Archive for the ‘Alignment’ Category

When I started this blog more than a year ago, one of the answers I was looking for, was if and why Business/IT Alignment is so different from alignment between for example sales and operations or between business and HR. If it’s not, we could learn more from other domains. If it is, than the question is why. So far, I didn’t find a clear answer to this question. But, maybe I stumbled upon at least a possible answer to this question.

It started when I was thinking about the pros and cons of internal customer/supplier relationships. IT is often perceived as a “supplier”. And, as a result of this, the relationship between business and IT can be seen as a customer/supplier relationship. Question is, why IT is perceived as a supplier? I have read some articles of people discussing the issue of running IT as a business. Several views on this can be found, proponents and opponents. These discussions made me realize, that IT in fact is always seen (and organized) as a separate unit. A unit which is struggling to get and keep connected to the business, which in fact is called the alignment problem. It is not the organizational form, which is relevant, but the fact that it’s been considered a rather isolated unit within an enterprise. And, maybe that could be one of the main reasons behind the alignment problem. Trying to be seen as an integrated department of an enterprise, but in fact not acting as one.

In one blog was stated:  “There is no secret to running IT like a business. It simply means that the IT group must now do whatever is necessary to sell products and services on a competitive basis. While there are a few caveats to this statement, overall it is as simple as knowing your market, giving customers what they want, and doing it at a price that is competitive. This means that CIOs are going to have to think and operate more commercially, using menus of products and services that describe these services with pricing, delivery time, service levels and support options. This can be accomplished with a product and services catalog that provides information about what the individual technology offerings bring to a business unit. This catalog must be based upon direct feedback from internal customers (business units) and state what service levels are included in the offering, the fulfillment interval and support levels. Content in any specific catalog depends on the specific business requirements of a specific project. IT must also step out of the technical realm to develop and communicate performance metrics in business language.” .

Although it all sounds logical, question is, if this really helps in getting more aligned with the business. There is a lot of discussion on this topic of running IT as a business. Some nice statements from opponents are found on http://taosecurity.blogspot.nl/2011/01/it-as-business-train-wreck.html. Some quotes:

“Another unintended consequence of running IT as a business with internal customers, while less tangible, might be even more important: Defining IT’s role this way creates an arm’s-length relationship between IT and the rest of the business…”

“When IT acts as a separate, stand-alone business, the rest of the enterprise will treat it as a vendor. Other than in dysfunctional, highly political environments, business executives don’t trust vendors to the extent they trust each other…”

“When IT is integrated into the heart of the enterprise, its priorities aren’t defined by who has the budget to spend (by chargebacks). Rather, they’re defined by a company leadership team whose members have a shared purpose, who understand what the company must do to achieve that purpose, and who understand the role new technology will play…”

The discussion on how to manage IT clearly is open ended. From an alignment perspective it doesn’t help – to my opinion – to position IT as separate business, because of the negative consequences. Maybe, this is where IT differs from other departments within the enterprise. Although there is also tension between for example sales and operations, they are part of the same value chain. And HR and Finance are different from ‘business’-departments, but clearly fill in a supporting role which is not questioned.

Looking at IT, they are more or less stuck in the middle. They are often not perceived as part of the business, but IT doesn’t act as a supporting department either. So, maybe this is part of the trouble in alignment discussions. How to position IT, and how to interact with business partners?

This question is getting more and more relevant in today’s developments. IT already was struggling with their diminishing role due to the large role of outsourcing and offshoring. But, now there is the impact of consumerization and ‘bring your own device’-trends. In a recent article (source: http://www.computerworld.com/s/article/9226927/The_IT_paradox_A_diminished_role_in_technology_but_greater_clout_in_the_business_) is suggested that IT should become more of an adviser to the business and provide governance over externally procured technologies.

Anyhow, it’s time to rethink your position as IT department, and this will direct how you can and should cope with the long lasting alignment issue.

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Shadows

Shadows in the late afternoon. (Photo credit: Wikipedia)

Last week I read an article of Raf Cammarano, which got my attention. In this article it is stated that alignment is about a fixed position at a certain point of time. Although I have seen lots of other definitions, which define Alignment as a process, rather than a state, Cammarano defines alignment as making sure everyone is on the same pag at day 1. He states that the real issue is about synchronization, making sure everyone stays on the same page from day 2 onwards. On this I agree. Cammarano comes up with four interesting types of lag, which all make it impossible for IT to stay synchronized:

  • Stimulus lag: the delay between the business changing course and IT finding out about it
  • Response lag: the delay between IT finding out about the change and deciding what to do about it
  • Execution lag: the delay between IT deciding what to do and actually doing it.
  • Results lag: the delay between IT completing what it needed to do, and the business seeing the results.

