It seems rather rudimentary to say that business strategy should dictate IT initiatives. But in many legacy companies, business and technology teams march to a different beat and sometimes in different directions.
While every CIO and technology executive explicitly acknowledges the principle of business strategy driving IT plans and projects, things don’t seem to be in rhythm in actual execution. An IT strategy that dovetails into business goals is the only way to achieve transformation.
The gulf between business strategy and IT’s slate of projects is not always about business/IT alignment, even though, in some cases, that may be a factor. And it is not always about interpersonal issues or fiefdoms.
The challenges why business strategy does not dictate or direct IT initiatives?
In most cases, the gulf between what business strategy needs and what IT delivers is due to a lack of a standard frame of reference and strategic planning and IT budgeting. Let’s explore these concepts in a bit of detail.
Common Lingua Franca:
The language, nomenclature, and terms of business are different than what the IT teams use. Even the acronyms may stand for things that are different. Bridging this gap is complex, and a well-defined, structurally sound, and internally coherent business capability model may help alleviate the challenge.
Of course, for a business capability reference model to become the connecting fabric of an enterprise, it is essential that the business owns the business capabilities map (with contributions from IT), rather than it being an IT artifact.
Business strategists and CXOs drive the three to five-year business strategy with perhaps an annual refresh. The corporate strategy is typically a high-level deliverable with highfaluting concepts and esoteric themes. At times, vague notions masquerade as strategies.
These corporate strategy deliverables are not actionable and only provide cursory guidance on how to plan and execute IT initiatives, some of which run for several years.
What is lacking is an operating model the distills strategic plans into operational execution blueprints.
At technology-optimistic companies, the planning gulf is lower as the CIO, and the IT leaders are an integral part of the business planning, not just IT planning.
Even if there is a long-term strategic roadmap, a business strategy is frequently changing due to changing market conditions, customer expectations, and competitive dynamics. Businesses need to be responsive and dynamic to such external eventualities.
But IT projects cannot turn on a dime, and when a project is set in motion, it takes a life of its own, oblivious to the changing business circumstances.
Concepts such as real options analysis of abandoning a project are seldom in practice in large firms.
Shiny Object Syndrome:
Technologists crave and thrive on emerging new technologies. Quantum computing, Blockchain, IoT (Internet of things), Digital Twins, Edge Computing – there are a million shiny objects that captivate technology folks.
However, without a direct linkage to a high-value use case and business sponsorship, the shiny objects gather dust while the meter is still running.
It is not rare for companies to own expensive software platform licenses that are never deployed at scale and in actual business operations.
Most large corporations have significant chunks of technical debt, which makes innovation and transformation exceedingly challenging. When servicing the technical debt takes the lion’s share of IT spending, and the focus is on keeping the lights on with duct tape and glue, major CAPEX decisions are tough.
How to get to the point where business strategy drives IT strategy?
Combine Business Strategy and IT Planning:
It should not be an afterthought and follow business strategy formulation. If there is a corporate strategy function, with multi-functional teams including IT, that crafts a company strategy where technology is interwoven as an integral part, it will help alleviate the business and technology gulf in planning versus execution.
Combining business strategy and IT planning is imperative in sectors and companies where technology is the product or drives the products and services. (As the saying goes, today, every company is a technology company.)
Drill Deeper than High-level Concepts:
An integrated business and technology plan should drill down deeper than vague goals and peripheral concepts. Many such notions and ideas are not actionable. Instead, the long-term, as well as the annual strategy, should focus on impact analysis of strategic decisions on operations, the capabilities that require investment, and the processes that need fine-tuning. The last part of this should be about identifying technology solutions and applications to achieve business and IT goals and not focus on putting the technology cart ahead of the proverbial business horse.
Budgeting and Investment Allocation:
Most companies fund IT projects with a finite time, scope, and schedule (even though such goals are seldom met) rather than a focus on capability evolution.
The challenge with such an approach is when the company needs a table, it funds one leg each year. By year three, the business priorities may have shifted, and the company is left with two legs and, in some cases, a tabletop rather than the entire table. Instead, if the focus were on a business goal and a capability, the funding and budgeting allocation would be for the whole table and not each leg and then a tabletop.
Cross Project Rationalization:
When companies conceive projects for finite delivery of specific functional needs, each initiative and program takes a life of its own. The cross-project collaboration is often limited to monthly or quarterly updates. This lack of synergy and integration between projects causes divergence in deliverables, duplication, and redundancy.
The primacy of Business Value:
While some technology leaders pay lip service to the importance of business value as the guiding factor for IT decisions, the most successful CIOs and IT executives live by this paradigm. Technology exists to serve a business function and needs, and sometimes it may be a technology-led business innovation. However, progressive technology leaders resist the urge to chase the shiny new emerging technologies for the sake of whizbang effects and instead pick a slate of technologies that serve the strategic business needs.
Robust Enterprise and Business Architecture Disciplines:
A strong enterprise architecture and business architecture functions can help bridge many of the gaps. However, suppose enterprise architecture and business architecture are a part of IT and do the bidding of technology. In that case, they will never blossom to become the lynchpin in business/IT alignment and the bridge between strategy and execution.
And the enterprise architects and business architects must focus on outcomes and not artifacts. They must deliver business value, not just a set of boxes and arrows.
If your goal is a business strategy to dictate IT initiatives, it is essential to acknowledge the problem and then take remedial actions.