MIS M1S3 - cdn.upgrad.com

© Copyright 2019. UpGrad Education Pvt. Ltd. All rights reserved

So, in this segment we will talk about IT and business alignment. This is a very important topic of the MIS course.

You can see here two sketches. The first sketch, there are two cyclists who are sitting opposite to each other, and then

they are paddling. You can only guess how far they will go. Whereas in the second sketch both the cyclists are together

and they are paddling in the same direction.

Something similar happens if the business and IT do not see eye to eye, they are not aligned with each other. The end

result of IT or information system can be anybody's guess. So, what is business and IT alignment? Basically, trying to

bring the business and IT professional together and let them focus on the common objectives, like cost saving, the

responsiveness, the productivity, the customer service, and they speak the common language and they are all helping

each other. It's like a three-legged race, where you are putting one hand on the shoulder of your peer or your buddy,

and then you are running with each other.

Transcription

MIS M1S3


So, if IT has got some problem in understanding the business requirement, the business people have to come and help,

whereas the business people have got some tricky problem which they cannot solve, the IT or information system

people have to provide requisite information.

So, what is the key points of business and IT alignment? Basically, business tells what is they need? Okay, they have to

tell them in a very, very precise manner, and IT has to understand that requirement and convert into software and

application.

Both of them sometimes fall short of it. Business manager do not tell exactly what they need, or maybe they do it in

piecemeal. Well, the IT person is not able to comprehend as to what the information needs are and then finally, they

end up fighting with each other.

So how to bridge this gap? it can be bridged by business managers understanding the IT technology a little bit, and IT

people understanding the business function little bit. Sometimes some organization do a little swapping of their roles

from time to time, so that this understanding gets built up.


So, there are two importance of business and IT alignment. One is that you can only achieve long-term goal if the both

business and IT functions are aligned with each other. And it helps in reducing the mismanagement. Remember you

develop a system after months and years of effort, and it is not useful, who is to be blamed? Both business as well as

the IT people. Maybe the business people did not participate enough in the development process or maybe the IT

people did not consult the business people enough to understand what is their precise requirement. So, the

requirement of the business may be changing and then the business people have to keep on sharing that with the IT

people, so that there is no problem.

Now we will look at how to achieve this, and I am sharing with you a very simple 3D framework. So, what is the 3D

framework for achieving the business and IT alignment? The first part is that you have to motivate both business and

IT people to go for or achieve the business IT alignment, to understand each other, which can come through desire.

You know if you, if you have a good desire, nothing can stop you and then this can be achieved by the leadership. What

they do is they bring them together, motivate them, they talk to them. They help them understand each other. Then

second, one is destination. The destination has to be decided in unison by both of them participating together. So that

they see the shared goal, and that is when you decide your destination. Your third step comes up drive for results. So,

you can start, you know, wherever you want to start. It’s a cycle, which keeps going from desire to destination, to drive

for results and that's how you go forward.


So, for example, the desire of the Instagram founder was to create an app for sharing the location and photos. That

was a desire. The destination was the photo sourcing features that was their USP and then finally, the focus shifted

only to photos, location and sharing dropped because they found that this is the result, they are getting it. People are

liking it more and more.

So, what are the challenges of the alignment? Basically, it can be explained by a very simple metaphor called parent-

child triangle syndrome. And this is developed by me, where I compare the misalignment by a family situation where

parent do not participate in the affairs of their children. And then this is the top management. They say, don't disturb

to me. You try to sort out. And I find that there is a business in the elder child in the family, because they are the one

who lead the business. IT is the younger child in the family, their job is a support function. So, sometimes the business

people feel that without IT, I can manage it. Maybe they will manage it for a day or two. But in long run, they cannot

manage it.

Similarly, IT feel maybe sulking it at their own. They say, nobody cares to me because every time I go to business, they

don't treat me properly, they reject me. They say, I don't have time, come tomorrow, etc. Now, this is where the role

of the top management comes up to eliminate this parent child triangle syndrome and try to bring these two together

and then participate. You know, most good family, the parents participate in the affair of their children to make them

work towards a common goal.


