CIOs struggle with trying to align IT with the rest of the business. Problem is "the business" as a single entity does not really exist. Therefore there is not one thing to align to.

1. Trying to Align IT with ‘The Business’ is Futile December 30, 2008 Copyright: www.stankirkwood.com

2. Copyright: www.stankirkwood.com 2004 Business & IT CIO Challenges Every year Aligning IT to the Business ranks as one of the top three challenges for CIOs. Here is a snapshot of the result of a study done over a two-year period. As you can see the alignment of IT was the number one issue in both years.

3. CIO Challenges Business & IT The most critical challenges facing agency chief information officers* * AFFIRM – Association for Federal Information Resource Management Copyright: www.stankirkwood.com 2004 7 Developing agencywide IT accountability 10 5 Managing or replacing legacy systems 9 -- Consolidating/virtualizing the IT infrastructure 7 2 Using IT to improve service to customers/stakeholders/citizens 7 8 Unifying "islands of automation" within lines of business (across agencies) 6 4 Formulating or implementing an enterprise architecture 5 5 Hiring and retaining skilled professionals 4 11 Building effective relationships in support of IT initiatives with agency senior executives (agency head, CFO, etc.) 2 3 Obtaining adequate funding for IT programs and projects 2 1 Aligning IT and organizational mission goals 1 2004 Rank DESCRIPTION 2005 Rank Top ten challenges:

4. What is ‘The Business’? Business & IT The Business IT Align Each part of this car must be in alignment with each other part. Misaligned components will harm performance and could cause unexpected results. Copyright: www.stankirkwood.com 2004

5. What is ‘The Business’? Network Servers Internet Applications Security Management Business & IT The Business IT Align IT is not just one thing. IT performs many functions, each one requiring different knowledge and skill sets. Copyright: www.stankirkwood.com 2004

6. What is ‘The Business’? Executive Management Accounting Finance Legal HR Facilities Management Sales Marketing Advertising Merchandising Product Development Customer Service Production Operations Purchasing Material Mgmt Logistics Network Servers Internet Applications Security Management Business & IT The Business IT Align Aligning IT and The Business is a “Many-to-Many” relationship. Which part of IT is to be aligned with which part of “The Business”? Copyright: www.stankirkwood.com 2004

7. What is ‘The Business’? Network Servers Internet Applications Security Business & IT The Business IT Align The Business is not one nice and neat entity. It has many inter department connections which look like this picture. Copyright: www.stankirkwood.com 2004

8. What is IT going to align to? Business & IT Copyright: www.stankirkwood.com 2004

9. What is IT going to align to? Business & IT IT Logistics Copyright: www.stankirkwood.com 2004

10. What is IT going to align to? Business & IT IT Mfg Logistics Sales Customer Copyright: www.stankirkwood.com 2004

11. v You must be able to see what you are aligning to Business & IT Aligning to the Vision Each person must have a common understanding of what the end state looks like or else they are not going in the same direction Words are not good enough to have a common understanding. Here is an experiment to prove that point. Copyright: www.stankirkwood.com 2004

13. “ A house in a field with a tree on either side of it, mountains in the background, clouds in the sky and a brook.” Vision Business & IT Copyright: www.stankirkwood.com 2004

14. Just Do It! – Strategy 1 Result: Nothing aligned. Mountains in every quadrant Business & IT

15. Reorganization – Strategy 2 Here we had each person select the quadrant they could draw best. We were getting “the right people in the right seats” (Reorganizing). Alignment better than before but only barely. Business & IT

16. To replicate new IT systems I allowed them to talk with each other – exchange information more easily. This simulated having improved IT communications. Still distinct alignment issues. New IT Systems – Strategy 3 Business & IT

17. What would happen if I showed them what my vision looked like? Here is what I had in mind. And here is what my four VPs did after seeing my vision. Show Blueprints – Strategy 4 Business & IT

