Bringing Business and IT Together – Part 1

Published in TDAN.com October 2005

I wrote my first computer program in 1968. It was a COBOL program to read data from eighty-column punch cards, format the data, check control breaks, calculate totals, and print a report on
green-bar paper. The cards, of course, were sorted before my program began its processing. That was a simple era of computing – mainframe computers and batch processing. A lot of things have
changed since way back then. We now have personal computers, clustered servers, networking, the internet, object-oriented systems, graphical user interfaces, data mining, data warehousing, business
intelligence, and much more.

Unfortunately, one thing hasn’t changed – the fragile working relationships between business and IT organizations. In the early 1970’s a widely-circulated cartoon had the caption “You guys start
coding. I’ll go up and see what they want.” Then there’s the ever-popular tire swing cartoon that can still be found on the internet. The gap between business and IT has existed from the
beginning of business computer systems. This kind of humor speaks to the troubled business/IT working relationships that existed then and are still pervasive today.


New Urgency

Now, more than ever, it is essential that business/IT working relationships undergo fundamental and systemic change. The role of business intelligence (BI) as a strategic component of information
systems makes this a critical issue. Good BI systems are closely integrated collections of technologies, business metrics, business processes, and disciplines of business management. They demand
cohesion, continuity, consistency, and quality that can’t be achieved with tenuous and fragile business/IT working relationships.

Business and information technology are irrevocably intertwined and interdependent. It has become increasingly difficult to tell where one ends and the other begins. The technology manifesto of the
past – business before technology – no longer works. In today’s world technology drives business to the same degree that business drives technology.

The solution is no longer one of “bridging the gap” but of eliminating that gap. In the words of Howard Smith and Peter Fingar “Don’t just bridge the business-IT divide – Obliterate it!”
(Business Process Management: The Third Wave, Smith and Fingar, Meghan-Kiffer, 2003) Communication and understanding are fundamental to removing the gap. Common concepts, terminology, and goals are
essential to new business/IT relationships. Getting there will not be quick, and it won’t be easy. It is a journey, not an event. The first steps of the journey depend on two essential premises –
the foundation for common concepts, terminology and goals:

  • IT people must become more business skilled, and
  • Business people must become more IT skilled.


New IT Skills

IT people need to know more about business! They need to understand the disciplines and the terminology of business process management, business performance management, customer relationship
management, supply chain management, financial management, human resources management, operations management, etc. Lacking that knowledge, communication with business people and understanding of
business requirements will forever be troubled.

Superficial knowledge – using the terminology without truly understanding it – is not adequate. It may, in fact, do more harm that good by amplifying lack of business knowledge, causing business
people to feel deceived, and placing a greater strain on business/IT relationships. To develop, deploy, and sustain high-impact information and analytic systems IT people must understand:

  • What is business process management?
  • Who performs business process management?
  • Why perform business process management?
  • What are the key metrics of business process management?
  • What are the major activities of business process management?
  • What are the issues and challenges of business process management?
  • How does business process management support the mission and goals of the business?

Repeat each of these questions for business performance management, customer relationship management, supply chain management, financial management, human resources management, and operations
management. When IT people know the answers to all of these questions they have a good foundation for effective communication with the business. Perhaps more importantly, they gain an appreciation
of the challenges and complexities of business management.


New Business Skills

Business people need to know more about information technology! As with all communication and relationship issues, this is not a one-sided problem. Just as IT people need to become more
business-savvy, business people need to be more IT-savvy. They need to understand the roles and relationships among the many different kinds of technology upon which their information systems
depend, and they need to understand the dependencies among those technologies. Business people need to have a working knowledge of the technology stack (Figure 1) as it affects their capability to
get information, perform business analysis, and make informed business decisions.

Figure 1: The Technology Stack

Every business person who depends on information technology to do their job (and who doesn’t today?) needs to know for each layer of technology:

  • What role or purpose does the technology serve?
  • What can I do when the technology works?
  • What can’t I do when the technology fails?
  • What other technologies does it depend upon?
  • What are the difficulties and risks of the technology?

Fourteen layers of technology, when intersected with five kinds of questions, yield a total of seventy technology questions for business people. When the business knows the answers to all of these
questions they establish a strong foundation to communicate effectively with IT, and they develop an appreciation for the challenges and complexities of managing information technology.


New Perspective

Beyond the relatively straight-forward needs of business becoming IT-savvy and technologists becoming business-savvy, there lies a new challenge. We must develop common understanding and shared
perspective of value – an issue that is both a business concern and a technology consideration. When business and IT have different definitions and expectations for value conflicts are certain to
arise.

Business and IT organizations often have two distinctly different perspectives of value (Figure 2). IT professionals generally take a data-to-value approach. Data produces information; information
enhances knowledge; knowledge drives action; action produces outcomes; and favorable outcomes deliver value. Business management typically uses a goals-to-value system. Business drivers and goals
determine strategies; strategies drive tactics, which in turn produce results; and positive results produce value.