So, what are the roles played by the managers? Roles played by manager is very simple. The business managers first

have to assist in the technology selection. Which technology is best? Because they are the users. They need to know.

They don't have to know how to develop the technology, but they must know how to use it. Suppose I'm buying a car

from my spouse, so my spouse should have a decision as to what car is good for her. And then based on that, we don't

participate or end up buying something which may not be useful.

The second aspect of this business manager is to nurture its adoption. Nurture its adoption means that while the

business manager who has developed, maybe one or two people, it will be used by the very large number of managers

and the operators and the executives. So, they need to be encouraged so that they adopt this practice. If everybody

adopts this, then only the organisation will get benefit.

And the third role is to ensure utilisation. Once you have adopted it, but just adopting once or twice is not going to

help you. You need to make sure that you utilise more and more and more and more. Then only the organisation will

get benefit. And that is why the three roles of the business manager is technology selection, nurture adoption, and

ensure utilisation.

So, IT managers says, which is a very important, it says I can fail an IT project, but for the success, I have to depend

upon the business manager. So, mark these words. These words are very important because unless the business

manager participate, the IT managers cannot deliver you a good information system.


Define 4 stages of IT and business alignment. The first being follower, then expert, then thought partner and then co-

leader.

1. So, what happens in the follower stage? This is the stage when the IT gains understand of the business from

the business management team, and IT delivers the system to the satisfaction of the users. But there isn't

much contribution of the IT, other than knowledge of IT and delivering as per the requirements of business.

2. The second stage is when IT now develops expertise about a business and business trends, and it is ready,

before the business asks for changes to information systems or new modules to the information systems. This

kind of becomes a delight to the business.

3. The third stage, when IT suggests ideas on how technology can be exploited for business, for better business

outcomes, and this is what shapes the demands of business on IT. So, this stage we refer to as the thought

partner stage where the IT person gives ideas to the business on how IT can be exploited to give better results.

4. And then the fourth stage which we call as the co-leader is when IT actually takes on a place in the cockpit. So,

IT gets a seat in the cockpit is a way of saying that, now IT and business have the same vision and the same

view of where the business is headed and the IT and business together develop new streams of business which

create more revenues, and so on.


Now for the stage one, there are some key success factors and some very common problems faced. One is about

understanding business requirements. The ability to understand the business requirement and translate it into an IT

solution is one of the key success factors for IT as a follower. However, one of the problems there is the requirements

are lost in translation from the business problem into the IT product, and if this is not done well, there is dissatisfaction

in the users.

Another key success factor here is the challenges faced by IT and the challenges faced by business both. It can lead to

a failure, and it's this which sometimes is seen that it's taking much longer. So, the business users typically complain

during this stage is that IT takes so much time to understand simple things of business.

The third key success factor is understanding technology and having the ability to guide developers and building the

systems as desired by the users. One of the key success factors at the follower stage. But a common problem very

often as a counter to this is business does not spell out all their needs. It takes a few things for granted.

Being a follower, IT developed considerable business domain knowledge and they also learned about some of the best

practices from the industry. This happened while being on the job most often. Now, this also had a problem, a counter

problem to this, and that was, well, there were conflicts on what is a better practice and who takes the final call on

what's the better practice.


The second key success factor is about exchange of data and what authority the process owner has on the flow of data

between the functions. Remember a process cuts across multiple functions and if the process owner who is designing

the business process has no say in how a function uses and shares its data across other functions. Well, it will not

succeed.

So, ensuring that data moves seamlessly across all functions and the process owner’s ability to influence each of the

functions is key to ensure that IT at an expert stage works well.

