business-it alignment
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Getting to Alignment: and staying there. The CIO’s Leadership Role in Better Business Performance through IT Alignment.TRANSCRIPT
Business-IT Alignment
Getting to Alignment: and staying there.
The CIO’s Leadership Role in Better Business Performance through IT Alignment
Walter AdamsonDigital Investor Pty Ltd
June 2005
Dropping the Ball
Alignment falls short of expectations:
"IT investments are failing to provide the benefits and returns expected, according to a survey of senior IT executives. IT directors ranked the importance
of aligning IT and business objectives as high at 8.3 on a scale of 1 to 10, but the respondents only
rated their success in achieving alignment at 6.2"
said an article in Silicon.com
IT’s Perpetual Headache
AT Kearney, from a survey conducted in December 2001, report that only 17% of businesses had IT strategies that were "fully aligned and developed
simultaneously" with corporate strategy.
Furthermore, 45% of participants did not feelthat their IT strategies were developed to
support or align with their corporate strategy.
Fact: The Corporate Alignment Profile most often shows IT as the most unaligned group.
Fact: The Corporate Alignment Profile most often shows IT as the most unaligned group.
CEOs Seeking a Solution
The IT Governance Global Status Report (2004) found that 80%+ of CEOs recognised that
“IT Governance or some form thereofis required” to resolve “IT issues”.
The Report also found that 57% of CEOs looked to IT Governance to align IT strategy
(and 53% to manage IT risks).
However the Report concluded that “solutions in this domain are not yet available”.
Alignment Shalignment
The Board should drive business alignment by:
Ascertaining that the IT strategy is aligned with the business strategy.
Robert S. Roussey, ISACA International President & Professor of Accounting, University of Southern California, at a meeting of the ISACA Denmark, Danish State Authorized Public Accountants, IIA Denmark & Association of Security Specialists.
The Solution is ITinsync
ITinsync connects IT with the business: CLARITY asks if the vision and roles are clear CONSISTENCY checks operational Alignment COMMITMENT tests mutual support
Consistency of Leadership, Management & Adaptability
Consistency of IT’s Plans, Projects and Outcomes
Commitment Commitment
Mutual Commitment
CLARITY
ITinsync Measures Alignment
ITinsync provides longitudinal measures of progress:
1. Assess the current position
2. Plan the approach and the timing
3. Do the ITinsync survey – 120 questions
4. Checkout the hotspots – and explain
5. Act to correct - targeted, focused interventions
Then do it again and measure the results.
Leadership
Management
IT Alignment in Context
IT Alignment is one part of a wider framework:
Business Mission
Architecture
IT Strategy
Operations
Alignment Gap
Execution Gap
Innovation Gap
StrategicAlignment
ExecutionExcellence
TechnologyInnovation
Focus of ITinsync
COBITITIL etc
Focusing on the Core
Alignment is core and mission-critical:
Core IT
versus
Content IT
Non-Mission Critical versus Mission Critical
Infrastructure
Effectiveness
EfficiencySecurityRisk ManagementContinuity
DRPInnovationHR Planning for IT
StrategyArchitectureSourcing
Business EngagementDelivering ValueManaging Change
Alignment
Alignment a Journey
Getting “aligned” is not an event:
It is a continuous improvement process; Starts with the business and IT leadership team; Requires building of consensus and commitment.
An aligned IT group is strategy-focused, and:
Understands and demonstrates how the IT strategy will benefit a department or function;
Understands and can explain how the IT strategy will help to achieve the overall mission of the firm.
“IT alignment is a journey, not a destination.” “IT alignment is a journey, not a destination.”
Achieving alignment is a reflection of: Business Engagement competencies; The ability to deliver Business Value; The capacity of the IT group to Manage
Change.
► Business Engagement ► Business Value ► Managing Change
Foundations of Alignment
Alignment
3 Core Elements of ITinsync
➔ Business Engagement: success means that IT and the organisation share a common vision and strategic intent and understand why customers value the services of the organisation.
➔ Delivering Value: success means that IT has been able to achieve a dialogue and agreement of the business value that IT delivers.
➔ Managing Change: success means that IT and the business are share responsibility for aligning people around new projects and their successful implementation in delivering business value.