18. While not perfect this comes very close and I can manage the differences. It took much less time and communication to complete the “implementation” when they could see what I wanted. Blueprint-Based Alignment Business & IT

19. How to create alignment Executives developing goals and strategies Implementation team Business & IT What happens to common understanding when you only have words to rely on? How confident are you that the implementation team will build what you are thinking? Copyright: www.stankirkwood.com 2004

20. Blueprints provide a common understanding and context. Effective empowerment comes only thru common understanding. How to create alignment Executives developing goals and strategies Implementation team Business & IT Copyright: www.stankirkwood.com 2004

21. People can not see what you have in mind so how can you expect your employees to implement that? The design of the business is the responsibility of the CEO / President. 80% of the time performance issues are design-related. What you have in mind Our understandings constantly change. We read, we think - and our idea of what the business is and can be changes. Business & IT Copyright: www.stankirkwood.com 2004

22. Common Fundamentals Every business is unique and every business is the same. Business & IT Same is true of people. Each of us likes to think of ourselves as being unique and yet we are much more similar than different. The next two slides will illustrate my point. The first slide will show distinctly different people. You can easily tell them apart. As soon as you hit enter the people will be replaced by business logos representing their corporations. You can easily tell them apart as well. Copyright: www.stankirkwood.com 2004

23. Common Fundamentals How Unique are they? Business Blueprints ™ Copyright: www.stankirkwood.com 2004

24. Common Fundamentals How Unique are they? Business Blueprints ™ Copyright: www.stankirkwood.com 2004

25. Common Fundamentals That was easy. Business & IT Now we get to the interesting slide which will show how businesses are essentially the same. Structure: As humans we have the same structure. That is we have a head, two eyes, ears, torso, legs, arms, fingers, …. Though we may be apportioned differently the basics are essentially the same. Structure: Our businesses have the same structure. You will see the five basic components of every business regardless of size or industry. Copyright: www.stankirkwood.com 2004

26. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

27. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

28. Common Fundamentals That was easy. Business & IT We continue to develop this slide to show how businesses are essentially the same. Building Block: As humans we share a common DNA structure. True it is not completely the same or we would all look the same but human DNA is different than any other animal. Building Block: Our businesses have the same DNA. Look closely and see the very essence of business since day 1. Copyright: www.stankirkwood.com 2004

29. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

30. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

31. Business & IT Another perspective about how we are essentially the same. Framework: Not only do we share the same common components we also have the same basic systems. Our bodies act in a similar fashion. Look at our respiratory, circulatory and reproductive systems. They are the same. Framework: Our businesses have the same overarching processes. Every business, regardless of size or industry, must perform the same four processes. Copyright: www.stankirkwood.com 2004 Common Fundamentals

32. Common Fundamentals Metrics: Framework: Respiratory System Circulatory System Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

33. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004

34. Business & IT Another perspective about how we are essentially the same. Metrics: Visit a doctor in any country for your annual physical to see how well your body is performing and she/he will look at the same metrics. Metrics: The performance of businesses can be determined by looking at the same eight metrics. Four are outward facing (towards the customer) and four are inward facing (towards the stakeholder). Copyright: www.stankirkwood.com 2004 Common Fundamentals

36. Common Fundamentals Metrics: Framework: Building Block: Business Blueprints ™ Structure: Copyright: www.stankirkwood.com 2004 - (VP) Value Proposition - Measure market satisfaction o Desirability o Cost o Quality o Lead time - (ROI) Return on Investment - Measure stakeholder satisfaction o Customer satisfaction o Financial Success o Operational Effectiveness o Management Effectiveness

38. Business Alignment Business Blueprints ™ Expectations of market for services Competitor offerings of services How products/services designed to meet customer expectations How processes designed to deliver products/services How organization designed to execute processes How IT is designed to support The Business Copyright: www.stankirkwood.com 2004 Each component of the business (fundamental structure) must be designed based upon performance requirements of the preceding component. Business Alignment can only be achieved by design.