The third success factor here is that processes are coordinated between multiple departments. In the past, the

functions would wait for a set of documents to reach their department or place of work, but this typically meant that

processing of a transaction end to end would wait for sometimes days for it to complete. When actually the demand

on the business process would be, well how can it be done within a minute or within seconds? Well, it's just not

possible if we have processes run without this coordination and synchronization between multiple departments.

So, this synchronization and understanding of how the business process should work, a vision, a common vision of

how a business process should work. Lack of such a vision will be an impediment. So, creating a common shared vision

of the business process and acceptance of it across the functions will lead to a good success in this stage.

Now, with the domain expertise that IT has built as an expert and also the technical expertise. IT leaders now have

ideas and what can be done better than, than the way the organizations are being run. So, while IT can come up with

this, one of the common problems faces, well are you sure that this would work? A business would typically ask that.

Why? Because you know, there is a phrase in Hindi ‘Ghar ki Murgi, Daal Barabar’.

So, where the organizations you know undermine what they have as expertise within the organization and may tend

to believe, the experts from outside that business should be receptive to the ideas and some of those ideas may be

even contradictory to the common practices, that their functions know within the organization.

Now the ability to engage in a healthy debate and innovating new processes is necessary. If businesses or functions

do not encourage such a healthy debate or are averse to innovating new processes, this will not work. The same applies

to IT as well. IT should be willing to take risks to build leading-edge solutions that give business a competitive

advantage. An advantage which stands out in the marketplace.


And then the last one is about the business should get recognized as a consequence of these innovations, as a leader

in adapting technology for its domain of work. So, while the innovation might have happened in some another field,

for example, innovation might have happened in the hospitality businesses, but if that is adopted by, let's say a

manufacturing organization for as customer relationships. Well, it would be a great thing.

But having said that, business should take and should be given the credit for adapting the technology. There is always

a fear as to who takes the blame for a failure. Now this is where again, the maturity of the organization, to take the

blame or to take the credit for implementing or adopting the new technology that comes.

This is where IT and business, both conceptualize new revenue streams. Now that new revenue streams is an

important contribution of this stage. One example that comes to my mind is of Amazon. Amazon was known always

as a digital company which delivered books and then went on to add several other businesses with the same model.

Just as they sold books, they sold groceries, they sold clothes, they sold everything that one could imagine.

But then to deliver, all those services, the IT had done a whole lot of work out there and they said well, you are bringing

in so many, you know products for sale on the site. You can also use IT itself as a service, and so we have today, Amazon

web services, a whole new stream of business, and you will be surprised to know that AWS, as its called, brings in more

profits to amazon than the original business that amazon started.

And it was the IT team of Amazon that conceptualized such a revenue stream. Well for this concept or to imagine such

a revenue stream, well the IT should be prepared as well. I mean if they are not prepared to do that kind of work, then

it will surely fail, but yes for the business to accept that yes, IT in itself could be a revenue stream that we could think

of is something that IT as co-leader could contribute and I’m not saying that it gets restricted to IT services as the

stream. It could be some other services as well, but AWS is a good example of such a new revenue stream coming in.

Organizations become a business and IT innovator, a world leader. Isn't amazon a world leader? Now there is a

hesitation, typically in this kind of an opportunity. It's almost like, IT taking over the reins of running part of the

business, and there is sometimes hesitation in letting this happen.


So, in this section we'll talk about achievement of business and IT alignment. What are the different tools and

techniques which you use to make sure that business and IT are aligned with the common purpose? Achieving the

business and i.t alignment, there are various school of thoughts, there are various methods which we have which we

can adopt and we are sharing with you, the four methods which:

1. The first one is communication. If you can improve the communication between business and IT people, you

will find that there is a better alignment. Okay, good communication. You can have a weekly meeting; you can

have your quarterly reviews and so on and so forth.

2. The second one is the architecture school which define that all the business processes and IT requirements

are very, very structured in nature. So, in that case everybody is clear. So, basically, you are trying to eliminate

the frequent needs of communication by defining some rules and processes and procedures well in advance,

which is what the architectural school says.

