Fixing Disconnect between IT and business.

By SA
Contents
ABSTRACT...................................................................................................................................................... 2
Problems during Software Development ..................................................................................................... 3
Reasons for Failure of a New System or Application .................................................................................... 5
Alignment of IT with Business Strategy ........................................................................................................ 7
Solutions to fix disconnect between IT and Business ................................................................................. 10
Changing Role of CIO .................................................................................................................................. 13
What happens when IT and Business are not aligned ................................................................................ 14
Success Story- UPS ...................................................................................................................................... 14

PROBLEM: During a new systems development, business and IT are supposed to work

together, however, due to several reasons they don’t and it ends in a failure.

CLAIM: By analyzing why and how disconnect happens between IT and business, they can be

fixed easily.

ABSTRACT: Every organization has mission, vision, and strategy, so it is of paramount

importance that all employees know what the above are and work towards it. However, there is

disconnect between IT and business in many organizations especially during the systems

development process and this paper describes how disconnected IT and business are in an

organization and the ways by which they can be rectified so the organization can achieve its

mission and gain competitive edge in the market. This will be done with the help of case studies
to find out what exactly is going wrong and why the business and IT are not collaborating the

way they should be and provide solutions for the same.

Problems during Software Development

We will look at four case studies which revolve around new system development to see what

exactly is going wrong behind the scenes between business and IT.

Northern Insurance TUFS

With the help of Northern Insurance TUFS1 business case we will figure out why IT and

business are not collaborating the way they should during a systems development process.

Technical Underwriting Financial System(TUFS) was the largest investment made by Northern

Insurance and this system was going to transform the way underwriting was done and introduce

e-business at Northern Insurance thereby increasing efficiency, promoting growth, and saving

money. $4 million was spent after two years including the resources allocated to fixing problems

after implementation. Although, the TUFS team has delivered the project as per the specification,

the business users still preferred to get the old reports even though TUFS allows them to see the

reports online. The managers still used the old procedures and only used the system at the last

moment to double check. It was found that business users did not sit with the TUFS team and tell

them what exactly they needed and why they needed it. Since, the TUFS team had to complete

the project on time and within the allocated budget they had to defer some functionality that they

had originally planned to include. From this, we gather that some IT project fail because business

users do not tell what their exact requirements are to the IT team and to save costs the IT team

defer functionality which are needed by the business users.

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James D McKeen, Heather A Smith IT Strategy: Issues and Practices (3rd Edition) 2014
IT Investment at North American Financial

Caroline Weese, CIO of North American Financial met with senior executives to justify the IT

budget. This proved a difficult task as the senior executives didn’t see the value of IT but only

the $500M budget. The problem she faced was that they wanted innovation, reliability and

stability from the IT team but were not willing to spend the money for it. During one of the

meetings CEO of Northern American financial claimed that he is not seeing any value from the

IT with the amount of money that is being poured in and how the IT projects are supporting the

strategic decisions of the company. Caroline Weese intervened saying that she can only take

responsibility for quality of work, timely delivery, and cost. From this case, we understand that

business people don’t always approve budgets for the IT project. Sometimes, during the

development of the system business people feel that the project is going over the budget and may

pull the plug as the business strategies are always changing and it doesn’t make sense to pour

money into the project when the system is not going to deliver value as expected. IT team not

being transparent to business users about why the IT project costs the money they ask from

business users and thereby damaging their credibility with the business.

Enterprise Architecture at Nationstate Insurance

Jane Denton, Global CIO of Nationstate Insurance wants to find a way to make a difference in

the company before her retirement in 3 years. Nationstate Insurance has a federated structure

with some of IT being centralized and shared by all business units while the system development

was decentralized. Each business unit had its own CIO and IT staff who reported to Jane. Since

business unit CIOs had good business knowledge it was easy to work with them but central IT

was seen as a roadblock by business users. The problem at Nationstate Insurance was the silos

between business and IT. She exclaimed to the business units that “No one in our organization
has the big picture of what we have and where we need to go”. The major problem at Nationstate

Insurance is that not all the employee really understood what the business strategy is and IT

people didn’t understand what exactly the business people are expecting from them.

Consumerization of Technology at IFG

“There’s bad and good news,” Josh Novak, Manager of IT innovation reported to IT

management team. Their social media traffic has gone up 3000% in two years whereas their

competitor GPL is taking over their market share with new mobile apps. So, Josh wants to

develop a system to get a competitive edge over GPL. Mark Szabo, Head of BI team talks to

Josh about the current problems between business and IT. He tells him that people in business

units are buying applications from cloud even though the IT team is competent. In addition, he

tells him that when the business is in turmoil they want things right away and do not understand

that developing a system takes time.

