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Aligning IT and Business
for Better Results
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© 2015 Global Knowledge Training LLC. All rights reserved. 05/02/2023 Page 2
Presenter
Michelle MooreSenior Director, Organizational & Personal Effectiveness (Canada, Europe, Middle East & Africa)
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Today’s business environment
RapidGlobalization
ChallengingEconomic Climate
Changing Demographics
Rapidly Advancing Technology
Focus on Sustainability
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It’s a VUCA world
Volatility
Uncertainty
Complexity
Ambiguity
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One certainty?
In this VUCA world the only certainty seems to be the unstoppable advancement of digitalization.
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The new normal
By 2020, every company will be an IT company and every leader will be a digital leader..."digital is the business; the business is digital.
Peter Sondergaard, SVP and Head of Research - Gartner
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How are we doing?
Harvard Business Review – Business Transformation and the CIO Role
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Agenda
1. What is IT and Business alignment?2. Why is Business and IT alignment so important?3. Improving Business and IT alignment4. Questions
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What is Business & IT Alignment?
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What is business – IT alignment?
‘A dynamic state in which a business organization is able to use information technology (IT) effectively to achieve business objectives – typically with improved financial performance.’
‘The capacity to demonstrate a positive relationship between information technologies and the accepted financial measures of performance.’
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Common characteristics of definitions
The outcome of alignment is a positive result on business performance (quantitative or qualitative)
Alignment is evolutionary and dynamic
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The benefits of alignment
Cost effectiveness Quality Responsivene
ss Agility Innovation
Strategy & Business, ISSUE 70, Spring Edition 2013
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Enablers
Senior Executive Support for IT
IT involved in strategy development
IT understands the business
Business – IT partnerships
Well prioritized IT projects
IT demonstrates leadership
Inhibitors
IT – Business lacks a close relationship
IT does not prioritize well
IT fails to meet commitments
IT does not understand Business
Senior executives do not support IT
IT management lacks leadership
1
2
3
4
5
6
Enablers and inhibitors of alignment
Source: Luftman 2003
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Recognizing alignment
How effectively do IT & business communicate?
How is IT governed?
How effectively do IT & business collaborate?
How is the value of IT measured?
How is technology planned and consumed?
Do all employees have both technology & business skills and knowledge?
Source: Luftman 2003
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How effectively do IT & business communicate?
• Minimum understanding between IT and business• Casual or ad-hoc approach to capturing learning • Command and control approach to communication• Limited knowledge sharing • Few strong relationships
Poor Alignment
• Pervasive understanding between IT and business• Strong and structured capture and application of learning• Informal protocols• Knowledge sharing inter and extra-enterprise• Many strong relationships even with customers
Excellent Alignment
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How is IT governed?
• Business and IT strategic planning are separate and ad-hoc• CIO reports to CFO• IT is seen as a cost centre• IT investment management is cost-based• No formal steering committees exist• IT investment prioritization is reactive
Poor Alignment
• Business and IT strategic planning are integrated across the organization• CIO reports to CEO• IT is seen as a business driver and profit centre• Investment management is based on value• Steering committees exist with both business and IT participation• Business and IT prioritize investments together
Excellent Alignment
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How effectively do IT & business collaborate?
• IT is perceived as a cost• IT does not have a seat at the business table• IT takes risk with little reward or recognition of accomplishments• Program management is ad-hoc if at all• Relationship is driven by conflict with minimal trust• There is not a business champion for IT
Poor Alignment
• IT and business collaborate and share decisions• IT has a seat at the business table• Risk and rewards/recognition are shared• Program management is practiced • Relationship is one of valued partner• Business sponsorship exists at CEO level
Excellent Alignment
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How is the value of IT measured?
• Metrics are technical and are not related to business• Business metrics are not related to IT• Some service level agreements in place but sporadically• Benchmarking not practiced• No business reviews or performance assessments• Continuous improvement not evident
Poor Alignment
• IT metrics are related to business (and vice versa) and extended to external partners• Service level agreements are in place and extended to external partners• Benchmarking is routinely performed with partners• Business reviews and performance assessments are routinely performed and include external
partners• Continuous improvement is pervasive
Excellent Alignment
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How is technology planned and consumed?
• Focus is transactional back office systems• No common articulation or understanding of architecture• Limited integration of technology or digitized business processes• Little transparency or flexibility
Poor Alignment
• Business strategy is the driver of technology• Enterprise-wide standards• Integration is enterprise wide and includes external partners and customers• Flexibility and agility
Excellent Alignment
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Skills
• Entrepreneurship and innovation are discouraged• Power is in the business• Command and control management style• Resistant to change• No career cross-over
Poor Alignment
• Entrepreneurship and innovation are the norm• Power is equally distributed at C-Level including CIO• Management style is relationship-based• Career opportunities exist across the organization• Cross-training and education are widely available
Excellent Alignment
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Why is alignment so important?
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The third era of computing
Source: Gartner – CIO Agenda ‘Taming the Digital Dragon’
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What is digital?
The use of technology to achieve the vision of the organization and radically improve performance.
