Improving IT-Business Alignment - Coursework Example

Institution : xxxxxxxxxxx Title : Improving IT-Business Alignment Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2010 Improving IT-Business Alignment Introduction Alignment has emerged to be the perennial chart-topper among the resulting Information Technology issues. Since it is hard to provide the necessary education to the line management about the potentialities and limitations of technology, setting the Information Technology priorities for various projects, establishment of resources as well as skills and the integration of systems through the corporate strategy becomes necessary to an organization. However, global evolution of business strategies and the technology makes it demanding in keeping the business as well as Information Technology effectively aligned, although achievable (Bell 2002). Studies indicate that establishment and development of right relationships through processes is the key to successful achievement of sustained alignment within the organization. As a result, provision of the necessary training to the management and the entire staff is greatly required. Methodological approach introduced by Professor Luftman on has been considered important. It was intended for the assessment on how ready individual organizations or business units create, make improvements as well as sustain their respective alignments. Information Technology alignment is the desire within which a given business organization has the capability to effectively use IT in achieving business objectives, particularly improvement in financial performance and the marketplace competitiveness. This is simply because lining up of the Information Technology with organizational business plans, entirely requires the adoption of such language that is used in handling the financial matters (Burn 1993). Most of the IT and other business professionals are not able to effectively bridge the existing gaps among themselves due to the differences in their objectives, incentives, culture and mutual ignorance for other people’s knowledge. Such a rift normally is results into very expensive IT systems with inadequate investment returns. Therefore, Information Technology alignment is highly associated with interventions that improve any perceived business values of the various Information Technology investments. Strategic alignment has emerged as the major concerns of management as well as information technology executives. Various organizations have realized that effective achievement of competitive advantage requires the strategic alignment of Information Technology with the business objectives. Strategic alignment allows the organizations to make choices in IT applications that effectively meet their respective needs, resulting into profitability enhancement and reduction of costs. Since business goals revolutionize, maintaining alignment should be an ongoing process within the organization. Therefore, identification of the new projects that can enable the achievement of business goals and dumping of the old projects that have no longer been viewed as contributors must be implemented. However, outsourcing of the IT parts in controlling costs makes it difficult to maintain a good information technology alignment with the business goals (Henderson & Venkatraman1996). Evaluation Prior to the organizational alignment of Information Technologies, is the need for management to consider the existing evaluation methods in order to make the alignment feasible. Evaluation ensures that the consequences of every computer project are clearly linked with the organizational planning as well as budget commitments. As a result, the Information technology investments turn out to be catalysts of the organizational change rather than discretionary expenses without provable benefits. Gearing up for the Information Technology business alignment Information Technology business alignment is perceived as a continuous discussion that occurs between the senior management, business and IT. The information technology management needs to understand as well as interpret the organizational business strategy on the entire staff and the levels of business units since it should be a two-way communication. The Chief Information Officers is required to indicate the strategic opportunities as well as develop on the information technologies. As a result, the general understanding of the business priorities will be directly and effectively transferred into the IT initiatives and budgeting guideline (Luftman, Papp & Brier1999). In addition, improving the information technology business alignment requires the IT management to acquire extra set of relevant skills and a strong focus on the business-driven positioning. Information Technology managers ought to be the general managers of the organizational businesses, instead of the prime technology-driven people, particularly, in building relationships, focusing on the overall view in managing the business and optimization of the business processes within the organization. Effective improvement of the business and Information Technology strategic alignment involves the development of a strategic development process and has to include the organizational Chief Information Offer. Such interventions involve the application of Information Technology in the development of business strategy that is basically summarized as “Figuring out the systems at what cost, risks as well as timeframe. A paradigm shift is required for the alignment of Information Technology in support of the business objectives. Majority of the organizations have realized that successful achievement of competitive advantage involves the strategic alignment of Information Technology with the business objectives. Strategic alignment provides the organizations with various choices to choose from for effective IT applications in meeting their respective needs, these results into profitability enhancement and reduction of costs (Henderson & Venkatraman1993).In addition, the management must recognize their responsibility in driving the business growth and the significance of delivering the necessary IT services in a manner that is cost effective. Improving the Information Technology alignment in order to support the business objectives, IT should cease from informing the business units that their requirements are out of the scope. IT has greatly focused on the development or enforcement of standards within the enterprises in which they lost sight of the business units that were extremely in need of their respectful financial targets. The Six Sigma A new tool that was modeled after the commonly known Capability Maturity Model (CMM), a methodological approach that was introduced by Professor Luftman on alignment maturity has been considered important. It was intended for the assessment on how ready individual organizations or business units create, make improvements and sustain their respective businesses and IT alignments, can be applied to assess whether a