Reasons for Failure of a New System or Application

Following are some of the reasons why new system fails,

• Business people not telling the IT team what exactly they need.

• IT defer functionality requested by the business users to stay within the budget.

• Business people don’t always approve the budget.

• IT people not aware of the business strategies and the direction the organization is going.

• IT people being too technical and business users don’t understand.

• Business people stopping a new systems development to buy applications from the

cloud.

• Business people want things right away.

Before we try to fix the problems between IT and business we should understand the current

world and trend. Business strategies and business models are changing at a rapid speed and it

is extremely difficult for the IT team to keep up with this and deliver a high-quality working

system within the time requested by the business users. IT department wants to build a

reliable system which takes time whereas marketing (business) department wants the system

right away. Some systems take a couple of years or more to show value whereas business

users need something that delivers value every Quarter. In this case, the IT team should

create a system requested by business people as per their requirement and in parallel work on

systems that deliver value over a period. As mentioned above, business strategies and

objectives are changing in a very short amount of time so IT must work with business to

deliver a system or application that fulfills the near objective to gain a competitive edge in

the market. This makes the business people happy and builds trust between IT and business.

Historically, IT strategy was seen as a support for business strategy but now it should be

integrated with the business strategy.

The following are required from IT,

• Engagement competencies- Business employees should find new opportunities which

can be exploited and IT employees must offer advice, resources, and framework to

business people.

• Technical Skills- It is important to have people with right technical skills and

organization should attract and retain these people.

• Collaboration- We keep hearing about silos every now and then, to avoid this, IT people

should collaborate with each other, IT should collaborate with business.

Alignment of IT with Business Strategy

Fixing disconnect between IT and business can also be called as the alignment of IT with business.

Alignment of IT with business strategy starts with a clear understanding of the business without which

the alignment will not be possible. Every employee in an organization should be made aware of the

mission statement which drives the information system’s purpose. Alignment of IT with business

strategy is a continuous process, not something that you set and forget, management must periodically

review and check the alignment, if there is any divergence then realignment should be done either

internally or by bringing in third party experts.

A clear vision is needed of where the organization wants to go and how it’s going to get

there.

Alignment of IT with business strategy 2 can be done with the following plan,

• Understand business- Identify and document all formal and informal business

processes.

Use tools like porter’s 5 forces analysis, SWOT analysis or PESTLE analysis to

understand what the business is trying to do and to know where the business is heading

and map out the corporate model so we can know what the organization does exactly. It

is necessary to know what the strategy of the business is, say customer intimacy,

operational excellence or product leadership. A business could have one or both or all, IT should

be able to support the strategy.

• Acknowledge culture- Analyze the structure and nature of the organization.

Understand the way things are done as culture of the business influences the successful

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application of technology. “A company’s culture and a company’s brand are just two

sides of the same coin”-Tony Hsieh, CEO of Zappos. It is necessary to perform cultural

analysis of the organization and match nature of systems with business. It is unlikely that

an organization will be mono culture, if it is polyculture IT system and services should

be tailored accordingly.

• Know the IT estate- Identify and document IT assets and applications.

Even though the IT Asset Register accounts for important items, alignment cannot be

done without the addition of other important items like manpower, network bandwidth

etc. Entire IT estate and interdependency between different services should be

documented.

• Discover value chains- Identify and document relationship between IT estate and

business.

A value chain exists wherever inputs are transformed into outputs. Hence, it is necessary

to understand the value chains to align IT function with business strategy. With this we

can see what is driving business and IT activity and identify key factors critical for

strategic planning and alignment.

• Interpret the context- Collect intelligence about internal and external influential factors.

Analyze information and determine how changes will affect business, culture, IT estate

and value chains. SWOT analysis can be used to determine opportunities and threats.

Internal Influences- Corporate plans, business unit plans, infrastructure, and maintenance

programs.

External influences- Industry regulation, economic, customer and supplier trends.

• Determine the change agenda- Analyze the context, business strategy and influential
factors.

With regular exchange of information and communication between IT and business units

we can ensure that IT will support business as it evolves. We must establish relationship

between change agenda items and its impact on IT operations.

• Chart the technology roadmap- Prioritize and optimize the change agenda.

A good technology roadmap will have strategy statement, timeline of projects, estimated

cost and duration. As system view of organization will be different to that of the business

view, technology roadmap describes how technology changes will be implemented

keeping individual systems in mind. We must be ready to alter change agenda schedules

and technology roadmap to accommodate proper alignment with resources.

