Business and IT Alignment - Research Paper Example

Business and IT Alignment Abstract This paper will begin with an analysis as to why business leaders are reluctant to implement the newest technology. The solutions to this reluctance will then be examined, including the need to centralize operations and to ally business leaders with IT professionals. This paper will also examine specific strategies that must be implemented, including accomodation of all employees and risk management. An analysis of the different solutions and problems will then be produced, and, lastly, discussion of what needs to be done and a summary. Introduction Corporate planning, more than ever, must include IT planning. This is a crucial part of corporate planning and governance. Yet business leaders, by and large, do not give as much thought to IT as is necessary. The reasons for this are myriad – too expensive, too time-consuming, to cumbersome. This paper examines why business leaders give short-shrift to IT concerns, and what must be done to resolve this issue. Also examined will be the specific IT needs that all corporations must implement to be effective, those needs being accessibility and risk management. Research Problems with IT/Business Strategy alignment Research has shown that companies traditionally have difficulty integrating technology and IT into their business plans. Many Chief Information Officers (CIO) state that the aligning of the business goals with information technology to be their greatest challenge. (Jahnke, 2004, p. 1). There are myriad reasons why, and the Jahnke article encouraged business leaders to sound off on this issue. One of the reasons why it is difficult to “marry” information technology with business strategy is because executives do not know enough about technology, and rely upon trade magazines and salespeople to inform them of the latest trends. Because of this, they believe that technology such as “ERP, SCM, KM, data mining and a variety of software solutions” are the answer to gaining efficiency and finding new customers. According to one business leader, these programs and technologies often cost more than they benefit, and cause a company's paper value to worsen. (Jahnke, 2004, p. 2). Another reason cited is that the alignment of IT with business strategy is just too difficult and nobody wants to hear the truth. (Jahnke, 2004, p. 2). Another article stated that management complaints were that their IT department wasn't responsive to their needs, and that they didn't understand why they were spending the money on IT. (Sisco, 2004, p. 1). Managers often did not see IT as being critical to the business' success, and viewed IT “as an obstacle.” (Sisco, 2004, p. 1). Meanwhile, the IT members felt under appreciated and underpaid. (Sisco, 2004, p,. 1). While these were the opinions stated in 2004, an article dated 2006 did not have much more encouraging words to say about the climate for integrating technology into business strategies. According to Robert Heller (2006), who routinely authors articles on business strategy, managers do not put priority on IT strategy when formulating their business plans, because the pace of technology is too hard to keep up with, and because of the “inbred, uncommercial nature of some technologies.” (Heller, 2006, p. 1). However, Heller stresses that it is important for IT to align with business strategies, for the company who is able to effectively align their business strategies with IT strategies will have “a long march over its competitors which may well be permanent.” (Heller, 2006, p. 1). Heller states that a major reason why companies are so hesitant to align IT with their business goals is simply because of cost and hassle. Companies have their technology in place, and, even though the relentless pace of technology makes these systems dinosaurs, it is too costly to replace the entire system, and the company might have to cease operations while the new technology is implemented. (Heller, 2006, p. 2). An even bigger obstacle than above, according to Heller, is that most companies do not have a corporate strategy at all, and this is necessary to “define the ends for which IT will provide the means.” (Heller, 2006, p. 2). He used the example of Unilever who implemented 57 varieties of business, then decided that these varieties were too many. Heller implied that the decision to add all these business varieties in the first place is symptomatic of a company that does not have a corporate strategy. (Heller, 2006, p. 2). Heller also cited a survey that found that less 60% of managers clearly knew what their business strategy was, and that under 30% believed that “their organizations' strategies are effectively implemented.” (Heller, 2006, p. 2). The research showed that the problem of the integration of IT with business strategy is one that has been brewing for years, no less so in 2010. The research shows that little has changed in the past 20 years to improve the alignment of IT and business. The current climate is one in which IT spending is at a standstill because of the economic conditions, and there is still a gap between business priorities and IT – a 2009 survey of CIOs found that “only 24% of participants believed the business views them as a value added partner.” (Top Three Things, 2010, p. 1; CIO Survey 2009). Most traditional CEOs in 2008 “did not understand Its ability and thus only look at it from a cost center perspective.” (Sheelvant, 2008, p. 1). IT recognizes that they are still not accomplishing the goals of growing revenues, enhancing efficiency and reducing costs for businesses. (CIO Survey 2009). The problems with integration are the same that they were in 2004: businesses lacked “formal governance structures” and half of the businesses surveyed did not have a “current IT strategy that is published company wide.” (CIO Survey, 2009). In fact, one pundit claimed that, even as of 2009, “the lack of IT-Business Alignment is epidemic.” (Romero, 2009, p. 1). Another notes that “IT is often found to be 'nerdy' and having ' no sense of urgency' for talking about architecture and infrastructure.” (Buytendijk, 2009, p. 1). Solutions With all the problems mentioned above, there is a growing need for businesses to get the alignment between businesses objectives and technology needs right. Businesses must overcome the obstacles that are