Today, more than ever before, there is a significant disconnect between what the business expects from its IT resources and what the IT department thinks it is delivering. Why is that? What is so fundamentally different about IT? Why don’t business departments have the same difficulty in meeting one another’s expectations?
To answer those questions, let’s look at how business departments interact and then compare that to how IT functions. That way, we can identify fundamental changes that IT managers can implement to bridge this gap on business intelligence (BI) projects and other initiatives.
Even in the most dysfunctional company, there is a common language understood by all business managers—profit, expenses, assets and, at a high level, customers and products or services offered. The top executives in each department have their own goals to meet but also have a fundamental understanding of the goals for other departments. There are logical metrics for determining accomplishments and progress against those goals. These include customer churn rates, days of sales outstanding, same-store sales growth, inventory turns, call center hold times, marketing campaign response rates and, of course, weekly, monthly and quarterly revenues.
Most business units also have well-documented processes and procedures. They aren’t called “standard operating procedures” for nothing: Each department develops its own approved way of handling customers, orders, suppliers, inventory management and even external entities like regulatory agencies. These policies and procedures are detailed in manuals and taught in regularly scheduled training classes for new employees.
No Surprises on Business Roles
Finally, there are well-defined roles and responsibilities in business departments. Is there any doubt about the territory a salesperson covers, who is responsible for fulfilling an order or who can authorize a purchase? There shouldn’t be.
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But let’s face it: Accounting, sales, marketing and even logistics have been around since the first time a person bartered with another for something of value. In the modern business world, companies have had decades to develop, document and fine-tune what each business unit does, to the point that many departments can function in a self-sufficient way in the overall enterprise.
IT, on the other hand, is a relatively new area; after all, it didn’t exist 60 years ago as a formal entity. And unlike its business brethren, IT cannot stand alone—it is a fundamentally different kind of operation. The IT department must serve as a support function for all the other parts of an organization and strive to find economies of scale to keep costs down while satisfying the individual needs of each department.
In addition, determining a return on investment (ROI) for IT initiatives is often difficult. The metrics for measuring success are at best unclear—or worse, they change for each project. Furthermore, the ROI may span multiple departments or large functions, making it all but impossible to calculate in any meaningful way. What’s the ROI of your network, data warehouse or operational applications?
Efficiency and Effectiveness: Clashing Priorities?
Making matters more complicated, IT must run itself efficiently while producing systems and applications that improve business effectiveness. Coming up with the most cost-effective approach to technology is often at odds with meeting the needs of business departments.
Even the roles and responsibilities can be muddled in an IT department. Where do a data architect’s duties end and a DBA’s begin? Who decides on the methodology to use for a specific project? Where are the standard procedures for fixing bugs, correcting data errors, resolving system-performance problems or doing capacity planning?
So how should IT align itself with the business? In general, it means serving the business first and technology second. But IT managers must also fight the tendency to create silos of data and applications for individual departments. Not an enviable position to be in.
My first suggestion for bridging the gap should come as no surprise: Secure executive support and commitment—from the business side, of course, but also from IT.
Today’s business executives can no longer claim to be technophobic; there is no excuse for business leaders not to understand technology and how it can help them with their jobs. I don’t expect business managers to know the intimate details of how technology works, but I do expect them to understand its uses and benefits. On the other hand, there is no excuse for IT leaders not to understand their company’s business. At a recent conference, I heard a chief technology officer state that he never used technology terms when discussing the needs of the business. Smart man: He put everything in terms of business problems and business solutions.
Unfortunately, I still hear both sides claiming ignorance of the need for this mutual understanding—or that there’s no need for it. That must stop.
All Together Now
Second, an organization’s chief information officer should be a contributing member of the corporate strategy team. It’s an established fact that communications improve as corporate executives learn to associate technology projects with business initiatives. Also, IT and business managers should both be involved in developing the business case for significant projects, perhaps as co-authors of the supporting documentation.
From an application standpoint, BI, business performance management (BPM) and balanced scorecard initiatives are all good mechanisms for helping to ensure IT-business alignment. IT and BI teams supply the dashboards, reports and performance scorecards that underpin those efforts. And done effectively, business managers receive solid evidence of their departments’ progress or lack thereof. There is also a better chance of creating metrics that measure how IT investments such as a BI system help improve business performance by pointing the way to positive developments such as increased revenues, more efficient processes, lower customer churn and reduced inventory costs.
Third, long-term roadmaps for critical IT initiatives like BI, BPM and customer relationship management, and the technology architectures supporting them, must be aligned to an organization’s business strategies and the needs of both departments and the organization as a whole. For example, an IT plan could permit the creation of vertical silos for specific functions while ensuring horizontal integration across an enterprise through the use of common data models, consistent metadata and interoperable technologies.
And fourth, IT needs to focus on the data users. In plain English, it must become customer-focused. How will business users interact with applications and technology tools? What can they do for themselves—for example, self-service BI versus IT-generated reports? In addition to addressing such questions, showing sensitivity to end-user needs and communicating in business terms will go a long way toward building a bridge to the user community.
A new year is just around the corner. Resolve to take steps in 2013 to better align your BI plans and other proposed IT projects with your organization’s business goals, strategies and needs.
About the author:
Claudia Imhoff is president of Intelligent Solutions Inc., a consultancy that focuses on business intelligence technologies and strategies. Imhoff serves as an adviser to companies, universities and technology vendors and is the founder of the Boulder BI Brain Trust. Email her at firstname.lastname@example.org.