Posts Tagged ‘Business’

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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Knowledge Sharing Is...

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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

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.

An article written by Andrew L. Miser on alignment in partnerships of couples gives food for thought for using some of these lessons in the enterprise environment. Couples tend to align, and when something in their live is not working well, or is creating misalignment, the partners will work together to resolve the issue to get back in alignment. Isn’t that what we are looking for in the business/IT relation as well? So, why not look further than the domain of business and IT alignment.

The paper identifies five distinct areas where being in alignment can make a big difference. Those five areas include the perspectives the partners share with respect to each other and their relationship, the values they share in their lives together, the vision they have for their relationship, the future they visualize, and the projects and committed action to which they commit to realize heir dreams.

 

Align on perspectives

A perspective or point of view is the particular way of seeing or framing what happens in live. Three perspectives are mentioned which can have a positive impact.

First, adopt and align on the perspective that nothing is inherently wrong with either of the partners or the partnership in itself. With this perspective you can powerful focus on an issue you are dealing with and can avoid assessing weaknesses in yourselves or in the relationship.

Second, adopt the framework that each of you are responsible for your own happiness, but not that of your partner. Although you are not responsible, you can be committed to it.

Third, adopt the perspective that, for your relationship to work, it must work for both of you. A partnership can only be a partnership when it is collaborative and a “win: for both of you and for your relationship.

So, both partners are equally responsible for the partnership!

Align on values

Some couples value mutual understanding, validation, communication, openness, compromise, and friendship. Other couples value the freedom to express different viewpoints, emotional expressiveness, and passion. Still other couples value minimizing conflict, sharing common ground, harmony and autonomy. Couples who co-create and align on their values can be very successful and fulfilled in their relationship over the long-term. When you and your partner are able to articulate and generate the core values in your relationship, you co-create the foundation of your relationship on an on-going basis.

Align on vision

Another area where you and your partner can be in alignment is in articulating a vision for your lives and your relationship. A vision for your partnership conveys what you want to express in the world as the fulfillment of your lives together. It is not just the achievement of life goals or objectives. A vision for your relationship represents what you stand side-by-side for in your family and in your community. A vision could be thought of as a co-created stand for the quality of your relationship and lifestyle.

Align on visualizing the future

A fourth way you and your partner co-create your lives is through inventing a future for your partnership. To create the future, first anchor yourselves in what you value and in the vision you have for your relationship. Then, visualize and share with each other your dreams of your future, irrespective of time. Once you share and experience your possible desired future together, you can choose and align on a timeframe for the manifestation of the future you have both co-created. Committing together to the future you have co-created is essential for expressing your partnership in action. Almost immediately after making this commitment to your future, you will see a host of “partnership projects” needed to fulfill on the future you have envisioned. You will experience an alignment of focus and action when you undertake these partnership projects as an expression of your commitment to make manifest your future.

Align on committed action

Partnership projects are distinct from the normal “routine” of life as they are co-created by the couple to bring their future into existence and co-owned for the duration of the project. Within these projects, you and your partner can cooperate together in planned action and in co-owning your accomplishments, both the intended and the unintended outcomes. You can examine and acknowledge any disempowering perspectives you may have unwittingly adopted along the way as well as identify actions and accomplishments that you still need to take. By co-owning the results of your project(s), you are able to re-create your partnership and stay in action. When co-creating projects and bringing them to fruition, you will find that there are several necessary steps to co-designing a successful partnership project. These include creating the future accomplishment of the partnership project, sharing any current perspectives and concerns that may be limiting the project outcomes, creating and choosing an empowering way of being for the project, defining the actions necessary to fulfill the partnership project and putting them into time. It is also works and is fun to name the project. You will also discover that, throughout the life of your project(s), you must meet periodically so you can evaluate the results of your actions, plan the next steps of their projects and be in alignment on a regular basis.

Conclusion

Although all of the above is writtten around a partnership between two people, much of it could be beneficial for a healthy relationship between business and IT within a company. It all starts with the wish to establish a real good partnership between business and IT. Top level management must believe in this, and try to fill in all of the five areas.

 

Reference

Miser, Andrew L.: The Power of Alignment, Elysian Enterprises, Brookline.

MIT Sloan Logo

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In this post I will introduce the IT Engagement Model, developed by Nils O. Fonstad of CISR, MIT. In previous posts I already showed the importance of alignment on and between different layers in an organisation. In a study of the Center for Information Systems Research (CISR) this issue is adressed as well. Fonstad (2006) states that IT departments always struggle with the eternal dilemma how to achieve company-wide strategies while simultaneously responding to urgent requests from business units to implement dozens or even hundreds of solutions for local projects. Two different streams of research have attempted to adress this challenge.

Research on IT Governance has taken a top-down approach and specified how management allocate decisions. The other stream of research, with a more bottom-up approach, focuses on how projects can be coordinated and managed.  According to the CISR study, neither of these approaches is sufficient. Succesful approaches adress two fundamental goals – alignment between IT and the rest of the business and coordination across multiple organizational levels. In earlier post I mentioned horizontal and vertical alignment, to adress these different dimensions.

An IT engagement model has been introduced, which is defined as the system of governance mechanisms that brings together key stakeholders to ensure that projects achieve both local and company-wide objectives. This engagement model consists of three general components.

