Aligning IT and Business for Better Results

Aligning IT and Business

for Better Results

© 2015 Global Knowledge Training LLC. All rights reserved. 05/02/2023 Page 2

Presenter

Michelle MooreSenior Director, Organizational & Personal Effectiveness (Canada, Europe, Middle East & Africa)


Today’s business environment

RapidGlobalization

ChallengingEconomic Climate

Changing Demographics

Rapidly Advancing Technology

Focus on Sustainability


It’s a VUCA world

Volatility

Uncertainty

Complexity

Ambiguity


One certainty?

In this VUCA world the only certainty seems to be the unstoppable advancement of digitalization.


The new normal

By 2020, every company will be an IT company and every leader will be a digital leader..."digital is the business; the business is digital.

Peter Sondergaard, SVP and Head of Research - Gartner


How are we doing?

Harvard Business Review – Business Transformation and the CIO Role


Agenda

1. What is IT and Business alignment?2. Why is Business and IT alignment so important?3. Improving Business and IT alignment4. Questions

What is Business & IT Alignment?

© 2015 Global Knowledge Training LLC. All rights reserved. 2023-05-02 Page 10

What is business – IT alignment?

‘A dynamic state in which a business organization is able to use information technology (IT) effectively to achieve business objectives – typically with improved financial performance.’

‘The capacity to demonstrate a positive relationship between information technologies and the accepted financial measures of performance.’


Common characteristics of definitions

The outcome of alignment is a positive result on business performance (quantitative or qualitative)

Alignment is evolutionary and dynamic


The benefits of alignment

Cost effectiveness Quality Responsivene

ss Agility Innovation

Strategy & Business, ISSUE 70, Spring Edition 2013


Enablers

Senior Executive Support for IT

IT involved in strategy development

IT understands the business

Business – IT partnerships

Well prioritized IT projects

IT demonstrates leadership

Inhibitors

IT – Business lacks a close relationship

IT does not prioritize well

IT fails to meet commitments

IT does not understand Business

Senior executives do not support IT

IT management lacks leadership

1

2

3

4

5

6

Enablers and inhibitors of alignment

Source: Luftman 2003


Recognizing alignment

How effectively do IT & business communicate?

How is IT governed?

How effectively do IT & business collaborate?

How is the value of IT measured?

How is technology planned and consumed?

Do all employees have both technology & business skills and knowledge?

Source: Luftman 2003


How effectively do IT & business communicate?

• Minimum understanding between IT and business• Casual or ad-hoc approach to capturing learning • Command and control approach to communication• Limited knowledge sharing • Few strong relationships

Poor Alignment

• Pervasive understanding between IT and business• Strong and structured capture and application of learning• Informal protocols• Knowledge sharing inter and extra-enterprise• Many strong relationships even with customers

Excellent Alignment


How is IT governed?

• Business and IT strategic planning are separate and ad-hoc• CIO reports to CFO• IT is seen as a cost centre• IT investment management is cost-based• No formal steering committees exist• IT investment prioritization is reactive

Poor Alignment

• Business and IT strategic planning are integrated across the organization• CIO reports to CEO• IT is seen as a business driver and profit centre• Investment management is based on value• Steering committees exist with both business and IT participation• Business and IT prioritize investments together

Excellent Alignment


How effectively do IT & business collaborate?

• IT is perceived as a cost• IT does not have a seat at the business table• IT takes risk with little reward or recognition of accomplishments• Program management is ad-hoc if at all• Relationship is driven by conflict with minimal trust• There is not a business champion for IT

Poor Alignment

• IT and business collaborate and share decisions• IT has a seat at the business table• Risk and rewards/recognition are shared• Program management is practiced • Relationship is one of valued partner• Business sponsorship exists at CEO level

Excellent Alignment


How is the value of IT measured?

• Metrics are technical and are not related to business• Business metrics are not related to IT• Some service level agreements in place but sporadically• Benchmarking not practiced• No business reviews or performance assessments• Continuous improvement not evident

Poor Alignment

• IT metrics are related to business (and vice versa) and extended to external partners• Service level agreements are in place and extended to external partners• Benchmarking is routinely performed with partners• Business reviews and performance assessments are routinely performed and include external

partners• Continuous improvement is pervasive

Excellent Alignment


How is technology planned and consumed?

• Focus is transactional back office systems• No common articulation or understanding of architecture• Limited integration of technology or digitized business processes• Little transparency or flexibility

Poor Alignment

• Business strategy is the driver of technology• Enterprise-wide standards• Integration is enterprise wide and includes external partners and customers• Flexibility and agility

Excellent Alignment


Skills

• Entrepreneurship and innovation are discouraged• Power is in the business• Command and control management style• Resistant to change• No career cross-over

Poor Alignment

• Entrepreneurship and innovation are the norm• Power is equally distributed at C-Level including CIO• Management style is relationship-based• Career opportunities exist across the organization• Cross-training and education are widely available

Excellent Alignment

Why is alignment so important?


