Archive for the ‘Alignment model’ Category

Fusion

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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

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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

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In previous posts, I have already mentioned the different definitions on Business/IT-Alignment. The definition that’s most attracting to me, is the one of Benbya and McKelvey (2006):

“A continuous co-evolutionary process that reconciles top-down ‘rational designs’ and bottom-up ‘emergent processes’ of consciously and coherently interrelating all components of the Business/IS relationship at three levels of analysis (strategic, operational and individual) in order to contribute to an organization’s performance over time.”

This definition diverges from other definitions in a number of ways:

  • Alignment is a continuous process, involving continuous adjustment, rather than an event with an end point after which an organization can return to a state of equilibrium.
  • All the components of the Business infrastructure/IS relationship are taken into account; alignment is not confined to the strategic level.
  • Alignment should not be restricted to managerial processes, but includes design processes as well; while executive management is not able to determine every single aspect of the Business/IS relationship.
  • It is not necessary to strive ‘by definition’ for harmony or balance between the different elements of the Business/IS relationship, since consciously introduced and/or sustained lack of balance is the motor of many organizational innovations.

Benbya and McKelvey came up with their model, due to the fact that most existing literature is based on assumptions which hardly are found in practice. Many theories assume a structured strategy process and stable organisations and IT. IS plans are subject to change as the approval of a proposed investment is only the starting point for a continually widening gap between stated objectives and the realities of today’s changing environment. Unforeseen happenings, failing promises and human errors cannot be included even in the best-laid plans. Defining detailed strategic plans to integrate IS and business strategy (the strategic level) is important but not enough for alignment to be achieved. IS and business strategy should coevolve mutually to respond to changes in the business environment.

Their framework suggests the coevolution of IS with the organization at three levels:

Strategic Level – coevolving IS and business strategies

This cannot be achieved just by relying on top-down planning with little emphasis on the emergent nature and necessity of bottomup planning for alignment.

Operational Level – coevolving IS and Business departments

Business managers and IS planners are unable to express themselves in common language. In short, they do not understand each other’s complexities. Therefore, tightly aligned business and IS domains need continuous coordination and communication between the two poles of the duality, Business and IS. In order to achieve this, both Business and IS must form effective collaborative partnerships at all levels. Only through continuous adjustments between the two entities – Business and IS – alignment can be sustained.

Individual Level – coevolving IS infrastructure with individual users’ needs

Users do not hold the same view of themselves that IS analysts do, and they do not like to be referred to as users. They do not even think of themselves as primarily having anything to do with the computer at all. They see themselves as professionals, working with others, and using computers in support of these interactions. Within a typical firm, individuals rarely have the opportunity to choose the system they use. As users become competent in using an IS, they often see new ways of doing things and dream up new things to do with the IS. These new ideas change the organization and its perception of what is required from its IS. If these changes cannot be easily incorporated in the IS, the users become frustrated and dissatisfied with the system. The reality is, that to derive its expected benefits and remain aligned with users need, the IS and its users must continually coevolve.

Reference

Benbya, Hind, and McKelvey, Bill: Using coevolutionary and complexity theories to improve IS alignment: a multi-level approach, Journal of Information Technology, No 21, 2006

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 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