These four types of lag are recognizable, at least in my experience. Interesting though, is that many strategic alignment models and theories focus primarily on reducing the first two types of lag, by making sure IT’s strategy and business’ strategy are aligned. But, I am convinced that the last two types of lag, execution and results, are driving alignment even more. This is also something which is mentioned in my previous post, in which successful IT history is named an important influencer of the success of alignment.

Also in a survey published by A.T. Kearney, it is stressed that there is still work to do. While Business and IT executives agree on intent, they often disagree on delivery and execution. Business and IT executives have – according to the survey – very different perceptions on execution, and business executives are also more sceptical of IT’s budgetary efficiency.

Cammarano doesn’t mention real suggestions HOW to minimize the lags, although Oursourcing and Cloud computing should enable the synchronization or ‘movement’ strategy, as it is compared with a guerrilla. Cloud and outsourcing could eliminate fixed positions (data centres and legacy systems) and bring in additional firepower (outsourcing).

Reference

Raf Cammarano (2012) on http://www.rafcammarano.com/content/alignment-yesterdays-war.aspx

A.T. Kearney: Why Today’s IT Organizantion Won’t Work Tomorrow, 2012 http://www.atkearney.com/index.php/Publications/why-todayss-it-organization-wont-work-tomorrow.html

Found an interesting article, which I like to publish integrally, because it illustrates some of my ideas as well!

Is Business-IT alignment just a state-of-mind?

Have you ever heard of Business-HR alignment or Business-Finance alignment? Probably not. So why is so much attention paid to Business-IT alignment? This question was raised by an UCPartners Academy participant early December 2011 and stayed on our mind long enough to see the New Year. Information becomes a strategic asset so harmonizing business and IT functions is important. Business-IT alignment often seems a struggle for energy companies and needs a lot of effort and dedicated initiatives. Or can Business-IT alignment ‘just’ be a state-of-mind, where problems can be solved by a mental change that requires little effort?

Information is a strategic asset

Business-IT alignment refers to applying Information Technology (IT) in an appropriate and timely way, in harmony with business strategies, goals and needs and its external environment [1]. For energy- and utility companies managing information is just as important as managing utility infrastructures and electricity, gas, heat and cold commodities. Competitive and innovative use of IT can transform business strategy and helps enterprises to be successful in the upcoming ‘energy transition‘ era. In other words: Business-IT alignment is important because information is more and more becoming a strategic asset.

Business-IT alignment is difficult

We recently heard several utility staff say that ‘all IT KPI’s are green but the business is not happy’. Technically the IT function delivers what it should deliver: the IT infrastructure and business applications are reliable and incidents are dealt within the agreed time frames. But IT KPI’s are not always linked to business KPI’s: Server uptime for instance is not the same as Allocation process uptime. This is just one of the many cases we encounter where IT is not aligned with business and business is not in alignment with IT. Other cases have to do with rigidity of protocols, poor prioritization processes, unfit organization structures, unclear IT leadership and lack of business sponsorship at IT changes. These cases are symptoms of a situation where investments in IT remain significantly unleveraged.

The need for Business-IT alignment initiatives

Luckily there are many signals of improvement in our industry and IT is no longer perceived as a cost of doing business. But as the KPI example above demonstrates the state-of-mind still leads to an emphasis on control versus trust. Control is a low-level Business-IT maturity characteristic and does not stimulate innovation and entrepreneurship. In the KPI example a relationship based on trust would lead to a limited set of Key Goal Indicators (KGI’s) instead of multiple technical IT (and business) KPI’s. Key Goal Indicators are the result of a Business- IT vision and shared risks and rewards. Solving a whole range of issues similar to the KPI example calls for a planned and focused approach: Business-IT alignment programs.

A state-of-mind

So Business-IT alignment is important and difficult. But does improving alignment always need a lot of effort and program-like initiatives? A well known management coach [2] once showed us that to say ‘I am going to…’ in fact emphasizes the fact that ‘you are not…’. You smoke or you don’t smoke. To stop smoking is a decision you make here and now, a state-of-mind and not a plan for the New Year that suddenly becomes reality on January the first. To say that you will be a business focused IT department emphasizes the fact that you are not. You either are business focused or you are not, or perhaps trying hard to be so. You are an energy company colleague specialized in IT or an IT employee that happens to work at an energy company. Small change, big difference! Could that be why one never hears about Business- HR alignment or Business-Finance alignment? Because HR=Business and Finance=Business?

