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Trying to Align IT with ‘The Business’
is Futile
December 30, 2008
Copyright: www.stankirkwood.com
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Copyright: www.stankirkwood.com 2004
Business & IT CIO Challenges
Every year Aligning IT to the Business ranks as one of the top three challenges for CIOs.
Here is a snapshot of the result of a study done over a two-year period. As you can see the alignment of IT was the number one issue in both years.
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CIO ChallengesBusiness & IT
The most critical challenges facing agency chief information officers*
Top ten challenges:
2005 Rank DESCRIPTION 2004 Rank
1 Aligning IT and organizational mission goals 1
2 Obtaining adequate funding for IT programs and projects 3
2 Building effective relationships in support of IT initiatives with agency senior executives (agency head, CFO, etc.)
11
4 Hiring and retaining skilled professionals 5
5 Formulating or implementing an enterprise architecture 4
6 Unifying "islands of automation" within lines of business (across agencies) 8
7 Using IT to improve service to customers/stakeholders/citizens 2
7 Consolidating/virtualizing the IT infrastructure --
9 Managing or replacing legacy systems 5
10 Developing agencywide IT accountability 7
* AFFIRM – Association for Federal Information Resource Management
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What is ‘The Business’?Business & IT
The BusinessITAlign
Each part of this car must be in alignment with each other part.
Misaligned components will harm performance and could cause unexpected results.
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What is ‘The Business’?
Network
Servers
Internet
Applications
Security
Management
Business & IT
The BusinessITAlign
IT is not just one thing.
IT performs many functions, each one requiring different knowledge and skill sets.
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What is ‘The Business’?
Executive Management
Accounting
Finance
Legal
HR
Facilities Management
Sales
Marketing
Advertising
Merchandising
Product Development
Customer Service
Production
Operations
Purchasing
Material Mgmt
Logistics
Network
Servers
Internet
Applications
Security
Management
Business & IT
The BusinessITAlign
Aligning IT and The Business is a “Many-to-Many” relationship.
Which part of IT is to be aligned with which part of “The Business”?
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What is ‘The Business’?
Network
Servers
Internet
Applications
Security
Business & IT
The BusinessITAlign
The Business is not one nice and neat entity. It has many inter department connections which look like this picture.
Payroll /Benefits
P
P
P
P
P Advertise
P
P
P
P
P
Accounting
P
P
P
P
P
Sales
P
P
P
P
P
Finance
P
P
P
P
P
CustomerService
P
P
P
P
P
Logistics
P
P
P
P
P
Manfact
P
P
P
P
P
Warehouse
P
P
P
P
P
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What is IT going to align to?Business & IT
Business
Sales
Marketing
Advertising
Merchandising
Product Development
Customer Service
Operations Administrative
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
Manufacturing
Assembly
Purchasing
MaterialManagement
Logistics
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
Finance
Human Resources
Information Technology
Legal
Facilities Management
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
- Goals- Incentives- KPI’s- Budget- Projects
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v
You must be able to see what you are aligning to
Business & IT Aligning to the Vision
Each person must have a common understanding of what the end state looks like or else they are not going in the same direction
Words are not good enough to have a common understanding.
Here is an experiment to prove that point.
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Four people were given a verbal description of a vision.
Those four people represented four Vice Presidents of a company.
Their job was to implement my vision by drawing their quadrant which represented ¼ of the company.
There were two constraints placed upon them:
• Could not show each other their work until they were finished drawing
• They could not talk with each other.
Four different strategies were executed - as you will see by going through the next slides.
Business & IT Setting up the Experiment
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“A house in a field with a tree on either side of it, mountains in the background, clouds in the sky and a brook.”
VisionBusiness & IT
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Just Do It! – Strategy 1
Result: Nothing aligned. Mountains in every quadrant
Business & IT
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Reorganization – Strategy 2
Here we had each person select the quadrant they could draw best. We were getting “the right people in the right seats” (Reorganizing). Alignment better than before but only barely.
Business & IT
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To replicate new IT systems I allowed them to talk with each other – exchange information more easily. This simulated having improved IT communications. Still distinct alignment issues.
New IT Systems – Strategy 3Business & IT
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What would happen if I showed them what my vision looked like? Here is what I had in mind. And here is what my four VPs did after seeing my vision.
Show Blueprints – Strategy 4Business & IT
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While not perfect this comes very close and I can manage the differences. It took much less time and communication to complete the “implementation” when they could see what I wanted.
Blueprint-Based AlignmentBusiness & IT
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How to create alignment
Executives developing goals and strategiesImplementation team
Business & IT
What happens to common understanding when you only have words to rely on? How confident are you that the implementation team will build what you
are thinking? Copyright: www.stankirkwood.com 2004
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Blueprints provide a common understanding and context.Effective empowerment comes only thru common understanding.
How to create alignment
Executives developing goals and strategiesImplementation team
Business & IT
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People can not see what you have in mind so how can you expect your employees to implement that? The design of the business is the responsibility of the CEO / President. 80% of the time performance issues are design-related.
What you have in mindOur understandings constantly change. We read, we think - and our idea of what the business is and can be changes.
Business & IT
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Common Fundamentals
Every business is unique and every business is the same.