presented and realize that IT integration is an important component of their business model. A. Centralization The typical IT organization is that it is too decentralized. You have a group who deals with operations and support; another group that deals with planning and budgeting, HR reporting and measurement and training; still another group dealing with maintaining and building applications for business. (Curran, 2010, p.1). One person, the CIO, is in charge off all of this. Companies would do well to centralize “In centralized governance modes, IT activities are coordinated at the corporate level, and, therefore, organizations may require less effort for alignment.” (Ali & Qing, 2009, p. 5). One solution to this decentralization is to divide the CIO into two different positions. One position would be the “IT COO” - this person who run the day to day organizational challenges and the other position would be the IT Czar, who would be the “technology strategist and representative in senior business leadership discussions” and the “IT COO reports to the IT czar, along with planning, architecture and measurement analysis.” (Curran, 2010, p. 1). B. Align Corporate Goals with IT Goals This may seem self-evident, but this should be a corporation's number one priority. “For IT to properly plan its long term projects and activities it is imperative that the goals and objectives of the IT organization are in alignment with those of business overall.” (Maches, p. 1). In order for this to work, the IT needs to have a platform for which they can articulate how their projects and activities support the company's objectives, and this means that they must be a part of the corporate planning from the beginning. This would enable a business to “know whether or not to outsource certain functions, centralize [its] IT environment, devote more resources to Litigation Support or even to add cabling and technology specifications to leases for office space.” (Expertise, p. 1). IT executives must “identify, define, and develop discrete initiatives that will save money, improve quality, and/or increase efficiency to boost market value and competitive advantage for their companies.” (Top Three Things, 2010, p. 2). C. Minimize the strategy alignment gap The alignment gap that was explained above as to why business strategy is not aligned with IT strategy must be closed. This can be accomplished by corporations finding strong business leaders who are innovative and willing to consider new ideas; having “a clearly articulated vision”; realizing that the critical nature of IT in business strategy; recruiting and assigning alignment efforts to highly talented IT professional and business leaders who realize the value of IT; and having the commitment to deal with the issues of the new idea. (Rathnam, 2004, p. 6). Important is an alliance between business managers and IT professionals, and that they communicate. Specific technology goals that companies must consider In the modern age, companies cannot simply rely upon old business plans and technology. They must consider innovations in areas that are emerging, such as accommodating all employees with their technology, regardless of the employees' abilities and taking into account the employees' special needs. Another area that businesses must consider is that of risk management when it comes to their technologies. These are specific goals that must go into corporate planning when it is considering their IT needs. A. Developing an Accessible Technology Plan One area that is important for corporations to consider is that their technology must align with employee's accessibility needs, regardless of their abilities or handicaps. The answer to this is a five step plan: 1) Define the accessible technology strategy; 2) Identify requirements; 3) Design, develop and purchase technology; 4) Implement and train; and 5) Maintain technology and continue learning. (Developing an Accessible Technology Plan, p. 1). The first component is the accessible technology strategy. This consists of implementing a vision statement that “defines the role of accessible technology in your organization and how it will support the organization's overall vision of accessible technology objectives.” (Developing an Accessible Technology Plan, p. 2). The second component is objectives - a corporation must clarify the specifics of their vision, and align their technology objectives with their business objectives. The third component is expenses and budget – expenses that will be covered must be clarified – for instance, should the technology purchases come out of a centralized budget, or should these expenses be deducted from the budgets from each department? The fourth component is ownership – decide who will complete the steps of the plan. This might entail forming a committee to determine if the goals are being met and what steps need to be taken, or to assign one person in the organization who will have the responsibility to manage the plan. This also entails the business managers aligning with these objectives and understanding the “value of accessible technology.” (Developing an Accessible Technology Plan, p. 2). The next step is to identify requirements. This involves a needs assessment. Included in this is assessing if any employees have special needs, such as those with disabilities; finding out how the employees and customers use technology; and assessing the technologies that the business wants to support. (Developing an Accessible Technology Plan, p. 2). The needs assessment can by done by employee surveys that includes a specific list of needs. (Developing an Accessible Technology Plan, p. 2). Also included in this is evaluating the state of the businesses current technology. This entails examining the current technology and comparing the current technology to what is needed. The areas that need to be evaluated are the operating system, the office productivity and communication software, the assistive technology, the proprietary and legacy systems, the internal systems and the customer systems. (Developing an Accessible Technology Plan, p. 2). The third step is designing, developing and purchasing accessible technology. This includes looking at accessible operating systems, office productivity suites and accessible browser. (Developing an Accessible Technology Plan, p. 7). The fourth step is to