|Connecting IT to business...|
|by Harvey Okin and Daniel Pfau|
|clippings by gerwin hontiveros|
As technology has become intertwined with business strategy, the need for IT professionals to be plugged into the business has become critical. Similarly, business professional must understand how IT can improve business results.
Being plugged in, or connected, is all about knowledge, trust and working together. IT executives may think they are connected with business leadership and vice versa but a few quick questions can test that assumption. Too often, the answer to these questions is “no”. As a result, IT spending has little recognizable business impact. Too much money is spent on the wrong things.
In many disconnected organizations, we’ve found that 20 to 40 percent of total IT spending could be eliminated or reallocated to other, higher-impact items. Furthermore, in these organizations, IT priorities tend to change frequently.
Yet they lag behind the competition in deploying new strategic imperatives, such as eCommerce. The result: Business executives are disgruntled, and IT organizations are demoralized.
Why is this so difficult? The disconnect between IT and the business is a widespread problem. One reason is the lack of a common language and way of thinking about technology. Business executives don’t understand what they get from technology and don’t know how to control IT costs; their concerns are customers, products, markets and competitive strategy, and they often consider technology a necessary evil. Unfortunately, technology managers do little to bridge the gap. They are often overwhelmed just keeping things running and meeting the demand from new capabilities. Who has the time to focus on staying connected?
In some organizations, the job of staying connected is the responsibility of a relationship manager, yet few of them have the authority to do their jobs adequately. As a result, business leaders often view them as order takers, not partners. In frustration, many relationship managers abandon the critical role of determining and fulfilling clients’ strategic objectives and instead become technical project managers. This shift diminishes both IT operations support and the client’s perception of value.
What do world class IT organizations have in common? The way they stay connected. An examination of both reveal common characteristics, from which we have derived the Staying Connected Framework.
World-class companies know that optimizing the value of each customer relationship is the key to sustainable and profitable growth, and they have a clearly defined value proposition that drives day-to-day business decisions.
They cultivate an absolute obsession with the customer, engage in a two-way dialogue and maintain a continuous process and that leverages customer insight-researching customer preferences and emerging trends, analyzing data to obtain insight into customer behaviors and applying this insight to continuously improve the value proposition.
The same goes for world-class IT organizations. Dedicated their clients’ priorities, these organizations perform well in every component of the Staying Connected Framework: knowledge, organization and skills, process, incentives and metrics, and the relationship agreement.
Although connected IT organizations thoroughly understand their clients’ critical business issues, they constantly seek to learn more about how technology is used and what clients need to know. Likewise they actively identify and communicate to the executive leadership opportunities for it to deliver strategic business impact.
IT managers meet with client regularly, both formally and informally. In addition, they participate in key activities, like strategic business planning and operational reviews, to link IT activities with enterprise capabilities.
Organization and skills
Connected institutions have developed organizational and behavioral models that foster teamwork and collaboration. For example, key IT managers have dual reporting relationships. Business teams typically include an IT representative, and staff members regularly rotate between IT and the business. In this collaborative model, the relationship manager is accountable for all elements of IT support, but the roles of relationship management are distinct. Finally, the organization continuously invests in training and team building.
Connected organizations have a formal process to collaboratively set and achieve shared goals, to build knowledge and to promote trust on both sides.
The focus of this process is always “win-win” problem solving. In this environment, separate business goals and IT goals simple do not exist, and client managers view IT activities as critical enablers of business capabilities. Working together with clients, IT management participates equally in the creation and ownership of business strategy.
Incentives and metrics
Connected organizations create a balanced scorecard that measures critical quantitative and qualitative factors, such as business impact, client satisfaction, value created and on-time/on-expected delivery. IT develops this scorecard – the central tool for ongoing IT-client dialogue with key clients. In addition, IT periodically surveys client and employee satisfaction, and IT executives solicit client feedback and explain business organizations for technology in person to continue this dialogue. Finally, IT’s compensation is tied directly to business results.
Many connected organizations have a formal relationship agreement that sets mutual expectations for IT-client relationships. The agreement includes scope of services, business commitment, service scope of services, business commitment, service levels, service rates, key IT personnel assigned, right-to-audit terms, termination liability and required invoicing detail.
IT organizations not connected with the business should begin with a few simple questions: Are the activities we perform adding value? If so, can they be improved? If not, can they be stopped? These questions embody a fundamental shift in mind-set that is required to get and stay connected.
Beyond that shift in perspective, IT and its clients can start by developing a Connectivity Scorecard, a mechanism for measuring how connected IT and the business really are, and establishing the basis for ongoing dialogue.
Each organization must develop its own scorecard, relevant to its own issues.
Finally, both parties should make a habit of spending informal time together.
In the new economy, only enterprises with well-tuned IT capabilities will be competitive. To get there, IT and the business must become connected partners that leverage technology to drive sustainable and differentiating impact.