The Business of IT: Seven Success Strategies

As companies come to understand the magnitude of their dependence on information technology (IT), in today's fast-changing business environment, the situation demands that business executives become more involved in setting priorities and demanding greater returns on IT investments.

This article discusses seven strategies to make IT successful.

As companies come to understand the magnitude of their dependence on information technology (IT), in today's fast-changing business environment, the situation demands that business executives become more involved in setting priorities and demanding greater returns on IT investments.

Information Technology by itself has no intrinsic value, and only has value to the extent that it better enables an enterprise to serve its customers. IT cannot be viewed as an adjunct to business, or as a cost to business, rather it is more a critical, integral component of business success. In other words, we have to better manage the “Business of IT”.

The Gartner Group discussed in one of its reports that “the only sustainable competitive advantage is an organisation’s ability to predict and respond to change, faster than its competition”. Change is the most constant element in life, and we humans adapt remarkably well, from infancy through maturity, although not without experiencing life’s challenges. The “need for speed” philosophy of e-business, and the adoption of internet technology, has meant that businesses are experiencing a whole set of new challenges that are not replacing, but are adding to the challenges of old, like:
Ø      Strategic Planning horizon is reducing or being compressed
Ø      Changing business models – Collapsing business process cycle times
Ø      Articulating new and improved business capabilities aligned with business drivers and a common vision
Ø      IT must become business architects and change agent to bridge between strategy and delivery
Ø      Poorly defined IT value proposition
 
How to build a company capable of changing as quickly as the marketplace it serves? How to raise productivity without increasing costs? Are questions that suggest that there will always be plenty of healthy debate on how to fulfill these and other critical business imperatives, but no one would argue that any of it can be done without IT playing some role.  Enterprises of all sizes are searching for new ways to successfully deploy complex, mission-critical, and often costly IT initiatives. It is very clear and abundantly proved that IT will have to be the major business driver in the 21st century, and enterprises are relying on IT for competitive advantage. Leaders are enacting many effective methods, including deploying IT governance models to reduce costs and improve interoperability, committing to a unified infrastructure to lower costs and improve communication, creating a shared vision for IT, using metrics to measure initiative success, equipping CIOs with business leadership skills, and understanding when to outsource to partners. Companies need to create a visual and logical blueprint, or enterprise architectural view, of their organization in order to provide management and practitioners alike with the ability to assess and manage the risk and viability of change.
 
Below are the Seven Strategies that feed the key themes to make IT success to be viewed as an enabler in any organization. These will definitely improve the chances of success for every technology project:

A.     IT- Business Alignment:

Nothing is more critical to IT success than aligning an IT initiative with the goals of operational business units such as sales, finance, and human resources. If business is supposed to be customer-centric, then companies should aim their business and IT strategy at solving customer problems and not internal business problems alone. Critical success factors to best align their IT and business units are:
 
Ø      Involving business units from the start in setting projects goals and success metrics.
Ø      Involving heavy weight business sponsor who has enthusiasm, drive and dedication to implement the solution.
Ø      Creating joint accountability between IT and business units for business success.
Ø      Communicating the benefits effectively throughout the organization.
 
In order to achieve the above mentioned success factors, defining business architecture is a must. Business Architecture (BA) should define:
 
Ø      Organization: Business structure, roles, responsibilities, and user groups.
Ø      Information: What is the structure and content of the key categories? Or what “subject areas”, of persistent data need to be managed at an enterprise level? What do we need and what do we generate?
Ø      Processes: The activities and their processes necessary to execute the organisation’s business at the division, enterprise or extended-enterprise level.
Ø      Events: Major things that occur and trigger activities within the business.
Ø      Motivation/Goals: Business drivers, strategy and objectives or critical success factors.
Ø      Locations: Major locations, physical and logical, where business is carried out.
 
The process of folding IT and business planning together does, in practice, lead to continuous alignment of plans and actions. This process places great emphasis on shared accountability for the governance of I/T, encouraging improved allocation of IT resources from the perspective of the business units. The inevitable results of this process are business centric. These will, in turn: increase sales, reduce operating expenses, produce growth in market share, realize higher customer satisfaction, make employees more productive, and so forth. Align all IT decisions, actions and measurements of performance with the business strategy of the organization as a whole. Focusing IT this way reduces wasted effort, concentrates attention on activities of value to business, and gives purpose to this area of business.
 
