The development of an IT strategy that aligns with the business is a fundamental task for chief information officers (CIOs). But some strategies are better than others, and while that remains the case, some things must change.
‘The history of the relationship between IT and business has had several phases,’ says Ade McCormack, founder of Auridian, an organisation that coaches executives at companies such as Citigroup, HSBC and Manpower on how to better foster IT-business relationships.
‘First IT bullied the business. Then IT was sent to bed without its supper until it started doing what it was told. Now it’s all talk of “alignment”,’ says McCormack.
‘But IT is more of a supplier than a partner. What’s really needed isn’t alignment at all, but entwinement, and we won’t see that without a real dialogue between business and IT based on a genuine partnership and a common strategy.’
McCormack believes that something is still broken in the way technology leaders and the rest of the business interoperate.
He could, of course, be completely wrong, in which case any discussion of how to draw up and deliver an IT strategy should be mercifully brief, as there is a seamless link between board and desktop.
Alas, that is rarely the reality.
‘The past four years have seen IT almost in shell shock,’ says Tim Jennings, research director at analyst Butler Group.
‘Users reacted so badly to the dot com excess that for many of them IT is just now going to be a service they want to procure at the lowest possible cost. They’ve just had one too many conversations where the chief executive says we need something now and the CIO, or rather IT director, says – how about in two years?’
But Jennings does see grounds for optimism. ‘In some organisations technology has been recognised as a strategic asset, an important factor in the overall business strategy,’ he says.
‘But even where the chief executive and CIO do sing from the same song sheet there are still issues about how to do it effectively and flexibly. This is where the IT strategy comes in.’
Successful CIOs link what they do with what the business wants, delivering business advantage through technology. What is it they do that many others cannot – those IT leaders, that is, who find they are still arguing for .Net or Java, when others are talking about beating the competition in the new market?
Back to basics
CIOs can discuss ways to develop effective, business-friendly IT strategies with experts, observers and their peers, but this rarely leads to a cut-out-and-keep template for the ideal IT-business strategy. There is, however, best practice to refer to, as well as other companies’ experience of how to avoid the most common pitfalls.
David Butcher is director of a major internal reorganisation of how IT is delivered in BT. The programme, called One IT Transformation, is halfway through its two-year span. He says BT needed fixing.
‘We are doing this because we were not cost-effective, we were too high cost, we were not doing anything like enough offshoring, and came out poorly in benchmarking exercises that we carried out against other organisations,’ says Butcher.
The findings prompted a thorough review of how IT is structured, with a slashing of expensive third-party provision, seeding of internal CIOs in each of the operating businesses of BT, and a commitment to 90-day-only IT development projects – all aimed at taking 20 per cent of the cost out of the entire IT operation.
Internal communication
Even if your business is not the size of BT, nor facing anything like this scale of problems, there are lessons to be learned that are applicable to most organisations.
‘For a start, we are learning that formulation of IT strategy simply will not work if the business isn’t listened to first – great ideas on their own do not ease business pain,’ says Butcher.
‘Second, it’s almost like you can’t communicate enough. Things don’t go to plan if there isn’t a constant, clear dialogue – if there isn’t, the wrong things end up filling in the blanks.
‘We publish an open quarterly calendar of all commitments to ensure everyone knows what is happening.
‘And by giving CIOs in each business board-level responsibility, a goal often aspired to but not achieved often enough, we have taken a lot of tension out of things by making it clear IT doesn’t seek to run the business, but wants to be driven by it.’
All about information
These kind of issues do seem to be common ones bedevilling IT/business relationships, says Joe Peppard, a professor of information systems at Cranfield School of Management, and co-author of the book Strategic Planning For Information Systems. But not all problems are down to IT, he says.
‘There’s a confusion between the information systems that all businesses need to operate effectively and information technology’, he says. ‘A century ago, organisations needed information to keep them going, it just happened to be on paper. At the management level this distinction is not being made, which sometimes makes it more difficult for the IT director or CIO to elicit what the information strategy is,’ says Peppard.
‘In fact, it is really the responsibility of the executive management to articulate from their overall business strategies what information is required.’
To back up his theory, Peppard points out how technology vendors rarely have the kind of under-performing or problematic internal IT strategies that others firms seem to typically run into.
