Aligning IT with Business Goals

Too often, CIOs find it impossible to determine the answers to questions such as “What projects do I have running now?” “Which projects can I kill without adversely impacting my strategic route?” or “Where do I risk providing IT support for business that is based on obsolete technologies, skill sets?” That’s where IT planning comes in. 

IT planning supports effective and consistent decision-making about how IT should be deployed and managed. It provides support for effective decisions and ensures that decision-making is performed in a consistent way by suggesting a framework, methodology or process.

Enterprise resource planning brings together the relevant people, processes, tools and information to create an information-based, process-centric information platform on which to base decisions. It stipulates a uniform methodology that is shared across stakeholders – this is key to collaboration and enablement of decision-making. No large company today would be able to compete without a strong ERP system that drives and integrates business processes, building and maintaining a high quality information base for making business decisions. IT planning requires the same approach: a centralized information base is fed by integrated processes, updated with every plan made and every decision made. This allows for accurate information to be provided to stakeholders at the time of decision-making. 

Four aspects of the enterprise determine what IT will be implemented and thus need to be balanced across the planning process: strategy and demands, enterprise architecture, program portfolio and cost and budgets. These four aspects need to be balanced across the planning process. 

Demand and strategy. Demands and strategy provide direction for IT. By linking business goals with IT, which is needed to support them, IT’s mandate becomes clear. Identifying and managing this relationship is critical for being able to make the right decisions on what changes need to be made to the IT landscape to drive business improvements. 

Enterprise architecture. IT planning has to be architecture-based because it is the enterprise architecture that delivers the building plans for IT – which artifacts will be used, what is their purpose and how they relate to each other. Enterprise architecture is necessary for understanding the intrinsic dependency of the IT/business relationship, for example, the depen¬dency between business capabilities and services. Additionally, the enterprise architecture is at a level of abstraction that is suitable for planning – too much detail, for example, at the level of project planning, only makes the planning process unnecessarily complex and slow. 

Program portfolio. The program portfolio delivers the plan of action for IT. Key to the effectiveness of program portfolio management is the seamless integration with enterprise architecture management (EAM) processes so that architectural risk is minimized and opportunities to migrate, enhance or retire current applications or other IT artifacts are not ignored. 

Cost and budgets. Costs and budgets provide the range in which IT change needs to be carried out. Cost management needs to be conducted with an awareness of the enterprise architecture and project portfolio. In doing so, it allow enterprises to map their budget to value-producing IT components and transformational initiatives. 

Key planning activities can be broken down into basically three main process categories – strategy management, EAM and IT planning.

Strategy management works under the premise that understanding business strategy is the key to an aligned IT. Primary activities include operationalizing the business strategy. Strategic intentions of the enterprise are typically defined at very high levels of abstraction. They are not readily relatable to the discussions and activities in the enterprise architecture. 

Yet architectural considerations are an important part of any strategic transformational program. Enterprise architecture’s role has expanded from defining technology standards to include planning for business applications and services. As such, it is important to establish a framework and process that allow IT to work with the business to define business goals and requirements in a way that removes any room for interpretation. 

Such a framework supports: 

• Definition of business strategy down to a level that can be translated into specific changes to the enterprise architecture in general and the business architecture in particular, thus ensuring business validity of enterprise architecture actions; 
• The ability to link to business capabilities at a business function level; 
• Bottom-up definition of IT’s own strategic plan; 
• Governance and management processes in business and IT; and 
• The project portfolio review process by providing a more precise business context. 

To be confident in the enterprise’s ability to achieve its business strategy, organizations need to ensure that necessary capabilities exist and are in the required quality. Many organizations use business capability management to assess this. Business capabilities prescribe a view of the enterprise, based on business activities, which are independent of specific business processes and organizational silos. An enterprise can use them to identify which business activities are critical to enterprise success and which need improvement most urgently. With the capability approach, the traditional IT management focuses on services/process, information and communication technologies architecture and operations are extended to a superordinate capability layer that enables two key abilities.

First, the capability layer helps to articulate and document business needs in a structured way that is meaningful for the business. Second, the concept of a capability can easily be translated into IT functionality. Business capabilities are the missing link for enabling a business-related view onto IT functionality. They promote better understanding between business and IT by enabling the business to formulate their requirements in a nontechnical yet functionally precise way.