Do your IT projects propel your company forward or slow it down? Do your technical and business functions create synergies or disconnects? Your answers to these questions reveal whether your IT department is aligned with your business objectives.
“Without alignment, IT becomes a cost center,” says Eric Stoll, director of technology at Arke Systems. “But when IT does deliver on business objectives, it positions itself as a business driver and engages as a strategic partner.”
Smart Business spoke with Stoll about the impact of IT alignment and how you can create it in your business operations.
Why is it crucial to align IT with business objectives?
When IT is aligned and engaged, it can act as a business driver and strategic partner. But when this doesn’t happen, IT will stay in a reactive mode that distracts it from efficiently accomplishing business objectives. The goal of IT should be to deliver business capabilities that benefit the company.
What are the potential consequences if they are not in sync?
If IT can’t support key business objectives, this could lead to loss of revenue, missed service-level agreements and lower customer satisfaction. This disconnect can also hurt employee morale when IT professionals feel unrealistic expectations set them up for failure and other employees feel frustrated by ineffective IT systems. But when time and care is put into IT project planning, the end result will prove much more satisfactory to everyone involved in the process.
What does a unified business look like?
With an aligned plan, the business units feel a natural push and pull of productive stress, which drives the whole organization forward. Both the business and IT groups understand the overall company goals and objectives and how they relate to IT. Both parties also agree to company measures of success, such as revenue targets, customer service levels and strategic projects, and know how IT will help the company reach those measures. All IT projects would have a solid business reason or ‘case’ and a business sponsor. The sponsor represents the needs of the business, offers insight and affirms that the IT expense has merit based on the cost benefit analysis.
Continued momentum requires frequent, scheduled, measurable communication between business units. During these conversations, everyone can review an IT ‘scorecard’ that relates IT performance to the company measures of success. This allows for continual recalibration throughout the project.
What processes should be in place?
When the business considers IT a valued partner and involves the department during the planning phase, the business realizes the benefit of alignment. Planning should encompass these core areas:
- Financial: established processes that
account for IT costs and benefits
- Strategic: measurable IT involvement in
achieving business objectives and goals
- Operational: service-level agreements between business units and IT
Project management ensures the proper implementation of the plans and should include frequent, scheduled communication, such as:
- Monthly financial, strategic and operational reviews
- Peer and 360-degree feedback related to
performance and customer satisfaction
- Assessment of the company’s processes and systems by external talent
What are some common mistakes that lead to disconnect between business and IT?
Oftentimes, IT focuses too much on ‘how’ when they should focus more on ‘why.’ Executives aren’t concerned with ‘how’ IT happens, and rightfully so — knowing too much detail could be a distraction. For IT to participate at an executive level, it must speak about IT initiatives in terms of business strategy, which usually means discussing how IT supports each business unit’s objectives. IT must also operate and report performance in relation to these goals in order to be perceived as a business driver.
When IT doesn’t operate in terms of business objectives, other executives may feel frustrated. This could lead them to believe that IT is too costly, that the initiatives aren’t critical, and that IT representatives should be excluded from strategic planning.
How can mistakes be avoided?
Everything really comes back to clear planning, including defined vision, goals, objectives and success measures. The IT plan should relate every part of the project back to the business objectives to demonstrate their measurable positive impact.
Financial planning and management also play a critical role in the process. The ideal set-up has IT costs distributed and paid for by the individual business units. This will drive measurement and push the IT group to perform, especially if the business units can seek external support if they feel IT is not meeting its measurements. Also, the business sponsor of IT projects should control the budget and have accountability for meeting it. This creates checks and balances between business and IT and mutual agreement on spending.
ERIC STOLL is director of technology at Arke Systems. Reach him at (404) 812-3123 x130 or email@example.com.