implement and train. Implementing may be setting up a computer for a single disabled employee, or it might be “launching a more accessible intranet site” or “deploying a new operating system and office productivity suite across the entire organization.” The fourth step is leveraging legacy technology. This comes into play when companies cannot upgrade every employee at once to the “latest operating system and software.” (Developing an Accessible Technology Plan, p. 9). Training is also an integral part of this step. The fifth step is to maintain technology and continue learning. This is where the company “promote[s] the accessible technology vision statement in [its] organization, support[s] employees' use of the technology, and evaluate the success.” (Developing an Accessible Technology Plan, p. 11). HR and managers must first be educated, new employees can be educated at orientation, and current employees can be educated through newsletters, e-mail and web sites. (Developing an Accessible Technology Plan, p. 12). Support must be developed through IT professionals, and the success of the program must be continuously evaluated. D. Risk Management Another area of technology that must be examined is that of risk management. Risk management runs the gamut from “runaway projects, global sourcing, regulatory compliance, privacy, trans-border data flow, export control, financial disclosure, certifications, business continuity, fraud detection, protection of intellectual property and shortage of skilled resources.” (Chandiramani, 2006, p. 1). There are seven areas that need to be considered: business continuity planning/disaster recovery planning – what must a company do if there is a disaster, and what people need to be in charge in this event?; Information security and data integrity – implementing information security policies and procedures, and have a “formal incident response management team that can detect and escalate security breaches.” (Chandiramani, 2006, p. 2); sourcing and outsourcing – ensuring that the risk management strategies that are developed are also implemented by the third parties that deal with this corporation; performance measurement – this is crucial to prevent failures that could cripple the corporation; regulatory non-compliance – businesses must upgrade their software licences and regularly review the validity of their licences; IT strategy and spending – justify that costs of IT and control them; IT management infrastructure – this must be maximized, as this is a crucial part of IT governance. (Chandiramani, 2006, p. 3). Analysis The surveys through the years have shown that business managers are not concerned with IT implementation for a variety of reasons – cost and hassle being just two. This has been a problem for years, and continues to be a problem. However, centralizing the IT department and possibly appointing a czar to oversee the implementation of IT can be a solution. Business leaders must realize the importance of IT and align their strategies accordingly. An alliance of business leaders and IT professionals would help with this regard. Also, companies must consider specific needs that are related to IT, and make this a part of their corporate planning.. The first need is that they must accommodate all employees, regardless of ability. To this end, accessibility must be a goal that is considered. Also, businesses must consider risk management, as attacks are more and more likely to occur. This also must be a part of the integration of technology with corporate planning. Discussion It seems a little shocking that corporations are still not on board with the importance of IT in this day and age. It would seem that this would be of utmost importance to any corporation when they do their planning. However, this seems not be the case. Business managers seem not to care about upgrading their technology because it is too expensive, time-consuming and they do not really understand the importance of new technology. They seem to get their information from trade magazines and salespeople. The key initiatives discussed in this paper are important, and what is also important is for business leaders to be better versed in the importance of technology. It would seem that business schools might not be preparing our business leaders in the implementing of technology and the importance thereof, and this is one area that needs to be addressed. Of course, business leaders and managers must also focus on the bottom line – the cost/benefit analysis. All new technology must bring more benefit than cost. The alliances that might occur between the leaders of business and the leaders of technology would help in this regard, as business leaders learn the cost/benefit ratio of the technologies that need to be implemented and IT professionals learn the business needs for their technologies and also be made to understand the cost/benefit ratio. At any rate, businesses must have a better alignment with their technological needs, and the suggestions in this paper are just a few suggestions that should be implemented. SUMMARY Businesses do not grasp the need for implementing the latest technology. The reasons for this are myriad, but the bottom line is that they must adapt to the changing climate or their businesses will suffer. Business schools must teach this end of business management more clearly. Alliances must be formed between business and IT professionals. The cost/benefit analysis must be weighed. Departments must be decentralized. Also, important areas that businesses must focus on are accommodating all employees and risk management. The suggestions and observations in this paper are just a tip of the iceberg about the problem and how to solve it, but the problems must be solved for a corporation to survive. Therefore, it is important to integrate IT planning with the corporate planning right from the beginning, evaluate the systems and train all employees in the new systems. APA Reference Page Align technology and process with business goals. Retrieved from: http://www.brco.com/Enduser/services.aspx?SerID=3 Buytendijk, F. (2009, November 26). Business and IT alignment. Frank Buytendijk Blog, 1-4. Retrieved from: http://blogs.oracle.com/frankbuytendijk/2009/11/ business_and_it_alignment .html Chandiramani, S. (2006, February 27). 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