The first question about business-IT alignment is that what does it actually mean? Here in this article we take a look at the Business Strategic Plan and the accompanying IT Strategic Plan, and how to integrate it to maximize value.
When you use the word “alignment”, it means that there are two separate entities that try to work together but still remain separate. The truth is that roles or activities that have been rooted in IT historically are now part of the business activities. In this regard, “IT-Business Alignment” means that these both entities are going to become one integrated entity.
So what does the business and IT partnership look? In reality, most companies are separating business and IT. There are two different divisions as business on the one side, and IT on the other. On the business side, they have company strategic plans and business requirements. On the other hand, IT is responsible for distributing information and security for them. Fundamentally, we can say that this kind of division is like dividing a company into two separate sections: strategic and tactical.
As you also find out, there is a clear gap between business and IT. This is where the discontinuity or misalignment between business and IT begins. In the ideal world, IT strategic plans are driven by business requirements and plans. But it doesn’t happen often. Business speaks in a completely different language than IT and conversely, IT also speaks in a different language than business.
Tactical approaches projects are part of the IT strategic plans. Ideally, this tactical approach should be driven by an IT strategic plan which is driven by business requirements. On the tactical IT side, we need to make sure that our IT solutions are qualified. It means, we need to make sure that we get enough quality on the business side. And these two values are supposed to be related.
That is, if we get the perceived value from IT, but not from business, then we’re having a problem. This means that IT is delivering solutions while business set the road path.
In below, we review all related about Business-IT Alignment to provide a better image of it.
Indeed, Business-IT Alignment is a process, not a time event and it could be achieved when all IT initiatives in a company are fully in line with the objectives that set out in its business functions.
Furthermore, it is good to know that Business-IT Alignment gap is the degree to which IT initiatives deviate from business requirements. This gap should be calculated to provide a good index about such a deviation between business objectives and IT attempts. The main objective of Business-IT Alignment is to reduce and eliminate this gap over time. Business-IT Alignment could be considered as an accomplished target when this deviation would completely eliminated.
There are some steps for business-IT alignment that during these steps it attempts to maximize the value and profit for the company with respect to its business objectives and also IT expenditures. Indeed, business-IT alignment results in every penny spent on IT which supports the business objectives. These steps are:
- Identify Business Drivers
- Create IT Vision
- Assess Current Alignment
- Identify Alignment Gaps
- Prioritize IT Initiatives
- Evaluate Implementation Options
- Create Migration Plan
- Adjust IT Strategy
Business-IT Alignment is not only about strategies but it matches IT vision, mission, objectives, objectives, and capabilities like strategy, system, organization, and infrastructure with business vision, mission, objectives, objectives, and capabilities including strategy, method, organization, and infrastructure.
It should be mentioned that each company has its own unique business-IT alignment needs. Exactly like a hand that has five fingers and not all hands are the same and each one has its own unique set of fingerprints. So, the business-IT alignment depends on the company, its business objectives and business situation. In other words, we can say that each company has its own cultural characteristic. Cultural alignment is very important during the business-IT alignment implementation that decision makers in a company should take it into the main account, too.
There are three main assumptions that companies should consider when they want to apply business-IT alignment. These assumptions are:
- Business functions generate value and support other functions in a company.
- The IT function does not create value and it only supports value creation
- Therefore, every investment in IT must be aligned with the business objectives
According to this assumption, the value is generated by the business functions of the enterprise. While the IT feature does not create value but assists the business functions by their value-creating initiatives. In other words, IT is a support system that operates to facilitate the business functions of the company. Consequently, everything that IT wants to do should be in line with business functions.
There are some issues about business-IT alignment, too. For instance, hierarchical positioning of IT functions in terms of business functions has limited. Also, it should be mentioned that most of companies focus more on results (the ability of IT to produce business value) than on means (harmony between IT and business decision-makers within organizations) that it also cause issues during business-IT alignment.
On the other hand, there are some benefits for business-IT alignment, too. These benefits are leading to competitive advantages for the company to differentiate itself in comparison to others in the market. The greatest benefit of business-IT alignment is achieving strategic business outcomes with more confidence. Aligning both business and IT objectives and potentials cause that company could better position itself and develop and deliver market-leading products and services with more consistent quality standards. The sub benefits include:
- Better Customer Service: The customer service can be improved with more efficient and consistent customer handling, increased customer knowledge and insight.
- Organizational flexibility: The flexibility is greatly enhanced by operating processes that meet business needs by standardizing. Agility is one of the results of this flexibility that has pros and cons if it is not properly managed.
- Operational efficiency: The business relationships with suppliers, customers, service providers are complex. Business-IT alignment could provide such an efficient and effective relationships for the company.
- IT cost reduction: Business-IT alignment was planned accurately to achieve business objectives and count each expenditure of IT to be ensure that this expenditure is align with its targets.
- Risk management: Business-IT alignment enhance transparency and collaboration that helps to handle risks on every process.
In summary, business-IT alignment is a process in which a company use IT to achieve its business objectives and improve its financial performance and also its competitiveness in the market.