Figure 2: Two Different Perspectives of Value

Neither of these perspectives on value is wrong. Yet both are incomplete. Recognition of business goals and strategies is clearly missing from the data-to-value approach. Similarly, the
goals-to-value system fails to acknowledge information and data as elements of value creation.

On closer examination it becomes apparent that these perspectives have common elements as well as differences. Action from the data-to-value chain is synonymous with business tactics in the
goals-to-value chain. Similarly, outcomes and business results are different expressions of the same concept. By merging the common elements and retaining the unique components of both value chains
we arrive at a single, shared perspective of value creation as illustrated by Figure 3.

Figure 3: Shared Perspective of Value

This shared view of value creation is complete and balanced. It recognizes all of the elements – business goals, business strategies, information, and data – as equally significant to creating
business value.


New Imperatives

Effective business/IT relationships are ultimately a question of alignment. All of the previous discussion – new IT skills, new business skills, and new perspectives – sets the stage for
business/IT alignment. But it doesn’t assure alignment. To achieve real alignment there are several things that must be done – some by IT, some by the business, and some collectively.


IT Imperatives:

To close the gap, remove the barriers, and work effectively with the business, IT organizations must:

  • Maintain good business/IT relationships at line management level.
Good relationships at executive and senior management levels may achieve strategic alignment, but tactical alignment depends on line management. Strategy without tactics is an undeniable recipe
for frustration and unsatisfied expectations. This is described as an IT imperative because IT must take the initiative to rebuild troubled working relationships.
  • Create a federated IT culture.
Acknowledge that information technology exists virtually everywhere in the business. Stop the ebb and flow from centralized to decentralized IT. Recognize the need for a strong central IT unit
while welcoming the abundant resource of IT capacity (knowledge, skills, software, hardware, etc.) that is distributed throughout business units.
  • Operate transparent IT programs.
Business units must be able to see what their IT services consist of and have a clear picture of the cost and value of those services. When the business can’t “see inside” the IT
organization uncertainty and distrust are natural results.
  • Define and communicate technology strategy.
To business units most IT organizations appear to operate in a reactive mode of fixing problems, responding to immediate pressures, and slowly chipping away at a growing backlog of unfulfilled
needs. Alignment is difficult to achieve in the absence of a forward-looking technology plan.


Business Imperatives:

To close the gap, remove the barriers, and work effectively with IT, business organizations must:

  • Align technology with business processes.
Understand that process changes have technological implications. Think, speak, and operate based on defined and repeatable business processes. When changing business processes, consider what it
means for implemented information technology systems. When changing technology, consider the process impacts. When introducing any new business process, design the process with information
technology in mind.
  • Embrace the right technology for the right reasons.
Recognize when and how technology helps to achieve business goals. Take the lead in describing the business value to be derived from technology. Where practical meets new information technology
needs using products, skills, and infrastructure that are already familiar to the IT organization. When entirely new technology is needed, involve the IT organization from the very beginning to
ensure compatibility and sustainability of technology choices.
  • Define and communicate business vision and strategy.
In many companies strategy is poorly defined and even less well communicated. Strategic alignment without defined and documented strategy is impossible to achieve. When individual business unit
strategies are not integrated, IT systems and organizations are certain to be challenged.


Mutual Imperatives:

To close the gap, remove the barriers, and maximize value, business and IT organizations must:

  • Align strategically in two directions.
IT strategies are aligned with business goals and strategies. Business strategies aligned with technology initiatives.
  • Align tactically in two directions.
IT projects are aligned with business tactics, and business tactics are logically matched to IT projects, resources, and capacity.
  • Align temporally in two directions.
Business plans and IT initiatives are time-synchronized. IT projects are completed when needed by the business. Business plans understand and respect the constraints on IT capacity. Business
units recognize peak periods when IT workloads are high and resources are constrained. IT organizations recognize the peak periods when workloads are high and resources are constrained.


In Conclusion

Conflicts between business and IT organizations have existed from the very beginning of computerized information systems. We have advanced in so many ways both in business and in technology. Yet
the problem still plagues most companies. The business/IT gap must go away. The cost is high; the value is null; and the barriers that it creates grow bigger each day. The problem can be fixed, and
the time to fix it is now!

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About Dave Wells

Dave Wells leads the Data Management Practice at Eckerson Group, a business intelligence and analytics research and consulting organization. Dave works at the intersection of information management and business management, where real value is derived from data assets. He is an industry analyst, consultant, and educator dedicated to building meaningful and enduring connections throughout the path from data to business value. Knowledge sharing and skills development are Dave’s passions, carried out through consulting, speaking, teaching, and writing. He is a continuous learner – fascinated with understanding how we think – and a student and practitioner of systems thinking, critical thinking, design thinking, divergent thinking, and innovation. He can be reached at dwells@eckerson.com.

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