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Business and IT Alignment Measuring Model
Alignment is the perennial business chart-topper on
top-ten lists of IT issues. What follows is a methodology developed by the
author for assessing a company’s alignment. Modeled after the Capability
Maturity Model developed by Carnegie Mellon’s Software Engineering
Institute, but focused on a more strategic set of business practices, this
tool has been successfully tested at more than 50 Global 2000 companies and is
currently the subject of a benchmarking study sponsored by the Society for
Information Management and The Conference Board. The primary objective of the
assessment is to identify specific recommendations for improving the alignment
of IT and the business. Educating line management on technology’s
possibilities and limitations is difficult; So is setting IT priorities for
developing products, developing resources & skills, and integrating
systems with corporate strategy. It is even more tougher to keep IT and
Business aligned as business strategies and technology evolve. There is no
silver bullet but achieving alignment is possible by building right
relationships, developing the right processes and providing the required
training. Alignment categories IT-Business Alignment model developed by
Carnegie Mellon’s Software Engineering Institute has six criteria: 1.
Communications Maturity 2.
Competency/Value Measurement Maturity 3.
Governance Maturity 4.
Partnership Maturity 5.
Technology Scope Maturity 6.
Skills Maturity Each maturity category has several alignment
criteria as discussed below. Communication Maturity Effective exchange of ideas and a clear
understanding of what it takes to ensure successful strategies are high on the
list of enablers and inhibitors to alignment. Too often there is little
business awareness on the part of IT or little IT appreciation on the part of
the business. Given the dynamic environment in which most organizations find
themselves, ensuring ongoing knowledge sharing across organizations is
paramount. Many firms choose to draw on liaisons to facilitate
knowledge sharing through authorized “Facilitators”. This approach
often tends to stifle effective communication. Rigid protocols impede
discussion and sharing of ideas. Alignment Criteria - Communication Maturity
Alignment Criteria - Business Planning &
Strategy
Alignment Criteria: People, systems & Standards
Technology scope maturity This set of criteria assesses the extent to which IT is
able to: Ÿ
Go beyond the back office & front office of the organization Ÿ
Assume a role of supporting a flexible infrastructure that is
transparent to all business customers & partners Ÿ
Evaluate and apply emerging technologies effectively Ÿ
Enable or drive business processes & strategies Ÿ
Provide solutions customizable to customer needs. Competency/value measurements maturity Too many IT organization cannot demonstrate their value
to business in terms that the business understands. Frequently Business &
IT metrics of value differ. Service levels that assess IT’s commitments to
the business often help. However, the service level must be expressed in terms
that the business understands and accepts. The service levels must be tied to
criteria that clearly define the rewards & penalties for surpassing or
missing the objectives. Frequently, organizations devote significant resources to measuring performance factors. However, they spend much less of their resources on taking action based on these measurements. For example, requiring a return on investment (ROI) before a project begins, but not reviewing how well objectives were met after the project was deployed, provides little value to the organization. It is important to continuously assess the performance metrics criteria to understand: 1.
The factors that lead to missing the criteria 2.
What can be learned to improve the environment. Governance Maturity The considerations for IT governance include how
the authority for resources, risk, conflict resolution, and
responsibility for IT is shared among business partners, IT
management, and service providers. Project selection and prioritization
issues are included here. Ensuring that the appropriate business
and IT participants formally discuss and review the priorities and
allocation of IT resources is among the most important enablers
(or inhibitors) of alignment. This decision-making authority needs to
be clearly defined. Partnership Maturity The relationship that exists among the business
and IT organizations is another criterion that ranks high among the enablers
and inhibitors of alignmnet. Giving the IT function the opportunity to
have an equal role in defining business strategies is obviously
important. However, how each organization perceives the contribution of
the other, the trust that develops among the participants, ensuring
appropriate business sponsors and champions of IT endeavors, and
the sharing of risks and rewards are all major contributors to mature
alignment. This partnership should evolve to a point where IT
both enables and drives changes to both business processes and business
strategies. Naturally, this demands having a clearly defined vision
shared by the CIO and CEO. This category encompasses all IT human resource
considerations, such as how to hire and fire, motivate, train and
educate, and culture. Going beyond the traditional considerations
such as training, salary, performance feedback, and career
opportunities, there are factors that include the organization’s cultural
and social environment. For example, is the organization ready for
change in this dynamic environment? Do individuals feel
personally responsible for business innovation? Can individuals and
organizations learn quickly from their experience? Does the organization
leverage innovative ideas and the spirit of entrepreneurship? These are
some of the important conditions of mature organizations. Categories to be accessed for Skills Maturity Ÿ
Innovative, entrepreneurial environment Ÿ
Key HR decisions made by Ÿ
Change Readiness Ÿ
Career Crossover opportunities Ÿ
Cross functional training & job rotation Ÿ
Social Interaction Ÿ
Attract & retain top talent Levels of alignment maturity Each of the six criteria described above has a
set of attributes that allows particular dimensions (or practices) to
be assessed using a rating scheme of five levels. For example,
for the practice “Understanding of business by IT” under the
Communications Maturity criterion, the five levels are: Level 1: IT management lacks understanding Level 2: Limited understanding by IT management Level 3: Good understanding by IT management Level 4: Understanding encouraged among IT staff Level 5: Understanding required of all IT staff It is important to have both business and IT executives
evaluate each of the practices for the six maturity criteria.
