The troubled 30-year relationship between the IT department and the business at large shows little sign of mellowing with age.
For years, blame for the poor alignment of the two was placed squarely at the door of IT. Insular, awkward and expressing itself in a language of its own invention, the IT department, business executives argued, suffered from a fundamental lack of business savvy, resulting in IT implementations that failed to adequately serve the strategic needs of the business – assuming they were even delivered in the first place. Hitting back at its accusers, IT has claimed the business is chronically naïve and over-ambitious, launching into ill-conceived projects with restrictive budgets that reflect little appreciation for the complexities of the underlying IT requirements.
This professional mudslinging has fostered a good deal of mutual distrust, with each side regarding the other as unco-operative and unaccommodating. The simmering antipathy, argues David Leigh Fellows at software delivery consultancy ThoughtWorks, has impaired corporate IT to the extent that it is now fundamentally “broken”. Companies have become trapped in a “perpetual cycle” of repeated mediocrity when it comes to IT implementations. Some of his clients, he reveals, have attempted IT projects up to three times unsuccessfully.
“We need to reach a ‘tipping point’ that will give us the momentum to break out of this ‘lose-lose’ cycle,” says Leigh.
The bad news is that, despite strenuous efforts to bring IT and the business closer together, this point is perhaps further off, according to Shawn Fothergill, strategy consultant at Computer Associates. He believes that in general, “the disconnect is getting worse”.
And for understandable reasons. A recent report by the Economist Intelligence Unit (EIU) highlights how businesses are increasingly compelling IT to act rapidly and nimbly – to grasp new opportunities or respond to competitive pressures.
“In today’s market, the business is now demanding quite different things [from IT] in order for it to be able to respond to its changing marketplace,” says Norman Wilkinson, service management leader at Tivoli Software, IBM. As a result, “the routes to market are now being driven primarily through ecommerce applications and 24/7 availability.”
In particular, the movement towards providing products and services through web-based channels is fundamentally changing the relationship between the business and IT, explains Manila McLean, head of the e-commerce group for pensions at Standard Life. “In the ecommerce space things change on a daily, never mind a weekly, basis. You’ve got to be flexible and get your products to market as quickly as possible. You don’t have the luxury of drawn out conversations with suppliers; you need to come up with an idea and just deliver it.”
Consequently, a new impetus has grown up around what IT has to do to support these business goals, often driven by the simple fact that many new business projects can only be delivered through large-scale IT implementations. That means “you want your IT people to be business experts,” says McLean, “and for them to come up with ideas [for new business initiatives] as well.”
“BSM has helped us [IT] adapt to the business and at the same time the company has learnt to adapt to us.”
Waldemar Klemm, IT systems manager, Toyota Formula 1
The problem IT organisations now face, says Richard Warley, managing director at IT infrastructure service provider, Savvis, is that they are “like the NHS: people expect they’re going to get free stuff from them.” Yet the reality is that the massive growth in IT infrastructures has left the IT department with few resources to do little more than keep the lights on, restricting its ability to enter into revenue-generating initiatives.
The uncomfortable truth is that the gap between what the business demands and what IT can deliver is growing, argues IBM’s Wilkinson. So much so, it “is not so much a gap as a chasm.”
Closing the chasm
Daunting as it may sound, this chasm will have to be bridged. In order to do so, many companies have put the blame game to bed and are instead undertaking various and creative alignment measures, both cultural and technological.
In the past two years, it is the latter part of this picture that has drawn most attention, with the industry experiencing a growth in IT governance tools, particularly in the area of business service management (BSM). According to Tom Bishop, CTO of BMC, a specialist in BSM software, the approach to managing the underlying IT from the perspective of the business is now being embraced “in large numbers”.
For those companies that have pursued BSM, there is evidence to suggest the investment has paid off. As Waldemar Klemm, IT systems manager for Toyota’s Formula 1 business, explains, the technology has “helped us adapt to the business, and at the same time the company has learnt to adapt to us.” Other more established and emerging approaches such as ITIL and agile programming (see box) are also aiding the industry’s alignment efforts.
As BMC’s Bishop concedes however, and as many companies are now realising, a significant proportion of the challenge in aligning IT with business cannot be solved by the technologists alone. “There aren’t many tools that are going to address the cultural problem. The kind of solutions we’re talking about here [solve] part of a larger problem.”
This wider problem is often a function of attitude. As Standard Life’s McLean observes, in some organisations the IT department’s perceived impenetrability is a product of underlying organisational constructs. In Standard Life’s ecommerce division, prior to reforms McLean herself oversaw (see box on previous page), the IT department per se was not in fact at fault, she explains. “I’d say it was a cultural issue, with the business not recognising the additional value that IT can provide.” IT was largely kept at “arm’s length”, she adds
Many organisations are now attempting to overcome such cultural obstacles through changes in their internal structures. An organisational chart for Standard Life ecommerce group, for example, shows that that IT staff are embedded directly within the business unit to encourage greater interaction. Such ‘co-location’ of differing departments has be- come one of the more popular alignment measures, suggests ThoughtWork’s Leigh Fellows – sometimes to extreme levels.