3. The third one is the technology school. The technology school talks about that, at the level of the users. You

try to align the business people and information people with the IT and IT infrastructure in such a way that

both of them are participating in the use of the technology together.

4. Finally, there is a people school which talks about, that If we can motivate the people, try to create processes

which collaborate them with each other’s and then give opportunity to revolve between the business and IT

function. You can achieve this alignment.

Now, your question would be which school I should use, which method I should use. The answer is, you may have to

use more than one, and maybe all sometimes maybe two or maybe three depending upon what type of organization

you have and then what type of problems you are facing of disconnect between the business and IT people?


For the communication school, the target segment is usually the top and senior management. If you improve the

communication, if you are having more number of IT led initiative, then it mean that this method is working fine.

Architecture is generally used for middle and IT level people which have got, you are leading the IT led innovation for

process for the business, because you have already defined the best practices and based on that, the business is

changing its way of working using technology.


The technology is basically at the lower down, business users and IT users, where you are trying to do the adherence

to the end business process improvements and operating parameters on the day-to-day IT.

And the last one is the people school, is about the IT professional and user community. If you change their role, reverse

their role occasionally, it will start helping them to have a better alignment with each other.

How to achieve the business and IT alignment, and there are five perspective for this business and IT alignment. And

the alignment can be done at two levels. One is the functional integration between the business function and IT

function. And the strategic fit, which talks about the strategy and the execution, how they are related with each other.

So, for example, what this model says is in order to achieve the alignment, you can start either from business strategy,

or you can start from IT strategy. So, there are four routes, two routes come from business strategy and two routes

come from IT strategy. We'll talk about the fifth route later on.


But let us understand the first route, which starts from business strategy, goes to organisation infrastructure and then

finally leads to IT infrastructure. What is this alignment? So, business has some long-term goals in mind. And then

based on that, they have set up their business processes and they're asking for requisite IT infrastructure support.

Route number one, this is also called the strategy execution perspective.

In order to achieve the same strategic objective, you can look at what is the IT strategy potential. And then based on

that, you decide the IT infrastructure, based on the IT potential. So, if I take the example of, let's say bank, my business

strategy is to open up new bank branches. So, I open up new locations, I establish bank branches, and then I call IT to

install banking software in every branch.

Whereas if I take the IT strategy approach, route number two, which starts from business strategy, I say my purpose

is to reach out to the larger number of people. So, can I do it using IT? Then answer comes up, yes, you can go for net

banking or you can have mobile ATM, or you can have banking correspondence. So, using different types of IT

infrastructure to achieve your same business strategy. This route is called technology potential route for business and

IT alignment. Original model is connected to Henderson and Venkatraman.


The two other routes starts from IT strategy. This talks about that, how IT can be used to bring about changes in the

business strategy, starting from IT strategy, impacting the business strategy, and finally coming out with the new

business infrastructure. So, like if the online system has come up, then how can I generate new business for my online

classes? And this is my IT strategy.

I can conduct new PGDM program in the online method. So, for that, I need a different organisation structure, I need

people who can record videos, edit videos and so on, which are not required in the face-to-face class. So, this is

competitive potential. Why competitive potential? Because if you keep on offering new and new services and new

facilities, the students and your customers would like to adhere to you.

The fourth perspective is service level perspective where you decide what do we do with our IT infrastructure. Whether

we do it ourselves or outsource it, and which part of it I should outsource? So, we are starting from IT strategy, going

to IT infrastructure. And finally, the organisation structure, accordingly you decide. This is called service level

perspective.

For example, we have decided that we will use Google platform for sending our emails. We have not made this Google

emailing services. So, this is our route. I can use Google Meet for conducting the video classes. I can use some other

platform for generating my application, and so on. Some companies have decided to outsource their entire IT support.


For example, ten years ago, Airtel decided to outsource their entire IT infrastructure management to IBM. So, the

other perspective.

