1. The challenges of IT-business alignment
A presentation for Microsoft’s TechNet IT Director’s Strategy Day
Neil Macehiter, Partner

2. Agenda A brief introduction to MWD Aligning IT and business
Understanding business processes
Understanding managed IT services
Summary
© Macehiter Ward-Dutton

3. A brief introduction to MWD
Strategic advice and consulting
Focus on issues concerning IT-business alignment
Driving more business value out of enterprise IT
Not about the “nuts and bolts” of individual technologies
Core: two highly experienced industry analysts / practitioners
Sun, Oracle, Sybase, Ovum, Deloitte Consulting, etc
Based in UK, Europe-wide capability
© Macehiter Ward-Dutton

4. advising on IT-business alignment
Aligning IT and business
© Macehiter Ward-Dutton
advising on IT-business alignment

5. 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
© Macehiter Ward-Dutton

6. Why now? 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
© Macehiter Ward-Dutton

7. 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)
© Macehiter Ward-Dutton

8. 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
© Macehiter Ward-Dutton

9. 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
© Macehiter Ward-Dutton

10. 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
© Macehiter Ward-Dutton

11. advising on IT-business alignment
Understanding business processes
© Macehiter Ward-Dutton
advising on IT-business alignment

12. 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
© Macehiter Ward-Dutton

13. 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
© Macehiter Ward-Dutton

14. 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
© Macehiter Ward-Dutton

15. 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
© Macehiter Ward-Dutton

16. 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)
© Macehiter Ward-Dutton

17. 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)
© Macehiter Ward-Dutton

18. A resulting (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
© Macehiter Ward-Dutton

19. advising on IT-business alignment
Understanding managed IT services
© Macehiter Ward-Dutton
advising on IT-business alignment

20. 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
© Macehiter Ward-Dutton

21. 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
© Macehiter Ward-Dutton

22. 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
© Macehiter Ward-Dutton

23. 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
© Macehiter Ward-Dutton

24. 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
© Macehiter Ward-Dutton

25. advising on IT-business alignment
Summary
© Macehiter Ward-Dutton
advising on IT-business alignment

26. 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
© Macehiter Ward-Dutton