Aligning IT to the Strategic Plan

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1 RG Perspective Aligning IT to the Strategic Plan Why it s permanently number one on your to-do list 11 Canal Center Plaza Alexandria, VA HQ Fax Robbins Gioia, Inc.

2 With increased emphasis on outsourcing for labor, parts and assembly, successful organizations seek agile core business processes that enable speed to market for new, innovative products and services. First, you need a clear strategic plan with actionable outcomes that your Enterprise Architecture (EA) plan can support. Once you have these two plans cross-walked, you can apply the strategic business plan to the IT portfolio management plan to achieve the business goals and outcomes. Business Process Management (BPM) can assist you with the next step of your plan with a top-to-bottom approach. With portfolio management and Lean Six Sigma (LSS) in play, you can apply BPM to enable modeling of the enterprise s to-be state for innovation and new improvements with proper line of sight and alignment for strategic plan outcomes. The Strategic Plan Is Essential Among a CIO s top priorities is aligning the business processes with IT. CIOs can tackle this challenge by addressing three common problem areas: Absence of a clear business strategy and plan: Often, business plans are seen as large thud factors. They consist of hundreds of pages with no discernable actionable outcomes and goals the key missteps in most plans. The business plan needs to be just long enough to walk the reader to the business goals and outcomes with actionable takeaways to implement. Conflict between the business strategy and operating objectives: This is another common barrier to alignment. The CEO may be hell-bent on short-term quarterly profits at the expense of long-term or strategic goals. This approach inevitably sets up the CIO and the company for failure. Conflicting operating objectives and plans: Divisions may be crafting their operating objectives without a clear line of sight into the strategic plan. This type of blind divisional planning will either sabotage the overall organizational mission or worse yet conflict with it. By aligning the people, processes, and tools involved in IT with the strategic plan, organizations can address these challenges. However, this endeavor must be continuously reassessed and renewed to ensure success. People Alignment will occur only through executive agreement on IT s role. The organization and its governance must be structured so all members of the executive team share a clear, focused strategy. The CIO must be involved to make this alignment happen. As a wise person once said, If you aren t at the table, you re on the menu. Usually, alignment is driven by a strong CIO who knows both business and technology someone who performs a cost-benefit analysis first but also intimately understands the technology requirements and someone with sufficient authority to say no when other business units attempt to implement technology without CIO guidance or assistance. The CIO must be able to report the value of IT and guide other executives on achieving and reporting the contribution of the investment on their own goals. If executives can t quantify their business benefits and strategic goals, the CIO probably should walk away from 1

3 the project (with the exception of steady-state infrastructure and maintenance upgrades). The CIO has several well-established processes and tools, including portfolio management, balanced scorecards, and business metrics. Implementing them is usually feasible, though not always easy. If the problem is inaction, the blame can t be totally on IT. The business of IT is delivering capabilities. Turning those capabilities into business benefits can be achieved only with the full participation and engagement of the business side of the house. Otherwise, any attempt to align IT and the business will underachieve or fail. Lack of alignment wastes the time and effort of well-intentioned, hard-working employees and hurts the company and its shareholders. Processes Business values drive business processes. First, an organization must decide what s most important to its mission. Then, it uses these values to shape its business model, whichinforms its processes. 1. Product or service leadership consisting of continuous product/service innovation and rapid commercialization 2. Operational excellence, where the focus is on efficiency and reliability 3. Strong customer service, where the focus is on cultivating the relationship with the customer by thoughtful but quick response to customer demands. To align business and IT strategies, a top-down process structure must support a clear mission, vision, and strategic plan with aligned business outcomes, EA, and a portfolio management program using a Project Management Office (PMO). In this case, a portfolio refers to the organization s current IT projects or investments. Ideally, these projects are aligned with the strategic plan, mission, and goals through the iterative portfolio management phases of analyzing, selecting, controlling, and evaluating. The CIO should deploy a PMO to oversee these phases and their activities, such as scheduling, reporting, and risk, cost, and scope management. EA is the description and documentation of current and desired relationships among business and management processes and IT. EA facilitates business alignment by enabling business and technology transformation. EA process provides a tightly focused stream of business logic linking the business drivers and strategic requirements to the IT investment portfolio via a business case designed to support those strategies and respond to threats and opportunities. Tools Luckily, we have tools to help speed up the alignment and provide business modeling for the changes in the processes, enabling us to see the to-be results with simulations. BPM is a systematic approach to improving an organization s business processes, involving the convergence of process improvement with business modeling and simulation tools to create an efficient enterprise. Therefore, BPM should include: The use of BPM COTS tools. These new tools need to offer automation with simulating, monitoring, and reporting new or modified business processes to create a baseline leading to operational deployment with users and stakeholders. 2

