The
Alignment Practice
The
Story:
An overseas
division of a large corporation was looking at its IT
development and enhancement budgets for the coming year.
Most of the division's systems were old and technologically
ailing, and were consuming a large (85+%) of the IT budget for
the next year (known in aggregate, although no one had yet tried
to understand the cost to operate each individual application).
When each business manager was asked about his or her systems,
of course every system was necessary to keep the business
operating. The division GM had no easy way to get his arms
around the budget needs, the system needs, the quality, level of
use, or the business
impact of the existing systems.
The GM
undertook an alignment analysis of the entire application
portfolio, assessing each application's connection to the
company's strategic intentions, its service and quality levels,
how intensely it was used in the company, and last but not least
it's overall cost. He discovered that :
-
The
systems on which the company depended the most were the lowest
quality, with little money earmarked to fix them.
-
A
significant portion of the IT budget was spent on systems
which were not strongly related to the business's goals, were
low quality, and were lightly used in the organization.
-
Few of
the applications, and only a small percentage of the dollars,
were directly related to the company's strategic intentions.
The Result:
The GM was
able to identify low-performing applications that could be
eliminated with little or no impact on the business, and use
those dollars to improve existing systems and develop new
systems that were in line with the company's strategic
intentions. With the alignment information in hand, he was
able to make the case to the business managers for a complete
re-orientation of the budget dollars.
The Alignment practice
asks a fundamental question: do the existing IT
activities promote or inhibit the company's strategic intentions and
operational requirements?
Getting business and IT
aligned is a prerequisite for delivering IT value, and is on the critical
path for using IT to improve business performance. Alignment can be
measured, and consequently can be managed and improved.
While the
Prioritization practice allows management to assign resources to proposed IT
initiatives based on bottom-line impact and connection to strategic
intentions, the Alignment practice does the same for existing IT
applications and infrastructure. In most companies, IT resources dedicated
to existing activities far outweigh resources given for new initiatives.
These resources are rarely examined for continuing contribution to the
business. The Alignment practice looks at these activities and assesses the
cause and effect between existing IT activities and the company's strategic
intentions and operations.
One of the hardest things to do in any
business is stop doing things that are currently in place. Legacy systems
and imbedded infrastructure in particular take on a life of their own, with
little formal examination of their continued value. However, every dollar,
man-hour, and infrastructure resource that is spent on existing activities
is a resource not spent on new initiatives that may have a greater value to
the company. The Alignment practice provides a way to look at past resource
decisions in the light of present and future needs, and free up resources
from lower value existing activities to be used for higher value initiatives
supporting the existing strategic intentions.
When business managers
ask whether the company’s IT resources are being invested in the right
place, what they really want to understand is whether there is a difference
between where IT’s energies are being applied and the real business
problems. This happens when senior managers are distant from resources
decisions, such as when investment decisions are made by middle-level
supervisors rather than managers, when maintenance and support overwhelm new
development, and when IT leadership resists re-allocation to new business
areas, when business conditions change.
The Alignment practice
is divided into three parts. The first, called “Strategic Alignment,”
addresses the alignment of IT asset pools (applications, infrastructure,
services, and management) to the business strategic intentions. The second,
called “Internal IT Alignment”, addresses how well each of the four IT asset
pools are consistent with each other, and in particular how well services
and infrastructure supports the application asset pool. The third , called
Functional Alignment, addresses the service level, quality, functionality,
technology, and intensity of use, of each asset pool.
Next Page:
The Alignment
Approach
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