Alignment perspectives

In my conversations with business managers and IT managers, the subject of the divide between business and IT often comes up. Business managers often have no idea why IT is working on someone else's project and not theirs, or taking too long and still not meeting their expectations, and wonder why IT can't be outsourced. IT managers are asking why the business managers don't have to agree on what is important, don't take an organisational view and get rewarded for making departmental efficiencies at the expense of other departments in the value chain (usually IT), are not held accountable for realising the benefits stated in shoddy, forgotten business cases, and continue to blame IT.


Both sides despair about the wasted opportunities and point the finger but nothing changes. These are symptoms of weak or flawed organisational governance, which is necessary to effect binding improvements in aligning both the business and IT toward the creation of real value and the achievement of the organisation's goals.


Governance drives alignment, which in turn drives the creation of value. 


Commitment and a structured approach to governance at the highest levels is required to continually drive the alignment of business and IT across various dimensions:

• Strategy and goals
• Processes and operations
• Portfolios of plans
• Resources and budgets
• Organisational structures, behaviours, and rewards
• Performance measurement
• Risk management
• Benefits realisation
• Decision making and lines of accountability.

A useful frame of reference for starting discussion with business and IT managers and creating awareness of alignment opportunities and challenges, and the need for sound governance to ensure continual alignment of these dimensions, is Venkatraman's Strategic Alignment model.


Venkatraman's model recognises that value from IT investments cannot be achieved if the strategies of the business and IT do not align and if there is no dynamic process to ensure continual alignment.


The model illustrates four alignment perspectives:

1. Strategy Execution - How will business strategy drive organisational design and change, and how will IT infrastructure and processes need to support that?
2. Technology Potential - How will business strategy drive IT strategy, to that the required IT infrastructure and processes can be determined?
3. Competitive Potential - How will IT trends and capabilities influence or transform the business model and operations?
4. Service Level - How to build IT capability to support fast changing demands of end-users?

The model is useful when aligning strategies by opening minds to the various alignment perspectives and considerations. It becomes even more useful when managers use it to drill down to understand what that means and what changes will be needed in the various dimensions for business and IT.

4 Steps to IT Alignment

Check out Hank Marquis' presentation, 4 Steps to IT Alignment, on managing IT operations based on business value to help address four of the perennial top 10 IT management goals:

1. Aligning with the business
2. Controlling costs
3. Improving quality
4. Balancing resource allocation

Business Services Management (BSM) is a term used to focus IT Service Management (ITSM) initiatives on business value. "BSM is a mindset not a product set" according to Peter Armstrong, BMC, the man who is attributed to inventing the term. I like the term BSM because of its business orientation, which is a key aspect of the approach outlined in this presentation.

Hank's recommended approach is:

1. Define the customer facing services with the customer, in customer terms, the supporting resource facing services, and understand the business case for each service (Hank refers to the SID/eTOM model)
2. Get the customer to value and prioritise the (customer facing) services in terms of risk to the business, taking into account confidentiality, integrity and availability (refers to CRAMM)
3. Measure service quality starting with the most important service (refers to SERVQUAL)
4. Justify projects in terms the business understand and follow best practice.

Keep in mind the term "IT alignment" in this presentation is about aligning IT services with business needs. This presentation is not about aligning IT strategy with business strategy or about aligning the portfolio of IT-enabled investments with business and IT goals and the business's role in this, so this approach alone is not sufficient to achieve alignment of the whole IT portfolio, but it is a good approach for getting your ITSM initiatives in tune with the business.

District Health Board software push

I read with interest an article in New Zealand's Computerworld about the NZ Health IT Cluster’s questioning of a Request For Information (RFI) issued by seven District Health Boards (DHBs) for a single patient management system and citing the challenged NHS NPfIT project as a reason to be cautious of this approach.

A point overlooked in this debate is the role of effective governance in the health sector. The article points out that there has been a failure to achieve interoperability through architectural standards, that the RFI is pre-empting the update of the national health IT strategy, and that a single IT system is already deemed to be the only solution– these are significant governance issues. What is going to be done differently to ensure that health sector, or even the DHB collective’s, IT-enabled initiatives will be successful in creating (and not eroding) ongoing value?

