This guest blog is written by Earl Butler, Information Technology Finance Expert. We asked Earl to share his insight on achieving better alignment between IT and the rest of the business. If you’d like to contribute a guest blog at ComSci, please contact us!
Information technology has an image problem that everyone is aware of and it is getting worse. You ask: “How can you make these claims when companies like Apple, Google, and Amazon routinely report earnings in the billions?” The image problem isn’t with the technology itself, but instead with IT’s impact on value creation within the organization.
Many IT organizations are running like they did 20 years ago. Back then, there was just an internal cost structure. Today that is no longer true. Research shows that IT project failure rates range from 25% to 75%. To increase the success rate there are three essential pieces IT organizations need to implement:
- More effective communication – Attending an IT project meeting is to be exposed to an alphabet soup of technology acronyms. Conversely, attending a business partners meeting is to hear about all the glowing virtues of the business with little to no discussion about the risk.
Business/IT alignment is a very innocuous term. What is important is that each party must be present, candid and honest in their part in the relationship. If one party is not carrying their weight, withholding information, or overwhelming the other group with language and jargon that doesn’t help achieve the mission, then it doesn’t matter if the one team is high-performing. The relationship will not attain its full potential. Business/ IT alignment requires more than just communication; the efficacy of that interaction is of most importance.
How is your relationship with your business partner or IT? Are both parties truly on the on the same page? If we want greater impact and to be taken seriously as an integral part of the corporate structure, then this align is vitally important.
- Development of IT governance – IT governance is often not taken seriously, or taught to IT teams. By definition: “IT governance is the responsibility of executives and the Board of Directors and consists of leadership, organizational structures, and processes that ensure that the enterprise IT sustains and extends the organization strategies and objectives.”
Poor IT governance exposes weak leadership and inadequate process. When IT governance is not properly addressed the high failure rate of IT projects increases dramatically. Have you heard the term IT Governance in your organization? Do you have a black box IT governance model? Is training and development around best practices, or left to individuals to interpret at will? Once IT organizations take this seriously then their alignment with corporate strategy will be taken more seriously.
- Increased cost transparency – The world is changing at an ever-increasing rate today. The days of IT being a money pit are a bygone era and with the advent of the Cloud there is an IT alternative. The crux of the problem is in IT’s repeated failures in the eyes of their business partners. Perception is the reality.
Enterprise resource planning (ERP) was supposed to usher in an era of enterprise resource management, but the results have been less than stellar while the cost has been enormous.The technology and methods exist to measure and manage IT’s impact on the value engine. The resulting cost transparency of goods and services would have an immeasurable impact on the perception of IT by providing actionable intelligence around new products and or enhancements. If you can’t measure it how do you manage it? Do you have the courage to move beyond mediocre spreadsheet analysis and implement cutting edge technologies?
“We are here for sales and income,” said Robert Edwards, CEO Safeway Inc. Twenty years ago when I started in IT Finance I was fortunate enough to support a world class IT product with world-class governance and tools. Since that time, I still experience organizations that aren’t even being managed at the level I experienced 20+ years ago.
As IT plays an increasing role in business success, the choice is clear: Adapt to these ever changing market forces … or be replaced.