Report on Business & Technology Alignment

InItIate SucceSS | Structure to achIeve | DelIver alwayS

April 2015

As Managing Partner and Chief Solution Architect, Chris is a Senior Management Consultant, Strategic Business Architect and Change Management practitioner with 20 years applied leadership and consulting experience.

With broad cross-industry experience with organizations of all types and sizes, Chris offers a unique perspective on a variety of strategic organizational and technology issues. A systems thinker by nature, Chris offers clients an unobstructed wide-angle lens to tactical and strategic opportunities and offers value in delivering a specific and measurable roadmap.

Introduction 3AProblemwithPriorities 4What’sImportant 7TheTrustFactor 8Implications 11

Table of Contents

About the Authors

A senior Information Technology Services leader with expertise in IT services delivery, application management and application delivery services. Andi has broad, international knowledge base with work for clients in retail, oil & gas, insurance, hospitality and telecommunications industries worldwide.

His experience includes e-commerce, retail supply chain, telecomm service management, point-of-sale, hospitality and accounting systems. He is a strategic thinker and a natural leader and has developed the ability to quickly understand the needs of a client’s business and associated IT projects, and translate these into strategies, priorities and practical action plans.

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Chris Enstrom Andi Gabb

Organizations are walking a tight rope of expectations when it comes to prioritizing and implementing technology. Our research, based on the data collected in February and March of 2015, clearly demonstrates the chasm continues to be large between the solutions being delivered by corporate IT departments and solution providers, and the needs of the users of these solutions.We uncovered a number of interesting and disturbing trends in our research. Of utmost importance is the clear disconnect between solution expectations and solution implementation. CIO’s and their counterparts within IT departments clearly have an uphill battle in building bridges and executing business-oriented solutions for their customers. The importance of delivering relevant solutions to customers must not be underestimated. The results show a continued lack of clarity between IT and business when it comes to investment priorities. Perhaps this is due to miscommunication, or perhaps it is a breakdown in expectations. Regardless of the cause, this research clearly demonstrates ineffective investment decisions and poor execution of technology solutions.

In our survey results, a full 62%, almost two-thirds, of respondents indicated there is no clear link between business objectives and technology investment. This expectation gap is significant.When combined with the consensus that budget constraints continue to be an issue, the importance for organizations to effectively evaluate their technology investments has to be one of the core priorities for 2015 and beyond.Three-quarter of respondents indicated that ‘aligning technology strategy to business objectives’ was either very important or absolutely essential, while only 24% stated that their organization was either above average or very high on the effectiveness scale when it comes to achieving that alignment. Moving forward for the rest of 2015 and into the coming years, change is mandatory. Bridging the gap between expectations, objectives, planning and execution must take top priority if companies wish to derive greater value from their IT investment wallet. While this is not a new problem, most have yet to take advantage of the opportunity to better utilize technology in enabling core business functions.

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“The IT-business relationship in most organizations is often a fractious one rather than a marriage of equals. Business teams often find the IT department’s high costs and long

implementation timelines unacceptable.”The Digital Transformation Symphony: When IT and Business Play in Sync, CapGemini Consulting. 2014.

1 | Introduction

For most organizations, achieving good return on IT investment does not depend simply on appropriate technology choices and their successful deployment. Many organizations, for example, face frustration with an increasing sprawl of initiatives, driven by conflicting agendas, and hampered by competition for funding.

Opportunities abound for organizations wishing to deliver greater value through IT. In order to produce results, someone has to take charge and lead the organization through a complete review of the implementation of technology solutions and how they align with core business objectives.In our survey, we were seeking answers and insight in the following five areas:1. What are the important goals that

organizations are striving to achieve in 2015 and how well equipped are they to succeed?

2. How effective is IT in delivering what organizations need?

3. What aspects of change management are important to organizations?

4. What trends in project management are important to organizations?

5. What are the most important technology objectives and the biggest technology challenges for 2015?

Our results are clear. A disconnect between desired solutions and implementation capabilities is similar across all respondents.

