Tuesday, December 8, 2009

Strategy Alignment: Poor State of Affairs

While there is a lot of common sense talk about aligning strategies, it seems that it is easier said than done. I am sure that all of us have across situations in our careers where we have gone through this conflict ourselves – when the business strategy did not quite align with the IT strategy. The results range from less than desirable to disastrous.

Now a survey by McKinsey finds that the situation is continuing (see exhibit 6 in the linked article). That is despite the recession. This is surprising and disappointing because such market pressures generally lead to the kind of organizational transformations that drive greater alignment to increase the efficiency of capital investments. The survey found that only 16% of the 444 respondents agreed their business and IT strategies were integrated and affected each other. Other 19% found no relationship between their business and IT strategies.

Misaligned business and IT strategy can lead to several undesirable consequences including the following:

  • Misdirected capital investments: Since almost all functional capabilities are enabled through technology, misalignments between the business and IT strategies leads to capital investments that are simply not compliant with the long term IT strategy and therefore just not sustainable. Examples of such investments may be technology platforms that are obsolete, not mainstream, require skills that are not abundantly available or unavailable in-house, or are not supported adequately by the suppliers. However, once established, such technologies must be maintained at the cost of business continuity or replaced with more compliant solutions at the cost of additional investments.
  • Unsustainable technology solutions: When business and IT strategies are independent of each other, the resulting technology solutions may be unsustainable as they simply do not support any direct business requirements and therefore do not add value.
  • Siloed solutions: Misaligned strategies typically result in siloed solutions that do not adequately support business processes. Integration, when possible adds complexity, cost, and ongoing maintenance to the solutions.
  • Organizational friction: When the business and IT strategies are established in isolation from each other, the resulting conflict affects the business and technology solution deployment teams, reducing the organizational efficiency, affecting project timelines and costs.
  • Cost and functionality compromises: As the misalignment between the business and IT strategies inevitably leads to multiplicity of solutions, it adds to the cost of technology, complexity of solution landscape, multiple vendor relationships, and sometimes compromised business functionality if the solutions cannot be integrated effectively.

Getting the strategies aligned is not hard, but it does require an organizational resolve to do that. Executive understanding helps and is a critical factor in bringing together the two teams in business and technology. It is tough, but worth every penny invested in the effort!

© Vivek Sehgal, 2009, All Rights Reserved.

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