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8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
1/8
ALIGNING
IT
WITH TIE BUSINESS
STRATEGY
ASSESSING
IT BUSINESS
ALIGNMENT
erry uftm n
Alignment is
the
perennial
business
chart-topper on top-ten lists
of IT issues.
What
foliows is
a
methodology developed by the author for assessing
a
company s
alignment Modeled after
the C apability M aturity
Model
developed
by Carnegie Mellon s Software
Engineering
Institute,
but focused
on
a
more strategic set
of business practices,
this
tool has been
successfully
tested
at more than 50 Global
2000 companies
and is currently the
subject
of a
benchmaricing
study
sponsored
by the
Society
for Information
Management and
The
Conference
Board. The
primary objective of
the assessment
is to identify specific recommendations
for improving
the
alignment
of IT and the
business.
UIGN1MENT
IS THE PERENNIAL
BtJSLNESS
chart-topper on
top-ten lists of IT
issues.
Educating
line
management
on technolo-
gy s
possibilities
and
limitations
is diffi-
cult; so is
setting IT
priorities for
projects,
developing
resources
and
skills, and integrat-
ing systems with corporate strategy.
It is even
tougher to
keep
business and IT
aligned as
business
strategies
and technology
evolve.
There
is
no
silver-bullet
solution,
but
achieving
alignment
is
possible.
A
decade
of
research has
found
that the
key is building the
right relation-
ships and processes,
and pioviding
the neces-
s ry trainiing.
What follows
is
a
methodology
developed
by the author for
assessing a company s align-
ment.
Modeled after the
Capability
Maturity
Model® developed
by
Carnegie
Mellon s
Soft-
ware
Engineering
Institute, but focused on
a
more strategic set
of business practices, this
tool
has
been
successfully tested
at more than
50
G;lobal 2000
companies and
is currently the
subject of
a benchmarking study
sponsored
by
the Society
for
Information
Management
and
The
Conference
Board. The primary
objective
of
the
assessment
is
to
identify specific recom-
mendations for improving
the
alignment
of
IT
and the
business.
ALIGNMENT CATEGORIES
The
tool
has
sLx IT-business alignment crit:eria,
or maturity
categories, that are included
in
each assessment:
L
2.
3
4.
5
6
Communications Maturity
Competency/Value
Measurements
Maturity
Covernance
Maturity
Partnership
Maturity
Technology
Scope Maturity
Skills
Maturitv
Each maturity
category is
discussed
below. A
tist
of
specific practices
for each of
the
six
alignment criteria can be found
in Exhibit 1.
ommunications
Maturity
Effective
exchange
of
ideas
and
a clear
under-
standing of what it takes to
ensure successful
strategies
are
high
on
the
list
of
enablers antd
in-
hibitors to
alignment. Too
often there is
little
business
awareness on the part of IT or
little IT
appreciation on the
part of the business.
(iiven
the
dynamic
environment
in
which most orga-
nizations find themselves, ensuring
ongoing
knowledge sharing across
organizations is par-
amount.
N FO RM
AT; O N SY ST E MYS
MA N A G
FM EN
FAlL
2003
JERRY
LUFTMAIN
is
professorat the Howe
School of
Technology
Management t
Stevens
Instituteof
Technology
in
hIoboken New Jersey.
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
2/8
LIGNING
ITWITH THE
BUSINESS STRATEGY
EXHIBIT
I Alignment
Criteria
Alignment
CrIterion.
