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We have all heard the phrase "IT needs to align with the business" but what does it actually mean, and how are businesses achieving it?



We have all heard the phrase "IT needs to align with the business" but what does it actually mean, and how are businesses achieving it?


Contents
Getting the go-ahead
Modelling the processes
Skilling the business-IT divide
Sidebar: The enterprise that plans together...

Cramming onto a charter bus for a grand tour around the city sounds more typical of a football team than an IT organisation, but that's exactly where several dozen employees of outsourcer Datacom Systems found themselves after the organisation secured a service contract with a Sydney-based consumer goods company.

Shuttling the staff across the city -- from Gosford to Parramatta and into the Sydney CBD -- might have taken them off the job for the day, but it gave them an intimate knowledge of the customer's operations. They met with branch managers and IT technicians, who outlined the company's current IT environment and its business practices, giving the staff a real sense of the interaction between business and IT.

Datacom director Clark Hobson believes the tour was invaluable in aligning staff with the customer's business needs so they can better understand the importance of the contractual service level agreement (SLA) between the two organisations. "The whole point was trying to learn what's underneath the SLA," Hobson explains.

"The SLA has got to mean something, and most people learn things better visually than by reading. To someone on the service desk, by seeing where the IT systems touched the production process, they were able to see that it's less an issue of 'this application is not available' and more an issue of 'that truck cannot leave with its load because it's lacking a material safety sheet.' It creates a bit of empathy as well, since the service desk analyst can actually understand what the [client] is trying to do."

Alignment of business and IT goals has been a catchcry throughout the evolution of IT -- particularly over the past decade, as the proliferation of open systems and massively customisable information systems left many IT organisations spoilt for options that were often tangentially related to actual business needs. Countless consulting firms have built strong businesses based on their ability to help customers align business and IT practices, and many organisations have undertaken clear strategic initiatives in order to stop the fruitless turf wars and finger-pointing that have often characterised business-IT relations.

While the need for alignment is well understood, however, there are indications that the issue still remains a major one at many organisations. A January survey of 1300 CIOs by Gartner Executive Program (EXP) revealed that many of the top CIO priorities for 2005 -- which include business process improvement, a focus on internal controls, enterprise-wide operating costs, supporting competitive advantage, the shortage of business skills, and faster innovation and cycle times -- directly reflect the IT organisation's role in supporting business goals.

When this role is executed well, both the business and IT organisations benefit. At Zurich Financial Services, for example, 12 years spent consolidating once mainframe-based information on a flexible business intelligence platform, built around Information Builders FOCUS and WebFOCUS environments, has revolutionised reporting in an environment where strict regulatory requirements and business demand for information are paramount.

"We have been able to reorganise our information depending on the user's needs," says Peter Barraclough, business analyst within Zurich's IT Management Information Services division, a business unit whose name alone suggests its role in supporting management goals. By delivering tailored reports rather than forcing users to sift through mountains of information, the division has been able to replace voluminous weekly paper reports with electronic versions that help business units access data more quickly and effectively.

Getting to this point has required close alignment of business objectives and IT capabilities -- a need that has seen half the strategists in management information systems brought into IT from the business side. "We have a whole division that focuses on looking through reports to find things out," says Barraclough, one of the people who changed sides.

"Business and the IS organisation align in this organisation very well," he continues. "We meet regularly and determine the initiatives that are available, and which ones are going to see the greatest return. We have substantial business knowledge in our team, and the people that we deal with don't necessarily have any knowledge -- but we do go to a lot of effort to make sure we're talking the same language before we put hand to code."


Contents
Introduction
Getting the go-ahead
Modelling the processes
Skilling the business-IT divide
Sidebar: The enterprise that plans together...

Getting the go-ahead
Different organisations have found different ways to align their IT and business efforts, but analysing the experiences of a number of well-aligned organisations reveal some common threads.

One of the biggest indicators of IT-business alignment is the traditional source of impetus for projects involving IT. In the past, many IT projects were developed by the IT team in response to a broad mandate from the business organisation, which would often find that the end project was woefully unsuited to the actual business needs driving the project.

