Next steps

Transforming the way business and IT interact

by Keith Ferrell

There has long been a cultural divide between the IT and business sides of the corporate house—so much so that the split has become almost invisible to the people involved. Suits and techies alike have come to expect that business and IT will have different goals, different methodologies and sometimes diametrically opposed ways of thinking. It's considered acceptable, even "normal," because that's the way it's always been and that's how it will always be.

But the divide should be viewed as anything but acceptable. The long-term effects of IT/business misalignment—lack of agility, corporate dysfunction, dying projects and sagging profits—can eventually sound the death knell for even the most robust business.

The good news is that there is a way out. We spoke with seven of the world's leaders in the field of business alignment—the establishment of strategies and processes that eliminate false divisions between business and IT and replace them with shared values—to uncover best practices for business and IT alignment.

Part one of this discussion was covered in the article "Common Ground." We continue now with part two, "Next steps: Transforming the way business and IT interact."

Our participants, listed and quoted in alphabetical order, include:

Michael S. Chiappetta, vice president, Fair Isaac

Jane Griffin, principal, Deloitte

Kevin N. Quiring, partner, Accenture

Cathryn Rheiner, vice president, CRM solutions, SAP Americas

Brian Robertson, managing director, BearingPoint

Paul Rodwick, vice president, Siebel Business Analytics

Bjorn-Erik Willoch, vice president, global consulting solutions leader, Capgemini

How do you and your organization go about determining a company's state of alignment?

Chiappetta: We look for the yield that organizations derive from their decisions. And we look for agility within the organization, its ability to find and develop new sources of business value and do so while reducing risk, using industry-standard platforms and transferring their capabilities across new industries to better help them make more precise decisions. A truly aligned organization is one that understands that IT as utility is dead—what matters is that which creates advantage in an area that affects the customer.

Griffin: We look for IT departments that are guided by an awareness of what they are delivering to business, by the awareness of the difference they make in their business and by the understanding that IT-driven projects—projects that serve only IT purposes—are not sustainable.

Quiring: It takes a top-down and bottom-up approach, looking at planning documents and proposals, listening to senior executives but also to the street and the investor community. At the same time, you have to analyze the specific activities of in-flight projects, of projects being teed up and investments being proposed, and ask whether there is evidence that the strategy is taking hold. You may discover that there's misalignment between business execution and corporate strategy—and if that's true, there's almost certainly misalignment between business and IT.

Rheiner: Look at quarterly MBOs (management by objectives) and what they are goaled on, at whether or not technology makes people more effective and efficient, at how technology can enable the achievement of business strategy. The other area that's really crucial to look at is the business analyst division. They live on both sides of the line.

Robertson: If you can't map a direct connection between IT initiatives and corporate goals, or you have an environment where business "tosses" needs over a wall to IT, you know you have alignment problems. You need a partnership where IT is inexplicably involved in the business planning process on both the strategic and the short-term tactical levels. At BearingPoint, we have an agility assessment tool that can be tailored to gauge the degree of IT/business alignment.

Rodwick: You need process analysis. The greatest challenge to alignment from IT's perspective is the competing demands of end-user priorities and functions. A key part of the process is getting to some agreement as to what the priorities are.

Willoch: Look at the architecture. You can look at architecture at the level of plumbing, of a house, of cities and of states. For many organizations this is a relevant metaphor. You want to have compliance, but you also want an architecture that creates transparency both in terms of managing the business and managing the data.

Are there key indicators that tell you a company is well aligned?

Chiappetta: If you can change quickly and agilely in the right places, you're aligned. It's about having the investments where they make the greatest difference to the business.

Griffin: The ability of IT to answer business-related questions and communicate how their services help to answer those business questions.

Rheiner: KPI metrics, on-time delivery, increased operational efficiency and revenue growth. As an IT professional, you have to ask yourself if your business counterparts are hitting their revenue numbers (are you supporting their business appropriately and are the projects they depend upon getting completed on time).

Robertson: Specific indicators may be influenced by the role IT has within the business or other factors, but a few of the common indicators include: IT is active at the business planning table, there is a steering committee or IT governance board, business units take ownership for funding and share accountability for successful deployment of IT solutions, and the business is held accountable for achieving the estimated business benefits of the technology.

What are the immediate business benefits of proper alignment?

