Posts Tagged ‘Information Technology’

Recently, a dutch consultancy firm  – ForceFive – published the results of a survey on business/IT alignment maturity within several companies. What I found interesting, is the scale they used to define the alignment maturity level of these companies.

Well known are the maturity levels as defined by Luftman, starting at level 1, ending at level 5. ForceFive defined also five levels, but defined them differently. The stages they define are islands, recognition, collaboration, alignment and fusion. In fact, alignment is defined here as a certain state. And, fusion is defined as the ultimate state which companies can achieve.

Companies should strive to the level, which matches their specific situation, which is not neccessarily the top level.

The five levels are:

Islands (level 1)

Two separate worlds; lacking awareness of mutual dependency between business and IT.

Recognition (level 2)

Aware of mutual dependency. Business expects IT to be flexible in realizing their demands. IT imposes architecture and standards to the business.

Collaboration (level 3)

IT is seen as ‘business enabler’ to realize business objectives. Business defines processes and IT requirements. Business and IT are convinced of their mutual added value. Customer/Supplier relationship.

Alignment (level 4)

Shared processes which combine business and IT interests. Conflicts are prevented through deliberation and compromises.

Fusion (level 5)

Difference between business and IT becomes irrelevant. IT is integral part of business processes.

Reference

De IT organisatie van de toekomst, TIEM, January 2011 (Dutch). www.forcefive.nl

Just read an article of Weiss and Anderson (2004), in which a simple model is introduced to achieve alignment. Some overlap can be recognized with other models, but it’s strong in it’s simplicity. The model – The Four C’s model – consists of four common themes, which provide a way to align business and IT.

Clear direction, which is the development of a clear strategy for the entire organization into the near and distant future. Strategies must be jointly developed. Commitment involves and requires the support of management, especially at the highest level. Mutual respect and trust must be established. Communication must begin with the clear outlining of expectations. Once there is mutual understanding of eachothers intentions and goals, parties become involved and willingly to share risks. Cross-functional integration represents the fourth C. For an organization to succeed at business/IT alignment, boundaries between functions must be intentionally blurred. Creation of a cross-functional team to create an organization-wide governance structure is needed.

In their article, Weiss and Anderson touch also another interesting point of view. In today’s business, companies include suppliers and customers in their strategy development. Organizations gain the technology and interest in using their complete value chain. Business and IT are both needed to enable these kind of networked businesses. At the same time, if these kind of networking is creating value, than it shouldn’t be so hard to enhance partnership between business and IT. It’s just an relation which has to be managed as all the other partnerships, with suppliers and customers. Understanding, clear expectations and mutual respect and trust!

Reference

Joseph W. Weiss and Don Anderson: Aligning Technology and Business Strategy: Issues & Frameworks, A field study of 15 companies, Proceedings of the 37th Hawaii International Conference on System Sciences, 2004

The third of the six dimensions of the Strategic Alignment Maturity Model of Luftman (2000) is Governance. Ensuring that the appropriate business and IT participants formally discuss and review the priorities and allocation of IT resources is among the most important enablers/inhibitors of alignment. The decision-making authority needs to be clearly defined. IT Governance is a topic in itself, and widely studied. Sometimes, alignment is presented as part of good governance. Luftman adresses this as one of the six dimensions in his model. In this post I limit myself to Luftman’s description of governance. In later posts I will expand the view on alignment.

This dimension consists of 7 attributes. Comparing the questionnaire I’ve used with Luftman (2000), one dimension has been changed. Or, in fact, one has been replaced by another one.

The first two attributes are about participation of business and IT in the strategic planning of business and strategic planning of IT. If these processes are isolated, you cannot expect alignment to be mature. The more integrated they are, the better the alignment maturity will be.

The third (original) attribute was about the reporting structure of the CIO. He should report to the CEO to enhance alignment. As said, this attribute didn’t appear in the survey. The new attribute is about the ability of the IT organization to react/resond quickly to changing business needs.

The fourth attribute relates to the way the IT organization is seen, how IT is budgetted. Is IT seen as a cost center, an investment center or even better, a profit center.

The following, fifth, attribute is about how IT investment decisions are made. The more IT investments are seen as value driver, the better it is. The last two attributes are related to this. Number six is about the usage of steering committees. Does your company use steeringcommittees or not, and are the formal and regular or not. The last attribute has to do with the way projects are prioritized. It should be clear by now, that mature alignment consists of a shared prioritization process by business and IT.

As I mentioned earlier, IT Governance, is a topic in itself. Methodologies are provided by several authors and institutions. I will come back to this topic later on.

Reference

Luftman, Jerry: Assessing Business-IT Alignment Maturity, Communications of AIS, Volume 4, Article 14, December 2000

Knowledge Sharing Is...

Image by Choconancy1 via Flickr

One of the six dimensions of the Strategic Alignment Maturity Model of Luftman (2000) is Communication. Communication is part of the social dimension of alignment. This dimension consists of 6 attributes, which all are important to achieve and sustain alignment. Let’s take a closer look at those attributes.

The first one is Understanding of Business by IT. To be effective, IT has to understand the business environment. Knowing about their processes, but almost more important, knowing the business’ customers, the products, competitors and so on. The second attribute is the other way around: Understanding of IT by the Business. Business should be aware of the capabilities of IT, but should also understand what needs to be done to develop and maintain information systems and technology. The better these understanding of business and IT of both worlds, the more mature alignment will be.

The third attribute is Inter/Intra-Organizational Learning. The better an organization is capable of learning (and educating) from opportunities like previous experiences, problems, and challenges, the more mature the alignment is.