Plan for the impact of change
‘Granted, these are often specialist firms staffed by engineers and technicians who all understand the value of the common information system, but why does the other extreme have to be banks and financial services institutions that have an altogether separate site for IT?,’ he says.
‘After all, what is a bank now but a kind of information processing facility? This does nothing to solve any organisational split between business and IT.’
Peppard says that he cannot understand why people stress so much about the alignment of business and IT objectives.
‘There’s a difference between alignment and impact,’ he says. ‘Surely, the job of the CIO in drawing up the IT strategy is to measure the impact of new technologies. It’s one thing to buy in radio frequency identification (RFID) technology, but it’s another to articulate the potential to change offered by the RFID route.
‘We need to start talking not about chief information officers but chief innovation officers. IT strategy really should be driven by these kinds of individuals.’
Internal or external?
Few would dispute this as a long-term goal, but how are these issues experienced in the real world? Many professionals still feel the IT role is to support the business as closely as it can, instead of setting visionary aims around IT strategy.
Some executives do not worry too much whether IT is provided by an internal or an external resource.
Evelyn Timson, managing director of business information provider Advanced Media Information, says that, like many executives in small firms, she cannot understand why she should have a major internal IT resource.
‘We do have an IT manager here, but his job is to look after and support our internal requirements and fix technical problems,’ she says.
Instead she looks to a third-party supplier, Concentra, to provide what she describes as IT strategy, in the sense of a framework to support the general thrust of the company.
‘IT is a facilitator to the overall business, which we communicate to our provider after we have set the overall strategy at board level twice a year. Our partner is very good at translating these lay terms into IT speak,’ says Timson.
But this sentiment is not a problem for Dave Burwell, IT director and CIO of Allen & Overy, a major City law firm, which has recently outsourced its IT as part of a drive to rationalise resources and strengthen its disaster recovery plans.
‘The wider IT strategy behind this is very simple: we need to optimise IT delivery in terms of quality, and we do not want to have any failures in the delivery of that service,’ he says.
But outsourcing so much IT is not a situation all organisations want to face, and it is also not always clear what responsibility the internal IT leader should be left with at the end of such a process.
An alternative way of working out an IT strategy that preserves an appropriate level of internal resource, but that still helps the business, is presented by EMI Music, which has used IT as a strategic response to changes in its business environment.
James Anderson, executive vice president and CIO of the organisation, says the overall aim has been to digitise EMI.
Anderson is responsible for all technology-related activities in the group, from the support of desktops to looking after core business processes.
‘That includes, of course, both service delivery – things have to run every day – and strategic innovation,’ he says.
Four years ago, the company started reading about this strange device called an iPod, he says. Now, at the end of a series of major business upgrades through EMI’s technology strategy, much of the way the company works has been completely revamped, based on a common Microsoft .Net-based approach.
For example, instead of couriers biking Robbie Williams’ latest album samples to executives across Europe, it is now fully digitised. Managers can listen to the music and feedback on plans for the album all online. This helps to prevent CDs from going walkabout and ending up on the black market, as well as dramatically improving the workflow and the speed at which these processes are done.
‘Those early signs four years ago clearly showed that we’d end up with a situation where technology, from broadband on, would give the consumer much greater control and interactivity with music.
‘We needed to deal with these themes of convenience, choice and access, which meant we had to change the way we traditionally did a lot of things,’ says Anderson.
As a result, he sponsored an executive board level debate on what the reaction of EMI should be. ‘This was a real strategy debate we boiled down to a set of fundamental objectives, seven core things we had to be able to do better or did not already do, but would need to do in the future,’ says Anderson.
But this, on its own, was not an IT strategy. ‘We had to avoid the trap of not speaking the same language. You hear things like “business intelligence” bandied around and it’s mostly mumbo jumbo,’ he says.
‘What it really means is something like synchronised global, regional and local reasoning about what we do. So that is how you must talk to the business.’
For the transformation programme, he says, a kind of special vocabulary was created and maintained so that both sides knew exactly what was being talked about.
‘It was a capability language that was easy to understand so as to avoid us investing in routes where no-one was really sure where it would take us,’ says Anderson.
Another commitment was to keep it short and sweet: ‘No project could be over 12 months and it ideally would take no more than six months,’ he says.
For Myron Hrycyk, IT director at Unipart Automation Logistics, much of this makes basic sense, but he also understands that crafting an effective IT strategy is not an hour’s work.