Reading the background on the RFI, it is very clear that the health boards place an emphasis on an IT solution, rather than how IT will be used, to deliver benefits. In the absence of sound governance, will anyone even be held accountable for realizing the claimed benefits? Experience and research has proved time and time again that technology is only part of the equation and that desired outcomes can only be achieved with full consideration of the required changes to the business model, business processes, organisational structures and culture, the way people work, and the involvement and commitment of all stakeholders. These are the areas where DHB collaboration must occur and it must be addressed as part of a whole programme of change within a structured and integrated governance framework.

Typically IT drives these initiatives when the clinicians won’t and that should be seen as a red flag — just as it was for the ill-conceived NHS NPfIT project. IT has the potential to improve health care but IT alone will not solve the problem of adoption. A survey found that only 62% of doctors think NPfIT will improve patient care and only 20% of consultants had a card to use electronic records. A US survey of physicians' adoption of outpatient electronic health records found only 13% adoption rates. How can the claimed benefits be achieved given these adoption rates?

Research by the IT Governance Institute is very clear on how organisations successfully create value from investments in IT-enabled change – there is:

• Strategic, leadership-sponsored commitment to IT governance—to align IT decisions with business objectives and to monitor performance with clear accountability for achieving benefits
• Recognition that IT is not just about implementing technology—it is about unlocking IT-enabled business change
• A structured approach to the governance of IT-enabled investments, based on proven practices for doing the right things, the right way, getting them done well and getting the benefits.

The Information Paradox

John Thorp's book, "The Information Paradox", is about the conflict between widely held belief that investment in IT is a good thing and the reality that this, all to often, cannot be demonstrated. My own experience as a CIO affirms the challenges and experiences described in the book. It gives valuable insight into what needs to change to realize value from IT investments and how to go about it. The book describes the Benefits Realization Approach in terms of three fundamentals and three necessary conditions aimed at changing the way people think and manage. It extends this approach with the concept of Enterprise Value Management to stress that the major effort and challenge that organisations must face is implementing not technology but change.

The three fundamentals of the Benefits Realization Approach are:

• a shift from project management to program management to produce clearly identified business results;
• a shift from free-for-all competition for resources to disciplined, strategic portfolio management; and
• a shift from traditional methods of tracking project delivery to full cycle governance to turn concepts into realized benefits.

The three necessary conditions are:

• activist accountability that includes the concept of ownership;
• relevant measurements linked to contribution to outcomes and to lines of accountability;and
• proactive management of change that is visibly led by senior management.

This book was a key source for many of the concepts used in the IT Governance Institute's Val IT framework.

I suggest these works support another paradox: the conflict between the widely held belief that IT alone is responsible for achieving value from IT investments and the reality that 80% or more of the change needed to achieve this value rests with those who hold this view.

Some hard hitting quotes below from the book demonstrate the challenges faced by CIOs:

"Management thinking has failed to understand the implications of the evolving role of IT in business and how critical IT decisions will affect elements of the overall business system beyond technology."

"The persistence of the industrial-age mind-set leads to what we call 'silver bullet thinking' about the capabilities of IT - and, more specifically, about the power of IT alone to deliver business results. Organisations rush to purchase IT 'silver bullets' in the form of customised business solutions, enterprise application packages and other ready-to-wear IT solutions in the naive belief that they come neatly packaged and stamped benefits inside.' ... the magic bullet theory does not tell us who should aim and fire the gun."

"An industrial-age management practice that encourages silver bullet thinking is the use of one-off business cases to support IT investment decisions."

"Another facet of silver bullet thinking is that most, if not all, of the delivery and implementation focus is on the IT project, with blind faith that any other required changes will fall into place."

"Decisions are generally made in the environment of a competitive free-for-all among stand-alone IT projects, each championed by an executive sponsor interested in pushing his or her pet project....the result is that too many IT decisions are made with no greater chance of success than the average gambler in a casino."

"Tough questioning is critical to get rid of silver bullet thinking and lose the industrial-age mind-set that is proving extremely costly to organisations."

"Senior business sponsors must take ownership of the program and accept clear accountability for delivering benefits."

"... in the case of enterprise application packages, our experience suggests that of the work involved in delivering benefits, 80 to 95 percent lies in the areas of organisation, processes and people - on the business side."

"CIOs will have to leave behind some familiar roles - like chief magician of information technology, and honourable head scapegoat!"

"Business sponsors must join CIOs in leaving behind some outdated roles...that of senior cheerleader, who waves magic pompoms internally as the IT team performs more miracles."