because of the dynamic nature of business. Every organization operates in an ecosystem and is affected by the forces at play in it. Economy, industry, competitors etc. are all players in this ecosystem who are continuously evolving. Similarly, knowledge and tools – such as information technology - are also continuously changing. To remain competitive i.e. maintain differentiation, every organization must adapt in response to the actions and activities of others in its ecosystem. Organizations that do not adapt lose their competitive edge over time and disappear.
Add to this the changes in an organization’s internal environment – structure, skills, finances, personnel, knowledge, core competency etc. – and now one has a potent mix of forces that demand change in response.
This continuous change is the cause of perpetual misalignment. It takes time to understand the impact of the actions of others. It takes time to take action. While you are reacting, the world is not stationary – it is throwing more stuff your way. By the time you are done, you are out of alignment. To be precise, while you are taking action, you are out of alignment!
Till we have perfect predictive modeling and instant systems, no organization will ever be in perfect alignment. The best one can do is to move “toward” alignment i.e. moving in the right direction.
An Effective Business IT Alignment Process
Do not let this discourage you from pursuing business and IT alignment! It is a worthy goal to pursue. Indeed, it is a critical one to pursue. You might never reach alignment but you can take steps to get ever closer. This requires a process.
Often, we ignore the fact that business and IT alignment is a process. This process does not have a starting point nor does it have an end. It is a series of “learn and do” cycles that incrementally get towards alignment.
Step 1: Identify Business Drivers
In this step, we identify the business needs that are driving IT. In other words, what are the business needs that require IT enablement? Is the company launching a new product that requires, say, a new fulfillment system? Is the company acquiring another company that requires rationalizing the systems of the two?
These business needs are continuously changing. Periodically, they should be identified so action can be taken in response.
Step 2: Create IT Vision
Now that we know our business’ needs, how can IT help? This step identifies the IT Capability – strategy, process, infrastructure and organization – required to meet business priorities.
The starting point? A vision for IT. This vision lays the general guidelines or policy that drive the creation of this IT Capability. Remember, two people might react differently to the same requirements depending on their underlying beliefs. It is very important to articulate these underlying attitudes and beliefs into a vision before attempting to answer the IT Capability question.
Step 3: Assess Current Alignment
This step answers the question: How does the current IT Capability compare to the envisioned IT Capability?
There are three dimensions of alignment – investment, asset and organization. By answering this question for all three, this step assesses the alignment along these three dimensions.
Step 4: Identify Alignment Gaps
Comparing the desired or “to-be” IT Capability with the current or “as is” IT Capability, one can identify gaps that are causing misalignment.
Again, this comparison is made along the three dimensions – investment, asset and organization to precisely identify the root cause of misalignment.
Once we have the root causes, we can identify the potential fixes. One “fix” can potentially address multiple gaps!
Step 5: Prioritize IT Initiatives
The previous step gives us a list of “fixes” that can get business and IT aligned. However, we might not be able to act on them – all organizations are capacity constrained. More importantly, we should not act on all of them. Some fixes are easier than others. Some provide a bigger “bang for the buck”. There are other reasons why we should not attack the entire list all at once.
Consequently, this list must be prioritized. Step 5 does just that.
Step 6: Evaluate Implementation Options
A prioritized list of “fixes” or IT Initiatives is the starting point for implementation planning. This is a critical step to ensure success. Often, organizations forget to plan for implementation and pay the price in terms of over budget or delayed or failed projects.
This step takes the list of initiatives and creates a roadmap for IT. This roadmap is a result of careful planning that takes is driven by one primary consideration - risk.
Step 7: Create Migration Plan
This step creates a migration plan for the IT roadmap – steps, deliverables, responsibility, timing etc.
This is a plan. It needs these key elements in some detail. However, trying to button this down beyond a certain point is an exercise in futility. No plan stands the test of time. Hence, this plan should also be modified as we learn new things after implementation begins.
Step 8: Adjust IT Strategy OK, I lied. There are 8 steps to IT Alignment! This is the key step to ensure connection between the changing business needs while we are implementing IT solutions in response. If we keep going without looking back, by the time we are done the world might have moved away and made our solution irrelevant!
Business IT Alignment is a Process
It is essential that we keep track of the changing business world – both internal and external – and make sure our solutions are in line. If they are not, then senior leadership has the responsibility to ensure that we do not continue those initiatives that are not. Putting good money after bad is never a good idea. CIOs are paid to make these tough decisions.
This is the science of IT Strategy. However, there is also an art of IT Strategy that comes from doing it a few times. This art or instinct plays an equally important role in getting business and IT aligned as these 8 steps.