The third era of computing

Source: Gartner – CIO Agenda ‘Taming the Digital Dragon’


What is digital?

The use of technology to achieve the vision of the organization and radically improve performance.


Creating new opportunities


…and lots of disruption


Business models

Digitally modify/ complement existing business offers (usually physical)

Create new digital business


Digitally modifying/complementing physical business


IKEA – Product innovation


Business processes

Process digitizationImprove employee productivityBetter decision making


Improving employee productivity


Better decision making (crowdsourcing)

Crowdsourcing product ideas and features

Every customer is R&D


Customer experience

Increase customer understanding

Improve top line growth – new sales opportunities

Increase customer touch-points – strengthen the brand or improve the customer experience


Enhancing the customer experience & improving sales


Employee experience

Increase connection with the organization and colleagues

The new way of working


The new employee experience

The New Way of

Working

Mobile

Flexible

Inclusive

Social


The New Way of

Working

Mobile

Flexible

Inclusive

Social

The new employee experience


The main trends main behind digital transformation

Social

Mobile

Analytics Cloud

Internet of

Things


The emerging trends behind digital transformation

3D Printing

Artificial Intelligence

Robotics


Poll question

Improving IT and Business Alignment


What can you do to improve alignment?

Educate IT on Business

Educate Business on IT

Optimize your governance







Understanding business

Understand the

business

Understand the

functions

Understand the

individuals


Understanding the whole business

The Formal Organization

The Informal Organization


The formal organization

The Formal Organization

The Informal Organization

Policies & Business Processes

Priorities and Objectives Organizational Charts

Vision & Mission Statements

KPI’s Job Roles & Descriptions

Business Model

Business Capabilities


And don’t forget the external environment

Competitive SWOTPESTEL 5 Forces


Educating IT on the business – The Business Model Canvas

A business model shows how value is:

CreatedDeliveredCaptured


A simple 9 box grid

Key PartnershipsActivities and

resources acquired

outside the enterprise

Key ActivitiesBusiness processes

Value PropositionSolutions to client needs

and problems

Customer RelationshipsCreated and

maintained for each client segment

Customer Segments

Types of clients served

Key Resources

Assets needed to provide the

value propositions

Distribution ChannelsAvenues of delivery of

value propositions

Cost StructureCost of performing all the

activities of the organization

Revenue StreamsResult of value

propositions to clients


…and the informal organization is really important


The secret to success – the soft skills

Interpersonal Understanding

Influence & persuasion

Relationship building

Customer-service

orientationEntrepreneurism Creative thinking







In the past…


But today it’s different – the consumerization of IT

The specific impact that consumer-originated technologies can have on enterprises

Consumerization cannot be stopped


The impact of consumerization

Non-IT employees are more comfortable with technologyHigher (and sometimes unrealistic) expectations:

DevicesAccess ApplicationsUser Experience

An increase of shadow IT


Risks of shadow IT

Increased costs (duplication of services,

loss of economies of scale)

Risk of data loss

Process Inefficiencies

Compliance Issues


Becoming IT savvy

Learn about corporate versus

consumer IT

Learn about the trends


Becoming IT savvy


consumer IT



Security

Optimizing costs

Regulatory compliance

Eliminating complexity

IT’s challenges

Keeping IT Running

Delivering value


The legacy of corporate IT

In the past when business asked for something IT would build an isolated solution



And then we realized those solutions needed to be connected within the organization



And then outside of the organization as well


The result…

IT-Business disconnect

SilosIncreased cost /

duplicationUnclear views of

the systems


Getting back on track

Enterprise Architecture

Cloud Computing


Becoming IT savvy


consumer IT



Understand the trends

Social

Mobile

Analytics Cloud

Internet of

Things


Understanding the trends

66


10 Strategic Technology Trends (1 to 3 Years)

Source: Gartner


Top 5 Technology Investments (1 to 5 Years)

Source: Gartner


Gartner Hype Cycle – Longer Term

Source: Gartner


Emerging Technologies – 2014 Hype Cycle

Source: Gartner







What is IT governance?

The processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals.Gerrard

The decision rights and accountabilities that encourage desirable behavior in the use of IT. MIT Sloan

The leadership and organizational structures and processes that ensure that the organization's IT sustains and extends the organization's strategies and objectives.ISACA


The value of IT governance

Architecture Question

Are we doing them the

right way ?

Are we doing the right things ?

Strategy Question

Are we getting the benefits ?

Value Question

Are we getting them done well ?

Delivery Question


A shared responsibility

Business IT


Getting IT governance right

People (Who)

Portfolio (What)

Governance Framework

Processes (How)


Play your position in governance

IT Architecture

ITInfrastructure

Business Applications

IT Investment Prioritization

Business

IT

Business & IT

IT Principles

© 2015 Global Knowledge Training LLC. All rights reserved.

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3 x 3 day Modules for Senior IT Leaders

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Aligning IT and Business for Better Results