Business-IT Alignment

Getting to Alignment: and staying there.

The CIO’s Leadership Role in Better Business

Performance through IT Alignment

Walter Adamson
Digital Investor Pty Ltd

June 2005

adamson@digitalinvestor.com.au
 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 feel

that 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.
 CEOs Seeking a Solution

The IT Governance Global Status Report (2004)

found that 80%+ of CEOs recognised that
“IT Governance or some form thereof
is 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

CLARITY
Consistency of Leadership, Consistency of IT’s Plans,
Management & Adaptability Projects and Outcomes

Commitment Commitment

Mutual Commitment
 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.

 IT Alignment in Context
IT Alignment is one part of a wider framework:

Business Mission
Strategic
Alignment Gap
Alignment
Focus of
IT Strategy Leadership
ITinsync
Execution
Execution Gap
Excellence

Architecture Management
Technology
Innovation Gap COBIT
Innovation
ITIL etc
Operations
 Focusing on the Core
Alignment is core and mission-critical:

Strategy Business Engagement

Core IT Architecture Delivering Value
Sourcing Managing Change
versus Alignment
Effectiveness

DRP Security
Innovation Risk Management Efficiency
Content IT HR Planning for IT Continuity
Infrastructure

Non-Mission Critical versus Mission Critical

 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.”
 Foundations of Alignment

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
 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:

1. Business Engagement
2. Delivering Value
3. Managing Change
AS8015 Risk &
Regulation COBIT
ITIL
ITinsync emphasis
 Includes Governance Links

ITinsync Foundations IT Governance Links

 Business Engagement  Responsibility for IT#

 Delivering Value  Regulation and Risk#
 Managing Change  Systems & Processes#
 Clarity  Communication and
 Commitment Knowledge

Plus Leadership, Management and Adaptability.

#AS8015 Corporate Governance of Information and Communication Technology, 2005.
 IT Alignment aids Governance
 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.

 Alignment and Governance

IT Alignment IT Governance

 Performance-oriented
 Strategy-focused
 Effectiveness
 Core & mission-critical
 Make a difference
 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.
#FinancialTimes: 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
 What CIOs Get from ITinsync

 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 Business gets from ITinsync

We understand the company Vision

Clarity And our roles in achieving it

We and IT work together

Consistency And understand how to best apply our skills

We are supported by the organisation

Commitment And we and IT respect each other

We are all swimming in the same direction

Performance And we enjoy being part of a performing organisation
Contact

Walter Adamson
Digital Investor
adamson@digitalinvestor.com.au
m: 0403 345 632
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Longitudinal
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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.