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2 | A Problem with Priorities?

We first asked respondents to rate the importance of nine capabilities in their organization. In order of most important to least important, the ranking result was:1. Achieving superior operational

effectiveness2. Aligning technology strategy &

planning to business objectives3. Implementing strategic technology

solutions4. Executing successful organizational

change management5. Implementing innovative solutions6. Improving collaboration with other

workgroups and departments7. Designing and implementing process

optimization8. Improving project and program

governance9. Understanding and defining a

business architecture modelAttempting to decipher prioritization is a significant issue facing most companies. While the results show a clear order of priority, the key finding of importance

is that respondents rated six of the nine with above average importance (Figure 1).Understanding that most every business relies heavily on technology to enable core business functionality, the difficulty lies in prioritizing investment when everything is deemed to be important.The second critical question we asked in our research was to rate the overall effectiveness of the organization in the same nine capabilities. In order of most to least effective, these are the results:1. Achieving superior operational

effectiveness2. Aligning technology strategy &

planning to business objectives3. Implementing strategic technology

solutions4. Implementing innovative solutions5. Improving collaboration with other

workgroups and departments6. Designing and implementing process

optimization

7. Improving project and program governance

8. Executing successful organizational change management

9. Understanding and defining a business architecture model

At first glance, there is a clear correlation between the importance and effectiveness rankings. In deeper analysis however, only the top two capabilities were ranked above (only slightly) average effectiveness (Figure 2) in contrast to the high level of importance assigned to them as objectives in the previous question.As troubling as this expectation gap is, the challenge faced by organizations is complicated by the fact that we found a significant disparity between the effectiveness of organizations to deliver solutions and the importance the business places on those solutions. The results show a large confidence gap between the importance and effectiveness across every dimension.When plotted together, the results are

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Figure 2 | The AbiliTy To execuTe on The MosT iMporTAnT

objecTives is A chAllenge in MAny orgAnizAiTons

Figure 1 | chAllenges exisT For iT when The business

DeeMs everyThing iMporTAnT

alarming. Not only is there an issue with prioritization of objectives and execution, the ability for organizations to deliver on even the most important capabilities remains a challenge.The four most important objectives also show the largest confidence gap. There are a number of conclusions we can draw from this aspect of the research.Collectively, the sheer volume of work IT is being asked to accomplish in light of budget constraints is unmanageable. Part of the challenge facing IT leaders is the competing priorities the business puts on delivering solutions. How can we expect IT to deliver value to their customers if the customers themselves cannot agree on what is important?The skill gap between IT capabilities and business objectives is large.The confidence gap presented clearly shows that desire and ability are far apart when it comes to delivering on what’s important.Drawing upon this finding, we have seen that overall effectiveness of execution is

low. In order to drive compelling dialogue and structure projects and delivery of IT services, it is imperative that IT leadership engage in strategic conversations with their counterparts on the executive team. Driving value through technology requires not only clear priorities aligned with organizational objectives, but also the ability to “skill-up” the IT workforce to execute on those objectives.When viewed as a whole, the nine parameters on which we gathered data provide line of sight to larger, longer-term issues with delivering value through IT and enabling business to achieve objectives.Combined, the confidence gap is clear evidence that initiating success requires alignment across the organization around global (organization-wide) benefits.A new way of assessing, measuring and implementing technology roadmaps is a must. No longer can organizations continue with the status quo.

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Figure 3 | The DiFFerence beTween whAT The orgAnizATion wAnTs AnD The AbiliTy To

Deliver shows A shocking DisconnecT.