US firm the Standish Group, whose CHAOS report tracks the rate of project failures, last year reported that 15 percent of all IT projects were still judged failures, and an additional 51 percent of projects ended up over time, over budget, and/or lacking critical features and requirements. This translated into an estimated AU$70.8 billion in project waste -- equal to nearly 22 percent of the total AU$328.2 billion spent on the studied projects.

In some cases, these failures are IT's fault -- techs will be techs, after all, and it can be hard for many technology specialists to see the proverbial forest for the trees. In many other instances, however, business organisations shared the blame for failing to follow through on projects and leaving the delivery up to the IT organisation.

The recent trend towards smaller, shorter, more modular IT projects has addressed this problem to some extent, since it's harder for things to go completely off the rails over the course of a three-month project than it would be if IT were left to its own devices for 12 to 18 months as in the past. Even with the advantage of smaller scale, however, IT remains intrinsically complex -- and past failures have made many business organisations sceptical of IT even when blame should rightfully be shared all around.

Transforming IT from whipping-boy into strategic partner has taken a concerted effort, but many organisations have successfully changed the dynamics so that business units have shouldered their share of the responsibility. At Melbourne's Deakin University, for example, the 183-strong IT Services division has focused on centralising its information systems and delivering its capabilities through a closely monitored services model.

"When you're aligning business and IT, it always seems to be IT that does everything," says Simon Plant, Service Planning & Development group manager at Deakin University. "It should be a two-way street, not just business dumping their needs on IT and saying 'just do it'. At the end of the day, it's not about satisfying ourselves, but about recognising that we are part of the same university and need to find ways of compromising."

The solution has been straightforward: ITS mandates the core technology -- it's Oracle on Linux all the way -- but business units retain their role as "custodial owners" of the systems. Twice-yearly meetings between ITS representatives and Deakin's 30-plus business areas allow common sharing of strategic directions, the IT implications of those strategies, and the long-term goals each unit is pursuing. With those plans in hand, ITS uses Mercury Interactive load testing tools to ensure that its services and performance continue to grow with business demand.

"It's been a fantastic outcome from the point of view of having the opportunity to look at their strategic and business plans," says Plant. "Ultimately, the more information you share, the better outcome you're going to get. Just having facts and data at your disposal is brilliant because it stops the subjective finger-pointing."

"Adversarial" isn't necessary a word that has to enter into discussions about business-IT alignment, however: in many organisations, recognition of IT's past success at a business level can be quite useful in letting it deliver on technology's promise of innovation. Harvey World Travel (HWT), for one, has so far converted more than 160 franchised sites across Australia, New Zealand, South Africa, and the UK from a slow client/server structure to a centralised thin-client environment based on Wyse Blazer thin-client terminals.

Franchisees are enraptured with the speed and features of the new environment, which has been codenamed "Hydra" and includes an upgraded version of the core Galileo booking system. The thin-client system particularly suits HWT's many part-time and home-working staff who can access it from home. And, client satisfaction being one of HWT's core business goals, the project has been an unqualified success -- but it was IT's idea from start to finish, says group IT manager Matthew Harris.

"We sold a concept that was nothing but thin air," says Harris. "We have a very good relationship between the business, the board, and the IT department, and the reason we have that is that IT has a history of delivering on what we say we're going to deliver on."

Progressing from concept to solid deliverable took HWT's IT organisation six months, during which time it worked hard to coordinate suppliers including Pacific Internet, Acer, HighPoint, and Galileo. There was certainly risk involved -- Galileo, for one, had never been installed in a thin-client environment, and a "bending backwards" Acer delivered to the project i-Track, a Web-based project management system that Harris says was integral to the project's success.

"We had the challenge of getting different stakeholders working together smoothly," he explains. "Developing the system wasn't that expensive, and the vendors went out of their comfort zones to make it work. The big leap of faith was that we had to put everything else on hold for six months while we developed this. If we hadn't had the good successful track record, it would have been hard to get that [management] trust."