Fourth, Protocol Rigidity has to do with the way how business and IT communicate with each other. Is it one-way or two-way? Is it only formal, or also informal? It may be clear that a two-way communication, with formal and informal characteristcs suits alignment best.

Next, Knowledge Sharing is also very important part. As I have introduced in the former post, knowledge sharing is an enabler for alignment. Shared domain knowledge is defined as the ability of IT and business executives, at a deep level, to understand and be able to participate in the others’ key processes and to respect each other’s unique contribution and challenges.

The last attribute in Communication is Liaison Breadth/Effectiveness. According to Luftman, many firms choose to draw on liaisons to facilitate. The key word here is facilitate. Facilitators whose role is to serve as the sole conduit of interaction among the different organizations are often seen. This approach tends to stifle rather than foster effective communications. Rigid protocols that impede discussions and the sharing of ideas should be avoided. I will come back to the role of liasons in a following post.

Reference

Luftman, Jerry: Assessing Business-IT Alignment Maturity, Communications of AIS, Volume 4, Article 14, December 2000

Most common models focus on the strategic dimension of alignment. Chan and Reich (2007) defined several dimensions on alignment. The strategic or intellectual dimension, the structural dimension, the social dimension, and the cultural dimension. A well known study by Reich and Benbasat (2000) defines only two dimensions. The first (intellectual dimension) concentrates on examining the strategies, structure, and planning methodologies in organizations. The second (social dimension) investigates the actors in organizations, examining their values, communications with each other, and ultimately their understanding of each others’ domains.

The intellectual dimension of alignment is defined as “the state in which a high-quality set of interrelated IT and business plans exists.” The social dimension of alignment is defined as “the state in which business and IT executives within an organizational unit understand and are committed to the business and IT mission, objectives, and plans”.

The study included four factors that would potentially influence alignment:

1. Shared domain knowledge between business and IT executives: the better IT and business executives understand and participate in each others’ key processes the better the alignment will be. Shared domain knowledge is defined here as the ability of IT and business executives, at a deep level, to understand and be able to participate in the others’ key processes and to respect each other’s unique contribution and challenges.

2. Successful IT history: the more successful the previous IT implementation the more trust business executives have in IT and the more motivation to communicate with the IT department, which leads to better alignment.

3. Communication between business and IT executives: the communication between business and IT executives can positively affect the level of mutual understanding and alignment.

4. Connections between business and IT planning processes: the more IT executives are involved in business planning the more they can understand and support the business objectives, leading to better alignment.

All four factors in the model (shared domain knowledge, IT implementation success, communication between business and IT executives, and connections between business and IT planning) were found to influence short-term alignment (the degree of mutual understanding of current objectives). Only shared domain knowledge was found to influence long-term alignment (the congruence of IT vision between business and IT executives).

References

Chan, Yolande E and Reich, Blaize Horner: IT Alignment: what have we learned, Journal of Information Technology (2007) 22, 2007

Reich, Blaize Horner and Benbasat, Izak: Factors that influence the social dimension of alignment between business and information technology objectives, MIS Quarterly, Vol.24, No.1. March 2000.

More or less in the same period as in which Maes (et al) developed the Amsterdam Information Model, a comparable model was developed by Van Bon and Hoving (2007), based on earlier work in 1998. They named their model the Strategic Alignment Model Enhanced (SAME). Both models look the same. Maybe, the scientific backgrounds are different, but from a practical point of view they appear similar. What the SAME model introduces is a nice definition of the different layers.

These three different layers (strategic, tactical, operational), combined with the three colomns (business, information, technology) form the SAME model.

Reference

Jan van Bon and Wim Hoving: SAME, Strategic Alignment Model Enhanced, BHVB bv, October 2007

In the past years I’ve executed some assessments on the business/IT alignment maturity of some organizations. I’ve used the assessment method of Luftman, the so-called Strategic Alignment Maturity Model (SAMM).

This model can be used in a survey to see where a company stands regarding maturity and once this maturity is understood, it can provide the organisation with a roadmap that identifies opportunities for enhancing the harmonious relationship of business and IT [Luftman, 2000]. The model consists of 6 alignment areas. Each area has multiple attributes. For each area there are clearly defined maturity levels. All areas should be given attention to mature the alignment between business and IT. With the help of a questionnaire, based on the SAMM elements, people from business and IT valued each question with a score between 1 and 5. These scores correspond with the maturity levels as defined by Luftman. One question per attribute of the model. The outcomes of the survey can be plotted in a graph.

It’s interesting to know where a company stands regarding the maturity level on business/IT alignment. But, that in itself doesn’t help very much. What does help, is using the outcomes to start an open dialogue with and between business and IT representatives. By looking at the outcomes, one can easily point at situations where business and IT disagree, or where the mean score is low. Luftman states that all elements of the model should be more or less on the same level to have good alignment. Such a survey facilitates an open discussion. And, in this dicussion you can find out why people valued certain elements the way they did. And this provides valuable insight into which areas improvements are possible and needed.

In some cases, the questionnaire was send to different levels of the organisation. On strategic, tactical and operational levels. This was useful as well, because this gives insight in differences between these levels.

From a practical perspective, this survey is easy to apply. It’s not the overall maturity score which is important. It’s the insights the individual scores provide. These scores enable the dialogue between business and IT. And, once this dialogue has started, it’s so much easier to start working on improvements.

References

Luftman, Jerry: Assessing Business-IT Alignment Maturity, Communications of AIS, Volume 4, Article 14, December 2000

Luftman, Jerry and Kempaiah, Rajkumar: An Update on Business-IT Alignment: “A Line” Has Been Drawn, MIS Quarterly Executive Vol.6 No. 3, September 2007.