An Internet bank in the Midlands, he reveals, went so far as to consolidate IT and business offices that were spread across different cities. “It moved all the IT guys and business guys into one place and built a big new office coined the ‘Solution Centre’.” Further to building composite teams, many organisations now operate “stand-up” meetings in order to foster closer interaction and to keep meetings short and sweet.
The benefits of such efforts are enthusiastically endorsed by all those who have implemented them. They form, as Ken Emerson, head of IT for British Airways Pensions observes, part of a general and on-going “education process”, in which both sides of the organisation educate the other on the possibilities and parameters of their particular function.
Given how deeply embedded IT has become in most businesses processes, and that business agility is often IT-enabled, organisations have no choice but to act on narrowing the IT/business divide.
Approach: Embed IT in the business
For some companies, the misalignment between IT and the business is a product of misaligned perspectives. Standard Life’s ecommerce division GroupPensionzone, launched in October 2005 for the online servicing of Standard Life’s 38,000 employer pension schemes, knocked down the ‘Chinese walls’ that had grown up around its IT function, through simple organisational reforms, explains Manila McLean, head of e-Commerce Group Pensions at Standard Life.
By merging a team of IT experts, developers and analysts, with a team of pensions, business professionals and sales people, the division effectively ‘multi-skilled’ its employees by simply relocating them, says McLean. “You’re making your IT people pensions professionals, and your pensions people IT professionals,” she adds.
Having decentralised its IT function, GroupPensionzone now operates through single, mixed teams. “When we have meetings we don’t have one team saying ‘here are the pensions issues you have to deal with’, and one team saying ‘here are the IT issues you have to deal with’: it’s more ‘here’s a business issue, and we’re here to solve how we address that and come up with new, innovative ideas’.”
Approach: Outsource IT infrastructure
For many organisations the burden of managing day-to-day IT systems prevents the IT department from becoming closely and successfully involved in highly strategic business projects. In order to address this issue, and make IT more integral to its business, low-cost European airline EasyJet chose to outsource its mission-critical IT infrastructure, including its website, networking and data centres, to infrastructure services provider Savvis.
One of the major benefits of this approach, says Richard Warley, international managing director at Savvis, “is the recognition by the IT department that managing IT infrastructure is not in fact a value-added benefit to the business. So in terms of aligning IT with business objectives, EasyJet has been able to free up IT resources to focus on value-added aspects of the IT function – particularly around their website and their booking function – that add competitive advantage to the business.”
In addition, because Savvis provides its services as a utility, charging EasyJet on a per-seat-booked basis, the IT function is now more flexible, allowing the airline to scale its infrastructure quickly according to business demands, says Warley. “For the IT function it means they have a very predictable cost per seat. So it gives them transparency and flexibility, and enables the IT department to provide a transparent cost to the rest of the business.”
(For more on this project, see ‘Applied IT’ profile in the January 2007 issue of Information Age.)
Approach: Create cultural buy-in
Most of today’s pure ecommerce companies still have the luxury of spending little or no time managing legacy infrastructure.
Nevertheless, says Jay Bregman, founder and CTO of automated dispatch company eCourier, to successfully ensure IT remains closely aligned with strategic business goals going forward, it is crucial to ensure “cultural buy-in to the IT functions” from all staff at every level of the organisation.
“You have to decide very early on if IT is going to be a core competency of the organisation or not. If it is, everyone can get caught up in that and see in whatever function or business action IT can be used to solve business problems.”
This was how eCourier was able, from its inception, to ensure its IT functions were conceived purely as business tools, he continues. “By establishing IT as a core competency of the business, everybody looks to IT solutions for problems they might have had for years.”
The company’s recruitment policy is also true to its founding philosophy, with all couriers compelled to apply online. In addition, control staff, most of whom came from traditional courier services, have been able to contribute their experience to the development of the software they use on an everyday basis, Bregman adds.
“I viewed their views and knowledge as indispensable. This made [our staff] see IT as an opportunity to contribute to projects that would help everyone in the end.”
This fundamental business enthusiasm for and confidence in IT functions has been fostered by the company’s overall approach to people management. “What’s really important is how you treat people when they’re on board,” says Bregman. “You have to give them help and support them in [in their use of the IT].”
Forces for alignment
Agile programming: An approach to developing software in fully working ‘iterations’, Agile allows users to provide business-oriented input during a product’s construction.
BSM: Now gaining significant traction across a range of industries, business service management directly links the services delivered by the IT infrastructure with business objectives.
Cassandra methodology: An academic creation, this technique attempts to identify business objectives and link them directly to IT investments at each phase of a project.
ITIL: The IT Infrastructure Library is a framework that outlines a broad set of IT management procedures designed to ensure high levels of business service and value for money.
SOA: By defining how loosely-coupled software services support the requirements of business processes, SOA creates IT infrastructure that is responsive to business needs.