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Creating new opportunities
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…and lots of disruption
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Business models
Digitally modify/ complement existing business offers (usually physical)
Create new digital business
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Digitally modifying/complementing physical business
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IKEA – Product innovation
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Business processes
Process digitizationImprove employee productivityBetter decision making
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Improving employee productivity
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Better decision making (crowdsourcing)
Crowdsourcing product ideas and features
Every customer is R&D
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Customer experience
Increase customer understanding
Improve top line growth – new sales opportunities
Increase customer touch-points – strengthen the brand or improve the customer experience
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Enhancing the customer experience & improving sales
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Employee experience
Increase connection with the organization and colleagues
The new way of working
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The new employee experience
The New Way of
Working
Mobile
Flexible
Inclusive
Social
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The New Way of
Working
Mobile
Flexible
Inclusive
Social
The new employee experience
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The main trends main behind digital transformation
Social
Mobile
Analytics Cloud
Internet of
Things
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The emerging trends behind digital transformation
3D Printing
Artificial Intelligence
Robotics
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Poll question
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Improving IT and Business Alignment
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What can you do to improve alignment?
Educate IT on Business
Educate Business on IT
Optimize your governance
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What can you do to improve alignment?
Educate IT on Business
Educate Business on IT
Optimize your governance
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Understanding business
Understand the
business
Understand the
functions
Understand the
individuals
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Understanding the whole business
The Formal Organization
The Informal Organization
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The formal organization
The Formal Organization
The Informal Organization
Policies & Business Processes
Priorities and Objectives Organizational Charts
Vision & Mission Statements
KPI’s Job Roles & Descriptions
Business Model
Business Capabilities
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And don’t forget the external environment
Competitive SWOTPESTEL 5 Forces
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Educating IT on the business – The Business Model Canvas
A business model shows how value is:
CreatedDeliveredCaptured
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A simple 9 box grid
Key PartnershipsActivities and
resources acquired
outside the enterprise
Key ActivitiesBusiness processes
Value PropositionSolutions to client needs
and problems
Customer RelationshipsCreated and
maintained for each client segment
Customer Segments
Types of clients served
Key Resources
Assets needed to provide the
value propositions
Distribution ChannelsAvenues of delivery of
value propositions
Cost StructureCost of performing all the
activities of the organization
Revenue StreamsResult of value
propositions to clients
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…and the informal organization is really important
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The secret to success – the soft skills
Interpersonal Understanding
Influence & persuasion
Relationship building
Customer-service
orientationEntrepreneurism Creative thinking
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What can you do to improve alignment?
Educate IT on Business
Educate Business on IT
Optimize your governance
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In the past…
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But today it’s different – the consumerization of IT
The specific impact that consumer-originated technologies can have on enterprises
Consumerization cannot be stopped
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The impact of consumerization
Non-IT employees are more comfortable with technologyHigher (and sometimes unrealistic) expectations:
DevicesAccess ApplicationsUser Experience
An increase of shadow IT
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Risks of shadow IT
Increased costs (duplication of services,
loss of economies of scale)
Risk of data loss
Process Inefficiencies
Compliance Issues
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Becoming IT savvy
Learn about corporate versus
consumer IT
Learn about the trends
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Becoming IT savvy
Learn about corporate versus
consumer IT
Learn about the trends
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Security
Optimizing costs
Regulatory compliance
Eliminating complexity
IT’s challenges
Keeping IT Running
Delivering value
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The legacy of corporate IT
In the past when business asked for something IT would build an isolated solution
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The legacy of corporate IT
And then we realized those solutions needed to be connected within the organization
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The legacy of corporate IT
And then outside of the organization as well
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The result…
IT-Business disconnect
SilosIncreased cost /
duplicationUnclear views of
the systems
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Getting back on track
Enterprise Architecture
Cloud Computing
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Becoming IT savvy
Learn about corporate versus
consumer IT
Learn about the trends
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Understand the trends
Social
Mobile
Analytics Cloud
Internet of
Things
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Understanding the trends
66
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10 Strategic Technology Trends (1 to 3 Years)
Source: Gartner
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Top 5 Technology Investments (1 to 5 Years)
Source: Gartner
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Gartner Hype Cycle – Longer Term
Source: Gartner
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Emerging Technologies – 2014 Hype Cycle
Source: Gartner
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What can you do to improve alignment?
Educate IT on Business
Educate Business on IT
Optimize your governance
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What is IT governance?
The processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals.Gerrard
The decision rights and accountabilities that encourage desirable behavior in the use of IT. MIT Sloan
The leadership and organizational structures and processes that ensure that the organization's IT sustains and extends the organization's strategies and objectives.ISACA
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The value of IT governance
Architecture Question
Are we doing them the
right way ?
Are we doing the right things ?
Strategy Question
Are we getting the benefits ?
Value Question
Are we getting them done well ?
Delivery Question
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A shared responsibility
Business IT
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Getting IT governance right
People (Who)
Portfolio (What)
Governance Framework
Processes (How)
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Play your position in governance
IT Architecture
ITInfrastructure
Business Applications
IT Investment Prioritization
Business
IT
Business & IT
IT Principles
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© 2015 Global Knowledge Training LLC. All rights reserved.
Business – IT Alignment Program: Coming Soon!
1 day Business Leader Program
3 x 3 day Modules for Senior IT Leaders
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