company is on a right path to alignment (Luftman, Papp & Brier1999). The alignment-assessment tool lets the management measure how effective or improved the technical as well as business organizations work in collaboration. It basically examines the six dimensions such as the communication maturity, competency or the value-measurement maturity, governance maturity, skills maturity, partnership maturity and the scope as well as architecture maturity, each one of them rated at the scale of 1-5(lowest-highest). Studies show that the key to improvement of the Information Technology business alignment is within the operations. The ability to predict the results is an indication of alignment maturity in any information technology or business process. One major element of the information technology and business process evolution to maturity is the capability to efficiently measure the results of such a process against the expectations, identification of the weak points as well as correcting them. A number of scholars argue that a top-down analysis of the existing process dependencies in relation to the metrics used to measure the results of each information technology process, can provide an improved set in the management of IT metrics than what is dominating the contemporary organizations (Luftman, Papp & Brier1999). Rationalization of the IT processes Information Technology process rationalization such as the ITIL, ISO and COBIT are entirely designed to support the improvement of IT processes, and hence develops the intended alignment between organizational business and IT. Such methodologies have proved to be strangely silent when measuring the results as well as characterization of the potential improvements. Statistical process management/control Statistical process control in collaboration with the Six Sigma and total quality approaches to management, has contributed effectively to the improving of an organization’s business and IT alignment, particularly the manufacturing industries. CMMI as an approach to maturity assessment and utilized in IT, also involves the statistical control methodology that is related to Six Sigma since it promotes the idea of consistent results as an indicator to maturity. However, despite such approaches being in a position to inform the IT on how to apply the metrics, they are so silent during the definition of correct metrics as well as how to easily capture them (Henderson & Venkatraman1993). Key factors that enable the realization of the IT alignment and business plans Alignment should indicate enhancements to the business plans Each proposed Information Technology project should clearly demonstrate its discounted cash flow for the business improvement intended to achieve, for instance its ability to indicate both high as well as low anticipated financial returns. In addition, displayed ranges of risks enhance the integrity of a proposed venture. Therefore, experienced executives need to consider that most of the computer-based changes within the processes are generally perilous. The organizational business case must provide its add-ons summaries to the preceding and endorsed financial year. In such a case, majority of the proponents becomes accountable for the documented promises. This implies that actual results need to comparable to the previously revised budgets as well as performance plans in stated intervals like months, quarterly but not exceeding annually (De Haes & Van Grembergen 2009). The ability to retain an updated alignment as the organizational business evolves Generally, project plans are entirely subject to any change. Approval of the proposed investment marks the starting point for a continuous gap widening between organizational stated objectives and its ability to effectively deliver the results. Since no plans remain unaltered during project innovation, keeping up with the reality requires the approved plans to undergo a continuous adjustment in order to avoid the creation of self-delusions (Burn 1993). There must be an existence of a stead exchange of information between systems of the organization and the entire staff because lack of continuous feedback forces the technologists to loose focus on business, and hence giving a room for the misalignment to prevail. The gap between the customer and developers widens over time Alignment should overcome the obstacles related to its objectives The change of Information Technology project scopes as well as the increase of new implementation problems, results into a varying resource commitments. In addition, the entire cost estimates and the schedules for IT investments are considered to be the tentative targets. The implementation task may turn out to be difficult, particularly in training operators or users to the intended performance standards. The management saying that “planning through a telescope while implementing under the microscope “leads to disparity assurance between the promises and the final results, however, as the project progresses, divergence in the two will always occur (De Haes & Van Grembergen 2009). Alignment should be planned Initial Information Technology project plan needs documented agreements of raised changes so as to effectively keep it current. Change in project conditions leads to re-examination as well as re-adjustments of the initial assumptions and the existing dependencies so as to reflect on what has already been learnt. Planning for a project emerges to be a record of the approved changes in relation to a baseline budget and subsequent revisions. Such continual updating of the business plans is referred to as evergreen alignment, because keeping the information technology projects that are related to the business goals, is a no one-time happening, but a continuous efforts (Papp1998). Through the business case decision-aid of the corporate management must be in a position to practice the business alignment any moment they intend to link organizational projects to the business plans. A focused alignment as the managerial process provides an ideal opportunity in displaying a perspective that maintains the connection of goals, performance measurements, expectations, actual results, projections and programs through a consistent approach. Alignment is also considered as the perpetual and current decision-making reporting system which insures that the linkage of information technology project plans to a standardized metrics of corporate performance stays intact. Studies reveal that effective planning method in the alignment is making the information technology invisible. This results from the idea that not the information technology which aligns with the business, but instead how computerization gets lined up with individuals who obtain, serve and keep the customers (De Haes & Van Grembergen 2009). Information Technology does not have to inquire what the business needs to do in supporting its alignment; instead, it is the business that should consider what, how as well as when the IT will be expected to deliver the results. Alignment