Business & IT
Same is true of people. Each of us likes to think of ourselves as being unique and yet we are much more similar than different.
The next two slides will illustrate my point.
The first slide will show distinctly different people. You can easily tell them apart.
As soon as you hit enter the people will be replaced by business logos representing their corporations. You can easily tell them apart as well.
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Common Fundamentals
How Unique are they?
Business Blueprints™
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Common Fundamentals
How Unique are they?
Business Blueprints™
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Common Fundamentals
That was easy.
Business & IT
Now we get to the interesting slide which will show how businesses are essentially the same.
Structure: As humans we have the same structure. That is we have a head, two eyes, ears, torso, legs, arms, fingers, …. Though we may be apportioned differently the basics are essentially the same.
Structure: Our businesses have the same structure. You will see the five basic components of every business regardless of size or industry.
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure:
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure: Capstone
Organizational Model
Process
Model
Market Model
SystemsModel
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Common Fundamentals
That was easy.
Business & IT
We continue to develop this slide to show how businesses are essentially the same.
Building Block: As humans we share a common DNA structure. True it is not completely the same or we would all look the same but human DNA is different than any other animal.
Building Block: Our businesses have the same DNA. Look closely and see the very essence of business since day 1.
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure:
Copyright: www.stankirkwood.com 2004
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure:
- ROI -
CustomersStakeholders
- VP -Process
Product
- VP -
Product
Competitor
Capstone
Organizational Model
Process
Model
Market Model
SystemsModel
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Business & IT
Another perspective about how we are essentially the same.
Framework: Not only do we share the same common components we also have the same basic systems. Our bodies act in a similar fashion. Look at our respiratory, circulatory and reproductive systems. They are the same.
Framework: Our businesses have the same overarching processes. Every business, regardless of size or industry, must perform the same four processes.
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Common Fundamentals
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Common Fundamentals
Metrics:
Framework: Respiratory System
Circulatory System
Building Block:
Business Blueprints™
Structure:
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure:
- ROI -
CustomersStakeholders
- VP -Process
Product
- VP -
Product
Competitor
Capstone
Organizational Model
Process
Model
Market Model
SystemsModel
Manage the Entity
Support the Entity
Create Demand
Fulfill Demand
BusinessEntity
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Business & IT
Another perspective about how we are essentially the same.
Metrics: Visit a doctor in any country for your annual physical to see how well your body is performing and she/he will look at the same metrics.
Metrics: The performance of businesses can be determined by looking at the same eight metrics. Four are outward facing (towards the customer) and four are inward facing (towards the stakeholder).
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Common Fundamentals
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Common Fundamentals
-Temperature 98.6°- Blood pressure 120/80- Cholesterol <200- Red blood count
-Females 4.2 to 5.4 m/uL -Males 4.7 to 6.1 m/uL
- White blood count 4,300 to 10,800 cmm
Metrics:
Framework: Respiratory System
Circulatory System
Building Block:
Business Blueprints™
Structure:
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Common Fundamentals
Metrics:
Framework:
Building Block:
Business Blueprints™
Structure:
- ROI -
CustomersStakeholders
- VP -Process
Product
- VP -
Product
Competitor
Capstone
Organizational Model
Process
Model
Market Model
SystemsModel
Manage the Entity
Support the Entity
Create Demand
Fulfill Demand
BusinessEntity
Copyright: www.stankirkwood.com 2004
- (VP) Value Proposition - Measure market satisfaction o Desirability o Cost o Quality o Lead time
- (ROI) Return on Investment - Measure stakeholder satisfaction o Customer satisfaction o Financial Success o Operational Effectiveness o Management Effectiveness
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2 Fundamental Questions
How satisfied is the market with your products and services?
• Alignment between customer expectation and business performance
Business & IT
BusinessLeaders
CustomersStakeholders
Value of products and services
Return on Investment
How satisfied is your stakeholder with the return on investment?
• Alignment between stakeholder expectation and business performance
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Business AlignmentBusiness Blueprints™
Capstone
Market Performance Requirements
Process Performance Requirements
Organizational Performance Requirements
InformationTechnology
Expectations of market for services
Competitor offerings of services
How products/services designed to meet customer expectations
How processes designed to deliver products/services
How organization designed to execute processes
How IT is designed to support The Business
Copyright: www.stankirkwood.com 2004
Each component of the business (fundamental structure) must be designed based upon performance requirements of the preceding component.
Business Alignment can only be achieved by design.
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IT AlignmentBusiness Blueprints™
Capstone
Market Performance Requirements
Process Performance Requirements
Organizational Performance Requirements
InformationTechnology
Expectations of market for services
Competitor offerings of services
How services designed to meet customer expectations
How processes designed to deliver services
How organization designed to execute processes
How IT is designed to support The Business
Copyright: www.stankirkwood.com 2004
IT alignment is based upon two things:
• The business design
• The design of the IT department
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Business and IT AlignmentGood News:• IT and The Business can be aligned• An aligned area will give you:
– Confidence that the IT management team has a common understanding of the department’s direction and strategies and their roles in it’s success– Confidence in the value of IT’s products and services and the processes that produce them– Confidence that the areas of IT are working together and aligned.
• A set of strategies and a master project plan are not
sufficient.
Business & IT
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