In Information Technology (IT) had traditionally been considered as a 'support' unit and was not necessarily included in the 'core' business. It could have been driven by the fact that IT had emerged as a business enabler relatively recently and organisations were still figuring out its true potential. However, we have come a long way and the key challenge today is not the 'alignment' but the overall 'integration' of IT into business.
Business IT alignment has conventionally been viewed as thejob of an IT headbut it is as much, if not more, the responsibility of the boardroom and the leadership team of the company. Thankfully, businesses are realising that fast. for example, data centres are the heart of telecom companies and form a critical cog of their entire business engine. Data centres are therefore not only a priority for the IT department but that for the entire organisation. no business plans of telecom service providers could be developed without taking data centres into account.
Today, the role of IT is not restricted only to the smooth running of operations but goes far beyond into every aspect of the business productivity, efficiency, revenue generation, and cost control, among others. IT cuts across all the key constituents of a business and also works as a binding force in many ways.
The leadership at the top (CEO/Chairman) has to set the right goals and key performance indicators (KPIs) of all the CXOs of the company and align them towards the business objectives. The duty of the CXOs is to turn these business objectives into departmental priorities. it is critical that the IT head is part of the discussion and has a clear view to the organisational strategy and roadmap. Without an understanding of the business direction, it will be impossible for the CIO to set an effective departmental goal.
Another typical problem faced by aIT headis the lack of an executable business plan. organisational business plan and annual operating plan (AOP) typically deal with the revenue and profit targets across geography and across product lines. Sometimes profitability across product lines cannot be determined due to common and shared infrastructure in the company and in proportioning the cost of this shared infrastructure across the products. In most instances, the AOP outlines the 'what' and does not articulate the 'how.' The plan does not identify what has to change in the business to be able to achieve the goal. It is left to each next level leader to articulate.
The second problem that theIT headfaces is the lack of a longer term AOP for year 2 and year 3. The ability of the it head is to influence plans and results in these years is more certain than his/her ability to impact the results of the current year. Let us take an example: The business sets an AOP of adding 10 million new customers a year and thus leading to annual growth rate of 10 percent. To achieve this target the business need to increase the distribution and marketing. They need to help the distributors get productive very fast and enable them with information about products and services such that they can be effective in front of the customer. The relationship of the company with the distributor also has to be improved so they need to calculate and pay out the commissions quickly. The annual operating plan does not articulate any of the above details. An alternate plan of getting new customers without adding distributors would be to launch products faster, to respond to market changes faster. They need to target customers directly and attract them differentially. All of these would require a high degree of automation if the company wants to expand their business with keeping their cost increase at minimal. here comes IT into the picture.
There has to be an agile and nimble IT plan that can support this robust growth. it would include automation for distribution enrolment, marketing, commission calculation and payout, and process streamlining. The IT plan should also encompass faster enablement of channel, spending and effectiveness analysis, customer segmentation and target marketing, scaling of hardware and software resources selectively or centrally.
CIOs who achieve alignment typically do so by establishing a set of well-planned process improvement programs that systematically address obstacles and go beyond executive level conversation to permeate the entire IT organisation and its culture. They therefore need to see consider themselves as business leaders and not just technology heads and should be equally concerned with the overall business in terms of revenue, profitability, share price, and dividends.
They should therefore create a strong business benefits realisation team, which comprises of resources with business consulting backgrounds and an ability to understand strategy, and translate that into process, people and technology.
The CIO also needs to define an IT strategy that is in sync with the business strategy. The first task would be to take the AOP and break the business strategy into IT goals and map it into a set of programs and projects that need to be executed. The year 1 AOP should be used to drive tactical plans and year 2 and 3 AOPs should be used to drive strategic changes. Longer term strategic goals (those beyond year 3) should also form part of the overall IT plan. The next critical task is the successful execution of the plan through tracking of projects in terms of timeliness, quality, and effectiveness. No plans are complete unless they are executed seamlessly.
At the end, the success of any business lies in its ability to integrate diverse constituents and operate holistically. IT is a key constitute of any business and is increasingly taking a centre-stage. it is paramount for businesses to recognize e this and make IT an integral part of their strategy and future direction. There are no two ways about it.
The author is Vice President and Partner at IBM. He is also the former CEO of Reliance Tech Services and former CIO of Reliance Communications.
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