Chiappetta: You have more satisfied customers. You're able to release more products—and the right products—to the right people, faster.

Griffin: The ability to support agility in business, to allow rapid change of products, to respond to customer wants immediately, to aggregate information and to provide better insight into what's going on in the business.

Quiring: Clearly you have faster delivery of pragmatic solutions that begin generating measurable business benefits upon deployment. That doesn't mean a solution pays for itself in a quarter—these are long-range endeavors and ideas. But some benefit has to be generated immediately.

Rheiner: The business that believes that IT can deliver what the business is looking for results in immediate trust in the organization. Which brings me back to the role of the business analyst. In a positive way, the business analyst's most important role is that of interpreter, the person who translates business needs into IT requirements.

Robertson: Reduced costs. The company is able to stop spending money that is not driving to a business goal. Also: increased speed to market; more streamlined approaches, with both process and portfolio benefiting from the streamlining. Well-aligned companies apply both short- and long-term goals to drive their IT architecture.

Rodwick: You eliminate an impedance mismatch and produce a much more frictionless process. Sometimes projects, especially infrastructure issues, can take a long time, but you will see immediate benefits on people, processes and the organizational side.

Willoch: Two things happen: One, from the external and customer/competitive point of view, you have the ability to sense and respond (with the) furthest reaches of your front lines. If a customer senses something and you are able to respond in a way that the customer finds pleasing, convenient and efficient, you have therefore created loyalty or saved the company from problems. Internally, the advantages are formal and legislative and center around compliance. If you are not compliant, you cannot run a big business. It becomes expensive, messy and dangerous.

To achieve those benefits, should alignment be approached as a short-term, clearly defined project? Or as something larger, that will take longer and become ongoing rather than having a set "end-point"?

Chiappetta: The lesson of the last five years is that you cannot just "do CRM." You need a high-level roadmap to ensure alignment, but there need to be interim deliverables that provide value to the business. The world is going to change, so your roadmap will never be 100% correct. That's why you need to make sure you're providing value all along the way.

Griffin: You need both the long-term view and an understanding of what you can do in the short term to get some real results from alignment. A service-oriented approach lets you leave applications in place while deploying new workflow and data management processes; you can fix underlying problems without replacing the entire architecture. You'll also have a holistic view of your financial position and a better understanding of your vendors. All of this is enabled because of technology, which gives IT a better pool of resources to respond more quickly and appropriately to business needs.

Quiring: Alignment should not be thought of as a project, but as an institutionalized process. You can determine the degree of alignment or misalignment in a month or two, but achieving alignment will actually take a few quarters, especially if it requires reprioritization of spending.

Rheiner: Some companies are good at process change and others aren't. You need to know whether the company can handle immediate change, or whether you put a roadmap in place and manage against the roadmap. Either way, you have to start immediately, to understand that alignment is an evolution, not a revolution, and be constantly looking at process improvements.

Robertson: Both business and IT will change over time. Aligning the two will take continuous monitoring and adjustments. An initial effort may be required to establish the proper framework, but it will take on-going efforts to be successful. Alignment must be sponsored from the top down. Management has to develop a burning platform from which to drive change. And that makes effective communication and change management programs prerequisites.

Rodwick: It's a long-term commitment, but there can be a fair expectation of short-term benefits. And you should have an expectation of continuing and escalating long-term benefits.

Willoch: The desire to take reengineering to the next level is high, but very frequently it hits the barrier of IT infrastructure and misalignment between strategic desire and strategic IT infrastructure.

What are the best ways to overcome the IT/business divide?

Quiring: There's no hope of achieving alignment with ad hoc governance. You need an institutional mechanism. Ideally the mechanism is not focused on IT governance, but rather, the mechanism is meant to create alignment across business units. IT is one of the stakeholders in this process, alongside marketing, finance, HR and products—they're all presenting and responding to each other's plans and priorities, first at a feasibility level and eventually at a very specific level. The mechanism for this will, ideally, be an organization that doesn't have a need for investments of its own—it's neutral.

Rheiner: The business that believes that IT can deliver what the business is looking for results in immediate trust in the organization. Which brings me back to the role of the business analyst. In a positive way, the business analyst's most important role is that of critic, the person who translates business needs into IT requirements.