Why a ‘simple’ mental change is difficult

Last year we worked together with utility (IT) employees that said they would like to meet with business colleagues more often but had no project numbers for these non-productive hours to write on. This example shows how a welcome mind-set can still be hindered by existing structures. It also shows the toughness of a culture that does not stimulate innovation and entrepreneurship: how can joint Business and IT meetings ever be seen as non-productive? Research [3] in this area shows that the skills component of Business-IT alignment has the lowest maturity level score: innovation, entrepreneurship, change readiness, career crossover etc. Hence we conclude that Business-IT alignment has a lot to do with a state-of-mind but changing this state-of-mind is difficult!

Final verdict

Is Business-IT alignment a state-of-mind that ‘just’ requires a mental change or do we still need to work vision, KPI’s, organization structures? Business-IT alignment is important and difficult. Initiatives that deal with vision, KPI’s and structures alone are not sufficient when the people that work in these structures don’t change. Changing a state-of-mind alone is not enough either; hindering structures must be replaced by facilitating ones. A successful Business-IT alignment transformation needs a focused effort of ‘hard’ and ‘soft’ aspects combined.

By naming this topic Business-IT alignment we might have created boundaries that do essentially not exist. So we end this column with a new challenge; to find a better name! Fortunately the title for the next column is already available: Key Goal Indicators green, everybody happy!

Rinke van de Rhee

Source: http://www.ucpartners.eu/user_files/file/ucpartners_column_business_it_alignment_en_feb_2012.pdf

Fusion

Image via Wikipedia

Time for an update. I would like to share some insights from my daily work experiences. Within my company we’ve changed the way we innovate.

Until a year ago, we had several departments throughout the company responsible for innovation. These departments were part of the business and in general they acted in a demandrole towards the (centralized) IT unit. While this caused suboptimal usage of scarce resources and money, our board decided to group all innovation activities in a limited number of strategic programs. I am responsible for one of them. These programs all are part of the business. To eliminate boundaries between business and IT, people from business and IT all take part in these programs. The day-to-day, functional governance is done by the programmanagers, for business as well as IT. So, although we still have an IT department, the innovation people are united in one of these programs, business and IT, and in many cases even with suppliers included.

We not only brought business and IT people together in one (virtual) organization, but also changed the overall responsibility of innovation. We used to talk about projects, due dates, milestones, etc. Now, we’re talking about capabilities and business benefits. Not the project is important, but what it is supposed to deliver and supposed to change within the organization is important.

In fact, we took measures to improve alignment, by introducing some mechanisms mentioned in the IT Engagement model of Fonstad [2005, 2006].  One could also recognize this as a step towards business/IT Fusion as introduced by Hinssen [2009].

It may sound like an easy task to change in such a way. But, it’s tough. Even in a situation where people from business and IT are brought together, thinking and acting in a way the business understands remains difficult. People are used to talk in sharply defined project-terms. But, to become a real partner in business-discussions requires a total different mindset. And, as I’ve experienced, this is something which takes a lot of time and intensive leadership.

I like to share some of the insights have experienced last year.

Shared (understanding of) goals
To realize alignment, shared goals are crucial. But, more important, is a shared understanding of those goals. This seems to be an open door, but it is not. Business and IT people must learn to speak in the same language. This requires explicit and intensive discussions. Do you really understand each other? Do we actually mean the same thing? It is as hard as learning a real language.

Senior sponsors
You can only succeed when senior executives of all partners are committed to the program. This means, executives from business and IT. In our case we installed a programboard with executives of all departments, which meets bi-weekly to decide on all major topics and projects. This commitment is needed to give a program enough mandate and power to act on behalf of business and IT.

Clear expectations
Create an organization in which business and IT are integrated, one should be aware that clarity should be given regarding roles and responsibilities of the members within the program. People are used to focus on the goals of their departments. Now they should focus on the shared goals of the program. In some cases these goals can be contradictive. Make sure these differences are made clear upfront, or at least, make very clear to the people within the program how they should act in these kind of situations. Otherwise this can become a disturbing, hard-to-get, issue undermining the program. Also, be aware that a combined program should take into account both interests of business as well as IT.

Stakeholdermanagement
Managing stakeholders’ expectations is also very important. Stakeholders tend to act and react the way they used to. They have to get used to the integrated approach, where business and IT act as one. They also have to get a clear picture of their own roles and responsibilities, as well of what they can expect from the program.

