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Business-IT alignment: The new convergence

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If you are still in an organisation where alignment of IT with business is a mere platitude, let me offer this advice to you: get off the bus before it tumbles down the ravine

By: Ashish Pachory

Business-IT alignment is not another well-tossed transformation brew stirred up by hype rather than value. It is a ground-up reality brought upon us by compelling and irreversible changes in our environment—market, economic, social, technological, and even behavioural. It is survival.

If we take a step back in time into IT in the pre-Internet era, the picture was starkly different. Actually there was no picture at all, as IT was completely invisible to all but itself. A typical IT (or EDP as it was then called) ‘department’ had a set of data entry operators, who, well, just entered data all day. This data was fed to huge batch-processing minicomputers running COBOL programs which required programmers to be within shouting distance at all times, because you never knew! In the background used to be boisterous ‘line printers’, always printing away on reams of lined paper. In fact there used to be a guy just to haul paper, so voluminous were the ‘MIS reports’. Then Y2K, the biggest damp squib in recorded history, happened, and people woke up to the existence of IT, though no one was quite sure of its role in their lives.

In the above scenario, Business and IT existed in different, non-intersecting universes. The advent of PCs and rudimentary LAN made a case for IT to be seen (though still not heard) around the office. From there on to email, internet, chat and a few smart Java apps led to IT being a key enhancer of office productivity, though still not a real business enabler. Many of us in our lifetimes have seen IT evolve from centralised Big Iron (mainframes), to networking terminals (mini computers), to client-server architecture (PC, LAN, servers) to internet (telecom/WAN) to cloud computing (SOA, Web 2.0). That is five generations of IT in one of ours! The saw-tooth shaped learning ‘curve’ did cause adoption challenges, but had a silver lining: in all of this, the realisation that IT can play a larger role than keeping the traditional light bulb on, finally dawned, albeit around the turn of the fourth generation of IT.

The current situation
Let us cut to the present. The amalgamation of IP-centric technologies, abundance of bandwidth, explosion of data, proliferation of smart mobile devices and a growing hunger for actionable information anywhere and anytime, have resulted in the creation of the mobile enterprise which has turned all traditional concepts on their heads. The foundation for the integrated Business-Technology edifice of the future has been laid.

Alignment of IT with Business in this backdrop is not about platitudes or catchy slogans, or even mission statements. It is about Business and IT thinking, building and operating together for a shared goal, and that is to make the business successful. If this simple tenet is demonstrated in the day to day behaviour of the entire IT workforce, you have already taken a major first step towards alignment of IT with Business. For the new-age digital enterprise, this must become the new normal.

This new normal also mandates that IT be no longer driven by RoI alone, but is outcome-based. Which means IT is an equal stakeholder in the achievement of business results. Let us consider some examples of this. Traditionally IT has been tasked with automation of the process workflow in a manufacturing environment while the actual outcome of those processes is the shop-floor users’ responsibility. In the outcome-based model, the role of IT would be achieving JIT manufacturing and lean production to reduce cost (a business outcome).

Taking the example of banking, IT is no longer just the agency for ‘computerisation’ of operations, but is a primary stakeholder in the growth of the banking business through enablement of internet and mobile banking and adapting quickly to changing customer preferences. In high-tech sectors like telecom, IT has an even higher influence on the business outcome, not only as an early implementer of new solutions (short TTM) required by the Business, but also as a leading light to the Business in proposing innovative solutions in areas like monetisation of data and business analytics. In such a scenario, IT is a direct stakeholder in creation of business value.

Sustaining the alignment
For true and sustained Business-IT alignment, it is clear that Business must have a stake in IT, and vice versa. Hence in companies that are serious about Business-IT alignment it is not only common for the CIO to be measured on Business KPIs, but for return on IT investments to become a KPI for Business as well. There is a need to move away from a formula-based allocation of IT costs towards a costing model based on actual consumption. This requires sound systems in place to measure IT consumption and also to tie back the business benefits of a solution to the investment made in its roll-out. These are non-trivial factors which require a fair degree of maturity in Business, Finance and IT processes.