So, fifth perspective is with the internet. So, if you create your own IT infrastructure, which is very useful and which

can be sold outside, then you can branch out as a separate business. A good example of this would be Citibank

information system, which has a good banking software. And finally, they started to sell it to other companies and

they became i-flex, and now they are part of that company.

Something similar like Ramco system, which is a cement company in Chennai. And then they developed a ERP, which

was very useful for Indian context. And now they have become a separate company altogether. Even TCS, TCS started

as a division of TATA Sons to process their shares and their fixed deposits and so on. And they build their capabilities

and that capability, they started to market. And today, the TCS is the market leader in terms of the revenue and the

capacity.

So, this is very important. If you play our cards, this perspective helps us how to achieve the alignment by trying to

bring all these two factors together.

See here, I'm summarising these five perspectives. The first one was the strategy execution perspective, which you are

using the IT to reinforce your current business. Then the two are the technology transformation perspective. You're


not changing your business, but you are trying to find some new ways of doing the same business for exploiting the IT

potential.

The third one, the competency potential, when you are trying to do some new business altogether by using the IT

potential. Like IRCTC getting into airlines ticket booking without having running any airlines. Similarly, Airbnb. Airbnb

is one of the largest providers of hotel rooms. But they don't own any hotel. They have only tied up with the existing

hotels, and so on.

Similarly, service level perspective is the decision, how do we manage your IT? And finally, your fifth perspective is

business level perspective. We are saying whether I want to start a new business, or I want to do it myself or let

somebody else do it for me.

So finally, what we are saying is the information system has a dual role. It is a competitive necessity as well as

competitive advantage. So competitive necessity means that, without which we cannot run. Competitive advantage

means that if we use it, we will become better off in the system.

It involves information system development, IT application development. It means the management of the technology,

the application which you already created, data center, then finally, you have to use it for new business innovation.


How you can use IT for more business innovation and, as you can see going forward, most companies will be starting

to use information technology for innovation.

Just think about the online classes. This is a great innovation taking place. Maybe it is being done out of compulsion

because we can't travel, but it is reasonably made sure, a transition from the current model of face to face. Remember

how much your time and effort has been saved and how much flexibility it has got for the learners to learn from various

faculty from all over the world.

So how do we achieve business and IT alignment, so I am giving some tip.

1. One is form a steering committee. Whatever is happening in IT, there has to be a top management committee.

They must review at least once in a month or bi-monthly to stay the progress and then put them on course.

2. The second is, you can establish a joint task force group where you bring business and IT people together, and

you say both of you are enlisted or is empowered or dedicated for doing this kind of project together. So, it is

not an IT project, it is not a business project, but it is a joint task force project.

3. The third one is you appoint the IT champion in the user department. So, every department you bring out,

those people who are IT savvy, hire them to be the IT champion. They should spend more time with IT, become

more familiar with the new technology, because IT will keep on changing. Today. It is artificial intelligence.

Tomorrow, it will be blockchain. Day after it will be 3D printing. So, these IT people, will be champions, will be

enabled by the IT department.

4. The fourth is appoint user advocates, subject matter experts in the IT department. Some people who have got

better domain knowledge and they can understand the business much better, so that you don't have to

depend upon the business people all the time.

5. Sometimes you do offer sabbatical in the sense that you transfer IT person from one department to the

business and business person from business to IT, work for a year, year and a two. Personally, I have myself

obtained this sabbatical. I have been from NIT. I have gone to business for first few years and then I bought

some business people in IT, and many of them became excellent people to make sure that the business

alignment can be achieved because you understood the plan and the worries for each of us better.

6. Finally, you can also create a joint innovation group where you are only letting them focus on something new,

not the existing application or processes.


No part of this publication may be reproduced, transmitted, or stored in a retrieval system, in any form

or by any means, electronic, mechanical, photocopying, recording or otherwise,

without the prior permission of the publisher.

MIS M1S3 - cdn.upgrad.com

Documents