Why business leaders must align IT strategy with business strategy
Last updated on December 4th, 2018
IT has become a critical part of almost every department, and the majority of businesses have high expectations for their technical investment – including reduced costs, increased security, enhanced productivity or improved workflows and communications.
However, despite this important role, IT strategy often ends up as an afterthought. Bolted on to business strategy, rather than forming an integral part of it. This can be, in part, because IT is seen as a separate entity, where decisions and investments are often made with a technology-centric approach rather than a business orientated one.
This divided approach, by both the business as a whole and by IT, is counterproductive and usually only serves to increase the disconnect between the two.
Why does disconnect happen?
- IT departments do not have a clear understanding of what is important to the business
- Leadership don’t understand the value of IT and are hesitant to abandon outdated technology which involved significant capital expenditure
- IT decisions are made separately
What is an IT-business alignment model?
Aligning an IT strategy and a business strategy involves more than just combining two strategies into a single document. Under this model, every aspect of the IT strategy should support the business goals of an organisation. This means that every IT-related investment, activity, service or project must play a role in creating or optimising business value. Furthermore, IT should work towards achieving business-related metrics, not IT, in order to improve alignment.
However, alignment is not the sole responsibility of IT. Leadership teams also need to award of their IT resources, something they often neglect. Technology plays an important role in the competitiveness and agility of a business and can impact on the speed of response to market change.
Ultimately the key to achieving an aligned IT and business strategy is mutual leadership and accountability. IT must increase accountability for their results, but they must also hold the business accountable for IT.
What are the benefits of alignment?
Utilising an IT-business alignment model can help improve your business’s overall performance. It can lead to more efficient processes, faster response times and more efficient supply chain management because all aspects of a business are not only working towards common goals, but they are aware of what other areas are doing.
- Everyone is working towards a common goal
- IT supports the business strategy, adds value and drives success
- Easier to control and manage risk and compliance issues
- IT demands are met in a consistent and efficient manner
- Increase the agility of the business and allow it to react to organisational changes
- Greater integrations and collaboration between departments – everyone is aware of the goals they are working toward
What are the potential drawbacks?
It is important to remember that IT and business alignment is not a one-off, checkbox type activity, it is something which will require regular reviews, assessments and adjustments.
Even businesses who achieve alignment can experience disconnect over time, as needs and priorities change. Other departments, such as sales, finance and supply chain, will react to these changes and develop their strategy but they will have little thought to how they must adjust IT to support these developments.
If this is allowed to continue then pain-points and organisational friction will occur, but businesses may not pinpoint the true cause – the fact that business strategy has developed, but IT has stagnated.
The leadership team should review IT strategy alongside business strategy each quarter, to determine how technology is helping – or hinder – growth. For this process, it can be beneficial to bring in an external consultant. This is true even where companies have an internal IT team, as they can provide an objective view.
Although aligning IT strategy and business strategy can take time and cooperation, it is an exercise worth completing. When IT is working to support business goals it leads to happier, more productive teams, smarter investments and greater return.