Communications
Maturity
Level 1:
With Process
No
Alignment
Level 2:
Beginning
Process
Level 3:
Establishing
Process
Level 4:
Improved
Process
Level
5:
Optimal
Process
Complete
Alignment
IT management
lacks
understanding
Understanding
of IT
Managers lack
by Business
understanding
Organizational
Learning
Style
and Ease
of
Access
Leveraging
Intellectual
Assets
.T-Business
Liaison
Staff
IT
Metrics
Business Metrcs
Link between
ITand
Business
Metrics
Service
Level
Agreements
Benchmarking
Formally Assess
IT
Investrnents
Continuous
Improvement
Practices
Casual conversation
and
meetings
Limitea
understanding
by
IT
management
Limited
understanding
by
rmanagers
Newsletters,
reports,
group e-mail
Business to IT only;
One-way,
somewhat
formal
informal
d
hoc
None
or
use
only as
needed
Technical only
IT investments
rneasured rarely,
if
ever
Value of IT
investments rarely
measured
Use
sporadically
Seldom or never
Do not assess
None
Some
structured
sharing
emerging
Primary
IT Business
iink
Technical cost;
metrics
rarely
reviewed
Costlunit;
rareiy
reviewed
Good
understanding
by
IT
management
Good understanding
by managers
Training
departmental
meetings
Two-way,
forrnal
Structured
around
key processes
Facilitate
knowledge
transfer
Review, act
on
technical,
ROI
mnetrics
Review,
act on ROI,
cost
Business,
IT metrics
Business, IT
metrins
not linked
becoming linked
With units for
technology
performance
Sometimes
benchmark
informally
With units; becoming
enterprisewide
May
benchmark
formaily, seldom
ac t
Only
when there
is
a
Becoming a
routine
problem
occurrence
Few;
effectiveness
not
measured
Formai Business
Not done, or done
as
At
unit
functional
Strategy
Planning needed
level, slight IT
input
Formal IT
Strategy
Planning
Organizational
Structure
Reporting
Relationships
How
IT Is Budgeted
Rationale for iT
Spending
Not done, or done
as
needed
Centralized or
decentralized
CIO reports to OF
Cost center,
spending
is
unpredictable
Reduce costs
At
unit functional
level, light
business
input
Central/decentral:
some collocation
CtO reports to
CFO
Cost
center
by unit
Productivity,
efficiency
Few;
starting to
measure
effectiveness
Some IT input
and
cross-functional
planning
Sorne business
input
and cross-
functionai
planning
Central/decentral
or
Federal
CIO reports to
CO O
Some
projects
treated as
investments
Also a
process
enabler
Understanding
encouraged
among
IT staff
Understanding
encouraged
among
staff
Formal
methods
sponsored
by
senior
management
Two-way,
somewhat
informal,
Understancling
required
of
ali IT
staff
Understanding
required of staff
Learning
mon:tored
for effectiveness
Two-way,
informal
and
flexible
Formal sharing
at all Formal
sharing with
levels
partners
Facilitate
relationship
building
Also
measure
effectiveness
Also measure
customer
value
Formally linked;
reviewed
and
acted
upon
Enterprisewide
Routinely
benchmark,
usually
act
Routinety assess
and
act
on
findings
Many;
frequently
measure
effectiveness
At
unit and
enterprise,
with
IT
At
unit and
enterprise,
with
business
Federai
CIO
reports to
COO
or
CEO
IT treated
as
investment
Process drnver,
strategy
enabler
Building relationsnip
with
partners
Also
measure
business
ops. HR,
partners
Baianced
scorecard,
incIudes partners
Balanced
scorecard, includes
partners
Includes
partners
Routinely
bench mark,
act on ,
and
measure
results
Routinely
assess,
act on,
and
measure
results
Practices and
measures
well
established
With IT and
partners
With partners
Federal
CiO
reports
to
CE O
Profit center
Competitive
advantage,
profit
N
F R
P M
A
r
N S Y S T E M S M A N
A 2 E M F N
FA 2
03
Understanding
ot
Business
by
IT
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
3/8
ALIGNING IT
WITH THE
BUSINESS
STRATEGY
EXHI IT I
Alignment
Criteria (Continued)
Alignment
Criterion:
Communications
Maturity
Level 1:
With Process
No Alignment)
Level 2:
eginning
Process
Level 3:
Establishing
Process
Level 4:
Improved
Process
Level
5:
Optimal
Process
Complete
Alignment)
Senior-Level
IT
Steering
Comrmittee
How Projects
Are
Prioritized
Business
Perception
of
IT
.T s Role
in Strategic
