is more than a cost benefit and support function. It
is an enabler of good business. Every enterprise needs
an IT strategy, which recognizes and complements the
interests of the organization.
Even while organizations increasingly devote significant
time and effort to develop their IT strategies, it is
important that these are built in alignment with the overall
business strategy. Unfortunately, this is not the case
in a majority of the IT strategies that get formulated.
For example, about two-thirds of the IT strategies developed
in the retail industry are reportedly not in complete
alignment with that of the corresponding business strategies
(Source: CGEY Retail IT Research Report 2002). Even while
the above statistics have been observed in the US, it
could measure even more in the context of organizations
in developing economies.
A few years ago, information technology (IT) was perceived
as a mere cost center and support function. Today, IT
is a value enhancer for business enterprise and a key
differentiator of service levels. Boardroom decisions
now rely on technology for the successful implementation
of business plans, and strategic restructuring of organizations.
In order to provide a formal structure to the IT function,
it is imperative that organizations develop an IT strategy.
A formal IT strategy defines the vision and objectives
of the IT function and also streamlines it within a
well-defined scheme of operations. Most importantly,
it builds in the well-deserved recognition for IT as
an important and integral function of the organization.
The need for business -IT strategic alignment
The implications of a lack of alignment are not too hard
to see. High levels of opportunity losses, misplaced and
redundant investments, operational inefficiencies and
customer dissatisfaction are the common consequences of
non-alignment of the IT-business strategy. For instance,
should the business strategy demand a centralized operational
model for the organization, the IT architecture cannot
have a decentralized set-up, even if better technological
and operational efficiencies suggest such a model. Technology
for the sake of technology and not driven by business
needs only results in opportunity losses and unnecessary
With the cost of non-alignment becoming dearer and organizations
also recognizing technology as a value driver, the need
to align the IT strategy with business strategy has become
significant. And this alignment comes with its own benefits.
As it can be observed in Figure-1, institutions that move
from a low alignment to a higher alignment are characterized
by higher maturity in structural and process-oriented
practices. This is reflected in the strategic planning,
organizational reporting, day-to-day operations and successful
implementations of strategic initiatives of such organizations.
While technology brings about efficiencies in operations,
aligning it with business also enables this adaptation
to be much more effective.
A growing number of leading organizations are consciously
building strategic synergies between their business and
IT strategies, and this mutually symbiotic relationship
provides two critical advantages to such organizations.
Adaptability to Change
A well-aligned business and IT strategy facilitates better
anticipation and higher levels of preparedness for technology-driven
market changes, and gears organizations to capitalize
on technological advances faster than their competitors.
Furthermore, since business drivers are themselves propelled
through technology in certain instances, this change becomes
much easier to adapt to. For instance, a bank that has
well-defined application architecture aligned with its
business strategy and with the adaptability to plug in
new applications, would have a big competitive edge to
launch new products and innovative offerings over another
bank, which does not have the same.
When IT strategy is in alignment with the business
goals, IT initiatives that flow from the strategy also
inherit such an alignment. The role of IT function then
becomes that of a facilitator, while the ownership of
IT environment is shifted towards business units, resulting
in better structural alignment of IT and non-IT functions.
With IT projects increasingly growing in size and value,
it is but imperative that such an ownership of IT initiatives
by business users is encouraged. This ensures success
of large IT initiatives which have a direct bearing on
the business strategy of today's leading organizations.
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