Alignment Model
Business-IT alignment can be achieved by success in managing three core elements:
AS8015 Risk & Regulation COBIT
ITIL
ITinsync emphasis
1. Business Engagement
2. Delivering Value
3. Managing Change
Includes Governance Links
ITinsync Foundations
Business Engagement Delivering Value Managing Change Clarity Commitment
IT Governance Links
Responsibility for IT#
Regulation and Risk# Systems & Processes#
Communication and Knowledge
Plus Leadership, Management and Adaptability.#AS8015 Corporate Governance of Information and Communication Technology, 2005.
Achieving Business-IT alignment is a foundation for good IT Governance - because achieving alignment requires:
Clarity of strategy and business value;
Agreement about projects and priorities;
Mutual commitment and respect;
Management of risk and change.
These are elements of effective IT Governance.
IT Alignment aids Governance
Alignment and Governance
IT Alignment
Performance-oriented Strategy-focused Effectiveness Core & mission-critical Make a difference
IT Governance
Compliance-oriented Operations-derived Efficiency Mission-critical Don’t make a mistake
Both need to be there, in balance.
Beyond IT Governance
IT Alignment aims to achieve higher levels of operating performance, whereas Governance per se is found to be of modest relevance#:
1. Adopting “boiler-plate” recommendations is a costly process and it is far from clear whether these changes will produce better-managed companies as well as satisfy stakeholder objectives;
2. There is little evidence that the costly governance changes that are currently being imposed on companies will produce expected net benefits in terms of improved performance.
#Financial Times: Sponsored Reports: Mastering Corporate Governance: Governance and Performance. May 26 2005. By David Larcker, Ernst Young professor of accounting at the Wharton School of the University of Pennsylvania. Scott Richardson and Irem Tuna, assistant professors at the Wharton School.
The Vision of ITinsync
Our vision is to take IT-Alignment off the agenda.
Still important; Still requires measurement and continuous improvement; But, becomes part of the fabric
of the organisation.
Our objective is to help the CIO be integral to improving the performance of the business.
What CIOs Want
The top benefits CIOs were hoping to achieve#:
1. Increased IT credibility with the business (81%);
2. Closer alignment between IT and business objectives (69%);
3. Improved teamwork between IT and internal business partners (68%);
4. Improved ability for CIO to influence the business (46%).
Item 1 and 4 are outcomes of 2 and 3, which are results of ITinsync.
#CIO Research Reports. June 1, 2005. Turning IT Doubters into True Believers http://www2.cio.com/research/index.cfm
ITinsync delivers teamwork and alignment, thus:
1. Gaining credibility with the business;
2. Getting a place to influence the business;
3. Positions the CIO as a member of the corporate board or executive committee;
4. Builds weight for the CIO to report to the CEO.
What CIOs Get from ITinsync
What Business gets from ITinsync
We understand the company VisionAnd our roles in achieving it
We understand the company VisionAnd our roles in achieving it
We and IT work togetherAnd understand how to best apply our skills
We and IT work togetherAnd understand how to best apply our skills
We are supported by the organisationAnd we and IT respect each other
We are supported by the organisationAnd we and IT respect each other
We are all swimming in the same directionAnd we enjoy being part of a performing organisation
We are all swimming in the same directionAnd we enjoy being part of a performing organisation
Clarity
Consistency
Commitment
Performance
Attachment
Picture on a Page
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By Division
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Longitudinal
Attachment
Defining IT Governance
Governance is:
The assignment of decision rights and accountability frameworks to encourage desirable behaviour.
Governance matters – it’s about effective use of $$$ and managing business risk.
The impact of business governance on business-IT linkages is not fully appreciated – every business decision has an IT
impact and there is no such things as an “IT project”.
# 2004 Marianne Broadbent, Melbourne Business School and Gartner Fellow
Attachment
COBIT
An IT control and governance framework.
Recent developments added a management and governance layer, providing management with a toolbox containing:
Performance measurement elements (outcome measures and performance drivers for all IT processes);
A list of critical success factors that provides succinct non-technical best practices for each IT process;
A maturity model to assist in benchmarking and decision-making for control over each IT process.