Business Planning
Shared
Risks and
Rewards
Managing
the
IT Business
Relationship
Relationship/Trust
Style
Business
Sponsors/
Champions
Primary
Systems
Standards
Architectural
Integration
How
IT
Infrastructure
Is
Perceived
Innovative,
Entrepreneurial
Environment
Key IT HR Decisions
Made by:
Change
Readiness
Career Crossover
Opportunities
Cross-Functional
Training and Job
Rotation
Social Interaction
Attract
and
Retain
Top
Talent
Do
not
have
React to
business
or
IT
need
Cost
of doing
business
Not invoived
IT
takes
ail the risks,
receives
no
rewards
IT business
relationship
is
no t
managed
Conflict
and
mistrust
Usually none
Cost of
doing
business
Not involved
IT
takes all
the
risks, receives
no
rewards
IT-business
relationship is
not
managed
Discouraged
Top business
and iT
management
at
corporate
Tend
to
resist
change
Job transfers
rarely
occur
No opportunities
Meet informally
as
needed
Determined
by IT
function
Becoming
an
asset
Enables
business
processes
IT
takes
most risks
with little reward
Managed
on an
ad
ho basis
Transactional
relationship
Often
have a senior
IT sponsor or
champion
Becoming
an asset
Enables
business
processes
IT
takes
most
risks
with
little
reward
Managed
on
an
ho
basis
Somewhat
encouraged
at
unit
level
Same, with emerging
functional
influence
Change
readiness
programs
emerging
Occasionally
occur
within unit
Decided
by
units
Minimal
IT business Strictly a business-
interaction
only
relationship
No retention
program;
poor
recruiting
IT
hiring
focused on
technical
skills
Formal committees
meet regularly
Determined by
business function
Enables future
business
activity
Drives
business
processes
IT,
business start
sharing
risks,
rewards
Processes
exist bu t
not always
followed
IT
becoming
a
valued service
provider
IT
and business
sponsor or
champion at
unit
level
Enabies future
business
activity
Drives business
processes
IT,
business start
sharing risks,
rewards
Proven
to be
effective
Mutually determined
Drives future
business
activity
Enables
or drives
business strategy
Risks,
rewards
always shared
Processes
exist
and
complied
with
Long-term
partnership
Business
sponsor or
champion at
corporate level
Drives future
business activity
Enables or
drives
business
strategy
Risks, rewards
aiways
shared
Processes exist but
Processes exist
and
not always
followed are
complied with
Strongly
encouraged Also at
corporate
at unit level
level
Top
business and
unit management;
IT advises
Top
business
and IT
management
across
firm
Also
includes
external partner3
Partners
priorities
are
considered
Partner with
business in
creating value
IT, business adapt
quickly to change
Managers
incenteJ
to take
risks
Processes are
continuously
improved
Partner,
trusted
vendor
or
IT
services
CEO
is
the
business
sponsor
or
champion
Partner with
business in
creating
value
IT,
business
adapi
quickly to change
Managers incented
to take risks
Processes are
continuously
improved
Also
with partners
Top
management
across firm and
partners
Programs
in place
at
Programs
in place
at
Also proactive
an
d
functional level
corporate level
anticipate change
Regularly
occur
for
unit
management
Regularly occurat
all
Also
at
corporate
unit
levels
level
Formal programs
run Aiso
across
by
all
units
enterprise
Trust
and
confidence
Trust and confidence
is
starting
achieved
Technology
and
business focus;
retention
program
Formal
program for
hiring and
retaining
Also with
partner;
Attained
with
customers and
partners
Effective
program
for
hiring
and
retairning
INFORMAThON
SYLTEMS
MANAGEMENT
INFO
RPM
AT IO N SYST
E MS
MAN
A G
E M ENT
F
A[.L L
2003O3
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
4/8
LIGNING
ITWITH
THE BUSINESS
STR TEGY
Many
finns choose
to
draw on
liaisons
to
fa-
cilitate
this
knowledge
sharing.
The
keyword
here
is facilitate.'
This
author has
often seen
facilitators
whose
role
becomes
serving
as the
sole
conduit
for interaction
among
the
differ-
ent
organizations.This
approach
tends
to stifle,
rather
than
foster,
effective
communications.
Rigid
protocols
that
impede
discussions
and
the
sharing of
ideas
should be
avoided.