• Plan the work program- Translate technology roadmap into business unit plans.

Use tools like service delivery matrix and service component chart to show take up of

service across business units. Management framework can be developed by associating

business and IT owners with charts.

• Populate the framework- capacity planning tells us true free capacity and hence should

be performed for all IT resources. Commit resources to plans in accordance with

established priorities.

• Achieve the business benefit- Implement delivery framework.

This includes managing delivery framework, measuring success using balanced scorecard

and managing relationships with clients. The efficiency with which promises are

delivered to business customers will tell us about the IT alignment.

Solutions to fix disconnect between IT and Business

Now that we have seen how IT strategy can be aligned with business strategy let’s see how the

disconnect between IT and business people can be fixed. Let us consider each reason that has

already been listed and see how they can be fixed.

Business people not telling the IT team what exactly they need – This is one of the most

common reasons a new system development fails. When requirements are gathered for a systems

development input of every system user should be noted and IT people should talk to business

people of what exactly that they want in the new system and how they envision the new system

to solve a business problem. Most important function of a system or application is to solve a

specific business problem. Now, business people should make the IT team understand the

business problem and the functionalities they are looking for in the new system.

IT defer functionality requested by the business users to stay within the budget – Most of

the IT projects go over the budget and to stay within the budget IT team defer some functionality

that they believe to be optional. Business users after using the system find that the functions of

the system that they need are present. When this happens, they tend to go back to old ways

thereby making the system obsolete. If the IT team thinks that the project will go over budget

then they should first talk to the business whether they could get extra money and if it’s not

possible then they should sit with the business users and ask them about the functions that they

can remove to complete the project on time and within budget.

Business people don’t always approve the budget – Business people think that IT team are not

being transparent with them and they sometimes believe that the answers they give for the

budget are not justifiable. So they don’t approve the budget the IT team asks them and this

creates conflict between business and IT. At the end when a new system is developed the
business users are not happy because it is either lacking certain features or doesn’t support the

business strategy. CIO and CMO should sit together and CIO should clearly explain why the

project costs this much and get any valuable input from the CMO. If the CMO feels that the

company cannot approve this budget then he should give him an alternative and some of the

functions that can be deferred.

IT people not aware of the business strategies and the direction the organization is going –

During the business strategy meetings the CIO should be involved, this is often overlooked and

as a result, the CIO is not aware of the business strategy and the direction in which the

organization is going. As a result, the IT department is not aware of the business strategy. So,

any business meeting should include the CIO and the CIO can pass the recent strategy changes

with the IT department during the meetings. Once the organization is changing its policies and

strategies then the CIO must be notified so that he can change the projects accordingly. If the

CIO has business expertise this goes a long way in forging a relationship between business

people and IT.

IT people being too technical and business users don’t understand – If business users not

telling the IT team their requirements is one problem, then the other is IT people being too

technical with the business users and as result, the business users do not understand the new

project or why they should sanction the budget. Sometimes. new projects don’t get approved

because the business people don’t understand what the intention of IT is and how the new project

is going to benefit the organization and solve business problems or give the organization

potential gain in the market over their competitors. During any meeting between business and IT,

a person from IT who has business experience should talk to the business users in the language
they understand. He should abstract what an IT person would say so that the business user can

understand.

Business people stopping a new systems development to buy applications from cloud –

Cloud has been successful for a while, you can get full-scale application from the cloud with the

click of a button. Some business users buy applications from the cloud even when the IT is

competent. The organization pays for both cloud and IT team which is not a good thing. Business

users also do not follow the procedures set in place like standards and policies enforced by the IT

Architecture team. This creates duplication of files and inefficient data. Business users should

talk to IT first and see if they are willing to code the application and if they aren’t then they can

buy applications from the cloud. It is always better to ask your IT team first as what they code

for you is customized and they also know the business better from someone who is outside the

company.

Business people want things right away – No one really has time these days with the pace at

which the industries are being run. Business users want things right away so that they can work

on data and things that matter and figure out a way to get ahead of the competition, what they fail

to understand is that building a reliable quality system takes time and they should expect nothing

less from their IT team. Some systems show value only after a couple of years in which case they

need something temporary that solves their immediate business problem. Communication is the

key between business and IT to figure out how the IT can solve their immediate requirement.

