Term Paper: Aligning Business Objectives With it Assets

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[. . .] By defining business objectives and measures, organizations create a basis for testing the effectiveness of their strategies" (p. 2). In addition, Osborn (2012) reports that, "An alignment strategy matches what an organization 'can do' versus what it 'might do'" (para. 6).

Some recent trends with respect to IT assets and business objectives include the following:

Businesses are moving out of cost consolidation mode and into growth mode -- there is a re-emergence of growth-related IT projects;

Information technology is being used to support more business transactions as opposed to generating more users -- more transactions equals more information and a move away from manual processes;

So-called 'Green' business initiatives are aligned with the need for better power and cooling for IT systems -- server virtualization technologies and servers that make better use of existing IT infrastructure and address these issues are in demand;

The infrastructure value of IT needs to be measured using better metric standards; there is a need to form better ways of measuring IT value in general;

There are emerging changes in management thinking that recognize IT can be used to dynamically respond to changes in the business as they occur;

There are emerging changes to IT vendor business models which are now more tailored and user-led (Bland, 2007, p. 55).

Given the complexity of most IT systems, especially with larger organizations, it is essential that IT assets be aligned with business objectives in order to move a company from where it is to where it wants to be. In this regard, Kavanagh and Suppert (2007) note that, "Successful planning and evaluation of IT projects, as well as effective management of IT assets, is key to realizing value from the dollars invested in technology" (p. 25). In some cases, companies even go overboard by strategizing the alignment of their IT assets with future business objectives that may or may not materialize. For example, according to Bland (2007):

Many businesses attempt to build a 'bulletproof' IT infrastructure to cover future IT needs but if the new infrastructure does not support business [objectives], it is future proofing for its own sake. These problems commonly result from a lack of meaningful engagement between the IT vendor and the business and an inability to inter-translate IT and business concepts. (p. 55)

In yet other cases, companies' business objectives are too vague or diffuse to develop corresponding strategies to align their IT assets appropriately (Bloomfield & Coombs, 2008). In addition, there is always the possibility that top management will deviate from the best strategy for aligning IT assets with organizational objectives (Bloomfield & Coombs, 2008). In this regard, Bloomfield and Coombs (2008) emphasize that, "Regardless of written plans, senior management maintains their freedom to react to events as they occur. The discrepancy between the explicit and implicit strategies leads to confusion for IT planners" (p. 27). Clearly, although the process is not easy, there are some steps that organizational leaders can take to ensure that their IT assets are closely aligned with their business objectives, and these issues are discussed further below.

Identifying Opportunities to Improve the Alignment of IT with Business Objectives

One approach that has been used to good effect in helping companies develop timely business strategies to achieve organizational goals and identify requisite IT resources to facilitate the process is the use of the Balanced Scorecard Model (McGinn & Kudyba, 2002). According to McGinn and Kudbya (2002), [The Balanced Scorecard Model] is a conceptual framework for translating an organization's strategic objectives into a set of performance indicators distributed among four perspectives: financial, customer, internal business processes, and learning and growth" (p. 107).

The Balanced Scorecard Model is depicted graphically in Figure 1 below.

Figure 1. The Balanced Scorecard Model

Source: Adapted from Tatikoda & Tatikonda, 1998, p. 51

The Balanced Scorecard uses several metrics that are used to gauge an organization's progress with respect to its stated objectives; in addition, other metrics are used to evaluate the organization's progress towards long-term success (McGinn & Kudyba, 2002). In essence, the Balanced Scorecard Model provides a useful framework in which organizations can align their IT assets with their business objectives (McGinn & Kudyba, 2002). For instance, according to McGinn and Kudya (2002), "The Balanced Scorecard approach has been recognized as one of the top management techniques. This strategic technique becomes an even more powerful tool when utilized in conjunction with software technology that supports business intelligence" (p. 107).

Using the Balanced Scorecard Model, the major design factors for aligning IT assets with business objectives including the following:

Developing a methodology to facilitate bidirectional communication of corporate strategy from the top of the organization all the way down to each staff member and back up again;

Creating the ability to emphasize organizational growth and value creation by other than traditional financial measures;

Identifying lead and lag indicators that help measure the organization's performance and developing business intelligence that directly relate to those measures; and,

Aligning each business function with enabling technologies to create a balance between business and technology (Rand, 2003, p. 3).

In fact, one of the major benefits of using the Balanced Scorecard Model is the ability to clarify business objectives so that they can be more readily aligned with IT assets (McGinn & Kudyba, 2002). Further, the Balanced Scorecard Model can be used for both long and short-term business planning, as well as for companies of any size or type (Jalbert & Landry, 2003). In addition, according to Fletcher and Smith (2004), "If properly implemented, [the Balanced Scorecard Model] is an excellent management framework to help managers track the many factors that influence performance" (p. 2).

Although every organization is unique in some fashion, some of the core components of an IT system include the following:

Data Warehouses;

Data Marts;

Data Extraction Technology;

Query and Reporting Software;

Online analytical processing (OLAP);

Data Mining/Quantitative Analysis/Expert Systems;

Server mainframes;

Personal computers needed to establish local area networks (LANs) and wide area networks (WANs), and,

Internet-Related Technology for Web Deployment (Intranets and Extranets) (McGinn & Kudyba, 2002, p. 108).

As can be seen from this non-exhaustive list, an organization's IT assets comprise a wide range of hardware, some of which may not be taken into account by top management and other stakeholders when formulating business objectives. Likewise, there are a number of IT software categories as well that comprise an organization's IT assets, including the following:

Central data repository -- supports a core business application utilized for handling multiple business functions within an organization;

Vertical applications -- software applications that relate only to a specific business function or process;

Enterprise application integration -- facilitates corporate data exchange between multiple applications;

Business process management -- internal workflow procedures used by an organization to accomplish a task;

Collaboration -- when two or more entities communicate and work together in order to achieve a common goal or mission;

Business intelligence -- the ability to convert data into knowledge;

Internet-based technologies -- utilizing technologies and methodologies derived from the Internet in order to enhance or streamline business processes;

Information technology infrastructure -- local- and wide-area networking components, including hardware and operating systems; and,

Technology management -- tools and methodologies for deploying and supporting technology (Rand, 2003, p. 4).

Using the foregoing IT assets as a basis, it is then possible for companies to align their IT assets with their business objectives (Rand, 2003). Moreover, by establishing business objective priorities, it will also be possible to improve the administration of IT assets in ways that facilitate project staffing, training and support (Rand, 2003). An important point made by Rand (2003) concerns the needs for all stakeholders to have their voices heard during the alignment process. In this regard, Rand (2003) advises that, "With the central role that strategy plays in the success of an organization, as well as the increased importance of technology to business operations and customer care, information technology professionals must be involved in strategy development" (p. 5). Furthermore, the alignment process requires oversight and periodic evaluation to ensure that the alignment is achieving the desired outcomes. For example, Rand adds that, "Just as software programs that 'talk' easily to one another function best, the same is true with an organization's strategic plan and its IT plan: They must be integrated, constantly communicating, and working toward the same goal" (2003, p. 5).

Other steps recommended to better align IT assets and business objectives include the following:

Educating business management regarding the importance of partnering with the IT organization;

Giving up some control to the business regarding decisions about information technology (strategy, architecture, priorities, spending, etc.);

Making IT related decisions with the same criteria used by the business;

Aligning the IT Organization structure, style, staffing, and skills to match the requirements of the business;

Creating a process that keeps the business and IT aligned (Osborn, 2012, para. 5).

Finally, aligning an organization's IT assets with its business objectives may involve fundamental changes, including staffing,… [END OF PREVIEW]

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