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Alignment agenda

Alignment agenda

While almost two-thirds of IT managers believe IT business cases are aligned to business strategies, less than half of business managers expressed the same point of view.

A new IDC study reveals that despite 83 percent of managers saying IT is an enabler of business innovation and competitive differentiation, there is a mismatch between the IT managers, executives and end user perceptions over the success of projects and implementations.

The survey finds five areas of misalignment that must be addressed to unlock the potential of New Zealand businesses through IT:

• Project success factors: In 2011, less than two-thirds of IT projects were delivered on time, a quarter were over-budget and only half of the respondents stated end user requirements were met for the top three priority projects.

• End user requirements: While three quarters of projects are deemed to meet end user needs, the lower down the company hierarchy a manager is, the lower the satisfaction levels about IT services delivery in general.

• Accountability for project failures: A staggering 40 percent of IT managers and half of line of business managers believe no one was held accountable for project failures.

• IT and business strategies: While almost two-thirds of IT managers believe IT business cases are aligned to business strategies, less than half of business managers expressed the same point of view.

• Working with the C-suite: 40 percent of the IT managers surveyed thought they had no or minimal input into the development of business strategies. In 2011, only half of the respondents stated the executive team had a governing role in all priority projects and a third stated the executive team had a role in only one or none of the projects.

“New Zealand organisations still need to do some work to harness the rewards IT can provide to an organisation,” says Louise Francis, senior market analyst, IDC New Zealand. “Greater scrutiny needs to be paid to project objectives, both tangible and intangible, at all levels of management, not just executives.”

Francis says it is essential for IT executives to be integrated into the business strategy team, while the executive teams must opt to provide a greater governance role in priority projects to maximise the potential benefits to the organisation.

The study is part of a project with the Getting IT Right Initiative (http:www.gettingitright.co.nz). The survey, conducted in November 2011 with 374 respondents, aims to provide a snapshot of IT’s role in New Zealand organisations and provide a benchmark on which IDC can measure year on year improvements.

Scott Groombridge, founder of the Getting IT Right Initiative says, says the results of the inaugural survey show that IT misalignment to business strategies is a common problem in New Zealand businesses. “This is impacting our competitiveness in the global market,” says Groombridge.

IDC notes business alignment will be at the top of the personal agenda for the majority of New Zealand CIOs this year. The focus is now becoming more centred on IT department support of the business strategy rather than on a separate technology strategy.

As a result, IDC is seeing much greater inclusion of IT managers within the business strategy development process. In the past, IT strategies were often divergent or parallel to those of the organisation, which made alignment difficult. The evolving model of IT within an organisation is seeing the focus shift to one of a shared vision and strategy across the business.

However, says IDC, there is still a significant gap that needs to be bridged in many organisations with only 44 percent of IT managers believing they have good to significant input in the development of the organisation’s business strategy, while 40 percent feel they have no or minimal input.

IDC research consistently finds that CIO reporting to the CEO is seen as vital to effective governance and credibility when justifying a business case for IT investment. The ability to demonstrate value will also have a direct influence on securing engagement by gaining credibility with the C-suite and board. As a result, executive participation and support of IT projects is also seen as critical to achieving objectives, particularly end-user buy-in.

IDC says it is encouraging to find It is encouraging to find that 79 percent of the CIOs that responded to this study stated that they were part of their organisation’s executive team, and this level of representation was confirmed by other executives with 74 percent of non-IT executive managers interviewed stating the CIO was part of the executive team.

However, despite this level of inclusion, the executive team is still being under-represented in IT project governance. The survey finds only half of the respondents stated that the executive team had a role to play in all three priority projects in 2011, and 14 percent of IT managers had no collaboration with executive managers in the priority projects.

The study repeatedly underscores working with Line of Business (LOB) managers is key to effective alignment of IT with the business. Francis says IT managers are building relationships with executive teams, “but LOB managers are ignored.”

This disconnect is linked to the incidents where LOB managers implement IT solutions without the involvement of the IT department. Over a third of LOB managers say they have implemented an IT solution independently and a further 4 percent say they would consider it for future projects.

When asked why they bypassed IT, the top reasons were inflexibility of the IT department (40 percent), and length of time it took to go through proper channels (20 percent). Another 20 percent says the solution was simple and did not require ICT involvement.

While these results were discouraging, IDC notes only one respondent says IT was not involved because they wanted to use an “inappropriate tool” that was incompatible with their enterprise systems.

“These responses suggest that LOB managers are keen to work within the IT department guidelines, but inflexibility and timeliness are missing from this relationship,” reports IDC.

The report notes some steps IT can take to address the gaps. The first is to manage expectations and perceptions by ensuring IT project objectives are “transparent and measurable”.

IT departments need to be more nimble and play a pivotal role in providing advice on strategy while ensuring the IT team is embedded within the line of business and forging strong relationships with suppliers and service providers, according to IDC.

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