Business-IT Integration Balance Model (Introduction)

Business-IT Integration Balance Model is intended to be used at negotiations between the Business and IT parties as a tool for initial strategic assessment of existing and desired situations in their relations.

The model helps to define the organizational changes necessary for proper Business and IT Alignment.

BUSINESS-IT INTEGRATION BALANCE MODEL

The main idea is that in relations of business and IT representatives different maturity levels of both parties are possible. And for proper balanced relations the maturity of each party has to correspond to each other.

As IT penetrates deeper in our lives and becomes a part of daily routine, you can often encounter a situation when business managers have relatively good understanding of technology possibilities and advantages. And at the same time people from IT (IT department, IT provider, IT managers, you name it) are not that willing to make a step towards understanding of business needs, requests, and of advantages and restrictions brought by technology. They are too much submerged in the technology complexity and their maturity is not sufficient for productive communication with people from the business side.

TYPICAL DIFFERENCE IN MATURITY LEVELS

As a result of this maturity difference we see the difference in mindsets, difference in values, difference in the language used. This is often described as abscence of Business-IT Alignment.

In an ideal situation there is not much difference between a business manager and an IT manager (you can also think about a CIO as a fully-fledged board member here). IT managers take responsibility for the results, budgets and the financial part of projects, notice new business opportunities or threats through the lenses of knowledge of appearing techhnologies and innovation trends. Business managers understand at least the basics, main principles of technologies used and value brought by them, and don't take the arrogant position in respect to IT, like "ah, I have no idea, it's the realm of techno-geeks" or "those IT guys, they can never make it just work". Instead they leverage on the possibilities which IT makes possible and take into account potential limitations or points of failure.

The business and IT realms in such a situation become integrated. And there are examples of companies where you can already find it.

But, of course, not every company can get it to the highest maturity level. And in fact, not every company needs it. A company producing glass bottles for the last 20+ years is not likely to revolutionize its business by introducing some changes in IT.

It is much more important here to watch the balance between the business need for IT, its IT maturity, the understanding of the situation by people from business on the one side, and IT provider focus, mindset, its business maturity on the other side.

If you try to map your company or some example from your experience on this maturity model, it will immediately become evident where and what type of disagreement might be there, and what possible improvements are needed.

----------------------------

Notes:

Initially the model was introduced in 2006 by Paul Leenards and was based on the models of Nolan and McFarlan. You can find a brief description on his blog.

Resently I made a scientific research to challenge, validate the model and see how well it reflects the real-life situation. If interested, you can download the complete public report here.

Three Strategies of CIO

A nice quality of any really good generic model is that it can be relatively easily translated from its original area of focus to any other domain. In this way a model from organizational management after minor adjustments can prove helpful for finances, knowledge sharing or innovation management domain.

MS Word in its SmartArt function (even though I don't like it) has many recognized patterns for the commonly used model shapes.

Models in the form of pyramids, value-chains, lists or matrices are used everywhere. But appropriate shape is only one side of the coin. More important one is the side on which we can read the value of the coin, i.e. the content part of a model.

Lately I tried to play with a strategic model of Treacy and Wiersema and translate it to the IT domain.

Treacy and Wiersema's analysis of successful companies led them to believe that there are three powerful ways of dominating markets, which they call Value Disciplines: Product Leadership, Operational Excellence and Customer Intimacy. Each discipline requires different skills, organisation and coporate focus although Treacy and Wiersema believed that no discipline could be neglected and companies need to be at least competent in all three.

• Operational Excellence: superb operations and execution often by providing a reasonable quality at a very low price. The focus is on efficiency, streamlining operations, Supply Chain Management, no-frills, volume counts. Most large international corporations are working out of this discipline.


• Product Leadership: very strong in innovation and brand marketing, operating in dynamic markets. The focus is on development, innovation, design, time-to-market, high margins in a short timeframe.


• Customer Intimacy: excel in customer attention and customer service. Tailor their products and services to individual or almost individual customers. Focus is on CRM, deliver products and services on time and above customer expectations, lifetime value concepts, reliability, being close to the customer.

The CIO role is usually explained by binary inherent contradictions: business acumen versus technology skills, operational fixation versus strategic ambitions, innovation versus cost containment, enterprise responsibility versus siloed demands, etc.

The triple of Treacy and Wiersema can give us a new perspective on those contradictions. Looking through the IT glasses we can see the model as possible strategies of an internal IT organization or as attention points on CIO agenda.

The three directions in this case will be:

First of all, similar to Treacy and Wiersema model, here your IT organization cannot succeed if any of three is lower than some minimum threshold. Second, depending on available budget, importance of IT how it is perceived by business, organizational maturity and other factors, one of three can really be a dominant strategy. But let's take a look at them one by one.

• Stable Infrastructure: (similar to Operational Excellence) The focus is on efficiency, low price and excellent stable operations. A company should not even notice its IT. And IT should provide reliable, stable and smooth support of all necessary functions at reasonably low cost. A better name for a CIO here is IT director.
  
  The necessary and sufficient innovation limit here is timely updates of hardware and software with as little disruption as possible. The partnership with business is limited to the reports with numbers and explanations in cases of accidents.


• Partnership With Business: (similar to Client Intimacy) Products and services are tailored here to the business needs. CIO and IT managers should understand the specifics of the business they support, main processes and information flows. Active communication between business and IT is essential. And the focus of conversations is on the business needs and problems and how they can be solved by IT.
  
  Infrastructure is important as a background here not to interfere in conversations with business managers. If the corporate e-mail server is down, it is not the best time for a CIO to discuss business needs. Innovation can be a part of conversations and make a part of portfolio. But usually this strategy is present when the core business does not require insights from IT visionaries. Besides, the number areas for possible internal improvements makes it not reasonable for a CIO to venture with radical externally-oriented innovation and risk getting spoiled relations in case of failure.


• Innovative Disruptions: (similar to Product Leadership) The role of CIO and IT managers here is to bring innovation and new opportunities. Every change in IT world - be it a new operating system, new gadget or new communication medium - can open new possibilities or bring new threats for the company. The CIO here is like a watchman skanning the technology horizon, picking the most promicing innovations, and taking measures against the most potentially dangerous ones.
  
  Infrastructure has to be stable enough here, same as in the previous point. Partnership with business is important to some degree. But instead of (or in addition to) adjusting to business needs and cementing the existing business model, IT serves now as a catalyst to organizational change.

What do you think about this "translation"? Can you find examples of those strategies or attention points in your experience?