IT-Business Alignment – Challenges, Strategic/Operating Planning

advising on IT-business alignment Aligning IT and business advising on IT-business alignment

IT-business alignment: multiple angles It’s not just about “building stuff that the business will use” Business Investment in capability Change capabilities, limitations Change implications Delivery of value IT

Why now- Reasons Globalisation Transparency Service focus Customers, partners, suppliers – and competition Connectedness driving sophisticated value chains Transparency Industry regulations, consumer pressure and competition driving openness Service focus Differentiation and shareholder value increasingly derived from service experience

Example -from a UK perspective A healthy economy – albeit growing at a low rate Spurred by public sector investment With a knock-on effect on the IT market Globalisation >4000 (+400/year) UK-Sino joint ventures Vonage launches UK VoIP service (01/05) Tesco enters mortgage market with First Active (11/04) Transparency Corporate Responsibility (CORE) coalition Government initiatives e.g. Extractive Industries Transparency Initiative International Financial Reporting Standards (IFRS) Service Focus BT launches mobile music service with UBC Media and Virgin Mobile (06/05) Amazon Services Europe to underpin M&S e-commerce systems (04/05)

The real world From Towards Application implementation Buy AND build AND integrate Build, or buy vs. build Business area investment focus Front office and beyond Back office “Personal productivity” desktop IT access environment Productivity desktop + global access to resources Technology innovation focus Communication, collaboration, integration Data processing Capability supply “Multi-sourcing” Outsourcing vs. in-house delivery Older approaches fail to capture reality re: integration, communication, collaboration, supply complexity

A common language is the essential starting point Business “Investment prioritised in terms of business need” “Systems that deliver value to the business” “Clear direction from the business about focus, strategy” “Collaborative approach to implementing business change” A common, agreed representation of business activity, goals + A common, agreed view of how current and future IT provides structured support to the business in this context ? IT

Reflecting the environment in IT-business alignment B U S I N E S S S T R A T E G Y Business processes form the foundation of a common language Business process Business process Business process Business process Business process Managed IT service Managed IT service Managed IT service IT defines and delivers “business level” services which support the right processes, the right way Managed IT service Managed IT service A P P L I C A T I O N S & I N F O R M A T I O N I N F R A S T R U C T U R E IT

advising on IT-business alignment Understanding business processes advising on IT-business alignment

Business process Applications Data The challenge Activities, processes The business The real world doesn’t “decompose” nicely – and IT isn’t just about things you build in-house

Providing structured support for business processes means understanding scope & scale of interactions From Towards B u s i n e s s p r o c e s s Loosely-coupled resources provide services which are designed to support the interactions that take place within a business process p r o c e s s B u s i n e s s Data design tightly coupled to application design, and application design to “user requirements” – very restricted view of process needs

IT approaches must consider business process support more broadly Support scenario: a mesh of interactions Transactional services Information services Communication & collaboration services We have to model more than just transactional applications

A universe of business processes [1] A hierarchy of business processes “Strategy” processes – instances oversee instances of management processes S “Management” processes – instances oversee instances of execution processes M M M We have identified three key levels of business process – which are materially different from each other in nature & also in the way that they might rely on IT resources “Execution” processes – instances handle particular units of work within business activities E E E E E

A universe of business processes [2] Contribution to competitive differentiation S S M M M M E E E E E E Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility)

Observations on the nature of business processes Increased collaboration, ad-hoc nature Increased structure, predictability S S M M M M E E E E E E Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility)

A wider view of technical architecture “Strategy” business processes Collaboration tools High “Management” business processes Business intelligence tools “Pure” BPMS Level of process abstraction Simple portal “Execution” business processes Workflow Development tools & “Traditional” app. frameworks Low Composite service-based application development & integration Business functions Non-differentiating Differentiating

advising on IT-business alignment Understanding managed IT services advising on IT-business alignment

So what is an IT service? “Provide automated support for my sales force” “Update customer details” “CRM database” Line of business perspective Developer perspective IT operations perspective

Managed IT services – aligned with business processes Users’ experiences of “managed IT service” Lifecycle services Managing the lifecycles of business functions and infrastructure Business function services Automating business functions Infrastructure services Providing the platform

Contracts bring obligations for suppliers and consumers QoS Terms Message Format Message Sequence Functions Security Response Time Throughput Functional Terms Usage Cost Liability Clauses Trust Commercial Terms

An organising model for service-oriented IT in the context of IT-business alignment Functional contract aspects Quality-of-Service contract aspects Commercial contract aspects How can we align flexibility / reusability requirements for business software functions, to business needs? How can we trade-off flexibility / reusability of business function services with efficiency / openness requirements? How can we ensure that the right consumers get the right kind of experience from these services, and do so cost-effectively? Business function services How should infrastructure elements provide their services to different business functions? How should infrastructure be optimally managed? How can QoS responsibility be delegated to infrastructure in a way that is easily flexed in response to changing requirements? How can we minimise the cost and risk of overall process support while creating an business support environment with more moving parts? Infrastructure services How should we differentiate lifecycle service levels for different kinds of business function, infrastructure? How should we define and enforce development, fault-fix and change-request priorities? How can we demonstrate the overall value of the services that the IT organisation and its resources provide to the business? Lifecycle services

An example – business function service design Level of process abstraction Low High Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility) Business activity role “Strategy” business processes “Management” business processes “Execution” business processes Activity functions Technical functions Reusability importance increases Openness, flexibility demands increase Efficiency demand increases

Summary Today’s business environment brings IT-business alignment to the fore In terms of investment, delivery and change Business processes provide a common language But the organisational context of real-world business processes is complex Managed IT services must align with business process priorities It’s about more than business function services Services and their contracts provide an organising model for service-oriented IT

Business-IT alignment Source: http://bill-poole.blogspot.com/2008/08/business-it-alignment.html

Business-IT alignment

Business-IT alignment

IT Strategy As with business strategy, IT strategy involves identifying the long term view of the IT function of the business. It identifies the direction and scope of the IT function over the long term in order to achieve advantage for the organisation through its configuration of IT resources within a challenging environment to meet the needs of the business and to fulfil stakeholder expectations.

Business Architecture Business Architecture is the process of defining the business functions, processes, capabilities, services, roles and reporting relationships that make up a business. Here, we are referring to Business Architecture applied at the enterprise level, rather than the solution level.

IT Architecture IT Architecture is often expressed as Information Architecture, Application Architecture and Technology Architecture. I'll describe these architecture domains in more detail in future posts. In short, IT Architecture is the process of organising IT and information assets to support the business architecture and IT strategy.