Business IT Alignment

A short while ago, a Houston-based freelance writer tracked me down in email to ask a few questions about a favorite marketecture question, what exactly is “business IT alignment.” It seemed like a good chance to write-up the thoughts on the topic, and repurpose the content here:

Why is business strategy and IT often at odds within organizations?

The cultures of these two parts of a company are often in conflict.
Speaking in the broadest sense of the term, “IT” is still very much so
a black box to the rest of the world. While companies like Facebook
and Google seemingly deliver software and services at the speed of
light, the process for creating the software and services that
businesses use is not as flexible. Computers and software require very
precise instructions, and the humans who support them tend to follow
in that train of thinking. The business side of the house tends to be
very imprecise in comparison, and cannot always articulate what it
needs from IT in a narrow enough way. The result is a communication
problem from the start.

Also, producing software and other IT to
support the business is still a very long process. Business needs, on
the other hand, change very rapidly, often several times a year. What
happens here is that at the start of an IT project, the business will
want one set of requirements, but these evolve over time to match new
customer demand. Often, during the project, these changing priorities
mismatch with the development IT is doing. By it’s nature, most IT is not
flexible enough to adapt to change.

What are the risks when IT and business strategy aren’t synced up?

There are several:

• Delivering Bricks – IT projects not delivering software and services that are actually
  valuable to a company’s customers and, thus, profitable to the company
  – often times, IT may be doing its best to shoot for this, but by the
  time the project is out it’s not flexible enough to change as needed
  or it may have missed a market window.
• Wasting money on un-valuable IT – removing unprofitable
  infrastructure is difficult, “IT never goes away,” is a common quip.
  If the business is not constantly asses the value various IT assets
  are giving the business, it could be wasting money. The problem is
  that getting the raw data to make these decisions often seems
  extremely costly in the short term. If a business manager is bonused
  on their short-term profit-making, there’s no need to worry about long
  term problems, so you save that money in the short-term by not
  spending it. And, who knows where a business person may be in the long
  term anyhow, so why should they worry about long-term problems?
• IT is at risk of loosing funding – if IT is not obviously
  contributing to a company’s bottom line, they’ll get less and less
  funding and may even be out-sourced.
• Lost opportunities – often times, the business side of the house
  tends not to view IT as a strategic asset. They may not be asking,
  “how can we use technology to make more money?” This is because of
  multiple reasons, but usually comes down to poor visibility into IT
  and trust lost over past project difficulties. IT may also not be
  staffed correctly to be strategic to the business:
  • do IT managers understand
    the market dynamic their company is in, and can they imagine new
    technologies that would allow them to capture more cash from existing
    and new customers?
  • Does IT even have the time to think about that?

  At the same time, elder companies (like telcos and cable companies, as
  just one example) are struggling to differentiate themselves in the
  market and need to look beyond played-out brand and “life-style”
  marketing to snatch the harder to grab cash in contemporary markets.
  What they need are new “features” to their nearly commoditized
  offerings and actual, concrete, real reasons for customers to given
  them money in return for products or services.

What steps can organizations take to best align business strategy with technology and turn IT into a competitive advantage?

The first step is to start with IT. People in IT need to understand
how what they do day-to-day helps make the company money and, thus,
keeps them employed. IT staff need to think like the business – as
horrifying as that can be to the more purely engineering types – and
start to want to participate in the business cycle, that is, making
money. Once IT can speak about the actual business of the company,
hopefully bringing some new ideas to the table, they can start to win
over the trust of the business.

Next, the business needs to actually fund IT to further this
transformation. You can’t view IT like the office supplies department:
they do much more than stock the closets with pens and staples. The
business side has to understand what IT is capable of and, more
importantly, be imaginative enough to push IT even further.

As a cliché example, you can look at Apple and AT&T. In the area the iPhone
plays in, AT&T is really a commodity product – in any given US city,
there’s a blizzard of other options that, really, are just as good, and probably cheaper. By
teaming up with Apple, AT&T was able to use IT (the iPhone and having the web in your pocket) to drive
much new revenue and new customers. And, as a delicious dichotomy, AT&ampT seems to be blowing itself up real good by not allowing poor service/IT and stifling innovation on the platform.)