Linking IT strategy with business Linking IT strategy

Linking IT strategy with business

Linking IT strategy with business v v v Srinivaskumar S Parth Shah Kiran Ahire Shripad Thombre Deepak Menon 14 -I-152 14 -I-145 14 -I-101 14 -I-154 14 -I-163

Linking IT strategy with business : Introduction v IT and Business v Expectations from IT: v v v v v Reduce costs Standardise processes Enhance productivity Improve workflow and communications Sustain repeatable service levels Improve Risk control mechanisms Implement new business strategies Facilitate organic and acquisition-driven growth Gain competitive advantage by exploiting new technology

Linking IT strategy with business : Introduction v Traditional role of IT strategy: v Subservient in business planning v Merely an implementation tool Completely technology-centric and focused purely on technology products Bolted onto the business, more or less as an afterthought v v v Need of the hour: v v v Drive business planning Intrinsic involvement and pro-active role in shaping strategy Move on from the old world thinking of retro-fitting business functionality into an IT strategy, towards a business-focused approach

Linking IT strategy with business : Introduction v It is far more likely that the principal benefit will be derived from having robust, but adaptable, technology throughout the organisation, thus facilitating an agile business strategy v We need a tangible alignment plan that will help us to realise our ambition of complete harmony between our IT and business strategy. v Fundamental questions while linking IT strategy with business: v v What do we need for the future? What have we got now? How do we change things to make our visions reality? How do we make sure that our IT remains relevant to an evolving business?

Linking IT strategy with business : Introduction v It is far more likely that the principal benefit will be derived from having robust, but adaptable, technology throughout the organisation, thus facilitating an agile business strategy v We need a tangible alignment plan that will help us to realise our ambition of complete harmony between our IT and business strategy. v Fundamental questions while linking IT strategy with business: v v What do we need for the future? What have we got now? How do we change things to make our visions reality? How do we make sure that our IT remains relevant to an evolving business?

The Alignment Process 1. Understanding the Business 2. Acknowledge the Culture 3. Know the IT estate 4. Discover the Value Chains 5. Interpret the Context 6. Determine the Change Agenda 7. Chart the Technology Road-Map 8. Plan the work programme 9. Populate the Delivery Framework 10. Achieve the Business Benefits

Understanding the Business Identify and document all of your business processed, both formal and informal. IT function in every business is all about Capturing, processing, storing, reading the data and distributing information or data. One should have a crystal clear understanding of the business and it process. One can start from the nature of the organisation fitting in the rest of business world in downward hierarchy such as: Map out the corporate models which determines what the organisations does and how it does it. Factors to be considered during this analysis are: ü ü ü ü Organisation Charts Roles and Responsibilities Formal Processes Informal Processes Markets & Products Key Customers Key Suppliers Key Business Partners

Acknowledge the Culture Analyse the structure, ethos and nature of the organisation. Culture (the way we do things) of the business always has a very strong bearing on the successful application of technology. Need to match the nature of the system to the nature of the business, if not then it will be a struggle to get the optimum performance from the IT aligned with. Few pointers to keep in mind while analysing the culture of the business: ü Simple Structure - Direct, two information flow between operational staffs and top level management. ü Management by Exception – Problems to be escalated up to the hierarchy only until appropriate level of authority is reached. ü Professional Bureaucracy – Standards and Operational procedures are determined by external professional bodies. ü Project Team – Organic Team, Matrix Management, Formal and Informal communication between the team members.

Know the IT estate Identify and document all the IT assets, application and delivery channels. For aligning the IT with business with need to know or do analysis on few things such as: ü ü ü How many IT assets we have. Their technical attributes: version, functionality etc. Who created/Transforms/Configures them. Life expectancy and Replenishment Model. How they are distributed Who uses them Who owns them Who supports them Who manages them How much they cost to buy/build/operate Who pays for them Most Organisation also keep a registry for following things: ü ü Hardware Operating System Software Applications Line of Business Application

Know the IT estate (Cont…) IT estate cannot begin to function without the addition of several other parameters such as: ü Manpower ü Skills ü Processes ü Security Precaution ü Service Definition ü Service Level Agreement ü Network Bandwidth Building Service Management Framework and Cost To Serve model that expresses the nature of the services and how they are derived. Understand what is driving our IT function and nature of our scaling factor.