B.      IT Governance:
 
Companies have to make IT governance a high priority. IT governance will help organization find ways to improve cross-functional communication, control, and effectiveness. Governance models help organizations design, develop, implement, and control technology initiatives in much the same way they help ensure the success of investment, marketing and manufacturing programs. Governance prevents individual business units from developing independent projects that don’t align with the overall organization’s business needs for security, interoperability, and quality support. For establishing IT governance models, companies have to:
 
Ø      Create compatible organization and funding models explicitly defining roles and responsibilities.
Ø      Establish functionally aligned teams such as sales-IT, finance-IT, and human resources-IT to ensure that the IT group is familiar not only with each business unit’s technology details but also with languages, issues, strengths, and weakness.
Ø      Ensure that risk analysis and cost benefit analysis are an integral part of all planning processes.
 
Governance components are comprised of:
Ø      Principles: Define the underlying rules and guidelines, which an organization will use to deploy IT resources and assets, across the enterprise.
Ø      Standards: Provides the general "policy" level statements that are implementation-oriented and provide an auditable exception process. These sets of "rules" may make specific mention of technologies, methodologies, implementation procedures and other detail factors of the policy.
Ø      Decision Framework: Defines the agreed criteria, which can be used to communicate requirements and decisions that are being made, plus spreadsheets and/or tables which are used to capture the results of an evaluation and selection exercise.
Ø      Architecture Management Framework: Defines the processes, roles and responsibilities required to manage and implement the Enterprise Architecture (EA), which covers business processes, applications, data and technology within a given organization.

C.      Metrics- Measure, Motivate and Execute:

One of the most obvious developments to occur in well-run IT organizations is the revolutionary changes made in measurements. To name a few, we need to measure effectiveness of project delivery and resource utilization giving the productivity index for each service. There are great deals of exciting new best practices emerging in well-run IT departments. Measurements are becoming more comprehensive and not limited to speed of equipment, amount of uptime for hardware and software, or expenses versus budgets. Senior executives outside of IT departments are increasingly focusing on analyzing customer satisfaction data, user productivity index and business measures such as IT money spent as a percentage of revenue or the number of IT projects aligned to corporate strategy. Evaluating IT investments requires a mix of analytic rigor and intuition. As a general rule, cost cutting efforts are more susceptible to analysis than those aimed at growing revenue. To measure the impact of an initiative, organizations should establish metrics before a project begins and asses its progress regularly by measuring and publishing progress reports at predetermined milestones. When metrics measures intangible or non-financial benefits, at the very least organizations need to make sure that the initiative aligns with business goals and subjects it to the same IT governance rules that apply to all projects.
 
The best of the IT begins with measures that link the performance of the IT department to corporate goals both through the actual measures and through a clearly communicated explanation of how those measures demonstrate progress towards contributing to the success of the business as a whole. The best organizations always use corporate goals to drive IT measures.

D.     Commitment to Enterprise Architecture:

 
When integrated solutions are considered from an enterprise-wide perspective, the view has to be applied from an organizational perspective; an enterprise could be an integrated “extra-connected” conglomerate of companies, a single company, and a business unit within a company, a department within a business unit, a singular group of users, or any combination.  Tactically, a unified infrastructure helps companies cut costs and deliver applications quickly and pervasively. If organizations have consistent technology on the lower level, anything built on the top of it will be that much easier and have the potential to deliver that much more value to company. Technologies should be chosen to mirror the culture of the enterprise. One way that the IT executives align their operations with corporate goals is to “get it right” when it comes to having the right technology architectures.
The inability of organizations to respond effectively to change is due, in part, to their failure to create a framework against which to evaluate and assess the impact of change. A framework that aligns the vision of the business with the technology requirements is a must. It should guide consistency in investment and design decisions for all stakeholders. By defining an Enterprise Architecture framework, we have to start with a vision for the role of IT in the future of the business. From such a vision, a strategy for the selection and implementation of IT’s capability can be developed, thereby enhancing the value of technical decisions. As the enabler of the IT strategy, the Enterprise Architecture becomes the link between the business strategy and IT infrastructure. The componentization of the EA enables reusability and a degree of standardization in solution realization. This in turn increases productivity, quality and savings, thereby delivering value to the business.
 
The EA operates on a mutually (Business and IT) defined set of principles, holds standards, records interfaces and common services for the deployment and management of IT assets. To standardize an informative architecture, it is also critical to revive and eliminate legacy networks and protocols that inhibit end-to-end performance. An Enterprise Architecture Framework enables the effective management and the exploitation of information through IT by providing a strategic context for the evolution of the IT systems, in response to a constantly changing business environment.
EA Architecture components are the following:
Ø      Applications Architecture: Defines the overall structure and relationships of the applications, which enables business processes defined in the BA, plus associated interfaces, usage and dependencies
Ø      Data Architecture: Defines the data stores, plus a set of rules for selecting, building and maintaining a data infrastructure, including storage, placement, usage and dependencies.
Ø      Technical Architecture: Defines the technology components required to enable the applications and data architectures, which in turn support the business architecture. Technology components include infrastructure, network, solution development, security and systems management.  

