Archive for February, 2011

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

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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 final dimension of the Strategic Alignment Maturity Model of Luftman (2000) has to do with Skills. This dimension contains seven attributes.

The first attribute is not specifically about human skills, but is about the innovative entrepreneurial environment an organisation fosters (or not), and too which extend this is done. Only in parts of the organisation, or enterpise wide.

Second, locus of power, has to do with the question where and by whom IT decisions are made. The maturity level rises when decisions are made in the top of the organisation and by business and IT executives together.

The third attribute is related to the readiness of an organisation to change. This ranks between resistance till proactive and anticipated change readiness.

Fourth, one should look at the level of career crossovers. How often do business and IT people move to the other side?

The next attributes, are not in the original paper of Luftman (2000), but were part of the questionnaire. The first one (or fifth one) is about the ability and possibility for learning within an organisation. The more formal this is arranged within the company, and the more enterprisewide, the more mature the alignment will be.

Sixth, the level of personal interaction and trust is assessed. And finally, the question which neds to be answered is the capability of the organisation to attract and retain skilled staff.

With this post, all domains and underlying attributes have been named. There is not a specific attribute or dimension which is most important. All should be given equal attention. It’s also clear that many attributes are interrelated. Executing an assessment like this is usefull, because it touches a lot of the elements related to good business/IT alignment. And, as earlier touched upon, the outcomes of the assessment in itself is not the best part. It is the discussion which should follow on this, to investigate why people responded the way they did. Only then, lessons can be drawn, and improvement areas can be named.

Reference

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

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The fifth dimension of the Strategic Alignment Maturity Model of Luftman (2000) is Scope and Architecture. When assessing the business/IT alignment maturity, an important element is how mature the more technical part is perceived. Often, this domain scores somewhat higher, due to the origin of most IT departments, which is the technical side. But, while companies also run into inflexible legacy systems, the maturity sometimes is negative influenced. Let’s look at the (four) attributes.

First, the scope of the usage of IT. Is IT just traditional office supporting, or is IT more important and enables and drives IT the business? The second attribute is about the availability of clear standards. It’s not only the availabilty what matters, but also wether these standards are followed or not across the enterprise.

The next attribute looks at the level of integration of IT withinthe company. The more integrated, the higher the maturity assessment scores on this attribute. Finally, the last attribute is on flexibility of the chosen architecture. Can IT respond to fast changing business needs?

Reference

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

The fourth dimension of the Strategic Alignment Maturity Model of Luftman (2000) is partnership. Partnership between business and IT should evolve to a point where IT both enables and drives changes to both business processes as strategies. Six attributes are defined by Luftman.

First, how business perceives the value of IT. Is it seen as just a cost of doing business, or is IT perceived as an important partner. Second, does IT play a role in the strategic business planning process or not. If the do, apparantly this improves the relation and the level of alignment.

The third attribute is about the way goals, risks and rewards are shared or not.  The more shared they are, the more mature the partnership will be.

The next attribute asks to what extend there are formal processes in place that focus on enhancing the partnership relations. Programmanagement is seen as a suitable mechanisms to manage these relationships in a formal way.

The fifth attribute is about the level of trust between business and IT. And finally, the last attribute is about the level of sponsors and champions within the company. Are they only present at lower levels, or even at C-level.

The domain of partnership is highly connected to the way both parties perceive and trust each other.

Reference

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

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

The second of the six dimensions of the Strategic Alignment Maturity Model of Luftman (2000) is Competency and Value of IT. Too many IT organizations cannot demonstrate the value they deliver to the business. This dimension consists of 7 attributes.

The first three attributes all are related to Metrics. The first two are related to IT and to business, where the more formal metrics and surrounding processes (e.g. feedback-loops) are implemented, the more mature the alignment should be. The third attribute is about the level of integration of business and IT metrics.

The fourth attribute is about the availability of Service Level Agreements within the company. Not only the availability in itself is a measure for maturity, but also the orientation of the SLA. The more these SLA’s are written in business-terms, the more mature the relation will be.

The next three attributes are all related to mechanisms on learning and assessing investments. The level of using benchmarks, assessments and reviews, and continuous improvements all form a indication for the level of maturity of the alignment between business and IT.

In the questionnaire I’ve used, which was provided to me by Luftman, an eight attribute was mentioned. This was a question on the demonstrated contribution of IT in achieving the strategic goals within the company. I think this is an important question as well, because it illustrates the level of credibility of the IT organization within a company.

All these attributes are connected to the validation of the value and contribution of IT to the strategic goals. The more business and IT are working together in making this contribution explicit in dashboards or Business Balanced Scorecards, the more mature the alignment relation has to be.

Reference

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