In ranking objectives for 2015, respondents singled out operational effectiveness and aligning technology strategy as the top two, with strategic technology solutions and organizational change management essentially equal third.Operational effectiveness as an objective is somewhat intuitive and perhaps too general, however, it is apparent that organizations see technology and change management tightly coupled with operational improvements. One point of note here could be that, while IT can reasonably be expected to have responsibility for the effective use of technology across organizations, ownership of change management, not usually as clearly assigned, needs a home, with the associated skills employed or contracted.Of interest, when taken together, these four objectives require alignment amongst each other. Operational effectiveness (or more correctly improving it) is fully dependent on the ability to manage change. Additionally, in many cases, it also necessitates building technology solutions that enable said effectiveness. It is likely no coincidence that the leading objectives identified in the research have such a common theme.

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3 | What’s Important

“… organizations see technology and change

management tightly coupled with operational

improvements.”

In correlating the results between important objectives and effectiveness to execute, one message drowned out all others, namely that organizations are poorly equipped to implement OCM successfully despite it being high on the list of objectives.The message? If you are targeting organizational change this year and your performance objectives depend on achieving superior operational effectiveness as a result, then you should be looking for help.OCM is no longer for amateurs and the continued innovation in the world of technology is causing organizations to continually rethink how they work and how they are organized. If prolonged periods of dysfunctional operation are to be avoided subsequent to increasingly frequent process and organizational changes, then OCM must be embraced as a professional discipline and adopted as a strategic business function.

Organizations are going to struggle most with implementing organizational change.

When asked to agree (or not) with statements reflecting trust in IT serving the best interests of the business, there was no clear vote of confidence. While respondents agreed somehwat that IT delivers projects with tangible outcomes, IT has clearly not yet reached the lofty heights of “trusted advisor” status. (The question relating to IT as a trusted advisor scored the lowest). Nearly half of respondents were on the ‘disagree’ side of this statement. A troubling fact indeed!Perhaps most significant was the lack of strong agreement with any of the statements painting IT in a positive light (Figure 4). For the question regarding delivering projects with tangible outcomes, the results shows only a slightly higher than average ability. While there was a definite hierarchy in the results, the spread of scores from top to bottom was quite narrow (7%). This indicated to us that opinions were fairly diverse regarding the effectiveness

(or lack thereof) of IT. While confidence cannot be described as high, there appeared to be no one factor which stood out as a black mark against those of us in the business of providing value through technology – maybe we are just mediocre at everything!A final observation in this section is regarding the central issue of business and technology alignment. Of all the statements in this section, “My organization has a clear link between business objectives and technology investment & implementation” was the one that had the biggest spread of opinions. (i.e. more respondents “strongly agreed” or “strongly disagreed” with this statement than any other. Also an equal number agreed as disagreed.) There are clearly some organizations that are succcessfully maintaining the business objective/technology investment link, and those of us who are not in that group would probably be well

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4 | The Trust Factor

“The challenge for the project management practitioner, however, is how to maintain the engagement of

key executives and to ensure that they have a clear understanding of what sponsorship means—specifically

how to deliver the balance between driving accountability and energizing people.”

PMI – Enabling Change Through Strategic Initiatives

Figure 4 | DeMonsTrATing AnD Delivering iT vAlue conTinues To be A chAllenge in

MAny orgAnizATions.

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advised to seek them out and make note of their methods.

Leadership support and increased awareness are the important trends in Organizational Change Management.

Being in the business of Change, we were very interested to uncover views on the trends that we have witnessed on the OCM landscape. Questions addressed, in our view, are the nine most prevalent trends recently observed. No runaway winner emerged, but clearly people felt that leadership support, need awareness and emphasis on training, communications and reinforcement are important. The most recent best practices benchmarking report on Change

“Regardless of the degree of formality, the most essential ingredients are based on communication and mutual understanding between business and IT management

to ensure that IT resources are prioritised according to business needs and IT-based business solutions that enable their users to create real value for the business are delivered. This requires business leadership to take more direct responsibility and

accountability for IT and education on IT related issues than perhaps traditionally has been the case. This responsibility cannot be delegated. Without open communication

and mutually respected contributions to the development of IT and business strategies, full alignment will not happen and value will not be delivered.”