This are some lessons I have experienced in real life. When I project this on what I have read (and published earlier), I conclude that a lot of what I have seen has been captured in the “4C model” of Weiss and Anderson [2004]. Apparently, this model captures quite nice the most important elements to enhance alignment between business and IT.

 

References
Fonstad, Nils, and Robertson, David: Engaging for Change: An Overview of the IT Engagement Model, CISR Research Briefing, Sloan School of Management, Massachusetts Institute of Technology (MIT), March 2005.

Fonstad, Nils, and Robertson, David: Transforming a company, Project by Project: The IT Engagement Model, CISR Working Paper 363, Sloan School of Management, Massachusetts Institute of Technology (MIT), September 2006.

Fonstad, Nils Olaya: Engaging Matters: Enhancing Alignment with Governance Mechanisms, CISR Research Briefing, Sloan School of Management, Massachusetts Institute of Technology (MIT), December 2006.

Hinssen, Peter: Business/IT Fusion, How to move Beyond Alignment and Transform IT in your Organization, Mach Media, 2009

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

I’ve adressed many models and theories regarding Business/IT Alignment. I have read lots of literature on this topic, and still, as a practitioner I did not find a single one which helped me out in daily practice. For me enough reason to see if I can reconstruct a framework which gives some practical guidance. I do not have the intention to add a new alignment model, but like to combine what I’ve seen.

Many models simplify reality. This can be useful, but oversimplified models loose their practical use. Still, I’m convinced that we can look at the real world using the proper models or frameworks. I’m not the only one who tries to bring the different views together. I have found a thesis of Vargaz Chevez (2010), who constructed the Unified Strategic Alignment Model. The following figure is from his work. Hardly readable, but it consists of many elements of the different existing theories. I regret to say, but this doesn’t help very much in (at least my) daily practice.

Figure 1 Unified Strategic Alignment Model

More usefull, is the so-called 9-cells model (Maes, 1999; Maes et al, 2000; Bon and Hoving, 2007). It offers an interesting view on the domain we’re looking at. The models divide three colomns representing business, information and technology. The three rows are in the two models a little different, but essentially they introduce an intermediairy row between the strategic and operational level.

Figure 2 Nine-Cells Model

This model can be used to  understand where we are looking at. Talking about alignment, one should try to bring all these nine cells in alignment. Many definitions see this as a static situation, where often only the strategic level is considered. But, strategies are worthless untill they are adopted by the tactical and operational level. The tactical level needs to define which projects are needed to really execute the strategy. And on an operational level, the projects need to be implemented and included in daily operations. The tactical level translates goals and preconditions of the strategic domain into concrete, realizable objectives, responsibilities, authorizations, frameworks, and guidelines for the operational domain [Bon and Hoving, 2007].

So, even if on a strategic level, business and IT appear to be aligned, this doesn’t guarentee that it will lead to success. In fact, one should be concentrating on the way the different cells are connected. And here lies the complexity of Business/IT Alignment. To make it even more realistic, we should add more cells. Most larger enterprises are organized in different units. This can be functional or divisional. This will lead to additional 9-cells connected. In the following figure, I have constructed this 3 x 3 x 3 cube, which I call the Generic Alignment Framework©.

Figure 3 Generic Alignment Framework©

This Generic Alignment Framework© is called generic, because this isn’t only applicable for Business/IT Alignment. One could replace bu 1, bu 2 and bu 3 with Sales, Marketing and Operations. Or even, put these functional departments in the place of business, information and technology. The matrix could even be larger or smaller than 3x3x3, depending on the specific organisation. Larger organisations do exist of different units which depend more or less on each other. This also depend on the operating model an organisation chooses to have [Ross, Weill and Robertson, 2006]. But, why should Business and IT be different from other entities? If this isn’t the case, we certainly could learn more on alignment by looking at alignment topics in other areas. And if the Business and IT relationship really indeed is different from the rest, how can we make these differences more explicit?

Using the framework

This framework has value in understanding the complexity of the domain of alignment. Which elements have to be taken into account when a company is looking for alignment. This model also shows the difference between the elements (whether departments or roles) and the linkages.

Many models and definitions adress the state of alignment an organisation has achieved. In fact, they take a picture of the organisation and measure if the elements are aligned at that very moment. Which, in a complex organisation, like illustrated in the framework, is a huge challenge. Anyhow, to achieve alignment, communication between the elements is required, which means that all information should pass all these linkages without any bias. That’s the process of alignment.

The most widespread theories on alignment approach this topic from a strategic point of view.  That in itself isn’t wrong, but they also restrict their theory to the strategic level. That’s wrong. Because an important problem area is excluded (or taken for granted), which is related to a proper translation of strategy into action, through the tactical level onto the operational level.

