Thursday, August 14, 2008

Survey says: Aligning IT operations with business goals increases agility, cuts costs

Aligning IT with business goals -- and the benefits that brings to a business -- have long been a recurrent theme of the podcasts and discussions we've done over the last few years. So it's gratifying to see a worldwide study showing that businesses are not only pursuing this strategy, but are reaping significant benefits from it.

A survey of nearly 1,000 IT professionals, from the C-level down to frontline workers, indicates that 27 percent of companies responding are in the process of a business transformation, with another 27 percent having just completed one, and another 30 percent considering changing their processes.

Conducted by the Economist Intelligence Unit, London, and sponsored by Cisco Systems, the survey also revealed that improving IT responsiveness to new business requirements was the top IT objective for 57 percent of the companies. Of the companies that have completed a transformation, 43 percent said that cost savings were the top benefit they realized. Another 40 percent reported smoother, more flexible operations.

While other companies reported different effects, the most astonishing result was that only 2 percent of companies reported no tangible benefit. This would seem to indicate that transforming your business model has a 98 percent probability of success, which is pretty impressive.

One interesting result in the survey was the revelation that companies in India lead the pack when it comes to aligning the operations with business goals:
For example, respondents in India are by far the most likely to have goals associated with interacting with business counterparts. Those goals include implementing new projects based on corporate—not information technology (IT)—objectives, actively seeking opportunities to propose technology-based approaches to improving business practices and gaining more support from senior business managers for things like budgeting, change management and technology adoption.

The willingness among Indian IT groups to “go where the business is going” and take concrete steps to pursue highly collaborative working environments is perhaps one explanation for why Indian respondents were most likely to identify their companies’ organizational structures as “very effective."
The report attributes this to the fact that technology executives in India seem to have greater power in the organization. A higher percentage of Indian chief information officers (CIOs) report directly to the CEO than is typically the case in the U.S., Europe, or the Middle East.

One drawback in many companies is a lack of clear communication of business and IT goals. The survey showed that 49 percent of CIOs saw contributing to business goals as one of their top objectives, but this view was shared by only 30 percent of frontline workers. At the same time, 59 percent of IT architects saw cost cutting as an objective, while only 45 percent of CIOs thought the same thing.

The entire survey report, which isn't very long, is well worth a read for anyone involved in IT, or the business of IT. It is available for download (PDF file) from the EIU site. There is also a Webcast that explains some of the finer points.

Here are the key conclusions and recommendations from the report.
Addressing corporate cultural issues is key to any successful IT transformation project. Senior IT executives must work doggedly to communicate goals, and build bridges up and down the chain of command throughout the organization, both in business strategy sessions and regular meetings with technology employees.

IT transformation is not a cure-all. Changing processes and organizational structures may make IT departments more agile, but will do little good if IT professionals do not adapt their thinking around how better to align their efforts with that of the business on a regular basis.

Walk before you run. Before embarking on a large-scale IT transformation initiative, assess the length of time it will take to complete the effort, as well as the costs, risks and eventual benefit to the business.

Track—and publicize—success. Make sure to assess the return on investment of any IT transformation project. Not only will it strengthen IT’s reputation among business partners, it could help to build momentum for future IT initiatives.
Can't argue with all of that. Of course, it is all clearly easier said than done.

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