Robertson: You need to determine and communicate what the "burning platform" is. What is the business reason that will motive people to change? IT governance should address which projects are necessary to drive the goals of the business and which are not, while being alert for multiple applications that do the same thing. Portfolio management has to be rationalized across the entire business and enterprise.

Rodwick: One technique of business intelligence is to have a BI (business intelligence) competency center—a forum for the business and IT communities to come together in a regular way. This needs funding and resources and could be housed in IT or business with a standing committee or rotating members, its nature dictated by the culture of the company.

Willoch: Teach your IT architects to think like business consultants. It's easier to teach IT business and embed the architects in business than it is to teach an MBA about IT architecture.

If the benefits of alignment are so great, why isn't everyone aligned?

Chiappetta: There are quite a few reasons: Customers and competitors change, there's no financial modeling, mergers and acquisitions leave a big mess, the business strategy is unclear. Each of these can have a dramatic effect. Just as dangerous is having the goals of business and IT not aligned. IT is too often measured too much on cost versus business value provided because the company doesn't know how to measure "business value provided."

Griffin: Businesses have resisted or deferred alignment for any number of reasons, for example, pressure from boards and shareholders that postpones necessary investment in appropriate IT platforms. But there are also management issues: insufficient executive understanding of technology, lack of IT's understanding of businessand failure to bring the two sides together effectively.

Quiring: It's just hard. Alignment requires large-scale coordination, collaboration and communication. It takes people's time. It requires more meetings, leaving them less time for their work. It requires more people interaction—and not everyone likes to work together. Also, the lack of a relevant company strategy offers nothing for the initiative-forming community to rally around. You end up with siloed business objectives and siloed incentives.

Rodwick: IT always has leaders and laggards—some at front and some who are dragging. Wrong leadership, too complex an organization, no way to measure the costs and benefits of IT—all can contribute to persistent misalignment.

Willoch: The average tenure of top executives in Europe now is 18 months—that's bad news, and not just for CEOs. It's terrible for organizations. The level of re-architecting required for alignment means that you have time to think through your business model and how technology enables it. This takes a consistent vision over an extended period of time, and today not a lot of companies have the stability to do that. But until you're stable, you won't be able to do it.

Can a company remain misaligned and be competitive—or even viable—in today's marketplace?

Chiappetta: The risk is a company that is not agile, not able to respond in the marketplace—or can only do so at a very high cost.

Robertson: In the long run, I don't think you can be both misaligned and competitive. Some industries/companies may think they have money to spend, but the cost burden will eventually catch up to them. For lower-margin industries, long-term survival mandates alignment where everything is streamlined, cost-effective and totally integrated.

Rodwick: IT, properly used, delivers such powerful competitive advantage, and misalignment is such an inhibitor, that one can't hope to compete with peers in this area unless one is aligned.

Willoch: You can survive longer in some industries—steel, aluminum, paper, etc.—without it. And in those industries you can afford to not think as diligently about it, but the tendency is for industries to have more time on their hands and as a result they can think about it. Retailing is still trying to figure out how to do transnational retailing with local flavor. So far, most major retailers have been rather misaligned, with the exception of Wal-Mart (in the U.S.).

And how do you prepare the organization for changing business conditions or circumstances, mergers and acquisitions and other events that might alter the alignment landscape?

Chiappetta: In a merger or acquisition, it is vital to address alignment—with clear vision and communication, as well as integration. You will also find that the better your alignment, the better able your organization is to deal with any type of volatility or change. Agility is the most important characteristic a company can possess when facing a challenge.

Griffin: Properly aligned companies are poised to adapt quickly to changing conditions, markets and customer needs. Mergers and acquisitions, done right, offer an immediate opportunity to look for and leverage consistent infrastructures and architectures.

Quiring: By its very nature an aligned company is adaptive. To understand how well a company is aligned, ask how well it sticks to its strategy in the face of these conditions. Ideally, the strategy reflects the current conditions.

Rheiner: You need a platform that can adapt, something that lets the business users be able to adapt and communicate changes and change-needs. And IT has to be able to say: "This is what you asked for—but we understand your business and believe this is what you really need."

Robertson: That's the very definition of alignment. If business knows that continuous change is the norm, then IT needs to know this as well, and (needs) to create processes that reflect this. Build your structures to suit conditions.

