Corporate Strategy, Technology Strategy

Enabling IT Alignment

The last IT transformation didn’t deliver the value it was expected to. Outsourcing turned out to be a costly affair. We are losing business as the systems continue to be not available most of the times. Is it IT’s fault?

There is an ocean of papers written to get the IT right for the firms. However, the issues still persist. Here I present a framework and a checklist, primary research based of my experience and secondary research on the existing whitepapers on the subject,  that should aid in validating how well the IT is aligned to business.

We first assess the current value add across the existing Business-IT alignment, then we run through a checklist to identify the root cause behind the missing value add.

The value derived is the sum of values across four alignment fronts within Business-IT Alignment. These are 1) Strategy Alignment 2) Resource Alignment 3) Risk Alignment and 4) Metrics Alignment. The framework looks into the individual pockets within these fronts to identify the areas wherein the value add is not at par against expectations.

Strategy Alignment: This is how well is the overall business strategy translated into IT strategy. And in parallel how well are the IT capabilities made use of in building business strategy. The value derived from this front is termed as ValueSB and ValueSI for Business alignment and IT alignment respectively.

Resource Alignment: This is how effectively and efficiently are the IT resources aligned to cater to the needs of Business and vice versa. The effective transaction model between these two entities creates a synergy that aids in a huge value add. This ranges from how they interact to how they account for such transactions. The value derived from both these is termed as ValueRB and ValueRI for Business alignment and IT alignment respectively.

IT Align 1

Risk Alignment: This is how well are the business risks translated into IT risk management and how well are the IT risks understood by the business. Overall understanding of both parties risk profiles and assessment results in better value delivery. The value derived from both these is termed as ValueRB and ValueRI for Business alignment and IT alignment respectively..

Metrics Alignment: This is how the business defines the value delivery as a set of expectations metrics from IT and how IT defines the support metrics to aid in value delivery. Both metrics should be clear, consistent and in support of above mentioned alignments. These should aid in clear communication and channeling. The value derived from both these is termed as ValueMB and ValueMI for Business alignment and IT alignment respectively..

With that said, the definitions of the above said alignment fronts should be simple and right sourced. This will not only help in better requirements understanding of both parties but also in better deliveries.

Now, in order to identify the missing links or the root cause behind the gaps in value delivery we need to follow a five step process. This will aid in identification of areas of improvement or re-engineering that currently fall below par on value delivery.

IT Align 3

Step 1: Identify the business essentials and capabilities which need to be delivered upon by IT.

Step 2: Identify the IT capabilities which support the items in Step 1. And build or reconfigure the missing links wherein these are either not meeting expectations or not being addressed at all.

Step 3: Review the IT operations and architecture which support the items in Step 1 and Step 2.

Step 4: Review the IT strategy that supports 1) the vision as defined in Step 1, 2) the sought capabilities or transformations in Step 2 and 3) the perceived changes in Step 3.

Step 5: Review the business priorities and IT spending to assess the priority alignment between business demands and IT catering.

Altogether, this entire analysis should leave you with a big picture sharing 1) the missing value-adds and 2) root cause of missing value-adds. Based on this a blueprint of plan of action can be designed to address the issues and gain the value-adds missing from the Business-IT partnership.

 

Secondary Research Source(s):

McKinsey Quarterly

BCG Perspectives

ATK Insights

IT Governance Institute

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