Competency/Value
Measurements
Maturity
Too many
IT
organizations cannot
demonstrate
their
value
to the
business
in terms
that
the
business
understands.
Frequently,
business
and
IT
metrics
of
v-alue differ.
A
balanced 'dash-
board that
diemonstrates
th-e
value of
If
in
terms
of contribution
to the
business
is needed.
Service
levels that
assess
If s commitments
to the
business
often
help. However,
the
ser-
vice levels
must
be expressed
in terms
that
the
business
understands
and
accepts.The
service
levels
should be
tied to
criteria that
clearly de-
fine the
rewards
and penalties
for suwpassing,
or
missing, the
objectives.
Frequently,
organizations devote
significant
resotrces
to measuring
performance
factors.
However,
they
spend
miuch
less of
their re-
sources on taking
action
based on these
mea-
surements. For
example,
reqjuiring
a return
on
investmnent
(ROD)
before a project
begins, but
not
reviewing
hlow
well objectives
were
met
af-
ter
the
project
was
deploved, provides
little
value
to the
organization.
It
is
important
to
continuously
assess
the performance
metrics
criteria
to understand
(1) the factors
that
lead
to
missing the
criteria
and (2)
what
can
be
learned
to imaprove
the
environment.
Governance
Maturity
The
considerations
for IT
governance
include,
how the
authoritv
for resoturces,
risk,
conflict
resolution,
and
responsibility
for
IT
is shared
among businiess
partners,
IT inanagemnent,
and
service
providers. Project selection
and priori-
tization issues
are includted
here.
Ensuring
that
the appropriate
business anid
IT participants
formally
discuss and review
the priorities
andJ
allocation
of IT
resources
is aimong
the
most
important
enablers
(or
inlhbitors)
of
align-
ment.This
decision-making
authority
needs
to
be clearly
defined,
Partnership
Maturity
The relationship that
exists
among the
business
and IT
organizationis
is another
criterion
that
ranks
high
among the
enablers
and
iihibitors
of alignment.
Giving
the
IT function the
oppor
tuanity
to have
an eqLual
role
in
defining
business
strategies
is
obviously
important.
However,
how
e-ach
organization
perceives
the contribu-
tion of the
other,
the trsust that
develops
among
the
participanits,
ensuring
appropriate
businiess
sponsors
and chamupions
of
IT endeavors,
and
the
sharing of
risks and
rewards
are all
major
contributors
to mature
alignment.This
partner-
ship
should evolve
to
a point
wlhere
IT
both
en
ables
and drives
changes to
both
business
processes
and
business
strategies.
Naturally,
this demancds
having
a clearly
defined
vision
shared
bv the CIO
and
CEO.
Technolagy
Scope
Maturity
This
set
of criteria
assesses
the extent
to
which
IT is
able to:
]
Go beyotnd
the
back
office
and
the front
office
of
the
organization
LIAssunme
a
role
suipporting
a flexible
infra-
structure
that
is
transparent
to
all business
partners
anid
customers
[ Evaluate
and
apply emerging
technologies
effectively
i
Enable or
drive
bulsiness
processes
and strat-
egies
as a true
standard
L
Provide
solutions
customizable
to
customier
needs
Skills
Maturity
This
category
encompasses
all IT
huaman re-
source
considerations.
such as
how
to hire and
fire, motivate,
train
and educate,
and
culture.
(icing
beyond
the
traditional
considerations
such as
training,
salary, performance
feedback
and career
opportunities,
there
are
factors that
include the
organization's
cultural
andi
social
environment.
For example,
is
the
organization
readv for change
in this
dynamic environment?
Do
individuals feel
personally
responsible
for
business
innovation?
Can
individuals
and
orga-
nizations learn quickly from
their
experience?
Does
the organization
leverage innovative
ideas
and the
spirit of entrepreneurshp?
These
are some of
the important
conditions
of mature
organizations.
LEVELS
O
ALIGNMENT
MATURITY
Eachi of
the
six criteria
described
anove
has
a
set
of
attributes
that
allow
particsular
dimen-
sions ( orpractices)
to
be assessed using
a
rating
schem-ne
of five
levels.