Rodwick: Once you get a mechanism, whether embedded in the organization or in collaborative groups of people, and once that mechanism is demonstrating results, the efforts continue, generating obvious benefits. You should generate a net positive ROI, and projects should withstand the test of funding. To achieve this, alignment has to be an institutionalized process rather than just being one person's idea. Mergers and acquisitions can actually drive IT and business alignment—there are so many moving parts, you have to align to get them under control.

Willoch: If you are architected for agility, you will adapt easily to changed conditions. If you're not, you won't.

Because alignment transforms traditional roles and relationships within an organization, what change-management practices should be in place as the alignment proceeds?

Chiappetta: This varies greatly by firm: How big a gap are they trying to close? You can minimize risk by piloting the alignment in a business unit, channel, location, etc.

Griffin: The amount of disruption depends on the insularity of the company. Disruption can be minimized by the careful use of incentives and budgets and by performance management plans. But as the old saying goes, "Be careful what you pay for because that's what you'll get." A well-thought-out and implemented incentive plan can move some large initiatives.

Quiring: There should be as little disruption as possible. In some cases, IT may need to get a facelift to support new structures. You may have to institute a business-relevant facet to the IT organization, one that can perform business-relevant engagement. Alignment is about people at all levels facing off with the business and helping the business make decisions and execute strategies.

Rheiner: Best practice? Understand that it's very easy to say we're going to do this and far more difficult to make it happen.

Robertson: The need for change management is a given. It must happen on an individual basis where the burning platform is well understood, expectations are set and desired behaviors are rewarded. Organizational change must also occur. Organizational structure, processes, roles and responsibilities must all be assessed. Alignment involves business and IT. It will take change in both to make it successful.

Rodwick: That differs depending upon the existing sophistication and capabilities as the company starts down the alignment path. Many large companies face quite different challenges from a company that's just starting to align.

Willoch: The agility is built into your plan and your architecture. Everything has to do with technology these days.

Are there alignment "road markers" or milestones that should be communicated throughout an organization?

Chiappetta: Shared goals among business and IT leaders in an organization are an important and necessary step. You should balance IT initiatives on cost initiatives versus business growth initiatives. Look into agility measurement and ensure that business users are not seeing IT as a barrier to rapid change of a business policy.

Griffin: Tighten your performance measures and motivate them through performance management plans. Use bonuses and money, campaigns and posters to build enthusiasm and reward achievement. Celebrate your wins!

Quiring: A business capabilities rollout map is an excellent artifact. Not a project plan, but the company's business capabilities presented on a roadmap of a few legal-sized sheets. The creation of such a roadmap is, in and of itself, an alignment milestone.

Rheiner: Establishing role clarity and over-communicating are essential—you've got to make sure that people really understand the new accountability. You must communicate how the whole group is doing against the company's over-arching goals. You should create a roadmap and make sure that everybody always knows what they're doing against that roadmap.

Robertson: Look for early successes to show that alignment can work. Start with a department or team who are apt to be enthusiastic early adopters. Establish a roadmap that has quantitative milestones. Incorporate alignment into formal processes and ways of doing business. If you do that, it becomes a part of everyday life.

Rodwick: Critical/essential road markers include identifying the executive sponsor of the alignment initiative, a position that carries with it a funding as well as strategic importance. It's also critical to establish the forum that will bring IT and business together. However this is done, the key test is getting the forum past the first meeting.

Willoch: If they don't buy into it, you've got to get rid of them. Once the decision is made, everyone has to execute with a smile, even if they disagree. Yet it is amazing how tolerant companies are of people who consciously oppose and even sabotage important initiatives. This is really dangerous.

How does management properly apportion responsibility (as opposed to leadership) for the alignment process—and do so without reinforcing cultural divides?

Chiappetta: Much of this can be avoided by establishing clearly shared goals, as well high-level exec sponsorship of the alignment initiative.

Griffin: Overcoming these obstacles requires management and leadership that are built on a plan of inclusion, not exclusion. If people feel like they're being left out, they probably will be. Effective alignment leadership rests on collaboration and moves people from all parts of the business. And it's essential to include definitions of the problems being addressed and the solutions you're seeking before you start taking anything away.

Quiring: Responsibility is part of the institutional process and can be most easily accomplished if there is a neutral party facilitating the alignment. It's also important to provide incentives for the IT executives supporting business units as well as the business executives.

