Posted by: Monideepa Tarafdar | December 16, 2009

Bridging the Execution Gap: Tactical IT- Business Alignment

The goal of strategic IT-business alignment is to identify and plan for deployment of IT applications and infrastructure that support the company’s business strategy.  Practices that firms use to achieve strategic IT-business alignment include aligning strategic business planning and IT planning exercises and deriving corporate IT plans from business plans (e.g. King 1978, Rockart 1979).

However, in spite of voluminous “strategic”  and presumably business-aligned IT plans, accounts of wasted IT investments, failed IT projects, and the deployment of business – irrelevant applications and technologies are distressingly rampant.  An estimated 68% of corporate IT projects are neither on time nor on budget. What is more, they do not fulfill the originally stated business goals, nor do they deliver envisioned business execution benefits.  About 30% to 75% of new systems and applications do not improve work processes or register a significant financial impact. As of 2005, 50% of all IT projects finished over-budget and over-time. Further, in spite of apparently “good” relations between CIO’s and their C-level counterparts, the interface between middle- and junior-level IT managers and increasingly IT-savvy functional managers is strained at best and hostile at worst. From a middle-level production manager at Dana Corp., one of the US’s largest automotive suppliers, “The best way that IT folks can help us is to keep out of our department and let us manage our own applications”. What goes wrong in these situations? There is lack of alignment at the tactical level, that is between IT that is planned and envisioned and IT that eventually gets executed and implemented.

In a study of alignment practices in companies (Tarafdar and Qrunfleh 2010), we find that “Tactical IT-business alignment” is accomplished through 5 kinds of mechanisms, primarily at the middle and junior management levels. First, through alignment at the level of projects . The strategic IT plan specifies applications that are needed. The IT projects  executed to actually implement these are selected at the middle-management level. The number of desired projects is always greater than what resources will allow. Moreover, many “unplanned” projects may need to be implemented, either because the IT strategic planning process did not take them into account or because operational considerations such as maintenance require them. Projects therefore, have to compete  for resources. Prioritization, monitoring, and functional sponsorship of projects ensure that strategically important projects are not neglected, that projects have adequate technical and managerial resources, and that they are implemented on time and within budget.

Second, by aligning the decision-making processes of the IT function and other departments. Thus leads to better understanding of business requirements by IT managers  and greater appreciation of IT constraints and technical capabilities by functional managers. Roles for IT professionals that situate them in user departments and allow for dotted-line reporting to business department heads, facilitate such understanding.  Putting middle and senior functional managers in positions of project champions, project sponsors or project team leads and giving them the charge to lead and implement IT initiatives ensures that the functions have a stake in the success of IT projects. Creating IT-business cross-functional project execution and management teams facilitates functional accountability and ensures that functional requirements are matched with IT constraints at the middle and lower management levels. These teams establish authority and accountability patterns for IT (business) related business (IT) decisions.

Third, by balancing firm-wide technology standardization with process-specific customization the firm can reduce redundancy, integrate elements of IT infrastructure such as networks across applications, and reduce competition for resources among applications that can use the same platform. Standardization choices form the basis for IT-related tactical decisions during mergers and acquisitions, and are important for aligning requirements of new applications with capabilities of existing infrastructure. At the same time, customizing process-specific applications that are closely tied to the workflow of day-to-day operations or provide some sort of a competitive advantage enables effective local support.

Fourth, ongoing formal and informal IT-business communication at the middle and junior management levels ensures that day-to-day technology, prioritization and resource-related problems are identified, discussed and mutually resolved by IT and functional managers. Communication ensures that middle and lower level IT managers are aware of  business requirements from IT, middle and lower level functional managers understand the role of IT, and that IT and business managers together work through resource allocation gridlocks, project management issues, and crisis resolution.

Fifth, alignment at the level of skills, that is, matching the skills of middle and junior level IT professionals with changing requirements vis-à-vis the IT function ensures that the IT function stays current. Skills required of IT professionals at the execution level change as the firm undertakes new product initiatives, mergers and acquisitions, and global expansion. When one firm acquires another, the IT function may have to acquire new technical skills to integrate and maintain new applications or infrastructure. Global expansion of the firm means that its IT managers may have to acquire soft skills related to culture, change management and language, for assimilating international IT sites into the parent company.

Alignment then, is a two level decision. Strategic IT alignment is about broad- brush- strokes planning and ensures that the firm identifies applications and platforms which would enable and further its business strategy. Tactical IT alignment is about sensing day-to-day operational hot buttons and pitfalls and instituting appropriate mechanisms and processes to resolve disconnects in priorities, activities and understanding between IT and functional managers, while deploying these applications and platforms.

Reference:

King, W. R. (1978).  Strategic planning for management information systems. MIS Quarterly, 2 (1), 27‑37

Rockart, J. (1979) Chief executives define their own data needs. Harvard Business Review, 57 (2), 81-93.

Tarafdar, M., and Qrunfleh (2010), S., IT-Business Alignment: A Two-Level Analysis, Information Systems Management, forthcoming

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