4 Leveraging the existing lower IT technical layer stacks. It is important to look for suite products that will work with the IT portal products your organization has in place so you can easily build composite applications. Developing agile enterprise processes. BPM needs to support the expected outcomes of new products and services while improving agility and operational performance to respond to new customer requirements and market demands. BPM Is in Play with Lean Six Sigma BPM activities seek to make business processes more effective, efficient, and capable of adapting to an ever-changing environment for new products and services. BPM is a subset of infrastructure management, the administrative area dealing with maintenance and optimization of an organization s core business processes. Commercial businesses and government agencies are using BPM to manage all types of processes, from simple to complex, short-running to long-running, function-specific to industry-specific. Whether they exist in a single department, run throughout the entire enterprise, or extend across the whole value chain, business processes across the board are benefiting from BPM. BPM s Value Proposition With ERP and LSS BPM improves profitability and yields competitive advantages. By using BPM suite technology, an organization can rapidly develop and deploy composite process applications to solve business problems. These applications can help the organization respond to changing market, customer, and regulatory demands faster than competitors not employing BPM. The goal of Enterprise Resource Planning (ERP) is to integrate an organization s data and processes into a unified system via multiple components of computer software and hardware. At first glance, BPM seems to deliver the same major benefit as ERP increased workforce productivity by streamlining business operations and automating repetitive tasks. BPM suites, however, transcend efficiency. Notably, knowledge-sharing capabilities via collaborative portals help improve decisionmaking. Process performance reports help optimize workflows. Notifications and triggers help reduce errors and eliminate waste. And an intelligent rules engine enforces best practices. So BPM suites help organizations increase workforce productivity, improve product quality, and reduce corporate risk. Within months of deployment, these improvements deliver substantial cost savings to companies. In addition, BPM suites also help organizations boost revenues by increasing product output, accelerating cycle time, and improving customer service. Straight-through processing helps accelerate delivery times. Dashboards help prioritize business activities. Process performance reports help identify bottlenecks and reduce hand-offs. Centralized enterprise knowledge helps speed decision-making. And closed-loop customer feedback processes help track performance. Over time, these enhancements result in a faster time-to-market and an improved company image, which ultimately can increase sales and revenue. Aligning IT With the Strategic Plan in Action The DoD issued its Continuous Process Improvement (CPI) guidelines in 2005, and today, all services are reaping the benefits. They re starting to deploy LSS and use portfolio 3

5 management tools that give them an executive dashboard and portfolio view of the whole enterprise. The Army is on an enterprisewide deployment journey, making it one of the largest LSS deployments ever attempted, touching approximately 1.3 million employees and contractors across the world. As in the private sector, the Army is applying the LSS culture of CPI. Like the other services, the Army is using Lean activities such as rapid improvement events, value stream mapping, and performance metrics on dashboards vs. the outdated balanced scorecard methodology and techniques. actionable, accountable way. So EA, BPM, LSS, and portfolio management plans and tools are the activities for making business alignment an annual priority that s never crossed off your to-do list. Conclusion The IT component of your organization will be positioned for true performance management when you apply five best practices: 1. An annual strategic plan with actionable business outcomes and goals 2. An EA plan that aligns with the strategic plan 3. Portfolio management for IT projects 4. BPM applied to the enterprise s core business process models 5. LSS applied for speed and precision. This concept can mean many different things to each executive. However, it s absolutely critical that the organization has an IT thought leadership position on using CPI with BPM and LSS to support innovation and new products. IT is the enabler that allows the executive team to achieve its next big product launch. With solid CPI, organizations can use their resources and talent to effectively execute worldwide. For CIOs, aligning IT to the strategic plan should be accomplished in an 4

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