Contents
Introduction
Getting the go-ahead
Modelling the processes
Skilling the business-IT divide
Sidebar: The enterprise that plans together...

Modelling the processes
Good relationships are of course essential to fixing the business-IT alignment, but technology is also important. And while there are no silver bullets when it comes to enforcing alignment, many organisations are finding the task much easier by utilising technologies such as middleware, which allows companies to set up data exchange conduits between information systems. This free exchange is critical for IT to meet the requirements of business operators, who often request that IT deliver reports and reporting systems that are far more complex for IT to assemble than they appreciate.

Even after years of hard work, and despite the assistance of middleware designed specifically to serve as a universal data translator, integration is hard work. A more recent survey of 87 Australian CIOs and IT managers, by database and middleware vendor InterSystems Corporation, found out just how hard: 51 percent of application integration projects -- crucial in modern IT systems -- were not delivered on time, and 46 percent had not or were not expected to deliver the ROI used to justify them.

If that's hardly reassuring for the business managers funding costly integration projects, worse still are InterSystems' findings that IT executives simply cannot meet the demands of the business within the timeframes they're allocated. Fully 57 percent of respondents said they were able to meet fewer than 40 percent of integration requests from the business on time, while 35 percent of all respondents were unable to meet business-imposed deadlines in 80 percent of integration requests.

As one of the more fundamental yet technically demanding aspects of IT systems, integration effectiveness is a good indicator of overall business-IT alignment because it is essential to sourcing, collating, and reporting on dispersed data to provide business information. Integration can also be a facilitator of change, particularly for companies that use middleware to built an abstraction layer in which business processes can be modelled as rules.

"We're getting a lot of reuse of rules," says Troy Jezewski, development lead for IT services with superannuation administrator VicSuper, which has progressively built up a slew of business rules within its BEA WebLogic integration engine. The system was introduced several years ago as VicSuper looked for a way to improve information controls over system accuracy and integrity, which were problematic in the past because employees previously keyed details of superannuation rollovers directly into core systems with no data validation.

VicSuper now runs three core business systems on top of the WebLogic platform, and all access the same core collection of business process models. "Changing business requirements is a very difficult thing for us, since it's obviously the business' prerogative to change priorities to meet customer needs," Jezewski continues. "Quite often they have very pressing timelines, and we have to adapt what we're doing to meet the deadlines. All of our systems are built on the same level of middleware, which we can use to do checks and balances, and when we have a new project coming in, we just build on the rules that are already there. The design based on middleware has really given us a lot of flexibility, and has meant that we can respond to business change a lot faster."


Contents
Introduction
Getting the go-ahead
Modelling the processes
Skilling the business-IT divide
Sidebar: The enterprise that plans together...

Skilling the business-IT divide
Management and IT co-operation and technological sufficiency may both be critical for alignment success, but anybody who's been involved in this level of organisational change will also point out that a clearly defined process for alignment can be equally important.

Many organisations are finding the inspiration for this process through ITIL (Information Technology Infrastructure Library), an increasingly popular service management framework that is providing the first concrete, broadly applicable way for companies to manage and measure business-IT alignment.

This value comes because ITIL focuses both on IT metrics and business goals for assessing service quality. "We've taken on ITIL as an initiative throughout the whole organisation," says Giles Blaber, standards manager with KAZ Group, a recently Telstra-acquired IT services provider whose internal capabilities include BMC application management technology that monitors business process availability based on the IT capabilities upon which those processes depend.

"We had our technicians and service personnel focusing very heavily on the technology and not having an understanding of the impact that a particular problem might be causing for the business," Blaber explains. "We hire good technicians on the basis that they're good technicians, and it takes a while for them to build up good information about a particular customer's business. Customers want a referenceable definition on which they can judge us, and we had to be sure that we realigned our processes."

By getting its employees reading from the same hymnal, so to speak, Blaber believes ITIL has become an invaluable way of aligning its capabilities with its customers' business needs. It's an essential capability for an outsourcer that's held to service delivery standards, as other outsourcers already know well.

