Why should information systems be aligned to an Organisations strategic plan?

Your information technology (IT) systems should effortlessly support your overall business goals and objectives. This alignment, however, is not always easy to achieve. Many businesses find that their IT systems are either too expensive to maintain, too cumbersome to use efficiently, or simply do not provide added business value.

What does it mean to align IT with business strategy?

Business-IT alignment simply describes a state where a business is able to use IT to achieve its objectives. In this state, IT is a valuable asset rather than a utility or an expense. The system functions across the business with optimal efficiency and is more likely to achieve a positive return on your IT investment.

Benefits of aligning IT with business strategy

Achieving business-IT alignment can help improve your business performance. It can also:

• boost efficiencies and profitability
• improve collaboration
• enhance customer experience
• improve supply chains
• achieve greater return on technology investments
• reduce the risks associated with business and technical change

How to align IT with business objectives?

To align your IT strategies with corporate goals, you must:

• know your business objectives and strategy
• know your current IT capabilities and gaps
• consider both priorities and investment within your IT strategy

See more on the key elements of strategic planning and find out how to carry out a technology needs assessment

If you are not sure where to start, focus on a few areas that may provide the greatest benefit. For example, you may want to:

• look for areas of underperformance
• engage with customers and suppliers to identify pain points
• benchmark to see how your business compares to others
• identify the key processes that matter most to your business (eg customer service, manufacturing systems, etc)

The next step is to decide what type of IT could make these systems work better. For example:

• Could a customer relationship management system help you identify new opportunities?
• Could enterprise resource planning help you control stock, cut waste, manage automated ordering and accounting?
• Could your e-commerce website link to your back-office systems?
• Could IT integration (eg of design and production systems) improve your manufacturing efficiency?

After you determine how IT can fit with your business priorities, you should develop an IT strategy. This is a long-term plan that defines how and why the business will use IT to achieve its business objectives.

Information Technology has been the fundamental driving force in businesses for the last few decades. Still, companies continue to invest millions of dollars to get ahead and remain competitive, however, the dividends of this investment range from smart investment to the not-so-smart.

Despite its critical role, IT departments continue to be viewed as siloed away from the rest of the departments and misaligned with the broader organizational goals.

A report by the Economist Intelligence Unit affirms this viewpoint. According to the survey, 31%, of non-IT respondents view IT departments as misaligned with the digital transformation goals. For a department that is supposedly in the driving seat of organizational digitization strategies, misalignment is a slippery slope.

In this primer, find out what IT alignment means for your business, why misalignment occurs, and reasons why leaders must prioritize business-IT alignment despite the challenges they might encounter.

Alignment: What is It?

Business-IT goals alignment entails marrying IT strategy with the strategic goals of the organization. It is the congruence between business and IT objectives. It is all about getting everyone on board and pointed in the same direction. This alignment can’t not be just on paper.

In a real sense, alignment implies that every IT investment, project, or activity must help create and deliver value to the business. In essence, the IT department should aim at attaining business-related metrics and not IT metrics alone.

Who is Responsible for Alignment?

The organizational leadership, not just the IT team, is responsible for alignment. The company’s leadership should be knowledgeable about the state of IT resources, capabilities, and handicaps. They must understand the role of technology in the business model and support IT investment to gain a competitive advantage.

The IT department also has a role to play. The CIO must be pro-active in providing working solutions to real business challenges. Investment in IT should not be a rabbit hole of idle investments. Additionally, the IT teams should support the other departments in solving day to day operational challenges.

The critical factor in achieving alignment is mutual and accountable leadership. The IT department must be responsible not just for their metrics but must hold the leadership accountable for IT.

Reasons Why Business Goals and IT Strategy Must Align

Business-IT strategic objectives alignment is key to the success of the modern organization. Here are some of the reasons why alignment is necessary to survive and compete in today’s complex business ecosystem.

Faster Time-to-market

Technology plays a critical part in how organizations create and deliver value. As competition stiffens, companies with a better alignment will deliver their products and services faster to their customers. They will also capture early feedback, which is critical for design-driven product development.

Increased Profitability

Companies with a high degree of alignment have a higher probability of making more profits. With all departments and staff reading from the same script and implementing the unified business strategy, the chances of hitting gold is multiplied. The reverse is also true; departments pulling apart creates a loophole for loss of synergies and money.

Better Customer Experience

All that a customer wants is excellent service and nothing less. Aligned businesses will probably deliver a better customer experience hence winning the loyalty of their clients. Misalignment disillusions business most essential stakeholders who left with little option, head for the exit doors.

Improved Collaboration

Collaboration takes effort to achieve and maintain, particularly in medium and large businesses. Alignment makes it worthwhile for teams to work together towards common business goals. With companies expanding vertically and horizontally, aligning business and IT goals becomes imperative in curbing the silo mentality.

Greater Industry and IT Agility

The business environment is dynamic as customer preferences and priorities shift. Rigid, misaligned companies will find it difficult to react to customer needs hence losing out in the market race. With better alignment, a business increases its agility that allows it to respond to changes.

Strategic Technological Transformation

Technology has become a potent driver of growth and competitive advantages but also a source of failure. One of the most sobering truths in today’s business environment is that despite the heightened digitization, too much data resides in silos. The alignment of business and IT objectives helps organizations reap the dividends of digital transformation and reduce the risk of failure.

Risk Management and Compliance

Technological transformations come with real risks such as failure of an application, market/demand risk, and the threat of cyberattacks. Alignment makes it easier to control and manage technological risks by enabling a concerted approach to risk analysis and mitigation. Aligned companies are also in a better position to comply with evolving compliance issues.

Creates Greater Integrations

Majority of companies are leaving money on the table because of poor IT integration. Business-IT alignment allows businesses greater integrations hence creating efficient workflows and faster decision making.

What Causes Misalignment?

Despite the immense benefits of business-IT strategy alignment, many companies still find it onerous to maintain effective inter-departmental communication. The rivalry between the CFO and CIO, which sometimes drags the staff, leads to full-blown flare-ups impeding organizational success.

The poor state of technical literacy among business leaders may be to blame for misalignments. If business leaders place unrealistic expectations on IT, it creates disharmony as IT teams push back. Moreover, as business leaders consider new strategic directions without involving IT, the result is a tug-of-war bogging down any meaningful progress. Lastly, technical illiteracy shows when leaders are unwilling to discard archaic technology despite clear industry trends and best advice from IT teams.

Communication is vital to every organization. Poor communication among business departments leads to confusion and paralysis as leaders struggle to motivate staff and sell their ideas. This is made worse when some departments receive and act on the communication while others remain stuck with the status quo. The strategic business plans get a half-hearted embrace from certain quarters, which leads to failure in the long run.

Final Verdict

While most business leaders believe their companies have clarity on their digital transformation path, an ever-present impediment is the lack of goals alignment. As a result, technological transformation efforts are ending up short on the intended ROI. Achieving Business-IT alignment is as much a leadership issue as it is a strategy, technology, culture, and talent issue.

Why should information systems align with the strategies of the organization?

What is strategic alignment in information system?

Who is responsible for aligning an information system with the strategic goals of an Organisation?