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THE DATA ADMINISTRATION NEWSLETTER – TDAN.com |
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Bringing Business and IT Together - Part 1
A Mandate For Change
Published: October 1, 2005
Published in TDAN.com October 2005
I wrote my first computer program in 1968. It was a COBOL program to read data from eighty-column punch cards, format the data, check control breaks, calculate totals, and print a report on green-bar paper. The cards, of course, were sorted before my program began its processing. That was a simple era of computing - mainframe computers and batch processing. A lot of things have changed since way back then. We now have personal computers, clustered servers, networking, the internet, object-oriented systems, graphical user interfaces, data mining, data warehousing, business intelligence, and much more. Unfortunately, one thing hasn't changed - the fragile working relationships between business and IT organizations. In the early 1970's a widely-circulated cartoon had the caption "You guys start coding. I'll go up and see what they want." Then there's the ever-popular tire swing cartoon that can still be found on the internet. The gap between business and IT has existed from the beginning of business computer systems. This kind of humor speaks to the troubled business/IT working relationships that existed then and are still pervasive today. 
New UrgencyNow, more than ever, it is essential that business/IT working relationships undergo fundamental and systemic change. The role of business intelligence (BI) as a strategic component of information systems makes this a critical issue. Good BI systems are closely integrated collections of technologies, business metrics, business processes, and disciplines of business management. They demand cohesion, continuity, consistency, and quality that can't be achieved with tenuous and fragile business/IT working relationships. Business and information technology are irrevocably intertwined and interdependent. It has become increasingly difficult to tell where one ends and the other begins. The technology manifesto of the past - business before technology - no longer works. In today's world technology drives business to the same degree that business drives technology. The solution is no longer one of "bridging the gap" but of eliminating that gap. In the words of Howard Smith and Peter Fingar "Don't just bridge the business-IT divide - Obliterate it!" (Business Process Management: The Third Wave, Smith and Fingar, Meghan-Kiffer, 2003) Communication and understanding are fundamental to removing the gap. Common concepts, terminology, and goals are essential to new business/IT relationships. Getting there will not be quick, and it won't be easy. It is a journey, not an event. The first steps of the journey depend on two essential premises - the foundation for common concepts, terminology and goals:
New IT SkillsIT people need to know more about business! They need to understand the disciplines and the terminology of business process management, business performance management, customer relationship management, supply chain management, financial management, human resources management, operations management, etc. Lacking that knowledge, communication with business people and understanding of business requirements will forever be troubled. Superficial knowledge - using the terminology without truly understanding it - is not adequate. It may, in fact, do more harm that good by amplifying lack of business knowledge, causing business people to feel deceived, and placing a greater strain on business/IT relationships. To develop, deploy, and sustain high-impact information and analytic systems IT people must understand:
Repeat each of these questions for business performance management, customer relationship management, supply chain management, financial management, human resources management, and operations management. When IT people know the answers to all of these questions they have a good foundation for effective communication with the business. Perhaps more importantly, they gain an appreciation of the challenges and complexities of business management. New Business SkillsBusiness people need to know more about information technology! As with all communication and relationship issues, this is not a one-sided problem. Just as IT people need to become more business-savvy, business people need to be more IT-savvy. They need to understand the roles and relationships among the many different kinds of technology upon which their information systems depend, and they need to understand the dependencies among those technologies. Business people need to have a working knowledge of the technology stack (Figure 1) as it affects their capability to get information, perform business analysis, and make informed business decisions. 
Figure 1: The Technology Stack
Every business person who depends on information technology to do their job (and who doesn't today?) needs to know for each layer of technology:
Fourteen layers of technology, when intersected with five kinds of questions, yield a total of seventy technology questions for business people. When the business knows the answers to all of these questions they establish a strong foundation to communicate effectively with IT, and they develop an appreciation for the challenges and complexities of managing information technology. New PerspectiveBeyond the relatively straight-forward needs of business becoming IT-savvy and technologists becoming business-savvy, there lies a new challenge. We must develop common understanding and shared perspective of value - an issue that is both a business concern and a technology consideration. When business and IT have different definitions and expectations for value conflicts are certain to arise. Business and IT organizations often have two distinctly different perspectives of value (Figure 2). IT professionals generally take a data-to-value approach. Data produces information; information enhances knowledge; knowledge drives action; action produces outcomes; and favorable outcomes deliver value. Business management typically uses a goals-to-value system. Business drivers and goals determine strategies; strategies drive tactics, which in turn produce results; and positive results produce value. 
