3 Compelling Steps to Align Business Strategy with IT

Sivakumar Krishnan, CISA, VP- Business Process Reengineering & New Initiatives, IFMR Rural Channels & Services talks about how to create a common language which both IT and business can decipher. 

The big question that faces business groups would be about how an enterprise can extract the most out of IT. It is generally believed that an enterprise’s existence revolves around its long term vision that adds value to its shareholders.

“Being a core member of the steering committee meetings between business and IT is critical which reflects the good governance of an enterprise”

IT managers do comply with the constantly changing external environment that keeps the organisation on its toes, demanding continuous evolution to adapt to the growing market demands. Besides this, the change should be in sync with the regulatory compliance framework.

IT managers agree that technology plays an important role in driving competitive advantage; and that it is the only lever available to the enterprise that helps it scale up its business. But the big question is: ‘How does an enterprise extract the most out of IT? And why is it important to align IT with business?

3 Steps to align IT and business

1. Establish a common language for IT and business: The first and the most critical challenge is to establish a common language which both IT and business understand, as they are different in their objectives and culture. Observing absolute transparency while engaging with the business is of the utmost importance. Being a core member of the Steering committee meetings between business and IT is most critical for debating and clearing roadblocks and approving/rejecting projects that reflect the good governance of an enterprise.
2. Head of technology should have business insights: The second critical point is to have a technology head who understands both IT and business. He should have worked in both business and technology. He should be a problem solver, with a fair knowledge of the latest technologies available and their inherent risks; a good articulator; and should possess excellent team management skills. He should be able to converse with business heads, the management, and business stakeholders in business terms; as well as in technical jargon with the technical team. He should also ensure that the business analyst who writes the business requirement documents also has a good knowledge of the business functions. This will ensure that IT is able to give more value to its business.
3. Have business goals and RoI as IT’s priority: The third critical point is to ensure that the technology always keeps the business goals in mind by aligning itself with the business. This will result in improved synergies benefiting both IT and Business. IT should not undertake projects only dear to them, but also those which are aligned with the business needs. Every expense towards a systems upgrade, an application change or new solutions should bring in measurable ROI.

“Technology head should be able to converse with business heads, management, and business stakeholders in business terms; as well as in technical jargon with the technical team”

He should constantly bring down costs without building a big team to justify his importance or the importance of IT for the enterprise. Anything that can be outsourced to bring down costs should be openly embraced. A lean IT team will definitely will bring more value to the business and also result in better business numbers. 

How to bring about the necessary alignment?
In matured organisations, Information technology, back-office operations and other support functions are considered to be cost-centres, while business functions like production, sales, marketing and other verticals that directly add to the top-line are considered profit-centres. 

The profit-centres first prepare the annual budgets for their division, which reflects the new branches to be opened during the year, new products planned to be launched, additions in head-counts etc.

This budget is shared with the cost centres, which in turn prepare the budgets for their division, while taking into account all the projected growth requirements of the profit-centres. This will ensure that IT is adequately equipped to render able support to the business, and IT’s goal will automatically get aligned with the business goals.

"Proper alignment can be achieved only when the business is aware of the capabilities and shortcomings of IT"

It maybe it is strong in some areas but not up to the desired level in a few others. Either IT has to augment the weak spots by getting the right resource or look at outsourcing those specific activities, provided cost and risks of both are known and understood beforehand.

Likewise, IT, too, should be aware of business performance and how technology is enabling it to achieve targets. Also, there should be clarity on the specific areas where technology is adequate and areas where technology needs to be augmented.

It may also be necessary at times to revamp or reengineer the entire solution so as to achieve efficiencies, which may even affect the way the business processes are handled. IT should also have a fair idea of how much the business can afford to spend under the given circumstances.

Once both sides understand and know each other, clear measurable goals can be set for both IT and Business. Since both will be tuned towards the enterprise mission, the goals will be common, too.

There are many standard metrics and frameworks available that an enterprise can adopt for measuring the alignment of IT with business and for measuring the value that they derive from IT.

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