Discover the Value Chains Identify and document the relationships/ touch points between the business and the IT estate. Every business consists of various value chains, each of which aggregates a number of inputs transform them to add values and then produce an output. Understanding these value chains is of paramount importance when planning to align the IT function with business strategy, because these generally represent the relationships and the touch-points between the business functions and the IT estate. For E. g. Here is a very simple Customer Order Process value chain: ü ü ü Order Entry Picking Despatch Invoicing Receive Payment By analysing our value chains we can discover what is really driving our business/IT activity and we can identify the key scaling factors that are absolutely crucial for strategic planning and alignment. Establishing a documented relationship between the business activities and IT activities aggregated within each value chains. Without the clarity of “Cause and Effect”, both our business and IT activities can be fatally flawed.

Interpret the Context: • So far we have concentrated on making sure that we know as much as possible about the nature and our business knowing and the IT functions. • Before we begin to plan for our future we need to interpret the future context in which our organization must operate. • To know future context we must gather intelligence sources, both Internal and External, analyze the raw information and determine how any consequent change may affect our existing business functions, culture, IT estate and values

a. Internal Influences • All the internal influences should be under the direct control of business itself and so should be the easiest to resolve. • The Internal Influential Factors will include: 1. Corporate Plans 2. Business Unit plans 3. Infrastructure Refresh/Renewal programs 4. Preventive/Routine Maintenance programs • External Influences • The External Influential Factors will include: 1. Legislation(International, National, Regional, Local) 2. Industry/Professional Regulation. 3. Economic Trends. 4. Customer Trends. 5. Supplier/Provider Trends. 6. Availability of Skills

Determine the Change Agents: • We must always strive to ensure that our Information Technology will support our business as it evolves. • To do this we need to have regular exchange of effective communication between IT department and other business units. • Corporate Change Agenda is the common ground for communication and discussion, as well as the basis for strategic planning. • The Change Agenda consists of parallel paths. At the highest level the se can be expressed under the following headings: 1. 2. 3. 4. 5. 6. 7. 8. Legislation; Regulation; Corporate Policy; Business Initiative; Technology Initiative; Infrastructure Initiative; Customer-driven change; Vendor-driven change; • A disciplined and comprehensive approach to change assessment will help to flush out the financial implications and operational consequences but will also help to formulate the relative priorities and benefits of potential changes.

Setting the Change Agenda: • The next important step after change management is to strike up an appropriate balance between value, cost and priority. • In other words to set the change agenda acceding to the likely commercial constraints and investment cycle • Setting up change agenda is a continuous process whereby we repeatedly: 1. Identify Requirements; 2. Priorities Time Scales – Immediate, Urgent, Routine; 3. Model the proposed changes; 4. Agree the changes to be made; 5. Plan and Implement the change programs; The Change Agenda is a document that defines our options for change, giving us a frame-work for decision-making and Goal-Setting.

Chart the Technology Roadmap: • The technology Roadmap takes up a step further, how the relevant technology changes will be implemented, with respect to individual systems, time-scales and priorities. • The reason we need a technology Roadmap is because system centric view of the organization will always be different from business centric view. • By Mapping out the consequences of every Business change agenda initiative, we can identify where it touches the technology and plan accordingly. • Updating the technology Roadmaps will involve careful negotiation with asset owners and business process owners to accommodate the proposed changes.

Plan the work programme: Translate the technology roadmap into business unit plans. • Business units need to move at different speeds- perhaps due to reasons of commercial, economic or geographic constraints • This view not only helps the departments/teams to see how they will be involved/affected by change but it also helps them to make a stronger connection between their business activities and the underlying technology services. • The easiest way to do this is start with a service delivery matrix, showing the take up services across the business units.