IT Alignment: Who’s in Charge? Rolling Meadows, IL: IT Governance Institute; 2005

Management from Prosci® shows a common theme with the results that we found. In their report, the top three trends in change management were:• Greater awareness of the need for

change management• Broader application of change

management• Increased leadership support for

change managementAs organizations continue to adopt and mature their change management capabilities, emphasis should be placed on continuous training and communication of the role and the impact that consistent change management has on the organization and the individuals affected.The challenge with change management

Figure 5 | leADership supporT AnD enhAncing unDersTAnDing For chAnge

conTinues To be A Top prioriTy

lies primarily in the lack of leadership support. This proves to be the leading obstacle to the overall success of change management. Our view is that it will take the commitment of a few to begin the journey to bring change management into the fold as a key organizational skill. Creating awareness requires courage in the face of poor leadership support. This dichotomy will prove to be one of the largest (if not the largest) obstacles to overall success.In project management, traditional skills like leadership, communications and risk management, won the day over Agile. Do we need to get back to basics?Opinions about project management were clear. Leadership and communication skills, as well as risk management, led

the field in terms of what people felt was important - interesting reading for project managers wondering whether to add Agile education to their resume, or to reinforce their more traditional PM skills and taking some extra training on issue and risk management.One of the more fascinating findings in this research was the relatively low importance (second-to-last) placed on improving program and project governance. Given the prioritization issues already discussed coupled with obvious challenges with budgetary constraints, we have to wonder if there is a solid understanding of the definition and role of program governance.

Figure 6 | builDing supporT For greATer involveMenT Across The orgAnizATion requires leADership engAgeMenT AnD

coMMunicATion.

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Responses for technology objectives, as well as for technology challenges, were predictably varied, but when we categorized these into groups that reasonably reflected their commonality, patterns emerged.Objectives were dominated by true technical goals (e.g. growth of cloud computing, optimizing existing technology, and more generically keeping up with technology change), alignment (e.g. better value from technology, alignment of associated costs to revenue, and aligning processes to technology) and project performance (e.g. keeping projects on track, executing projects faster and more effectively, becoming more agile). Nothing surprising really stood out in the objectives, except perhaps that, if this survey had been conducted 10 years ago, the responses may well have been very much the same (apart from the specific new technologies). Despite

the continuing pattern of revolutionary advancement that has characterized the IT industry over the last 30 years, it seems that we still consider delivering projects and applying technology effectively to business to be on a par with adopting the technology itself, when it comes to setting objectives.Taken collectively, the objectives we identified as part of our research and the results gathered show a definitive lack of prioritization. We believe if organizations are to identify one critical objective, it must be to focus on planning and executing a definitive technology roadmap - consensus plan aligned with tangible business objectives.Engaging key organizational leadership in building alignment between the business and technology strategy will drive constructive dialogue, align technology strategy with business objectives and provide the basis for IT to execute successfully.

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5 | Implications

Objectives for 2015

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The focus for 2015 and beyond

“They [CIO’s] should view their responsibilities through an enterprise-wide lens to help ensure critical domains such as digital, analytics, and cloud aren’t spurring redundant,

conflicting, or compromised investments within departmental or functional silos. In this shifting landscape of opportunities and challenges, CIOs can be not only the

connective tissue but the driving force for intersecting, IT-heavy initiatives—even as the C-suite expands to include roles such as chief digital officer, chief data officer, and chief

innovation officer.”Deloitte – Tech Trends 2015

When the smoke cleared on all the analysis of the survey, there were a few key messages that made their voices heard above the clamour:• While there are clear objectives for

2015, low confidence in the readiness of organizations to achieve them is a significant risk. Most worrying for those with substantial business changes in their sights for this year is that business architecture modeling and organizational change management were the lowest rated in effectiveness. These two key pillars are critical components of a successful business change program.

