Q&A: Improving Business/IT Collaboration

If you can’t save costs through efficiency, you can’t afford to be innovative -- but how do you get business and IT users to see eye to eye on the future?

To do more with less, you need a two-pronged attack that requires improving IT efficiency and embracing innovation. We explore why IT and business users have been at loggerheads and how focusing on efficiency and innovation can bridge the gap with Erik Masing, CEO of Alfabet, a company that helps companies strategically plan and manage IT.

Enterprise Strategies: Given the economy, how can CIOs and IT departments do more with less?

Erik Masing: The secret is finding the right balance between efficiency and innovation. CIOs need to focus on being more efficient and innovative and know when each is required. Efficiency is doing what you need to do or what is demanded in a better way than today. Innovation pertains to doing those things that provide a competitive edge. For example, CIOs at automotive companies may seek to innovate in the areas of data management and process management.

On the other hand, HR processes can usually be made more efficient. Both efficiency and innovation are continuous processes, an ongoing journey. To balance both optimally, you must continuously prioritize the processes. Although the results of efficiency may be seen quickly, it will require more than one budget cycle to measure the benefits of innovation. The principle in doing this is having a clear understanding of what areas need to be innovative and what simply needs to be efficient.

What makes IT efficiency and innovation so difficult to attain?

IT is a comparatively young industry and thus is less organized and understood by management. Important processes in IT management are missing. For example, the entire IT planning process: steps, roles, participants, stage gates -- the entire area where people decide about the future of these processes in IT management – has many holes.

The most widely accepted approach to IT service management, ITIL [IT Infrastructure Library], is good, but is mainly geared to the processes in IT operations. In addition, the business side of the house often doesn’t understand IT and IT lacks business skills or what I call “business IT management.” Business might say that it needs SAP implemented, but it may really mean that it needs a system to support its HR processes. Hence, the number one challenge many CIOs face is alignment with business managers.

Business IT management is fundamental if CIOs and IT departments are to manage with less. People lack information about which applications support which business processes, so, for example, they may not know the broader impact on the business if an application is taken offline. It’s really what’s in this “transmission belt” between IT and business that is critical and it affects business-to-business information.

Do business users and IT professionals share a common understanding of the issues? If not, is this contributing to the problem?

For the most part, business and IT don’t share a common understanding, and that’s a major part of the problem. Business typically understands the issue at an abstract, PowerPoint level. That isn’t enough, particularly for important undertakings. Business and IT have a different perception of reality because information and processes are not interlinked. Both have weak understandings of what technologies support business and how they will evolve. So often when organizations add more technology, no existing systems go away. There is very little common planning for building road maps, building master plans, etc.

As a result, more fragmented and embedded business and IT organizations may be more responsive to innovation but may also be less efficient. Conversely, the more centralized and long-term oriented the technologies are, the more efficient -- but less innovative -- the organization tends to be. The problem is that you need both efficiency and innovation. Innovation is always a cost driver and efficiency is always a cost saver, so if you can’t save costs through efficiency, you can’t afford to be innovative.

What are the other mistakes IT or business users make in trying to reach a common understanding and direction?

The most common mistake is that business thinks it’s an IT problem and IT thinks it’s a business problem. IT says, “If you can’t figure out the business side of it, you will get what you deserve.” Business says, “We are your client and you should understand us. Even if you don’t know what we do, it’s still a technology problem.”

The reality is that IT shouldn’t make business decisions and business shouldn’t make IT decisions. They need to have common processes and information to understand how decisions impact the future. What happens is that at budget time, business says IT has “x” dollars for the next year. If IT can’t show the business side why it needs more, then both IT and business suffer the consequences two and three years down the line.

Instead, both parties need business IT management planning, in which there is two-sided forecasting so everyone knows the business and IT implications and can prioritize. It’s a continuous process -- looking at a forecast and then determining which aspects would change if changes were implemented. This kind of planning is standard procedure in more mature areas such as supply chain management, but until recently was practically unknown in IT.

IT and business users have long been at loggerheads, sometimes both stubbornly digging in their heels. What tips can you offer to change the environment to make cooperation a reality?

First, IT and business need to agree on what role IT should play in the company. This will be different for a bank (where IT is a fundamental part of the product and business) than for a manufacturer (where IT is supporting mainly secondary processes). Then they should prioritize and determine which processes need to be efficient to match competitors and which need to deliver a competitive edge -- and so be innovative. Ultimately, they need to find a common ground, determining how, where, and what they will work on together.

How can business users and IT better collaborate to provide a solution?

It’s important to garner management consensus so that IT works like a business and thinks in terms of business IT management. It is critical that both entities understand the needs and state of each capability in their organization. First, both parties should start with a complete understanding of the technology and business situation. Then they should gather structured information and start alignment by using the basics of master planning, technology, and standard governance. This should be a broad and repeatable process creating sustainable information. The key here is that you have to have consensus on what exists and then share information.

Next, they need to expand information sharing and demand management and integrate the data and processes into ITIL.

Finally, they need to enlarge this to include cost and governance planning. When budget time comes, the company should invest only in initiatives that can converge both processes and information. Since this is an ongoing process, both groups need to work collaboratively to change plans when required.

What products or services does Alfabet offer for business/IT management?

Alfabet enables companies to plan and manage IT change for both efficiency and innovation. The company’s PlanningIT software provides core capabilities to sustainably manage and ensure IT’s contribution to the business value. It integrates enterprise architecture into strategic IT management processes to enable fast and accurate planning cycles, secure IT investments, and effective business and IT transformations. This ensures business strategy and demands are completely understood, prioritized and executed so costs, quality, and risks to IT support are considered during decision making. PlanningIT enables the CIO office to transform business demands into successful projects leading to reliable and efficient operations.