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.

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Business-IT Alignment

  1. 1. Business-IT Alignment <ul><li>Getting to Alignment: and staying there . </li></ul><ul><li>The CIO’s Leadership Role in Better Business Performance through IT Alignment </li></ul><ul><li>Walter Adamson Digital Investor Pty Ltd </li></ul><ul><li>June 2005 </li></ul><ul><li>[email_address] </li></ul>
  2. 2. Dropping the Ball <ul><li>Alignment falls short of expectations: </li></ul><ul><li>&quot;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&quot; </li></ul><ul><li>said an article in </li></ul>
  3. 3. IT’s Perpetual Headache <ul><li>AT Kearney, from a survey conducted in December 2001, report that only 17% of businesses had IT strategies that were &quot; fully aligned and developed simultaneously &quot; with corporate strategy. </li></ul><ul><li>Furthermore, 45% of participants did not feel </li></ul><ul><li>that their IT strategies were developed to </li></ul><ul><li>support or align with their corporate strategy. </li></ul>Fact: The Corporate Alignment Profile most often shows IT as the most unaligned group.
  4. 4. CEOs Seeking a Solution <ul><li>The IT Governance Global Status Report (2004) found that 80%+ of CEOs recognised that </li></ul><ul><li>“ IT Governance or some form thereof </li></ul><ul><li>is required ” to resolve “ IT issues ”. </li></ul><ul><li>The Report also found that 57% of CEOs looked to IT Governance to align IT strategy </li></ul><ul><li>(and 53% to manage IT risks). </li></ul><ul><li>However the Report concluded that “ solutions in this domain are not yet available ”. </li></ul>
  5. 5. Alignment Shalignment <ul><li>The Board should drive business alignment by: </li></ul><ul><li>Ascertaining that the IT strategy is aligned with the business strategy. </li></ul><ul><li>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. </li></ul>
  6. 6. The Solution is IT insync <ul><li>IT insync connects IT with the business: </li></ul><ul><li>CLARITY asks if the vision and roles are clear </li></ul><ul><li>CONSISTENCY checks operational Alignment </li></ul><ul><li>COMMITMENT tests mutual support </li></ul>Mutual Commitment CLARITY Consistency of Leadership, Management & Adaptability Consistency of IT’s Plans, Projects and Outcomes Commitment Commitment
  7. 7. IT insync Measures Alignment <ul><li>IT insync provides longitudinal measures of progress: </li></ul><ul><ul><li>Assess the current position </li></ul></ul><ul><ul><li>Plan the approach and the timing </li></ul></ul><ul><ul><li>Do the ITinsync survey – 120 questions </li></ul></ul><ul><ul><li>Checkout the hotspots – and explain </li></ul></ul><ul><ul><li>Act to correct - targeted, focused interventions </li></ul></ul><ul><li>Then do it again and measure the results. </li></ul>
  8. 8. IT Alignment in Context <ul><li>IT Alignment is one part of a wider framework: </li></ul>Leadership Management Business Mission Architecture IT Strategy Operations Alignment Gap Execution Gap Innovation Gap Strategic Alignment Execution Excellence Technology Innovation Focus of ITinsync COBIT ITIL etc
  9. 9. Focusing on the Core <ul><li>Alignment is core and mission-critical: </li></ul>Core IT versus Content IT Non-Mission Critical versus Mission Critical Infrastructure Effectiveness Efficiency Security Risk Management Continuity DRP Innovation HR Planning for IT Strategy Architecture Sourcing Business Engagement Delivering Value Managing Change Alignment
  10. 10. Alignment a Journey <ul><li>Getting “aligned” is not an event: </li></ul><ul><li>It is a continuous improvement process; </li></ul><ul><li>Starts with the business and IT leadership team; </li></ul><ul><li>Requires building of consensus and commitment. </li></ul><ul><li>An aligned IT group is strategy-focused, and: </li></ul><ul><li>Understands and demonstrates how the IT strategy will benefit a department or function; </li></ul><ul><li>Understands and can explain how the IT strategy will help to achieve the overall mission of the firm. </li></ul>“ IT alignment is a journey, not a destination.”