Rheiner: It requires strong leadership at the top, clarity in roles, and the use of KPIs (key performance indicators) and MBOs (management by objectives) to manage accountability. You must make clear that there is no room for "blame games." Everyone in the company has to truly believe and understand the effects of their contributions and how those individual and team contributions roll up to affect overall company performance.

Robertson: Business and IT must show discipline. If the "platform" is truly "burning," then both parties will have motive to make it happen. Both must take on accountability to achieve desired results and be prepared to cut loose people who resist the change that alignment requires.

Rodwick: Achieving real balance between business and IT—that's the whole point. If you are trying to force alignment without the right level of respect, understanding and communication, it's just not going to succeed. Getting together face-to-face, establishing personal relationships—assuming your organizational culture allows this—is important.

Willoch: As a result of alignment, there will be trust and energy. People will spend time encouraging the next change rather than avoiding answers.

How do companies best prepare themselves to "keep the excitement alive" during an alignment process?

Chiappetta: You need to have interim short-term deliverables, and you absolutely must engage impacted people in the planning and design process throughout.

Griffin: Identify and communicate short-term deliverables and incremental wins, being aware that the "big bang" alignment might be a multi-year undertaking.

Quiring: When, for example, you see incentives provided to reward manufacturing for the same kind of throughput and quality metrics for which the owner of that business is rewarded, you begin to see deeper and more productive ongoing collaborations.

Rheiner: Really strong executive sponsorship and over-communication are vital to keeping the alignment excitement alive. You have to communicate a lot to everybody about the alignment of roles and responsibilities, and work to keep everybody focused on what the initial goal was and make clear that it still is a priority.

Robertson: This is a definite risk—you can lose momentum with a change in leadership, with the new leader having a different vision. Depending on the degree of change when this occurs, you may be able to limp along. But if you're just starting, validate and/or modify the "burning platform," key stakeholders and approach as appropriate. Set short-term goals and achieve milestones and then celebrate successes.

Rodwick: You should be able to show success all along the way. Find the visible successes and communicate them. This becomes self-perpetuating, a motivator that helps everyone understand there is value here, that they can be heroes for the organization.

Willoch: This brings up the eternal debate between the right KPIs and good incentive programs. You need real leadership down to the lowest level of granularity that is truly aligned. And it has to be ongoing: There's a reason why people go to church every Sunday: Successful, sustainable religions have high frequency built into them, a regularity of reinforcement. Most business initiatives have a big kick-off, followed by a few newsletters, and then they peter out.

Transformation can be a powerfully invigorating force, sparking new ideas and unexpected insights. What are best practices for integrating new insights into an ongoing alignment without distracting from the process's original goals?

Chiappetta: Communicate the message that it's OK to be flexible, to take what you've learned along the way and adjust your roadmap. The outside world is changing while your project is going on. Long-term IT projects often fail because the world has changed before they are completed.

Griffin: Be prepared to better leverage your technology and your people. The diversity of people and ideas in an aligned company creates wonderful things—new insights, enhanced agility and a much better ability to respond to business needs.

Quiring: If the key output is a continual collection and synthesis of data into information, supported by a cross-disciplined, cross-corporate funding mechanism, people will participate eagerly and in an engaged manner. They will become eager to learn more things about their company. Synthesize around learning, and you will have engaged executives and employees.

Rheiner: There's a lot you can do, especially if there's a senior management team and steering committee, with the steering committee managing transitions day-to-day and week-to-week, while the management team provides leadership. But it's vital to enable anybody to communicate any kind of idea to these bodies. The structure should be organizationally set up to enable this communication, so that people throughout the company understand that their opinions matter.

Robertson: This is all part of running IT as a business, one that is completely focused and aligned with its "customer." Once you see this, you are able to incorporate changes easily and swiftly, to plan for them and then build them into the process.

Rodwick: If you're going to take the time and effort to set up an organizational mechanism to align IT and business, you need to be communicating results and outcomes upstream to the executive sponsors. New ideas are part of the serendipity you get out of IT/business alignment.

Willoch: With new platforms and well-thought-through architectures, businesses can change and adapt. This flexibility enables and encourages new ideas. T

Keith Ferrell, former editor of OMNI magazine, has written, spoken and consulted on governance and Web-enabled corporations.