IT /Business Alignment: Delivering Results

IDC - By Jan Duffy, Group VP, Solutions Research

Is your organization (like many others) regrouping, restructuring, and generally refocusing in order to survive the challenges imposed by the current uncertain climate? Dependence on information technology suggests that much of this change will involve technology-enabled and, in many cases, technology-driven plans, processes, and other business activities.

Two things are certain: first, IT is now at the center of most businesses; second, business is a moving target. The demand for coordination across value chains, functions, markets, and geographies will continue to accelerate, and it will be impossible to respond to this challenge without driving new ways of thinking through corporate ranks.

Information technology is fundamental to corporate success and IT decisions, like all other business decisions, need to be made on the basis of value contribution. In light of this, a solid, sound business case for IT investments requires mature IT and business judgment. Unfortunately, there are no shortcuts to developing maturity or to developing judgment - both take time and experience. There is only one way to gain traction in these circumstances and that is to apply the collective experience of both IT and business people to the pursuit and execution of a single corporate strategy. In this case the integrated whole is definitely much greater than the sum of the two parts.

Successful IT/business alignment means developing and sustaining a mutually symbiotic relationship between IT and business - a relationship that benefits both parties. This requires that IT executives be recognized as essential to the development of credible business strategies and operations and non-IT executives be considered equally essential to the development of credible IT strategies and operations.

The extent to which IT and business are integrated is closely related to the way IT is viewed by the organization's senior management and the context in which it is deployed. Many of the conclusions reached by IDC echo those of Henderson and Venkatraman (1993)1 but, instead of suggesting four, IDC suggests the need to consider the following six alignment perspectives, each of which is linked directly to key question:

HR Organization and Management - Is the organizational structure sufficiently fluid and its competencies both broad and deep enough to satisfy both the business and technical demands of today's highly competitive and volatile business environment?

Innovation and Renewal - Are you better positioned to anticipate and capitalize on technology advances and business shifts than your competitors?

IT/Business Architectures - Does your business architecture encompass the vision, principles, guidelines, standards, and best practices that govern the acquisition, use, and disposal of critical assets across the organization?

IT/Business Partnership - Do your processes and related measurements recognize the strong codependency between people, process, and technology?

Operational Excellence - Has every step been taken to ensure that all internal- and external-facing processes and transactions are frictionless?

ROI Strategy and Management - Are IT management and staff measured and compensated based on achievement of the same goals as non-IT management and staff?

The answers to these questions provide insight into the progress an organization has made in achieving strategic symmetry - a fully harmonized plan of action for dealing with the organization's environment and achieving operational synergy. IT and non-IT staff interact to produce a joint effect that is greater than the sum of the parts acting alone.

A combination of complexity and uncertainty continues to hinder business growth; this combined with the current environment of economic constraint suggests that every organization needs to maximize the potential of its assets. Economic success is directly related to an organization's ability to increase the value added through leveraging the collective (integrated) use of its assets. This cannot occur in a world where both the conduct of business and competitive success depend on technology unless all lines between IT and business have been eliminated.

Organizations must fully embrace the integration of IT and business and promote the ability of this combination as today's organizational DNA. IT and business become a continuum where nothing can be separated from anything else, and all is completely and infinitely intertwined - much like a Möbius strip.

Conceptually, aligning IT with business makes obvious good sense; the challenge of course is that IT/business alignment is systemic. Eliminating the discontinuities encompasses fundamental change in just about everything having to do with the application of information technology. However, the cost of not taking action to align IT with business is likely to be serious; inappropriate investment decisions, badly chosen priorities, and ultimately the delivery of the desired results will not be achieved.

Technology and the information it uses and generates defy the laws of diminishing returns. The more it is applied the more value it creates; one well-spent technology dollar can yield many business dollars.2 The alignment of IT and business is mandatory; it is not optional.