Posts Tagged ‘Business/IT alignment’

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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

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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

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…)

One of the proposed mechanisms to improve alignment is the usage of relationship managers or liaisons. Some people think this is usefull, others think the opposite. From firsthand experience I can say that it can be usefull, but only when the role is filled in properly.

The liaison role is one of the linking mechanisms as proposed by Fonstad in the IT Engagement model. Also Luftman suggests using this role to improve Business/IT alignment. But there is criticism on these kind of roles. In his blog, Harwell Trasher puts down a strong advice not to use a Business/IT Liaison person. He found out that over time liaison people gravitate toward either the business or IT camps, and begin to take sides in disagreements. Then, the liaison will magnify the problems rather than solving them.

Although I recognize this risk, I personally think liaisons can help improving alignment between business and IT. In the right situation, with the right person and for the right period of time.

Liaison roles are usually set up when the volume of contacts between departments grows. They are formal roles designed to facilitate communication and bypass vertical communication channels. A lot of their work is carried out through informal communication of information. Problems which lead to the introduction of liaisons includes conflict between business versus IT, inadequate communication, poor understanding, no structure to prioritisation, business without control, increased pressure on systems, time wastage, insufficient requirements determination and employee demoralisation [Barry and O’Flaherty, 2003].

One of the critical characteristics of this role is its ability to remain neutral. They are supposed to facilitate both sides and work through any impasses. The role of liaisons is highly political, liaisons must “understand politics and then avoiding them”.

What’s extremely important, is that there comes a stage in every action, where the liaison must step out of the process, because he/she is no longer adding value. The liaison should facilitate both business and IT to work together, but shouldn’t get in between. So, after the initial stages of communication, his or her role will vanish. Liaisons should act somewhat reactive, sweeping up issues and promoting collaboration as they go along. Whenever possible, push back both sides (business and IT) and mediate in conflict situations.

Liaisons can help in organisations where Business/IT Alignment lacks maturity. Liaisons can help bridging the gap between the two parties and help developing communications. But, liaisons should limit themselves to facilitating. Otherwise they can get stuck in the middle, and they can hinder further collaboration by business and IT and become just another barrier. Then, they could be used for things where business and IT don’t feel like working together. In all cases, the liaison should protect their neutrality and keep the facilitating role.

Question is in which unit this liaison is organised. It could be within IT, as well as within the business. What I think is wise to do, is to select a person for this role with experience in the opposite side. If the liaison is organisationally part of IT, select someone with extensive business experience. If the liaison is part of the business, appoint someone with an IT background. In the end, a person with experience in both business and IT is ideal, but not frequently available.

References

Blog Harwell Trasher: http://blog.makingitclear.com/2010/06/23/liaison/

O’Flaherty, Brian, and Barry, Owen Harte: A Case of ‘Non Strategic’Alignment – An IT and Business Unit Liaison Role, 2003

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