Archive for the ‘Skills’ Category

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

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

Jerry N. Luftman, well known for his Strategic Alignment Maturity Model (SAMM), published a new book: Managing the Information Technology Resource. It’s worth the money!

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.

There are numerous articles, studies and models to be found on the topic Business/IT-alignment. This makes it hard to define which model is most adequate to use. But some models are apparently much more accepted than others, although there seems to be no consensus on the best one. The basis of many models seems to be the Strategic Alignment Model (SAM) of Henderson and Venkatraman [Henderson and Venkatraman, 1999]. This model suggests that IT-business alignment can be achieved by building linkages among four strategic domains:

The dimension of strategic fit differentiates between external focus, directed towards the business environment, and internal focus, directed towards administrative structures. The other dimension of functional integration separates business and IT. According to the authors, Strategic Alignment can only occur, when three of the four domains are in alignment.

According to Leonard [Leonard, 2008] the SAM-model merely describes what needs to be aligned. In the same study, Leonard points out that there has been far less consensus regarding how alignment is to be achieved. The model which is seen by Leonard as the model which gives insight in the processs by which alignment can be improved is the model of Luftman. This is more about the question how alignment is achieved. The theory of Luftman is found in many articles as a framework for assessing Alignment within a company, and looks very useful.

Luftman developed a maturity assessment model, based on the 12 elements of Business/IT-Alignment, which can be recognized in the model of Henderson and Venkatraman. The components of this model, in concert with the earlier enables/inhibitors research [Luftman and Brier, 1999], form the building blocks for the strategic alignment maturity assessment method [Luftman, 2000].

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.

The areas are:

Communications

How well does the technical and business staff understand each other? Do they connect easily and frequently? Does the company communicate effectively with consultants, vendors and partners? Does it disseminate organizational learning internally?

Competency/Value Measurement

How well does the company measure its own performance and the value of its projects? After projects are completed, do they evaluate what went right and what went wrong? Do they improve the internal processes so that the next project will be better?

Governance

Do the projects that are undertaken flow from an understanding of the business strategy? Do they support that strategy?

Partnership

To what extend have business and IT departments forged true partnerships based on mutual trust and sharing risks and rewards?

Scope & Architecture

To what extend has technology evolved to become more than just business support? How has it helped the business to grow, compete and profit?

Skills

Does the staff have the skills needed to be effective? How well does the technical staff understand business drivers and speak the language of the business? How well does the business staff understand relevant technology concepts?

In my experience, the assessment-method of Luftman really provides enterprises and organisations with a tool which gives insights in the business/it-relationship. It is very useful in defining improvement areas, and even more important, it facilitates an open discussion with executives from business and IT. What it doesn’t, is providing guidelines how to improve the alignment between business and IT. But, the six dimensions cover, in my experience, quite nice on which elements attention should be given. Not at one specific, but all dimensions should be in harmony. I will come back to these dimensions in following posts.

References

Henderson, J.C. and Venkatraman, N.:Strategic Alignment: Leveraging Information Technology for Transforming Organizations, IBM Systems Journal, 1999

Leonard, Jenny: What are we aligning? Implications of a Dynamic Approach to Alignment, 19th Australian Conference on Information Systems, Christchurch, 2008

Luftman, Jerry and Brier, Tom: Achieving and Sustaining Business-IT Alignment, Calirfornia Management Review, Fal 1999

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