  • Company-wide IT Governance – decision rights and accountability of comapny level and business unit level stakeholders to define company-wide objectives and encourage desirable behaviour in the use of IT
  • Projectmanagement – a formalized project management process, with clear deliverables and regular well-defined checkpoints, that encourages disciplined, predicatable behaviour for project teams.
  • Linking mechanisms – processes and decision-making bodies that connect project-level activities to the overall IT governance.

The first two are well recognized. What CISR has found to be the ‘missing link’ is the third element: Linking Mechanisms. Linking mechanisms are at the heart of a company’s IT engagement model. They enable ideas to flow back and forth between company-wide IT governance and project management. Linking mechanisms ensure that high-level governance decisions are understood and implemented by project teams, so that projects help to incrementally achieve the company’s objectives and the company learns from every project.

An effective IT engagement model enables traditionally independent stakeholders to negotiate between competing demands, influence one another, learn from each other, develop trust across the company, and work collectively on achieving local and company-wide objectives. It ensures that project solutions are not developed by any single stakeholder, but rather, result from multiple stakeholders working together to resolve competing interests (e.g. tactical versus strategic, local versus enterprise-wide, new versus reuse).

All three components of the IT engagement model are important sources of mechanisms. Engagement mechanisms take the form of roles, procedures, decision-making bodies and work-groups.

Engagement Mechanisms:

Linking mechanisms can be found in three categories: business linkage, architecture linkage,  and alignment linkage. Business linkage mechanisms link projects to company- and business-level strategies. Architecture linkage mechanisms link projects to enterprise and business unit architectures. Alignment linkage mechanisms link IT with the rest of the business, particularly at the business unit level. There are all kind of mechanisms possible. In the enclosed figures, some of the most prominent are shown.

CISR found out that firms with a stronger level of alignment distinguished themselves by engaging IT and non-IT stakeholders in three areas:

  1. Establishing and maintaining a daily level of conversation between IT and non-IT peers
  2. Ensuring that different projects link to corporate goals and shared resources, and
  3. Asessing and learning from project performance.

These firms had a key mechanism in each of these three areas. These were:

  1. Business-IT relationship managers:  A business-IT relationship manager is a formal role in which an individual engages with IT and a specified part of the business.
  2. Program Management Office: this typically consist of a central group that coordinates resources across projects, ensuring they collectively contribute to corporate level objectives.
  3. Post-implementation Reviews: PIRs typically consist of a group that essesses a project’s key targets and deliverables at the conclusion of a project or project cycle.

In following posts, I will dive deeper in the topic of IT engagement in relation to Alignment.

 

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.

Synchronized swimming

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Last month I’ve read an article on how organisations cooperate regarding IT, which contains a couple of conclusions which I recognize very much in practice. Although the article is mainly talking about cooperations between organizations, it appears also applicable for situations within large enterprises and institutions. The article is written by a couple of advisers of dutch consultancy firm TwynstraGudde (www.tg.nl).

They illustrate that most partnerships are based on trying to realize the perfect world. Managers as well as IT professionals are very capable of dreaming of the ideal organisation, proces or IT solutions. A world in which every hospital has the same process, or comparable departments are exactly the same because they produce the same results. But, in reality it’s always less perfect. Some barriers are mentioned which are in the way of the perfect world.

1. Irrational behaviour
Although partnerships seems to be based on rational arguments, in practice it’s hardly the case. Most managers and IT professionals tend to act as result of emotional or at least less rational motives, which they can cover very well in rational arguments.

2. Lack of trust
Trust is neccessary, but isn’t there from the beginning. Trust needs time to grow.

3. Shared versus individual benefits
In realizing the ideal situation, cooperating partners need to give and take. In many cases, costs and benefits won’t be for one single party. The shared goal should prevail over the individual goals.

4. Concept versus reality
In bringing different parties together, the idealized concept needs to be translated into practice. This needs to be done on an abstract level. Too much details will harm the partnership, due to the fact that people will keep on discussing details, and will not longer focus on the shared goal.

5. Organisation and ICT not in sync
After development ICT systems will be implemented in a rather short period of time. Organisational changes aren’t implemented in a split second. Once the systems are implemented, organisational changes will take off, and it will take time. Often management expectations are too high, and they expect all the benefits as soon as the systems are implemented. Often this leads to disappointed management which threathen the partnership.

6. Different backgrounds
A partnership between organisations (but in my view also within the larger organisations) requires people from different disciplines to work together. This sounds easier than it is. People tend to be biased, and it’s common that they don’t understand each other.

In the article, some recommendations are given to solve the issues herefore mentioned.

  • use former failures, learn what went wrong
  • keep your eyes on the shared goal and common stakes
  • stay away from details
  • preferably institutionalise a new entity for the partnership
  • make absolutely sure that there is full executive commitment
  • don’t approach the partnership as a project, but as a process.
  • stimulate people with guts.

For people involved in cooperating entities, whether between or within companies, these insight should be recognizable. Especially true in the field of business/IT relationships. The recommendations could inspire you as well!!

Reference

Gloudemans, Migiel, Opheij, Wilfrid, Wendel de Joode, Ruben van, Wittkampf, Michiel: Samenwerken en ict, hoe dromen toch werkelijkheid kunnen worden, TIEM 39, 2010 (Dutch).

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