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Alignment: Business & Technology

• Alignment vs. Double-vision– Make sure that the direction for business is clear. – There are multiple paths to implement technology.

Choose the one that leads to your business destination. Sometimes it isn’t clear.

• Common Patterns for Failure & Success– Communication, personal biases, planning, use of

resources, understanding of risk, and the destination.

• A Solution: Governance Process– Budget, Value/Benefits, Business Alignment,

Risk, and Priority.

Alignment: Business & Technology

Choosing poorly

1. Biases & errors in judgment2. Failure to establish an effective

framework3. Lack of metrics for determining

value4. Inability to assess and value risk5. Failure to identify projects that

should be killed

Such problems cause companies to get only 60% of the value of their IT projects.

How do should we choose?

• Tie technology decisions to business objectives

• Build a process– It will help you to make a decision before you have

to make one under pressure

• Ask questions:– What does it [insert technical stuff here] gain us?– How do we measure its impact?– Where is the implementation & adoption plan?

• Get expert help– Are we using the right investments in the right

places for maximum leverage of resources?– Is our technology a drag or an accelerator for

growth?

Common Language

• Governance process– A clear destination and good

communication avoids: divergent institutional aims & divided leadership

• Value propositions– Accepting flawed value propositions

without scrutiny or promises that can never be realized is dangerous

• Risk– What are we willing to tolerate in

order to gain the situation described “post implementation”?

Governance Process defined

• Governance: This is simply the way various aspects of a decision will be processed. Iterative evaluation of a decision is often part of this process.

Define the selection process before you need to choose, define the weight of importance before you have to score, and stick to your plan.

Periodically, evaluate your G.P. and adjust based on business conditions

Value/Benefits defined

• Value/Benefits: The difference of doing or not doing something. It is the measure why which this project enables your company to reach its objectives.

• The value/benefit of a project is its worth to the organization to obtain the payoff of the project.

• Sources: Reduced cost, increased revenue, increased customer satisfaction, and obtaining a new capability or knowledge.

Risk defined

– Cost – typically escalation of project costs due to poor estimating or scope creep

– Schedule – Activities take longer than expected. Slippages or schedule compression

– Performance – Project outcomes will fail to produce the results expected

• Risk: Webster defines it as “a possibility of loss.”

Risk isn’t always bad. It should be seen in relation to its value. “How

much risk you choose to carry and how aggressively you mitigate it are directly related to how much value is at stake.” (Smart Business, © Dave Chapman 2002)

Common Language (cont.)

• Business Alignment– Business decisions rely on accurate

and timely information. Its worth varies over time.

• Priority– Clearly deciding among “top priorities”

based on their effect on the business. – Ask Why? Five times – Like root

cause analysis. Validate the real reason for the priority order

Business Alignment defined

• Consideration of IT projects against a backdrop of business conditions is critical for allocating resources along the organization's strategic goals.

• What’s most important here is how to best allocate the available budget across the identified main corporate initiatives (or strategies). – For instance: 

1. ABC will be known as an organization that develops innovative products

2. It is critical that ABC products and services deliver the data to achieve a positive behavioral change in the lives of our customers.

3. Achieve a 30% net profit growth over actual for FY ‘07

Priority defined

• Mandatory: Work that you "have to do" might be supporting a legal or auditing requirement. Generally speaking, do you don't have the ability to say you are not going to do it.

• Business Critical: Must be done to support (sustain) the business. One of the key aspects of this work is that you have some discretion over how much you spend on it.

• High: Work that you think "must get done." You might break this work into two areas based on the impact to the business: – Strategic - This work is usually larger and more expensive but helps you transform the

business. – Tactical - This work usually costs less and has a more short-term payoff. The value is

incremental, not transformational.

• Normal: You can break the "Normal" work down into medium priority or low priority, but usually neither category of work will get funded. Low-priority work should be the last to get funded.

Practical Approach

RISK SCORING

Very Low =

1, Low =

2, Med = 3,

High =

4, Very

High =5

Technology

Innova

tion

Complexity

Schedu

le

TOTAL RISK

BUSINESS A

LIGNMENT

BUSINESS A

LIGNMENT #1.

