Minimal IT - Business alignment is a design principle

16 August 2005

Business alignment is a design principle

Business alignment is not a vague management aspiration. It is a practical principle for designing systems.

We are very aware of the big problems in IT. IT projects overrun on cost and time. Sometimes they fail completely. Users do not accept new systems. Businesses do not get the return on investment that they expect.

We are also well aware of the solution. IT has to get closer to business so that IT more clearly contributes to business outcomes, and IT more closely meets the needs of its users. IT projects need to be run hand-in-hand with business projects. We have to align business and IT.

Alignment is usually seen as making sure that IT strategy, plans and spending decisions reflect the strategy, plans and spending decisions of the organisation.

That is a very narrow definition of alignment. It only covers the alignment of IT management and business management. We need to align the actual structure of the IT systems.

Within a typical business, the IT and the human organisation are structured differently.

There are a variety of IT systems. Each system stores data, carries out processing, and interfaces to other systems. The structure of the systems is largely an accident of history. It represents the acquisition of packaged applications or episodes of custom development. Interfaces have been created on an ad hoc basis, to support the immediate needs of projects.
The human organisation is composed of a hierarchy of departments, which are defined by their responsibilities. As well as the hierarchical structure of responsibilities, there are hand offs of responsibility which go across the structure, flows of meaning, and flow of control.

These two structures are aligned when each IT system is clearly owned within a single department. Its data and processing reflect the department's responsibilities for the creation, storage and accuracy of information and application of calculations and rules. Its interfaces reflect the department's hand offs of responsibility, and flows of meaning and control.

In a typical organisation, some systems are aligned like this, but many are not. Many in IT would even claim that structural alignment perpetuates the inefficiencies of the current organisation. They pursue enterprise-wide systems and corporate databases that cut across the structure of the organisation.

I disagree. Aligning IT structures to the organisational structure provides clarity of ownership, and a high degree of relevance to the system owners. IT projects stop being an inter-departmental political football competition. IT projects are clearly scoped within a single business area, which makes business change easier to understand and to manage.

Sometimes the human organisation needs to change, to be more efficient, connected and flexible. This is a political and human challenge, not a technical challenge. Those decisions need to be made first, and then the IT realigned around the new structures.

Taken to its logical conclusion, this view of alignment deeply impacts the relationship between IT and business change, and IT technology itself. Over the next few weeks I shall follow this thought and see where it takes us.