For example,
for the prac-
tice
Understanding of
business by if uider
the
I
N F C
iNAA I N
S Y S I
S
NAA N
A
,
F M
f
N T
F A I
1 2
olg
beyond
the
traditional
considerations
aire factors
that
include
the
oreranization
cultural
and
Social
environnment
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
5/8
LIGNING
IT
WITH THE
BUSINESS STR TEGY
Communications Maturity criterion,
the five
levels
are:
Each
description corresponds to a
level of
alignment, of which there are
five:
Level
1: IT management lacks understanding
Level
2: Lilnited
understanding
by IT1manage-
ment
Level 3: Good understanding
by
IT
manage-
ment
Level
4:
Understanding
encouraged
among IT
staff
Level 5: Understanding required of
all IT staff
It
is important
to
have
both business
and
IT executives evaluate
each of
the
practices
for
the
six
maturity
criteria.Typically,
the
initial re-
view
will
produce
divergent
results, and this
outcome
is indicative
of
the organization's
alignment problems and opportunities being
addressed.
The objective
is
for
the team of IT
and business
executives
to
converge
on
a
matu-
rity level.
Further,
the
relative inportance
of
each of
the attributes for each maturity criterion
may
differ
among
organizations. For example,
in
some organizations, the use
of SLAs (service
level agreements), which
is a
practice
under
the Competency/Value Measurements
Maturity
criterion,
may
not be considered
as
important
to alignment
as the effectiveness of
IT-busi-
ness
liaisons,
which
is
a
practice under the
Communications Matirity
criterion.
Assigning
the SLA
practice a
low maturity
assessment
should not
significantly
impact the
overall rat-
ing.
However, it is still valuable
for the assess-
ment teanm to discuss
why
a particular
attribute
(in this example, SLAs) is
less
significant
than
another attribute (liaisons).
After
each practice is
assessed,
an
average
score for the
evaluation team is calculated for
each practice, and then
an average
category
score
is
determined
for each of the six criteria
(see Exhibit 2). The
evaluation team
then
uses
these scores for each criterion
to converge on
an
overall assessment of
the
IT
alignment matu-
rity level for
the firm
(see below). The
next
higher
level
of maturity
is then used as a road-
map to
identify
what the
firm
should
do next.
A
trained facilitator
is typically needed for
these
sessions.
SSESSING YOUR
ORG NIZ TION
This
rating
system
will
help you
assess your
company's
level
of
alignment. You
will
ulti-
mately
decide
which of the
following
defini-
tions
best describes
your
business practices.
Level
1
Without Process (no alignment)
Level 2
Beginning
Process
Level
3: Establishing Process
Level
4: Improved Process
Level
5:
Optimal Process (complete alignment)
Level
1
companies lack the
processes and
com-
munication needed to
attain
alignment. In
Lev-
el
5 companies, IT
and
other
busi
ness
functions (marketing, finance, Rl D, etc.) adapt
their
strategies
together,
using fully developed
processes that include extemal
partners and
customers. Organizations should seek
to
attain,
and
sustain, the fifth and highest level
of align-
ment.
Conducting
an
assessment
has
the
follow-
ing four steps:
1 Form
the assessment
team.
Create
a
team
of IT and business executives
to
perform
the
assessment.Ten
to
thirty executives typ-
ically
participate,
depending on whether
a
single
business unit
or the entire enterprise
is being assessed.
2
ather information.
Team
members
should assess each of
the
38 alignmient
practices and
determine which
level, i
rom
1
to 5, best
matches their organization (see
Exhibit
1).This
can be done in three wrays:
(1) in a
facilitated
group setting,
(2)
by
hav-
ing each
member
complete a
survey
and
then
meeting to discuss the results, or
(3 )
by combining
the
two approaches (e.g., in
situations where
it is
not
possible fo,r all
group members to meet).
3. Decide on individual
scores.
The 1.eamn
agrees on a score
for each practice. The
most
valuable
part of
the assessment is
not
the score, but understanding
its implica-
tions
for
the
entire company and what
needs
to
be
done to
improve
it.
An
average
of
the practice
scores
is
used to deter
-nine
a category score for each of the
six
criteria
(see
Exhibit 2).
4.
