The Alignment Effect: How to Get Real Business Value out of Technology

Introduction

My observations of business and technology over the last 15 years compel me to write this book and to answer this question: Why aren't we getting real business value out of technology? One thing is sure—companies that continue to repeat the mistakes of the past will never reap the rewards of the future. Most companies fail to capitalize on the technologies they already have; and many more are poised to meet this same fate with the next big technology fad spawned in Silicon Valley and propelled by venture capitalists. Whether it's wireless, Web services, or the latest and greatest in nanotechnology, companies will never get value—real or perceived—without first solving the business/technology disconnect.

This book will begin by illustrating some of the ways the disconnect can manifest itself in the enterprise. These examples reveal an unequivocal truth: In order to understand, communicate, and plan how they should utilize technology in the enterprise, companies first need to align three key areas—business, process, and technology. But to achieve alignment among these areas requires a fundamentally different approach than those used before—one that brings these disciplines together in a way that all can understand. This approach creates unprecedented visibility into how business and technology decisions are made, and provides the means for tracing decisions back and forth between the two, so that companies can discover and communicate interdependencies.

This approach is called Business Technology Management, or BTM. In the pages that follow, the principles, activities, and governance that make up BTM will unfold to provide thestructure and the mindset to help any company in any industry get real business value from IT.

I am not alone in my views on the disconnect, or in my ideas about what's necessary to solve it. Many chief executive officers (CEOs), chief information officers (CIOs), industry gurus and academics—such as the contributors to this book (some of whom have been grappling with the disconnect since the earliest days of IT)—believe that the time has arrived for companies to adopt a structured approach to aligning business and technology. What's to Come?

Whether you accept this premise or not, one thing is obvious: The approaches that companies have been relying upon to close the disconnect aren't getting the job done. So what needs to be different in the way companies go about solving it?

To answer this crucial question, the approach should follow several guidelines. First, the approach should view the problem primarily from the perspective of the business. IT has a long history of considering itself an island apart from the rest of the enterprise. But, like every other business function, IT should service the bottom line first, and then its own needs. This doesn't mean that IT is only about dollars and cents; one of the biggest mistakes that companies have made in the past is failing to recognize the intangible benefits that can come from IT—benefits such as improved customer relationships and better communication between business units. The people who are most likely to recognize and advocate these benefits are business professionals, since they are often the end-users of technology. It is a mistake not to get this crucial group sufficiently involved in making decisions about how technology can and should impact the business. If IT is to become focused on the business, this trend needs to change.

Second, the approach should focus specifically on the business/technology disconnect, and leave other, more narrowly focused techniques (such as scorecarding or systems design) out of the equation. This means that the solution should zero in on the three key areas that need to be aligned—business, process, and technology—and specifically the connections between them. Often the easiest way to understand this is by forming a picture in your mind similar to what appears in Fig. I.1.

Third, the approach should enable disparate groups of people with different interests, capabilities, and objectives to visualize and communicate about IT. This includes everyone from the CxO suite on down to programmers and developers. To close the disconnect, all of these people need to be on the same page.

Finally, the approach should solve the problem up front, before the disconnect is cast in stone by expensive and irreversible IT implementations. The logical place for this to happen is in the design stage, where disconnects can be diagnosed, examined, and cured—all before the first line of code gets written.

Obviously, these guidelines leave a lot of room for interpreting how to go about closing the business/technology disconnect. Filling in these gaps is what The Alignment Effect is all about.

This book begins with Part I: The Business/Technology Disconnect, which introduces the disconnect and uses real-world examples to show the profound effect that it can have upon the enterprise. These examples, which include scenarios from integrated financial systems to human resources to call reporting, illustrate some typical conditions that can result in disconnects, as well as some of the material losses that they can produce. To begin closing the business/technology disconnect, IT departments need to address several emerging challenges. These challenges point to the need for a new approach to align business and technology: the principles, activities, and governance that make up BTM.

Part II: The Principles of BTM examines three underlying principles that must be in place in order to perform BTM. These principles include predictive modeling, which allows project teams to create blueprints that improve design decisions and facilitate alignment; collaborative decision-making, which includes a broad range of stakeholders to make sure that competing needs are balanced; and making knowledge and assets reusable, which maximizes the value of both intellectual and physical capital.

In Part III: The Activities of BTM, we explore business model definition, process optimization, and technology automation—the three activities that companies undertake to align business and technology. The purpose of these activities is to create an end-to-end blueprint of the enterprise architecture that is relevant to a given IT project. In order to create this blueprint, the project team relies on predictive modeling and the other principles of BTM. The activities of BTM begin by capturing a model of the current enterprise architecture, including business, process, and technology. The next step is creating multiple scenario models that correspond with the directions that the project could take. After selecting a final scenario, the final step is implementing the design created in the corresponding model and updating the current model to reflect the changes.

Part IV: Governing With BTM illustrates how the enterprise should administer BTM to achieve two goals. First, the blueprint developed during the activities of BTM helps senior decision-makers (including the CIO) to set strategic direction for how the business should put technology to work by managing the IT portfolio. Second, the design decisions captured in the blueprint become an important ingredient for helping the company maintain tactical control over their IT projects, including control over quality and cost management. Finally, since governance implies a concerted effort to incorporate BTM into the workplace, I will introduce some key roles and responsibilities for helping BTM make the jump from promise to practice. The Sum Total

Together, these building blocks add up to a structured approach—BTM—which aligns business and technology so that companies can get real value out of IT. This is the key message of BTM, and also of this book. So even if you decide not to read a word beyond this sentence, remember this point: "BTM aligns business and technology to get real value out of IT."