Posts Tagged ‘MIT Sloan School of Management’

Fusion

Image via Wikipedia

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

Joseph W. Weiss and Don Anderson: Aligning Technology and Business Strategy: Issues & Frameworks, A field study of 15 companies, Proceedings of the 37th Hawaii International Conference on System Sciences, 2004

MIT Sloan Logo

Image via Wikipedia

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.