There is no organised industry today where IT does not have a role in shaping the product that reaches the end customer. Can an airline today claim to offer the level of customer convenience that it does without packaging online reservations, seat selection, web-checkin and a variety of other value-adds enabled by IT? Or a bank, hotel-chain, telecom service provider, even governments? While this may be less evident in case of manufactured goods, the role of IT is equal, if not higher, here as IT is behind many of the real-time processes, material and inventory tracking, control systems, etc, that result in the final product being created and retailed. Even behind-the-scenes IT is at work alongside marketing teams in launching campaigns, benchmarking with competition, analysing customer behaviour and preferences, and enabling efficient customer service delivery.

In such a scenario, imagine for a moment that Business and IT are NOT aligned, and go back to the state of 80s and 90s that was depicted earlier in this article. It is not just that chaos will ensue, which it surely will. More to the point, Business will come to a grinding halt. IT is at the very CORE of business today. In fact it is indistinguishable from Business.

In an organisation where Business and IT are truly aligned, they are also interdependent. A Business strategy cannot by itself drive business success in the current technology-driven environment. The Business strategy lays the foundation for the IT strategy, which in turn is enabled by the IT architecture. The IT architecture thus has a strong correlation with the Business roadmap, and could have a serious constraining or liberating influence on the Business architecture itself. This cycle of interdependence and influence is at the core of the IT-Business alignment. There is no single, proven formula that allows this cycle to run in a well-oiled fashion. However, some pointers may be helpful.

  • A Business-led IT organisation. An empowered business analyst exists in IT for each LOB as a single point interface to the LOB for assuring that business priorities and IT priorities are never out of sync.
  • A comprehensive governance framework. Not only to exchange plans and information, but to trigger changes in the delivery mechanism, structure and architecture in tune with the changing business environment. However, nothing substitutes informal and continuous engagement between BU and IT at all levels.
  • Measurement of IT along Business axes. That is, factors of interest to Business, not IT. No one cares about server uptime or TAT. It is the end-to-end service availability and integrity that matters. For example, how accurately and quickly can customer information be made available to the call-centre agent? What was the lost revenue due to delayed customer acquisition? etc.
  • Business-sponsorship of IT. There is no common pool called IT-budget for everyone to dive in as required. Instead, an entirely business-funded approach to IT delivery and operations assures that everyone has some skin in the game. All IT costs must have a business justification and buy-in.
  • Thought leadership. An ‘order-taker’ approach by IT is no longer the norm. As domain experts, the IT organisation has to be a trusted advisor to the business providing thought-leading insights that help the business succeed.
  • Business-aligned IT roadmap. The IT strategy and architecture must be continually evaluated against the business roadmap. The most common reason for misalignment is divergence in strategies which lead to an IT architecture that is not supportive of future business requirements.

Increasingly, IT organisations are hiring for business-mindedness rather than technical skills. In most business-aligned IT organisations, the IT team itself is a core group of ‘influencers’ whose focus is on Business and not Technology. All routine operations are outsourced to like-minded partners. This trend helps in directing the organisations’ energies to its core strategic areas and is an insulation against technological upheavals requiring changing skill sets in large numbers.

Business-IT alignment is certainly not a platitude in organisations that are serious about the future. It is a requisite for the business to succeed in today’s environment. However, it is not a trivial task to accomplish and should not be under-estimated. Organisations have to consciously and consistently strive to achieve it. This environment requires business teams to be tech savvy and IT teams to be business savvy. There have to be a lot of common elements in the KRAs of Business and IT teams. Lines are blurring. We may soon see more business managers becoming CIOs and CIOs becoming CEOs.

The next generation of IT is fast gaining upon us. This may bring its own set of new, and as yet unknown, services and offerings but one thing is for sure—the defining feature of the new generation is going to be a much sharper convergence between Business and IT. This convergence is going to be not about technology, but a vastly bigger one—of minds. And this, in my view, will open up a whole new world of possibilities—for business as well as communities.

Ashish Pachory is CIO of Tata Teleservices.

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