To be continued (also on page Howe To…)

Most research on alignment between business and IT has attempted to reduce its complexity to allow investigation of simple, direct cause and effect relationships. Still, alignment remains a top-concern. Maybe the way we look at it, isn’t the right way. Concentrating on one aspect of alignment at the expense of other dimensions is an option to reduce complexity. Complexity can be reduced further, by adopting the assumption that strategies are developed in a formal planning process and implemented as intended. However, this is rarely true in daily practice. Therefore, definitions of alignment are concerned with an idealised future that cannot accomodate any deviation. Secondly, these definitions are only concerned with what happens at an executive level and totally ignore events at an operational level.

Co-evolutionary theory provides a promising alternative, ambracing complexity, and capturing the messy nature of alignment in practice. I’ve introduced this vision already in the previous post. Campbell and Peppard developed a model based on co-evolutionary theory and complexity theory. See the enclosed figure. This blog isn’t suited to explain this model, but if you want to read more, read the paper on  http://www.som.cranfield.ac.uk/som/dinamic-content/media/ISRC/Coevolution%20of%20Strategic%20Alignment.pdf.

Some points are interesting though, which I would like to share. The core concern of IS managers in their study was the difference between espoused business strategies and those they could see implemented by their managerial peers in the business. IS manager at an operational level tend to support the actions of their business peers, not the strategies contained within the plans, which are normally difficult to understand and implement at an opearational level. Many participants in the research indicated that it is the relationship and collaboration that provides alignment, not strategic plans.

The data from this study indicated that both business and IS managers within an organisation ‘learn’ to communicate, trust each other, develop a shared system of meaning and shared domain knowledge and then to collaborate. That is, their capabilities co-evolve. The opposite is just as possible. They may make an unconscious decision not to collaborate. In either case the deviance amplification behaviour of positive feedback loops within the alignment system reinforce the situation.

Another intersting point is that there is a difference between trust between two people and trust between groups of people that is rarely explored in the literature. They found that there is a direct relationship between inter-organisational trust and performance. If intergroup trust exists then it is more likely that business and IS groups will collaborate to discover new ways in which existing technology can be used. They will tend to solve mutual problems rather than remain remote from each other. At the same time the trust will mitigate the effects of an occasional poor project performance. Trust between individuals had little direct impact on performance. It appears that individual trust is important during the development of group trust but does not have a direct impact on performance.

An interesting finding related to this, found in another study (Campbell, Kay and Avison, 2005), was that some of the organizations which have been studied had a culture that did not encourage communication or collaboration between the business and IS functions, nor between the business units themselves. In fact the organizational cultures encouraged competition and conflict between departments and personnel rather than collaboration. The lack of communication means that the development of trust is severely impeded. This, then, affects the development of shared domain knowledge which, in turn, affects long term strategic alignment.

It is now clear that both IS and business managers must develop a shared system of meaning, shared domain knowledge and then apply these skills as they collaborate to resolve common problems and issues. And not only on a strategic level, but maybe mroe important, also on a tactical and operational level.

Reference

Capmbell, Dr. Bruce, and Peppard, Prof Joe: The Co-Evolution of Business/Information Systems Strategic Alignment: An Exploratory Study.

Campbell, Bruce, Kay, Robert, and Avison, David: Strategic Alignment: A Practitioner’s Perspective, International Journal of Enterpise Management, Vol 18, No 6, 2005. http://epress.lib.uts.edu.au/research/bitstream/handle/10453/5762/2005003284.pdf?sequence=1

Recognize this?

The CMO Council sited 38% of Chief Marketing Officers (CMOs) say sales and marketing alignment and integration is a top priority. However, only 30% have a clear process or program to do something about it. With only 38% of CMOs making alignment a top priority, we can assume approximately 1 out of every 3 organizations recognize the issue but few take action. How about the other 2 out of 3? Are they not aware of the problems between sales and marketing? This article highlights common problems prohibiting sales and marketing collaboration, summarizes reasons one group thinks the other is the antagonist, and suggests solutions to narrow the divide between sales and marketing.

Unfortunately, inadequate solutions and uninformed executives have only perpetuated the problem. Sales and marketers have developed a terrible misconception of one another culminating in an environment filled with friction and dissonance. Brian Carroll, CEO of InTouch, attests that “communication breakdown affects nine out of ten companies”.

Alignment is a much wider issue than only Business and IT relations. So, couldn’t we learn more from other areas?

Source: http://www.leadliaison.com/revenue-generation-blog/sales-and-marketing-alignment/