Such realignment is also paying dividends for many organisations by allowing them to focus customer-facing efforts internally. By doing this, successes in aligning internal IT with external business needs can be replicated for internal business needs.

In the end, making ITIL work requires skilled people as well as effective processes -- but it's important to remember that the CIO may not always be the best one for the job, warns Andrew Williams, practice leader for IT strategy with consulting firm Capgemini. "You don't need to transform the whole of the way the IT department is set up, but you do need a couple of people in the organisation who have targets and measures," he says.

"Many organisations will try to do this through the CIO role, but in the long run it doesn't work. The CIO will retain accountability, but in our experience it works more effectively when you have someone else who is working on that IT-business interface."

To this end, many organisations have appointed individual workers to new positions whose sole responsibilities revolve around maintaining and strengthening links between IT and business organisations.

Datacom Systems, for one, appointed an internal service delivery manager to apply the company's customer-facing methodologies to its 130-strong internal operations. Orica Consumer Products appointed dedicated IT business analysts within each of its groups after making a major shift towards SAP (see sidebar). And at Deakin University, dedicated project managers from the IT department's newly formed Service Planning and Development area are embedded within business units to ensure IT capabilities stay aligned with business needs.

"Before, it was just someone from the business who would assume a part-time project management role," says Plant. "But to make sure things get properly achieved from an IT and business perspective, our project managers now report directly to the business sponsor. They stay well informed because we have those direct lines of communications, and they can tell IT what's critical, and define metrics to go with the transactions. This gives the business a clear indication of what is possible and what will be delivered."


Contents
Introduction
Getting the go-ahead
Modelling the processes
Skilling the business-IT divide
Sidebar: The enterprise that plans together...

Sidebar: The enterprise that plans together...
Like any relationship, fostering love between business and IT organisations can take a lot of work.

Here are 10 tips for building a lasting partnership:

  1. Appoint a champion. You wouldn't send a salesman to Russia without a translator, so why would you send an IT person to the business without one? Find a person who know how the business works -- and how to translate back and forth with IT.


  2. Trumpet your success. With IT failures so common, who can blame business leaders for being sceptical of IT? A track record of strong wins will give IT the clout it needs to keep business in line.


  3. Don't be scared to innovate. IT knows the technology, so it's their right to suggest new projects. Don't forget, however, to put any innovative idea into a business context with clear deliverables.


  4. Plan together. No matter where the idea for the project came from, it's imperative that both business and IT leaders be involved in scoping, establishing expectations, and project sign-off.
  5. Push vendors out of their comfort zones. They may feel most comfortable talking with IT, but vendors can come up with some pretty good ideas -- and resources -- if they're forced to deal with business leaders to win and keep business.
  6. Share the responsibility. Giving the IT organisation all the responsibility for delivering a project on time and on budget is a recipe for disaster. Make sure the business units' skin is in the game too, if only so project deadlines reflect IT's reality rather than marketing's fantasy.
  7. Tech is your friend. It won't keep your business and IT leaders talking together, but business-focused technologies such as transformational middleware and service-focused systems management make it much easier to monitor performance, manage successful outcomes, and build up libraries of repeatable business and IT processes.


  8. Plan to grow. If there's one thing you know for sure, it's that IT success will leave the business wanting more. Be sure to assess IT capabilities not just in terms of whether a system meets a business need -- but how well it will be able to keep ahead of the business's long-term growth plans and scalability requirements.


  9. Get professional help. It's often hard to find the exact causes of business and IT disharmony. Consulting organisations and many vendors have spent years mediating between the two, and many offer formal alignment services that you should seriously consider before undertaking a major project.


  10. Walk a mile in their shoes. IT workers already know that business types don't get the tech -- nor should they. Business types may already be seen IT workers as cave dwellers who can't see the big picture. This is natural, and it can be worked around by building a culture of collaboration, education about job responsibilities, onsite visits, and myriad other approaches to fostering unity within the team.

  11. This article was first published in Technology & Business magazine.
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