Advising on IT-business alignment The challenges of IT-business alignment A presentation for...

advising on IT-business alignment

mwdmacehiterward-dutton

The challenges of

IT-business alignment

A presentation for Microsoft’s TechNet IT Director’s Strategy Day

Neil Macehiter, Partner

© Macehiter Ward-Dutton 2005 www.mwdadvisors.com 2

Agenda

A brief introduction to MWD Aligning IT and business Understanding business processes Understanding managed IT services Summary


A brief introduction to MWD

Strategic advice and consulting Focus on issues concerning IT-business

alignment– Driving more business value out of enterprise IT– Not about the “nuts and bolts” of individual

technologies

Core: two highly experienced industry analysts / practitioners– Sun, Oracle, Sybase, Ovum, Deloitte Consulting,

etc

Based in UK, Europe-wide capability

© Macehiter Ward-Dutton 2005 www.mwdadvisors.com 4advising on IT-business alignment


Aligning IT and business


IT-business alignment: multiple angles

IT

Business

Changeimplications

Changecapabilities,limitations

Investmentin capability

Deliveryof value

It’s not just about “building stuff that the business will use”


Why now?

Globalisation– Customers, partners, suppliers – and

competition– Connectedness driving sophisticated value

chains

Transparency– Industry regulations, consumer pressure and

competition driving openness

Service focus– Differentiation and shareholder value

increasingly derived from service experience


From a UK perspective

A healthy economy – albeit growing at a low rate– Spurred by public sector investment – With a knock-on effect on the IT market

Globalisation– >4000 (+400/year) UK-Sino joint ventures– Vonage launches UK VoIP service (01/05)– Tesco enters mortgage market with First Active (11/04)

Transparency– Corporate Responsibility (CORE) coalition– Government initiatives e.g. Extractive Industries Transparency

Initiative– International Financial Reporting Standards (IFRS)

Service Focus– BT launches mobile music service with UBC Media and Virgin Mobile

(06/05)– Amazon Services Europe to underpin M&S e-commerce systems

(04/05)


The real world

From Towards

Build, or buy vs. build

Application implementation

Buy AND build AND integrate

Back officeBusiness area investment

focusFront office and

beyond

“Personal productivity”

desktopIT access environment

Productivity desktop +

global access to resources

Data processingTechnology innovation

focus

Communication, collaboration,

integration

Older approaches fail to capture reality re: integration, communication, collaboration,

supply complexity

Outsourcing vs. in-house

delivery

Capability supply “Multi-sourcing”


A common language is the essential starting point

IT

Business

?

“Investment prioritised in terms of business need”

“Systems that deliver value to the business”

“Clear direction from the business about focus, strategy”

“Collaborative approach to implementing business change”

A common, agreed representation of business activity, goals

+A common, agreed view of how current and future IT provides structured support to the business in this context


Reflecting the environment in IT-business alignment

Business

IT

Busin

ess pr

oces

s

Busin

ess pr

oces

s

Busin

ess pr

oces

s

Busin

ess pr

oces

s

Busin

ess pr

oces

s

ManagedIT

serviceManage

dIT

service

ManagedIT

serviceManage

dIT

service

ManagedIT

service

A P P L I C A T I O N S & I N F O R M A T I O NI N F R A S T R U C T U R E

B U S I N E S S S T R A T E G Y

Business processesform the foundationof a commonlanguage

IT defines and delivers“business level” serviceswhich support the rightprocesses, the right way



Understanding business

processes


Business process

Applications

Data

The challenge

Activities, processesThe business

The real world doesn’t “decompose” nicely – and IT isn’tjust about things you build in-house


Providing structured support for business processes means understanding scope & scale of interactions

From

Data design tightly coupled to application design, and

application design to “user requirements” – very restricted

view of process needs

B u

s i n e

s sp r o

c e s s

Towards

B u

s i n

e s

s p

r o

c e

s s

Loosely-coupled resources provide services which are

designed to support the interactions that take place within a business process


IT approaches must consider business process support more broadly

B u

s i n

e s

s p

r o

c e

s s

Transactionalservices

Informationservices

Communication& collaboration

services

Support scenario: a mesh of

interactions

We have to model more than just transactional applications


A universe of business processes [1]

E E E E E

M M M

S

“Execution” processes – instances handle particular units of work within business activities

“Management” processes – instances oversee instances of execution processes

“Strategy” processes – instances oversee instances of management processes

A hierarchy of business processes


A universe of business processes [2]

E

E

E

M

M

S

Contribution to competitive differentiation

E

E

E

M

M

S

Non-differentiating(focus should be on efficiency)

Differentiating(focus should be on flexibility)


Observations on the nature of business processes

E

E

E

M

M

S

E

E

E

M

M

S

Increase

d structu

re, predict

ability

Increase

d colla

boration, a

d-hoc nature




A resulting (wider) view of technical architecture

Level of

pro

cess

abst

ract

ion

Low

High

Non-differentiating Differentiating

“Strategy”business processes

“Management”business processes

“Execution”business processes

Business functions

“Pure” BPMS

“Tra

dit

ional”

app.

Develo

pm

ent

tools

&

fram

ew

ork

s

Collaboration tools

Simple portal

Business intelligencetools

Workflow

Composite service-basedapplication development &

integration



Understanding managed IT

services


So what is an IT service?

“CRM database

”

“Provide automated support for my sales

force”

“Update customer details”

Line of business perspective

IT operations perspective

Developer perspective


Managed IT services – aligned with business processes

Lifecycle servicesManaging the lifecycles of business functions and infrastructure

Business function servicesAutomating business functions

Infrastructure servicesProviding the platform

Users’ experiences of “managed IT service”


Contracts bring obligations for suppliers and consumers

Message FormatMessage Sequence

Functions

SecurityResponse Time

Throughput

Usage CostLiability Clauses

Trust

FunctionalTerms

QoSTerms

Commercial

Terms


An organising model for service-oriented IT in the context of IT-business alignment

How can we align flexibility / reusability

requirements for business software

functions, to business needs?

How can we trade-off flexibility / reusability of

business function services with

efficiency / openness requirements?

How can we ensure that the right consumers get

the right kind of experience from these

services, and do so cost-effectively?

How should infrastructure elements provide their services to

different business functions? How should

infrastructure be optimally managed?

How can QoS responsibility be

delegated to infrastructure in a way that is easily flexed in response to changing

requirements?

How can we minimise the cost and risk of

overall process support while creating an business support

environment with more moving parts?

How should we differentiate lifecycle

service levels for different kinds of business function,

infrastructure?

How should we define and enforce

development, fault-fix and change-request

priorities?

How can we demonstrate the overall

value of the services that the IT organisation

and its resources provide to the

business?

Functional contract aspects

Quality-of-Service contract aspects

Commercial contract aspects

Business function services

Infrastructure services

Lifecycle services


An example – business function service design

Level of

pro

cess

abst

ract

ion

Low

High



Business activity role

“Strategy”business processes

“Management”business processes

“Execution”business processes

Activity functions

Technical functions

Reusability importanceincreases

Openness, flexibility demands increase

Efficiency demand increases



Summary


Summary

Today’s business environment brings IT-business alignment to the fore– In terms of investment, delivery and change

Business processes provide a common language– But the organisational context of real-world business

processes is complex

Managed IT services must align with business process priorities– It’s about more than business function services

Services and their contracts provide an organising model for service-oriented IT

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