  11. 11. <ul><li>Achieving alignment is a reflection of: </li></ul><ul><li>Business Engagement competencies; </li></ul><ul><li>The ability to deliver Business Value ; </li></ul><ul><li>The capacity of the IT group to Manage Change. </li></ul><ul><ul><ul><li> ► Business Engagement </li></ul></ul></ul><ul><ul><ul><li> ► Business Value </li></ul></ul></ul><ul><ul><ul><li> ► Managing Change </li></ul></ul></ul>Foundations of Alignment Alignment
  12. 12. 3 Core Elements of IT insync <ul><li>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. </li></ul><ul><li>Delivering Value : success means that IT has been able to achieve a dialogue and agreement of the business value that IT delivers. </li></ul><ul><li>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. </li></ul>
  13. 13. Alignment Model <ul><ul><li>Business-IT alignment can be achieved by success in managing three core elements: </li></ul></ul>AS8015 Risk & Regulation COBIT ITIL IT insync emphasis 1. Business Engagement 2. Delivering Value 3. Managing Change
  14. 14. Includes Governance Links <ul><li>IT insync Foundations </li></ul><ul><li>Business Engagement </li></ul><ul><li>Delivering Value </li></ul><ul><li>Managing Change </li></ul><ul><li>Clarity </li></ul><ul><li>Commitment </li></ul><ul><li>IT Governance Links </li></ul><ul><li>Responsibility for IT # </li></ul><ul><li>Regulation and Risk # </li></ul><ul><li>Systems & Processes # </li></ul><ul><li>Communication and Knowledge </li></ul>Plus Leadership, Management and Adaptability. # AS8015 Corporate Governance of Information and Communication Technology, 2005.
  15. 15. <ul><li>Achieving Business-IT alignment is a foundation for good IT Governance - because achieving alignment requires: </li></ul><ul><li>Clarity of strategy and business value; </li></ul><ul><li>Agreement about projects and priorities; </li></ul><ul><li>Mutual commitment and respect; </li></ul><ul><li>Management of risk and change. </li></ul><ul><li>These are elements of effective IT Governance . </li></ul>IT Alignment aids Governance
  16. 16. Alignment and Governance <ul><li>IT Alignment </li></ul><ul><li>Performance-oriented </li></ul><ul><li>Strategy-focused </li></ul><ul><li>Effectiveness </li></ul><ul><li>Core & mission-critical </li></ul><ul><li>Make a difference </li></ul><ul><li>IT Governance </li></ul><ul><li>Compliance-oriented </li></ul><ul><li>Operations-derived </li></ul><ul><li>Efficiency </li></ul><ul><li>Mission-critical </li></ul><ul><li>Don’t make a mistake </li></ul>Both need to be there, in balance .
  17. 17. Beyond IT Governance <ul><li>IT Alignment aims to achieve higher levels of operating performance, whereas Governance per se is found to be of modest relevance # : </li></ul><ul><li>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 ; </li></ul><ul><li>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. </li></ul># 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.
  18. 18. The Vision of IT insync <ul><li>Our vision is to take IT-Alignment off the agenda . </li></ul><ul><li>Still important; </li></ul><ul><li>Still requires measurement and continuous improvement; </li></ul><ul><li>But, becomes part of the fabric of the organisation. </li></ul><ul><li>Our objective is to help the CIO be integral to improving the performance of the business. </li></ul>
  19. 19. What CIOs Want <ul><li>The top benefits CIOs were hoping to achieve # : </li></ul><ul><li>Increased IT credibility with the business (81%); </li></ul><ul><li>Closer alignment between IT and business objectives (69%); </li></ul><ul><li>Improved teamwork between IT and internal business partners (68%); </li></ul><ul><li>Improved ability for CIO to influence the business (46%). </li></ul><ul><li>Item 1 and 4 are outcomes of 2 and 3, which are results of IT insync . </li></ul># CIO Research Reports. June 1, 2005 . Turning IT Doubters into True Believers
  20. 20. <ul><li>ITinsync delivers teamwork and alignment, thus: </li></ul><ul><li>Gaining credibility with the business; </li></ul><ul><li>Getting a place to influence the business; </li></ul><ul><li>Positions the CIO as a member of the corporate board or executive committee; </li></ul><ul><li>Builds weight for the CIO to report to the CEO. </li></ul>What CIOs Get from IT insync
  21. 21. What Business gets from IT insync Clarity Consistency Commitment Performance We understand the company Vision And our roles in achieving it We and IT work together And understand how to best apply our skills We are supported by the organisation And we and IT respect each other We are all swimming in the same direction And we enjoy being part of a performing organisation
  22. 22. Contact Walter Adamson Digital Investor [email_address] m: 0403 345 632
  23. 23. Attachment Picture on a Page
  24. 24. Attachment By Division
  25. 25. Attachment Longitudinal
  26. 26. Attachment Defining IT Governance <ul><li>Governance is: </li></ul><ul><li>The assignment of decision rights and accountability frameworks to encourage desirable behaviour. </li></ul><ul><li>Governance matters – it’s about effective use of $$$ and managing business risk. </li></ul><ul><li>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”. </li></ul><ul><li># 2004 Marianne Broadbent, Melbourne Business School and Gartner Fellow </li></ul>
  27. 27. Attachment COBIT <ul><li>An IT control and governance framework. </li></ul><ul><li>Recent developments added a management and governance layer, providing management with a toolbox containing: </li></ul><ul><li>Performance measurement elements (outcome measures and performance drivers for all IT processes); </li></ul><ul><li>A list of critical success factors that provides succinct non-technical best practices for each IT process; </li></ul><ul><li>A maturity model to assist in benchmarking and decision-making for control over each IT process. </li></ul>