September 3, 2010 – Much gets said about “IT-business” alignment – go to any conference, read any analyst or consultant briefing, or pick up or log into any technology journal, and you will find that magic phrase everywhere: “IT-business alignment.”
But how do you go about achieving this almost-mythical alignment? Have IT and business folks spend a survival week together at a national park? Have weekly group therapy sessions where everybody reveals their innermost hopes and fears?
Don't worry so much about aligning, and concentrate on communicating. Alex Kozlov, director of marketing at Compass Management Consulting, recently enlightened me on what IT executives need to know about selling IT to the business. Specific return on investment is what everyone worries about, he says.
“It's not enough to say, 'fund this project and we'll be faster and better,'” Kozlov explains. “Rather, you need to be specific and say, 'This is what we're paying now. This is the IT investment I'm proposing. This is the benefit we'll receive.'”
Often, technology may already be contributing to returns that haven't even been documented, he adds. But one needs to dig deep in the analysis to see these advantages.
For example, Kozlov illustrates, an insurance company may want to assess its process efficiency against a group of industry peers; what it costs to process an insurance claim.
“From an IT perspective, one metric to consider is the IT cost per claim review. Turns out that the company's IT cost per claim is double that of the industry average.”
In and of itself, that doesn't look good for IT, Kozlov says. But if the analysis is elevated to the total cost of the activity – a total cost that includes personnel, premises, and third-party support – the insurance company may find that its costs are actually lower than industry average.
“Now it's increasingly starting to look like the IT investment is contributing to process efficiency,” he says.
"In this case – and we often see this among our clients – the investment in IT, along with process improvement, greatly reduces human error and duplication of effort, and increases productivity. The result is lower overall cost.”
Dig deep, and look at the big picture, Kozlov urges.
“The ability to demonstrate the ability of IT to increase productivity and reduce total costs of business activity is key to working with the business to get funding for projects.”
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