CLIENT will

be

known for o

ur crea

tion of in

novative p

roducts

Strongly D

isagree =

1, D

isagre

e = 2,

Neit

her = 3,

Agree =

4, Stro

ngly Agree

= 5

This projec

t driv

es inno

vation of

existi

ng prod

ucts

This projec

t open

s a ne

w mark

et for C

LIENT pr

oducts

or servic

es

This projec

t will a

llow CLIENT to

impro

ve its

market

standin

g aga

inst c

ompetit

ion

This projec

t sup

ports

a "grow

ing" lin

e of b

usiness

This projec

t autom

ates curr

ent m

anual p

rocesse

s

This projec

t will i

mprove

integratio

n betwee

n busi

ness

develop

ment a

nd IT

Ope

rations

This projec

t will r

esult in

a sol

ution th

at can

be re

sold

This projec

t will f

acilita

te new

capa

bilities

that

may

lead to

product i

nnovat

ion

This projec

t will p

romote

the pu

blic aware

ness of

CLIENT prod

uct inn

ovation

TOTAL

BUSINESS ALIG

NMENT #2. C

LIENT produc

ts

must ach

ieve po

sitive

behav

ioral chan

ge in

custo

mers

This projec

t has s

pecific

objectiv

es to

contrib

ute to

the

improvement

of da

ta ava

ilable

This projec

t incre

ases th

e integrat

ion of m

ultiple

CLIENT syste

ms and D

atasets

This projec

t redu

ces the t

ime involve

d in da

ta

collec

tion p

atient/cu

stomer s

ide

This projec

t redu

ces the t

ime involve

d in da

ta

processi

ng pa

tient/cus

tomer sid

e

This projec

t improv

es the m

anage

ment o

f data

lifecyc

le

This projec

t redu

ces the d

istance be

tween d

ata

provider

and co

nsumer

This projec

t will c

learly m

ake a dif

feren

ce in

behavi

oral ch

ange

adop

tion rate

This projec

t will i

mprove

the pr

esentation

of da

ta for

easier d

elivery/

reten

tion

This projec

t prov

ides acc

ess to cli

nical kn

owledge

for

servic

es pro

vider

This projec

t's infr

astruct

ure re

quire

ments w

ill be

leverage

d by o

ther p

rojects

This projec

t enab

les a new

servic

e capa

bil ity t

hat w

ill

affect p

ositive

behavi

oral chan

ge

TOTAL

VALUE / BENEFIT ALIG

NMENT

Cost redu

ction

This projec

t will r

educe

costs

signifi

cantly

(2:1 ra

tio of

saving

s to co

st)

This projec

t will c

ontribute

to re

ducing t

he use

of

contra

ctors/

consultan

ts

This projec

t will e

nable

syste

ms for im

proved

accoun

tability

of pr

oductiv

e time

This projec

t will r

educe

the nu

mber o

f FTEs c

urrently

neede

d

This projec

t will i

ncrease

syste

ms auto

mation

This projec

t enab

les bett

er remote pr

oductiv

ity to

reduce

trave

l costs

TOTAL

Increas

e in re

venue

This projec

t acce

lerate

s the

time t

o marke

t for n

ew

product

s/serv

ices

This projec

t prov

ides acc

ess to bett

er mark

et

compe

titive inf

ormation

This projec

t prov

ides fas

ter acce

ss to

data

neces

sary

to win ne

w busine

ss

This projec

t enab

les CLIENT to

reach

a new m

arket

or custo

mer seg

ment

This projec

t satis

fies a

critic

al requ

irement

for

winning/deliv

ering

business

TOTAL

Increas

e in cu

stomer

satis

faction

This projec

t brin

gs new

problem so

lving c

apabili

ty to

frontli

ne staf

f

This projec

t prov

ides vis

ibility to

timely

infor

mation

regarding

CLIENT perf

ormance

This projec

t bench

marks C

LIENT agains

t com

petition

This projec

t corr

ects a

custo

mer sa

tisfactio

n problem

This projec

t incre

ases th

e loyalty o

f CLIENT cli

ents

throu

gh cle

ar va

lue adde

d

TOTAL

New learni

ng or c

apab

ility

This projec

t open

s the d

oor to new

servic

es

previousl

y una

vailab

le

This projec

t incre

ases CLIE

NT' capa

bility t

o compete

This projec

t incre

ases th

e front-

line sta

ff cap

abiliti

es to

servic

e the

custo

mer

This projec

t enab

les th

e delive

ry of n

ew

trainin

g/acce

ss to kn

owledge

This projec

t prov

ides a b

etter

infrastr

ucture fo

r

advanced

techn

ologies

This projec

t exte

nds the

produ

ctivity

of exis

ting

sytem

s or re

places o

utdated o

nes

TOTAL

4 4 4 3 3.75 4 4 4 4

3 4 3 2 3 3 3 2 2

3 3 4 5 3.75 4 4 3 3

2 1 3 3 2.25 2 2 1 2

Steps to Alignment

1. Create a Governance Process & Revise it periodically

2. Write a clear description of your destination – Business Objectives

3. Define the metrics to recognize your having attained them

4. Place this vision in its proper context of short + long-term goals for next layer in the team & so on

5. Create a safe environment to escalate new information back to you. Communication is key!

6. Check IT project’s reasonableness among other business goals (Budget, Value/Benefit, Business, Alignment, Risk & Priority)

7. If your organization is large, appoint a Portfolio Manager

8. As in sea voyages of old, check your bearings often

9. Stay the course, but kill a project swiftly if needed

10. Ask for assistance at any point. No one-of-us is as smart as all of us.

The Language of Business Leaders(spoken here)

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Michael GaloPresident & IT Strategistmichael.galo@bytesofknowledge.com(615) 850-0279