Typically, the initial review will produce divergent results, and this
outcome is indicative of the organization’s alignment problems and
opportunities being addressed. The objective is for the team of
IT and business executives to converge on a maturity level. Assessing your organization This rating system will help you assess your
company’s level of alignment. You will ultimately decide which of the
following definitions best describes your business practices.
Averaged Score Practice
Categories Practices
1
1.5 2
2.5 3
3.5 4
4.5 5
Average Category Score Communications
1
Understanding of business by IT 2
Understanding of IT by business 3
Organizational learning 4
Style and ease of access 5
Leveraging intellectual assets 6
IT–business liaison staff Competency/Value
Measurements 7 IT
metrics 8
Business metrics 9 Link
between IT and business metrics 10
Service level agreements 11
Benchmarking 12
Formally assess IT investments 13
Continuous improvement practices Governance
14
Formal business strategy planning 15
Formal IT strategy planning 16
Organizational structure 17
Reporting relationships 18 How
IT is budgeted 19
Rationale for IT spending 20
Senior-level IT steering committee 21 How
projects are prioritized Partnership
22
Business perception of IT 23
IT’s role in strategic business planning 24
Shared risks and rewards 25
Managing the IT–business relationship 26
Relationship and trust style 27
Business sponsors and champions Technology
Scope 28
Primary systems 29
Standards 30
Architectural integration 31 How
IT infrastructure is perceived Skills
32
Innovative, entrepreneurial environment 33 Key
IT HR decisions made by 34
Change readiness 35
Career crossover opportunities 36
Cross-functional training and job rotation 37
Social interaction 38
Attract and retain top talent Your
Alignment Score:
This rating system will help you assess your
company’s level of alignment. You will ultimately decide which of the
following definitions best describes your business practices. Each description
corresponds to a level of alignment, of which there are five: Level 1: Without Process (no alignment) Level 2: Beginning Process Level 3: Establishing Process Level 4: Improved Process Level 5: Optimal Process (complete alignment) 1. Form the assessment team: Create a team
of IT and business executives to perform
the assessment. Ten to thirty executives typically participate,
depending on whether a single business unit or the entire enterprise is being
assessed. 2. Gather Information: Team members should
assess each of the 38 alignment practices and determine which level, from 1 to
5, best matches their organization. This can be done in three ways:
(1) in a facilitated group
setting, (2) by having each member complete a survey and then meeting to discuss the results, or (3) by combining the two
approaches (e.g., in situations where it is not possible for all group members
to meet). 3. Decide on individual scores: The team agrees
on a score for each practice. The most valuable part of the assessment is not
the score, but understanding its implications for the entire company and what
needs to be done to improve it. An average of the practice scores is used to
determine a category score for each of the six criteria. 4. Decide on an overall alignment score: The
team reaches consensus on what overall level to assign the organization.
Averaging the category scores accomplishes this, but having dialogue among the
participants is extremely valuable. For example, some companies adjust the
alignment score because they give more weight to particular practices. The overall alignment score can be used as a
benchmarking aid to compare with other organizations. Global 1000 executives
who have used this tool for the first time have rated their organizations, on
average, at Level 2 (Beginning Process), although they typically score at
Level 3 for a few alignment practices. Conclusion Achieving and sustaining IT–business alignment
continues to be a major issue. Experience shows that no single activity will
enable a firm to attain and sustain alignment. There are too many variables.
The technology and business environments are too dynamic. The strategic alignment maturity assessment tool provides a vehicle to evaluate where an organization is, and where it needs to go, to attain and sustain business–IT alignment. The careful assessment of a firm’s IT–business alignment maturity is an important step in identifying the specific actions necessary to ensure that IT is being used to appropriately enable or drive the business strategy.
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