‘The core part of all IT leadership is having an IT strategy that is there to support the business. If you haven’t got that I’d really ask what it is you think you’re doing? But I do meet IT peers who struggle with this so I know it’s an issue,’ he says.
Part of that is brought about by the IT person waiting for something they are just never going to get, such as a fully organised strategy document from the business, says Hrycyk. ‘The reality is that business is so fast-moving you might end up waiting a very long time for it to happen,’ he says.
A much better path, he suggests, is to create your own strategy document.
‘You should have the confidence to talk to your colleagues, get four to five key business aims and look at how the marketplace is dealing with them. Then suggest some technology-based responses.
‘This could be a practical way to get a foundation for discussion with business peers,’ says Hrycyk.
But such an exercise should not be seen as leading the business.
‘It’s a platform for discussion and clarification only,’ he says. ‘You need to have the confidence to ask real questions, even of the chief executive, but nothing goes forward until the business clarifies what it really does want to happen. You certainly would never want to move so fast that you destabilise the overall business, for instance.’
Hrycyk says that he finds advice from research groups and analysts helpful to start the thinking process, but the end result has to be arrived at on his own.
Using this kind of approach has resulted in a strategy document being created at the beginning of each year at Unipart, which is then reviewed at least every quarter after being signed off by the business.
‘You have to work in tune with the business by augmenting what it does, not leading it. The IT strategy is broken if it’s not aligned,’ says Hrycyk.
Sharm Manwani, a former CIO who is now a senior faculty member at Henley Management College, agrees that the key to effective IT strategy has to be getting the IT/business balance right.
‘Of course, this can be complex to achieve,’ he says. ‘But the first step can often be as simple as creating a useful document that doesn’t just get locked away. Business problems and opportunities are often fluid and emergent. It is the IT leader’s job to keep such a document on the agenda, or it can easily be forgotten.
‘Another aspect is that the document has to face both in and out. What is c ha nging in the wider landscape is one dimension, but you must also always have an internal focus: how are we doing on cost and cost-effectiveness? Is this the most appropriate platform to deliver what we need? Evaluating weakness and opportunity on both dimensions can be extremely useful in getting that strategy document started,’ says Manwani.
This theme is also picked up by another ex-CIO, Stephen Agar-Hutty, previously IT director at retailers Argos and Lloyd Pharmacy, before leaving to set up a consultancy called Preferred Managed Services.
‘IT is very difficult to explain to other people, much more so than functions like human resources, marketing or logistics,’ he says. ‘IT has to work with every part of the business, unlike many other disciplines, but is often invisible to them.’
Agar-Hutty’s way of developing the perfect IT strategy to combat this is radical, but may be the only way, he says.
‘To avoid the communication and relevance issues involved in drawing up a strategy, CIOs can build separate IT strategies for each group and then build them into one master one. That could mean eight or nine separate exercises, but that is the best way to avoid any possible gaps or business misalignments,’ he says.
Is he right? The common message from the experts is that each CIO must answer that question for themselves, as they find their own way to square what some see as the impossible circle of fusing IT and business language and approaches into one strategy. All you have to do, then, is make the strategy work.
Case studies:
The chief executive's view - Glass Partnership
Best Practice: an IT strategy is...
* Never created in isolation
Documents that reflect your insular technology goals will not go anywhere. Neither will ones that articulate lofty corporate goals, divorced from any implementation path.
* Written in the right language
If the business plan says ‘enhanced customer service,’ examples of how to achieve this, such as ‘create a better web site with a CRM back up’ is a much better practical discussion point than leaving the demand to stand on its own.
* Short and sweet
Be brief – no one will read all 30 pages of your brilliant IT strategy document. Keep it to a few pages, or better still use some key diagrams or mind maps that clearly and graphically display the idea.
* Contains some content
What are your proof points? What are your competitors doing? How is technology X or Y seen as faring? A document that gives some context and reality to the outlined business/IT goals is an invaluable way to ensure buy-in from the business. Plus, it establishes you as a player who knows what you are talking about.
* Given a breath of air now and again
Do not leave the document to be opened on an annual basis. It has to be a living document – ideally revisited by you once a day, by the team once a week, and by the chief executive once a fortnight.
* Tracking return on investment
How will you know you have succeeded? When and how do you finish?
What do you think? Email us at feedback@computingbusiness.co.uk
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