IT departments struggle to demonstrate business value

TORONTO — For many people, the same resolutions pop up at the beginning of the year several years running before the goal is finally achieved.

The same could be said of achieving alignment between business and IT in an organization: It’s something few have achieved on the first try, and it takes

time to get it right.

But according to Jan Duffy, group vice-president of solutions research with Toronto-based IDC Canada, aligning business and IT is the only way you can truly put a value on the latter.

“”We’re in a time of tough economic constraints,”” she told a small audience at the Next Business Forecast Conference late last month. “”And, of course one of the issues organizations are dealing with is the whole concept of reduced budgets — budgets being reduced across the board without real thought as to why, what, where and when.

“”The challenge we have,”” said Duffy, “”is that in many organizations things are measured in their own silos as opposed to their actual contribution across (the organization), particularly horizontal things. And IT is a horizontal thing.””

IT also has an aura surrounding it, she said, and no one knows how to value it.

To foster a better understanding of how organizations can better match IT and business goals, Duffy’s group has developed SAMM — the self-assessment maturity model.

“”It’s not a benchmarking tool,”” said Duffy. “”SAMM is the framework we use to do our research.””

IDC has built four maturity models organizations can use to assess themselves and determine which stage they’re in. The research firm has identified six key success drivers — HR organization and management, innovation and renewal, IT/business architecture, operation excellence, IT/business partnership, and return on investment strategy and management.

“”You have to stay evergreen, both internally and externally,”” said Duffy. “”Innovation and renewal is not about throwing more money at the R&D (research and development) department. It’s about staying fresh and rewarding behaviours, including the behaviours that will identify ways of applying technology to drive new initiatives.””

And while most organizations have an IT architecture, there are many organizations that don’t have what Duffy calls a business architecture.

“”They have no representation of what their processes look like,”” she said, “”of how the information requirements map to those. You should be able to layer the various pieces of your IT and business architecture on top of each other. Otherwise, I don’t understand how you make one drive value out of the other.””

Duffy said the whole notion of deriving value out of technology in the past has been focused on making the technology work harder. But what’s required is a more holistic view, and IT and business have to work in partnership.

“”Most organizations will tell you that IT and business work well together,”” she said. “”I would challenge you to scratch the surface and you’ll quickly find in many places that it’s a very thin veneer.””

Efforts to align business and IT are nothing new — they’ve been around for 30 years, says Jim Love, worldwide practice leader for enterprise value management with Fujitsu Consulting in Toronto.

“”It has been surfacing again,”” he says. “”It’s partly cyclical.””

Progress has been made over the years, says Love. Improved project management has been one step in the right direction, for example.

But some organizations are still looking for a silver bullet in the form of a technology to realize value and find alignment. “”IT can give you capabilities,”” he says. “”That’s all it can give you.””

In good times, Love says, organizations can tolerate some inefficiencies, and that’s the fat that is cut off during leaner times.

“”Resilience is becoming a big issue,”” said Duffy at her presentation. When an organization has no fat left, it can become brittle and inflexible, and it’s hard to make changes if you don’t understand all of the linkages between people, business processes and technology. “”It could break.””

Anton Kritzinger, vice-president of Compass Management Consulting in Mississauga, Ont., says the profile of IT/business alignment gets higher as cost constraints increase and people realize IT is a significant contributor to expenses. “”The issue is always there,”” he says. “”If the business views IT as an enabler of business advantage, then the focus will be there all of the time. There will be an expectation that IT is contributing to advancing the business, not just controlling its own costs and supporting the business, but growing the business.””

When IT is viewed as a strategic enabler, there is a continuing focus on alignment, says Kritzinger, but that balance is hard to come by.

“”It’s a continuing struggle for IT executives to demonstrate to the business that they are doing what the business needs,”” he says. “”In part, it’s a reflection of the difficulty that business sometimes has in expressing its requirements, because frankly, the two speak a different language.””

As IT matures as a business discipline, he says, the two groups are becoming better communicators.

“”There’s a long history of IT working independent of business and focusing more internally, and it’s taken people a long time to get around that old heritage.””

But that is starting to change, says Kritzinger.

“”The more experienced IT executives have found ways to communicate with the business and there is an effective mechanism in place, but it is not the norm.””

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Jim Love, Chief Content Officer, IT World Canada

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