Each year, New Zealand media organisation publishes the MIS Top 100, ‘state of the nation’ overview of information technology and IT management procedures in the country’s largest organisations. And each year IT managers and chief information officers (CIOs) reiterate the importance of tying IT and business strategy tightly together.
Mike Harte, director of IT services for the University of Otago, says the university recently completed strategic planning process which requires IT management to better understand business needs and closer align these to IT strategy.
“We need to understand what the organisation’s needs are going forward and what it needs in terms of IT governance and leadership – that is where we feel we can add value,” says Harte.
He says questions being asked include whether the university has the appropriate advisory bodies, input groups and access to customer responses to help align business and IT, and how IT can become more customer driven. further focus is IT organisational structure – the customer’s needs and wants, and any obstacles to delivery. Harte says there are also ongoing challenges around service management, including IT support, delivery, capacity and prioritisation.
“IT management is therefore seeking greater involvement of senior management in prioritisation of IT work,” he says.
Why is IT and business alignment so important? Consider the IT executive who lobbies hard for funding for new software system designed to gather more intelligence about the behaviours of customers and potential customers. If IT strategy is executed in isolation to business strategy, funding will probably be awarded to the IT ‘department’ which will then get on with developing and implementing the new system.
However, once the system becomes available the business may find it doesn’t gather the right information – perhaps it tells sales and marketing managers something they already know, or something new but in not enough detail. Alternatively, it may ask all the right questions, but because staff don’t consider it important they don’t use the system correctly.
Suddenly, an IT investment that cost maybe $500,000 (and ongoing costs to maintain) ends up delivering the business nothing at all, or little at best. The IT ‘department’ is frustrated, senior managers are annoyed and disappointed, and staff scornful of, or oblivious to, the drama.
Here’s another example: an IT team plans out comprehensive data security solution in order to protect an organisation’s intellectual assets. The solution, which involves the purchase of software, hardware and consultant time, also relies on change in the way people within the organisation work. Certain policies and procedures have to be followed, and staff are required to use specific technologies – say mobile device with particular operating system – to standardise the IT operational environment of the business and make it easier to secure.
Problem is managers at the top want to use their mobile device of choice and consider themselves above following the new security policies.
Result: compromised data security which all the expensive technologies in the world won’t be able to fix.
The obvious answer to these problems and others like them is to ensure IT strategy is well enmeshed with business strategy so that IT specialists know exactly what business goals they are attempting to meet, and business managers know and agree on which IT projects are critical and what part they have to play in ensuring each project’s success.
If this sounds like common sense, surprising number of IT executives say they are still asked to launch new IT projects at the whim of senior business manager who has “read something” about new technology or been made nervous by the perception that “everyone is doing it”.
Conversely, the IT executive may want to trial or ‘play’ with new technologies and strategies that the business manager isn’t sure of, doesn’t completely understand, and for which they can see little business benefit.
Getting IT
Misalignment of IT and business strategy can be so expensive and so detrimental to business that small number of corporate organisations have started to appoint their senior IT managers to the board. Others engage with their top IT people at every strategic opportunity, placing chief information officer (CIO) at roughly the same level of consulting priority as chief financial officer (CFO). Indeed, some IT executives are so closely aligned to the business they are considered capable of promotion to CEO – high profile example being Telecom’s most senior IT executive, Mark Ratcliffe.
Claudia Vidal, group information services manager of agricultural testing company Tru-Test, has held number of IT management positions throughout her career and says business managers often assume that business strategies are so obvious IT managers should just get on with it.
“There has to be an opportunity for IT to be consulted. Maturity of governance is low if IT strategy remains purely technologically driven,” says Vidal.
She says too few organisations understand the negative business impact and expense of poorly aligned IT and business strategy and even top tertiary level management courses are removing IT strategy content to make room for new topics.
“From CIO’s point of view, we have to concentrate the resources we have on developing initiatives that will achieve the business’ goals. This requires meetings between CEOs and CIOs to discuss business objectives and the related value of IT.
“It is dual CEO and CIO responsibility to ensure that collaboration is occurring,” says Vidal.
Many CIOs observe that when CEO takes ownership of an IT strategy, the entire executive team follows so that suddenly there is combined vision of the importance of IT and business alignment. Without that ownership, CIOs have to work hard to foster alliances with other key executives.
“CIOs prefer supportive business environment, but [if that’s missing] they need to ask questions and try to form alliances with members of the leadership team to discover where the business urgencies are, what the priorities are,” says Vidal.
This strategy is used by several senior IT managers interviewed for the MIS Top 100, and one CIO estimates he spends 40 percent of his time “consciously demonstrating the importance of IT initiatives to the business goals of various managers and ensuring their support on IT strategy and direction”.
Obviously this requires extra effort, and some CIOs simply move to new employer with more supportive management team. But for the more patient it does work – as the CIO quoted can testify, the IT and business strategies of that business are now so tightly aligned that other business executives constantly encourage their staff to use IT systems and IT-supported business processes.
Vidal says finding the right IT tools to support particular IT initiative is usually the easiest part of any CIO’s job – it’s finding the business problem that takes time.
“Executive managers look to [IT professionals] for balanced advice on the best ICT solutions along with full understanding of the business problem – for example, if the business wants to grow its online channel, but needs to address the problem of dissatisfied customers first,” she says.
Tools and tips
Cognos, an international developer of business intelligence and corporate performance management software, says business intelligence software can ‘surface’ information from within an organisation and package it so that both IT and management can understand it at glance.
“Business managers can then see whether they are capturing the vital information that they need and work alongside IT management to [fine tune] their needs. If I want to know the sales trends of our top 100 customers over past years, I know I can generate that query and get that report back,” says David Merchant, marketing director for Cognos Australia and New Z