E.      Shared Vision Between Business and IT:

 All of the senior management including the CIO has to be involved in the process of defining the corporate vision.  The CEO should treat IT like any other part of the business. That is, put in place very stringent operation metrics and hold the CIO accountable to it. But the CEO must also help create and support a vision for the IT department and signal the importance of that vision to the rest of the company. Today, in 21st century, the focus is on returning to the basics and setting a foundation for systems that reach across the business to increase productivity. Simply put, organizations cannot live without a secure, efficient and unified IT infrastructure. Strategically, a globally networked business helps a company achieve new standards of efficiency and productivity in its business relationship, whether those relationships are with vendors, partners, or customers. The vision could be as modest as treating IT as an internal service company. It answers to the needs of the individual business units and is responsible for the operation of IT assets. Or, the IT vision could be as broad as having the group act as a strategic partner. IT helps identify company opportunities and creates the structure for the business-IT environment that optimizes investments and fuels company growth. The CEO should also play the role of tiebreaker in major cross-functional disputes and champion for productive improvement. But the CEO can be most effective by installing a governance architecture that ensures close cooperation between IT and business throughout the enterprise. To succeed, the CEO needs to give the CIO the information and authority he or she needs to act. For their part CIOs must be ready to “come out from behind their technology boxes and communicate their visions”. And that’s a skill with which CIOs often struggle. Finally, CIOs and CEOs must both be sure that the vision for adding IT value matches the style of the organization.
 

F.       CIO with Business Knowledge is a Must:

 
CIOs need to develop a broad skill set beyond technology. Skills like communicating, understanding of business processes and operations, and strategic thinking and planning are some of necessary required skills. Among other skills, they need a strong business orientation and a proven ability to bring the benefits of IT to solve business issues. They also need keen organization skills: management ability to centralize IT resource and applications and coordinate business-unit resources and initiatives; and the ability to conceptualize, launch, and deliver multiple IT projects on time and within budget. In short, the major task of the CIO today is to simplify and unify processes across functional boundaries, and often across the enterprise. This requires an unprecedented level of collaboration with the line managers and business units who own those processes. CIOs should also have a number of soft skills including the following: good business communication, take quick action and foster change, have harmonious and fair temperaments, have organizational capability, posses a global outlook and outreach.
 

G.     Partnership Development:

 
Few companies are in a position to conduct internally all the business processes required to run a company effectively. So the question becomes: What portion of technology should remain in-house and which should be parceled out to partners? And for good reason, outsourcing provides several benefits for IT project like: increased ROI, enhanced cost saving, rapid time to market for deployment and implementation, reduced annual IT operating costs, fewer resource and existing technical-infrastructure limitations, improved service levels and response times, sharpened focus on core business activities.  Mainly, outsource stable and critical applications. If an application is not expected to change, companies will increasingly outsource these to someone who can perform them either more reliably or less expensively. Companies should make sure the contracts include service-level agreements and components that reward innovation and customer satisfaction. For successful partnering, the following strategies need to be followed:
 
Ø      Retain intelligence, strategy, and completely advantaged systems knowledge in-house
Ø      Outsource with a long-term strategy rather than one that vies than for short term financial gain.
Ø      Make decisions on individual functions within the enterprise.
 
The key themes that an IT leader has to keep in mind are:
 
Ø                  Execute decisions with an enterprise oversight.
Ø                  Eliminate “messianic fervor” in IT investment decisions.
Ø                  Provide for consistent impact analysis.
Ø                  Enable swift assessment of risk and viability of change.
Ø                  Readily identify inter-dependencies amongst IT projects.
Ø                  Converge with strategic IT directions.
 
IT projects can be costly and complex. And they can fail without the right leadership. CEOs, CIOs, and other business leaders need strategies to improve the success rate and ensure that IT aligns with business objectives and functions. Companies should utilize these seven strategies to successfully implement IT projects from conception through deployment, while ensuring that business units buy in for cross functional and integration projects. There are two actions that a management team can take to get ahead on the effective use of IT. First, challenge the organization to come up with new and better ways of using computing to provide services not readily or quickly replicated by the competition. Second, one can execute a leapfrogging strategy, bypassing currently accepted uses of applications or technologies. Constantly look for innovative ways of applying IT.


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Posted on 06/10/2009 by


The Business of IT: Seven Success Strategies author ganeshseetharaman

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