Figure 2: Two Different Perspectives of Value
Neither of these perspectives on value is wrong. Yet both are incomplete. Recognition of business goals and strategies is clearly missing from the data-to-value approach. Similarly, the goals-to-value system fails to acknowledge information and data as elements of value creation. On closer examination it becomes apparent that these perspectives have common elements as well as differences. Action from the data-to-value chain is synonymous with business tactics in the goals-to-value chain. Similarly, outcomes and business results are different expressions of the same concept. By merging the common elements and retaining the unique components of both value chains we arrive at a single, shared perspective of value creation as illustrated by Figure 3. 
Figure 3: Shared Perspective of Value
This shared view of value creation is complete and balanced. It recognizes all of the elements - business goals, business strategies, information, and data - as equally significant to creating business value. New ImperativesEffective business/IT relationships are ultimately a question of alignment. All of the previous discussion - new IT skills, new business skills, and new perspectives - sets the stage for business/IT alignment. But it doesn't assure alignment. To achieve real alignment there are several things that must be done - some by IT, some by the business, and some collectively. IT Imperatives:To close the gap, remove the barriers, and work effectively with the business, IT organizations must:
Good relationships at executive and senior management levels may achieve strategic alignment, but tactical alignment depends on line management. Strategy without tactics is an undeniable recipe
for frustration and unsatisfied expectations. This is described as an IT imperative because IT must take the initiative to rebuild troubled working relationships.
Acknowledge that information technology exists virtually everywhere in the business. Stop the ebb and flow from centralized to decentralized IT. Recognize the need for a strong central IT unit
while welcoming the abundant resource of IT capacity (knowledge, skills, software, hardware, etc.) that is distributed throughout business units.
Business units must be able to see what their IT services consist of and have a clear picture of the cost and value of those services. When the business can't "see inside" the IT
organization uncertainty and distrust are natural results.
To business units most IT organizations appear to operate in a reactive mode of fixing problems, responding to immediate pressures, and slowly chipping away at a growing backlog of unfulfilled
needs. Alignment is difficult to achieve in the absence of a forward-looking technology plan.
Business Imperatives:To close the gap, remove the barriers, and work effectively with IT, business organizations must:
Understand that process changes have technological implications. Think, speak, and operate based on defined and repeatable business processes. When changing business processes, consider what it
means for implemented information technology systems. When changing technology, consider the process impacts. When introducing any new business process, design the process with information
technology in mind.
Recognize when and how technology helps to achieve business goals. Take the lead in describing the business value to be derived from technology. Where practical meets new information technology
needs using products, skills, and infrastructure that are already familiar to the IT organization. When entirely new technology is needed, involve the IT organization from the very beginning to
ensure compatibility and sustainability of technology choices.
In many companies strategy is poorly defined and even less well communicated. Strategic alignment without defined and documented strategy is impossible to achieve. When individual business unit
strategies are not integrated, IT systems and organizations are certain to be challenged.
Mutual Imperatives:To close the gap, remove the barriers, and maximize value, business and IT organizations must:
IT strategies are aligned with business goals and strategies. Business strategies aligned with technology initiatives.
IT projects are aligned with business tactics, and business tactics are logically matched to IT projects, resources, and capacity.
Business plans and IT initiatives are time-synchronized. IT projects are completed when needed by the business. Business plans understand and respect the constraints on IT capacity. Business
units recognize peak periods when IT workloads are high and resources are constrained. IT organizations recognize the peak periods when workloads are high and resources are constrained.
In ConclusionConflicts between business and IT organizations have existed from the very beginning of computerized information systems. We have advanced in so many ways both in business and in technology. Yet the problem still plagues most companies. The business/IT gap must go away. The cost is high; the value is null; and the barriers that it creates grow bigger each day. The problem can be fixed, and the time to fix it is now! Go to Current Issue | Go to Issue Archive Recent articles by Dave Wells
Dave Wells -
Dave is a consultant, mentor and teacher in the field of business intelligence (BI). He brings to every consulting endeavor a unique and balanced perspective about the relationships of business and technology. This perspective – refined through a career of more than 35 years that encompassed both business and technical roles – helps to align business and information technology in the most effective ways. Editor's note: More articles, resources, news and events are available in Dave Wells' BeyeNETWORK.com expert channel. Be sure to visit today! |
