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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