Resolving Conflicts – Conflicts happen every day in an office say between team members or

between C- level executives but it is much more common between business and IT team. As a

result, business and IT don’t agree completely on anything; business people claim that the IT are

being too technical and are not transparent whereas the IT accuse the business people of not
sanctioning the required budgets for projects but wanting them completed within time. Conflicts

between members start at the higher level between CIO and CMO and go lower. If the conflicts

keep happening the CEO should interfere and ask them to work together. There should be

weekly or monthly meetings between CIO and CMO so they can work together to deliver value

to the company.

Changing Role of CIO

Alignment starts with CIO, traditionally CIOs mainly focused on technology with less

importance given to business but now in the 21st century, the skills needed for the CIO are

diversified. It is important that the CIO acts as the enabler of business agility and embrace

innovation while minimizing risk. The diversity in skills is due to the change in viewpoint of IT

itself. Until recently, IT was just used as a tool to implement strategy but now IT plays an active

role in developing long-term business strategy. Hence, it is the job of the CIO to make sure that

there is synchronization between IT and business functions and that both these are geared

towards common business oriented goals. More companies are going bimodal with business and

it is necessary that they do the same with IT. Instead of running IT like a business to enable

change, CIOs must now run IT with the business to shape change. It is necessary to have an

adaptable technology to facilitate agile business strategy in an organization. The disconnect

between IT and business can only be fixed when CIO and CMO are on the same page and to

facilitate this CIO should have skills that weren’t required of him before.

In 2017, the following are the roles of the CIO,

 Strategist

 Leader

 Relationship architect
 Information steward

 Operator

 Educator

 Utility provider

What happens when IT and Business are not aligned

This paper keeps mentioning about business, IT, and alignment but what exactly happens when

there is no alignment between business and IT in an organization. Following are some of the

things that happen in an organization when there is no alignment between IT and business,

▪ Development of Application or system that doesn’t solve a business problem.

▪ Silo between IT and business.

▪ Increased costs.

▪ Decreased productivity.

▪ Losing competitive edge to competitors.

▪ The decrease in market share.

▪ Failure to implement emerging technologies.

▪ Using legacy systems and losing a foothold in the market.

▪ Inefficient business processes.

Success Story- UPS

Let’s look at a success story to see how business and IT should be collaborating. Big data is

driving the market today with every company trying to figure out what they can do with the

massive data they have at their disposal. UPS started using big data in the early 2000s before it

was called big data to create predictor models to plot efficient routes for drivers. Their business
and IT collaborated in a way every company should, business users figure out where they can

add value and IT makes it possible for them to do it. This doesn’t start from bottom up, it starts

from top to bottom, once the top executives work together then they can achieve success with the

projects, they must share same targets and follow the direction the organization is going. By

usage of efficient routing, UPS has saved $50 million per year, this figure is due to saving of 1

mile per driver per day. They did not stop with one successful project, business users constantly

tried to understand the ways UPS could handle things and they sat with IT to figure out how

technology can help the company. They implemented a device in every UPS truck and this

captured data about the driver pattern and other things like when the truck is idling and such. IT

team built a predictor model with this and these were shared with the business users who

performed analysis to figure out where they can shave off miles. CIO and CMO me every two

weeks and started discussing what they could do better. In 2012 UPS came up with ORION

system, in-house development of their IT team which showed the efficient route a driver should

take and deliveries they should make according to the priority of the delivery saving the driver

time and shaving off miles. This system clearly supported the mission of UPS and so it is of

paramount importance that IT team know of business strategy and direction the organization is

going. Once the IT team understands this then they can work with the business users to provide a

reliable system for them to use. Collaboration between business and IT is key to the success of

any systems development and success of an organization. There should be no silos between IT

team or between business and IT.

To conclude, case studies helped us understand why disconnect happens between IT and

business, with this knowledge solutions were provided for the same. There are always silos

between business and IT and with the pace at which organizations are changing their strategies
and business models it is not surprising. CIO and CMO should work together to make the new

system a success and for the company to gain market share and advantage over their competitors.

With Internet of things and automation gaining momentum there will be a shift in operation of IT

and hopefully for the better.

Reference:

http://www.networkworld.com/article/2850874/big-data-business-intelligence/how-ups-uses-analytics-to-

drive-down-costs-and-no-it-doesn-t-call-it-big-data.html

http://www.computerweekly.com/feature/IT-and-marketing-working-together-for-business-success

http://connectingcare.org.uk/files/Align_IT_with_strategy.pdf

https://www.thebalance.com/zappos-ceo-tony-hsieh-on-passion-2892515

http://www.computerweekly.com/feature/The-changing-role-of-the-CIO-in-the-business