• IT is still not meeting business expectations of the value for investment in technology. This was most apparent in the responses to the open question regarding 2015

challenges, with half the respondents citing concerns that indicated alignment between business goals and technology would be an issue for them this year.

• Organizational benefit from IT investment will not increase until such time that leaders begin with the end in mind. Often, projects lose sight of their intended outcomes. Whether it is due to evolving requirements, resource challenges or perhaps poor project management – the end result is projects that fail to live up to their intended benefits or expectations.

Starting with a comprehensive and common understanding of the benefits creates a solid foundation for planning, designing and executing projects. Organizations must take a good hard look at the project planning and

Challenges for 2015When it came to technology challenges, the picture was very different.Again, we categorized responses to identify patterns, but this time a full 50% of the responses fell into the “alignment” category and this made it the clear leader. Examples of alignment challenges included:• Balancing value and investment• Prioritization• Proving TCO and ROI achievement• People acceptance• Managing conflicting priorities in

multiple business areas• Technology that doesn’t support

business processes• Understanding what the business

needs versus what the business wants.

In a distant (almost equal) second place were technical, budget and governance challenges.Our findings demonstrate that there is a clear mandate for change. The largest obstacle we identified is engaging leadership in taking ownership and engaging in collaborative, constructive

and tangible dialogue in building a plan for change.Prioritizing benefits and architecting a roadmap to achieve measurable outcomes is critical. For those organizations that choose to accept the challenge, a true shift is necessary. Bridging the gap between expecations and execution requires commitment and focus.We are in no way suggesting this is an easy journey, however, we do believe there is significant advantage for those organizaitons capable and committed to accepting the challenge.

Building a connected framework for investment decisions and tactical project execution requires commitment and necessitates maturation in the Business-IT relationship. The obstacles presented are not so large they cannot be overcome, but let’s not underestimate the effort, they are challenging to even the most mature and collaborative organizations.Start small; engage differently on the next project. Start with the end in mind and engage in useful and collective dialogue about the intended outcomes and benefits of the project. With this change in focus, business sponsors and IT leaders can have constructive conversation about intent, benefits and responsibilities and thus establish a more solid foundation for mutual success.

Final Word

At Mosaic we help small and medium-sized businesses (SMBs) maximize the return on their information technology investment. We call this “Enterprise IT for SMB”.

It means making sure that, as your company grows, your technology keeps pace. It means making sure that your data is safe and that you are protected from viruses and denial of service attacks. And it means taking advantage of the latest in technology in order to delight your customers, optimize the efficiency of your

About Mosaic

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governance they have in place and put greater focus on outcomes. Creating work plans and milestones aligned with outcomes provides a clear link to delivering value. Adjustments to project resources (people, budget) can be evaluated against outcomes and benefits, and ramifications against the original intent can be evaluated. • Selling change management as a

foundational skill is critical. As we discovered, change management is the largest confidence gap we identified. The challenge lies in the fact that many leaders do not see the benefit, and research across the globe shows that the largest contributor to change management failure is the lack of sponsorship. What a conundrum!

Redefining the role of change management is mandatory if organizations want to take advantage of new solutions. In most organizations, small pockets of

change champions exist, waiting for the right moment to deliver a compelling pitch to engage and execute successful change. The ability to effectively “sell” change to senior leadership is of utmost importance.• Prioritization is key. The first

challenge that must be addressed is the overall need for IT to deliver everything. Technology solutions have become the catchall to fix every problem an organization encounters. Fixing investment and project priorities has to be at the top of the list.

Building consensus for a technology roadmap that is aligned with business objectives must be first and foremost. Providing strategic direction based on outcomes allows the IT organization to focus its resources, initiate projects in concert with the business and structure IT services around tangible benefits.

operations and beat the competition.

Today your SMB can’t do business without technology, but it needs to grow as you grow, it needs to be as risk free as possible and you need to exploit new technologies to give you an edge over your competitors.

All of that adds up to Enterprise IT for SMB.

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