Decide
on
an ovlerall
alignmentscore.The
team reaches consensus on what overall
level
to
assign
the organization.Aver.ging
the category scores accomplishes
this,
but
having dialogue
among
the participants
is
extremely valuable.
For example, some
companies adjust the alignment score
because they give more weight to particu-
lar
practices.
NFORMATI
O
SYST ZMS
MANAGEMENT
F
A
*
L
2
0 0 3
WArganizations
should
seek
to
attain and
sustain the fifth
and highest
level
of alignment.
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
6/8
LIGNING
IT
WITH
THE
BUSINESS STR TEGY
EXHIBIT
2 Tally Sheet
Practice
Categories
Pr
Communications
Competency/
Value
Measurements
Governance
Partnership
Technoiogy
Scope
Skills
2
3
4
5
6
8
9
10
11
12
13
14
is
16
17
18
19
20
21
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
actices
Understanding of business
by
IT
Understanding
of IT by
business
Organizational learning
Style and ease
of access
Leveraging
intellectual
assets
IT-business liaison
sta-f
IT
metrics
Business metrics
Link
between
iT
and
business
metrics
Service
level
agreements
Benchmarking
Forrrmally
assess
IT nvestments
Continuous
improvernent
practices
Formal
business strategy
planning
Formal
iT strategy
planning
Organizational
structure
Reporting relationships
How
IT is budgeted
Rationaie
for
ITspending
Senior-level
IT
steering
committee
How projects
are prioritized
Business perception
of
IT
IT s role
in strategic
business planning
Shared
risks and rewards
Managing
the IT-business relationship
Relationship/trust
style
Business
sponsors/champions
Primary
systems
Standards
Architectural
integration
How
IT
infrastructure
is
perceived
Innovative, entrepreneurial
environment
Key
IT
HR decisions
made by:
Change
readiness
Career
crossover opportunities
Cross-functional
training and
job rotation
Social interaction
Attract
and
retain
top talent
Your
Alignment
Score.
I N
F
R AT
CN SYFS T EM
S MVAN G E
M N
F
A L L 2 )
3
Averaged
Scores
1
1 5
2 2 5
3
3.5
4 4 5
5
Average
Catgory
Score
8/21/2019 Alineando Las TI Con La Estrategia Del Negocio
7/8
LIGNING
IT
WITH
THE
BUSINESS
STR TEGY
The overall alignment
score can be
used as
a benchmarking
aid to compare
with
other
or-
ganizations.
Global 1000
executives who
have
used
this tool
for the first time have
rated
their
organizations,
on
average
at
Level
2 (Begin-
ning Process), although
they
typically score
at
Level
3
for a few
alignment
practices.
CONCLUSION
Achieving
and sustaining
IT-business
align-
ment continues to
be
a
major issue. Experience
shows
that no
single
activity
will enable
a firm
to attain
and sustain alignment.
There
are
too
many
variables.
The technology and
business
environments
are too
dynamic.
The
strategic
alignment maturity
assess-
ment tool
provides
a vehicle
to evaluate
whlere
an organization
is,
and
where
it needs to go,
to
attain
and sustain business-IT
alignment.
The
careful assessment
of a
firm s IT-business align-
ment
maturity
is an
important
step
in
identify-
ing
the
specific actions necessary
to ensure
that IT is being
used to appropriately
enable
or
drive the
business strategy.
Note
1.
See also Jerry
Lufftan,
editor, Comnpeting
ir the
InformationAge.Align
in the
Sand
Oxfor d
University
Press,
2003; and
Jerry Luftman
Managing
tbe [T
Resource
Prentice
Hall,
2:003.
IN
FO PM T IO N
SYS T E MS
M N AC; E M
EN
T
F
A
LL 2
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8/8
COPYRIGHT INFORMATION
TITLE: Assessing IT/Business Alignment
SOURCE: Inf Syst Manage 20 no4 Fall 2003
WN: 0328802780001
The magazine publisher is the copyright holder of this article and it
is reproduced with permission. Further reproduction of this article in
violation of the copyright is prohibited. To contact the publisher:
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Copyright 1982-2003 The H.W. Wilson Company. All rights reserved.