requires a very reliable feedback of expected results to contain the entire automation on the stated objectives’ path. It should not be implemented through the information technology push, but by operational pull (Papp1998). Alignment has to relate to the benefits For effective achievement of alignment in the organization, the management must begin with the identification of misalignment resources. Lack of the performance to meet the organizational expectations, implies that denumerable reasons leading such failure exists. Outputs, for instance, revenue or the profits, are not very much involved in the determination of information technologies’ demand, but basically the organizational structure, opinions concerning the benefits that results from computerization, personal computer proliferation, corporate overhead size and the number or population size of the staff people responsible for the demand dictation for computing or business alignment in an organization (Burn 1993). Benefits of computers in business alignment The effects resulting from the information technology investments, normally are observable only through a careful comparing the different performances of a specific organization with or without the introduced computer investments. How to effectively evaluate the Information Technology Alignment On completion of the project, the actual results will indicate if the reality matches with the plans. Quantification of benefits resulting from computerization should be sufficiently rigorous to only indicate the sustained improvement, but also lack of deterioration. To proof that alignment has been achieved through the use of computers in improving profitability, requires the removal of the entire savings that may be accrued without the application of computers. This implies that alignment is not an ex-post-facto reasoning, but the complete understanding the futurity of the present decisions made as well as the current financial commitments (Burn 1993). However, various inhibitors to the alignment of the information technology businesses exist, for instance, the absence of business strategy as the primary barrier. Other barriers to the strategic alignment of information technology businesses include barriers related to the organizational structures, absence of an enterprise-wide view, rapid rate in the technological changes, ineffective communication as well as understanding of Information Technology, mentality the IT in relation to the business and lack of the need for strategic alignment awareness (Luftman, Papp & Brier1999). Lack of a focused business process re-engineering, result into alignment gap between the business and information technology strategies. Majority of the managers automate the existing processes without improving them and hence the debate on the applicable time for implementing the business process re-engineering. Strategic alignment gap between the business and Information Technology strategies can be minimized by introducing a very strong business need of strategic alignment, a business leader who can explore as well as champion new ideas, clear articulation of the vision as the critical consideration for the successful achievement of business as well as IT strategic alignment and highly talented IT and business professionals to be assigned to the strategic alignment projects (Henderson & Venkatraman1993). A strategic development process that is very weak greatly inhibits effective alignment of the business and information technology strategies. The management needs to conduct a research that examines the existing correlation between the maturity of a strategy development and the capability to effectively align the organizational business as well as IT strategies. Therefore, if the maturity of a developed strategy proves to be the key determinant of an organizational ability to align the business- IT strategies, then such an organization should pursue the strategic development enhancement as part of the business as well as Information Technology strategies for the alignment efforts (Luftman, Papp & Brier1999). Evaluation of the Alignment success Effective linkage of the promised gains from the information technology alignment to profitability always requires the financial planning and the use of a budgeting system that incorporates the commitments of information technology projects into monthly, quarterly and yearly measurable targets. The availability of a demonstrative association between the incremental investments due to computerization and improved profit gains, results into the achievement of information technology alignment in organizations (Norton 2002). Conclusion Establishment and development of right relationships through processes is the key to successful achievement of sustained alignment within the organizations. This implies that provision of the necessary training to the management and the entire staff is significantly required. A number of the IT and the business professionals find it difficult to effectively bridge the existing gaps among themselves because of the differences in their objectives, incentives, culture and mutual ignorance for other people’s knowledge. Strategic alignment is the major concern of the management as well as information technology executives. One of the major elements of information technology as well as business process evolution to maturity is the capability to efficiently measure the results of that particular process against the expectations, identification of the weak points as well as correcting them. Alignment improvement is the perpetual as well as current decision-making reporting system which insures that the linking of information technology project plans to the standardized metrics that lead to corporate performance stays intact. Bibliography Burn, J.M. (1993), Information Systems Strategies and the Management of Organizational Change - A Strategic Alignment Model, Journal of Information Technology, pp. 205-216. Bell, S. (2002), Business Strategy and IT Alignment, Gartner Symposium ITXPO 2002, 37, pp. 1-17. Henderson, J. & N. Venkatraman (1996), Aligning Business and IT Strategies. New York: Oxford University Press. Henderson, J.C. & Venkatraman, N. (1993), Strategic Alignment: Leveraging Information Technology for Transforming Organizations, IBM Systems Journal, 32(1), pp. 472-484. Luftman, J.N., Papp, R & Brier, T. (1999), Enablers and Inhibitors of Business-IT Alignment, Communications for the Association of Information Systems, 1(11), pp. 1-33. Norton, O.P. (2002), The Alignment Enigma, CIO Insight, July 1, 2002. Retrieved November 03, 2010, from, Papp, R. (1998), Alignment of Business and Information Technology Strategy: How and Why," Information Management, 11(3/4), pp. 6-11. De Haes, S & Van Grembergen, W., (2009), Exploring the relationship between IT governance practices and business/IT alignment through extreme case analysis in Belgian mid-to-large size financial enterprises”, Journal of Enterprise Information Management, 22(5), pp. 615–637. Read More