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Standards and Best
Supplier of Choice




Capacity Increase




Unweighted Total
Cost Reduction




Customer Cost




Weighted Total
Optimization
Product Mix
Practices
Weight




10 200
Customer
20 1 3 3 0 2 0 -1 2
Information System
9 135
Supplier Quality
Monitoring 15 -1 2 0 0 2 2 2 2
4 140
Financial
Information System 35 0 0 0 1 1 1 1 0
14 210
CORBIT Materials
System 15 2 3 2 0 2 3 3 -1
Product Planning 5 2 1 1 1 0 0 -2 -1 2 10
-7 -70
Manufacturing
Expansion Control 10 1 -1 -2 0 -3 2 -1 -3
Unweighted Total 5 8 4 2 4 8 2 -1
Weighted Total 100 80 40 20 80 80 10 -10
157
The Alignment Practice


Additionally, we may look at specific strategic intentions, and examine the
application “coverage”. In Exhibit 8.24, some strategic intentions have neutral,
or worse, overall ratings for application support. Again, managers can ask:
Where should we beef up applications to rectify that gap? Are new development
projects needed in that area?
Alignment assessments allow managers to look at portfolios (application,
infrastructure, services) and decide where the existing applications are support-
ing the business, where they are weakest, and develop plans for covering gaps
in alignment.

Management Issues
Existing applications, infrastructure, services, and management processes were
implemented to address strategic intentions of the past, not of the present.
Alignment looks at previous resource allocation decisions and examines the
continuing bottom-line impact of those decisions in light of present and future
strategic intentions and business process needs. As with Prioritization, this prac-
tice asks a form of the question: Are IT investments strongly connected to strate-
gic intentions?
Again, culture comes to the fore. The Alignment practice requires that man-
agement look at all activities that use IT resources, not just new initiatives, and
assess them for bottom-line impact. Management must adopt the philosophy
that as the business changes, activities that were valuable in the past may not be
so in the future. Over time, the process of Alignment will produce a manage-
ment mindset that requires all resources to be used for the strategic intentions
of the business, not just those targeting new initiatives.
Alignment expresses the degree to which the IT organization can contribute
to the company, today and in the future, from the business perspective. By
embracing the principles of Right Decisions/Right Results, companies can use
the Alignment practice tools to be sure that all of the IT resources in the com-
pany, not just new development, are contributing to the business.

Critical Success Factors: Right Decisions/Right Results
Principles in Alignment
Alignment most directly supports the resource management and business out-
come principles of Right Decisions/Right Results but has an indirect impact on
the other as well. See Exhibit 8.25.

Actionable Strategic Intentions: As with Prioritization, Alignment assessment
requires a clear statement of strategic intentions, and forces management to
develop them as a necessary step in implementing the practice.
Actions Tied to Strategy: Alignment looks directly at the company™s strate-
gic intentions and assesses the role that existing IT activities play in meeting
158 MAKE THE RIGHT DECISIONS


EXHIBIT 8.25 Goals and Practice Principles
Goals Practice Principles
Actionable, 1. Actionable Strategic Intentions
Commonly 2. Actions Tied to Strategy
Understood Strategic
3. Common Understanding of
Intentions
Strategic Intentions
The Right Business 4. Business-Focused Outcomes
Results from IT 5. Value-Based Resource
Allocation
Management Culture 6. Role-Based Culture
and Consensus View Management
Portfolios and 7. Value/Portfolio-Based Resource
Portfolio Management Management
The Right Actions 8. Responsive to Change
and Results




them. In many companies, for the first time, business and IT management
are able to directly assess the impact of existing IT activities and eliminate
those that do not contribute to the company™s strategies.
Common Understanding of Strategic Intentions: Again echoing the Prioriti-
zation practice, business and IT managers must share a common view of the
company™s direction in order to perform a valid assessment.
Impact-Based Resource Allocation: Alignment is a powerful tool for assess-
ing which existing portfolios and processes produce or inhibit the pro-
duction of bottom-line impact. By looking at ongoing resource usage for
existing portfolios, Alignment allows IT and business management to exam-
ine their existing assignment of resources and determine which are and
which are not producing bottom-line impact, allowing reassignment where
necessary.
Impact-Based Resource Management: Portfolios are explicitly built into the
Alignment philosophy and process. Using the results of Alignment, IT and
business management can make resource decisions that move resources
from existing but low-value activities to higher-valued new and existing ini-
tiatives. Additionally, “under-performing” but still necessary portfolios can
be identified for added resources and targeted improvement.
Business Outcomes: During assessment, the key question answered is, is this
component (application, infrastructure, process) helping or inhibiting the
business in a particular area? The issue isn™t whether an application, for
example, works properly or satisfies its user™s needs, but whether or not it
is contributing to a desired business outcome. As with Prioritization, busi-
ness and IT management are forced to focus on how IT supports specific
business intentions, processes, and outcomes.
159
The Alignment Practice


Responsive to Change: As with Prioritization, Alignment explicitly factors in
business strategies and directions into assessments. By providing a frame-
work for easily reassessing activities when conditions change, Alignment
provides a means for continuous reevaluation.
Role-Based Culture Management: Like Prioritization, Alignment requires
business management to participate in assessing the bottom-line impact of
ongoing IT activities. By placing this responsibility on business, Alignment
begins the process of changing how IT is deployed and forces business man-
agers into the role of helping IT to think about where resources are going
and where they can be best utilized, from a company perspective.

Summary: Strategic and Internal Alignment
Business and IT must be aligned if IT is to improve a company™s performance.
Alignment can be accomplished by examining four aspects of IT and also exam-
ining the way that business managers and IT managers plan and execute IT ini-
tiatives in each area.
Understanding, measuring, and monitoring IT/business alignment is a pre-
requisite for delivering and demonstrating IT value. Without alignment, IT and
IT management operate in a reactive and uncertain manner, making decisions
with limited business input. Proper IT/business alignment satisfies the CIO™s
need for supporting existing requirements and positioning for tomorrow by pro-
moting management processes, applications, and infrastructure investments that
directly support business goals today and for the future.

Functional Alignment
While the Prioritization practice allows management to assign resources to pro-
posed IT initiatives based on bottom-line impact and connection to strategic
intentions, the Alignment practice does the same for existing IT applications
and infrastructure. In most companies, IT resources dedicated to existing activ-
ities far outweigh resources given for new initiatives. These resources are rarely
examined for continuing contribution to the business.
Functional Alignment continues this examination by looking at quality, serv-
ice levels, intensity of use, and technology. The basic assessments are shown in
Exhibit 8.26.
The assessment process is identical to the alignment process. In some cases,
the technical staff is better suited to do the assessment, particularly for the tech-
nology assessments. In all other cases, it is expected that the business leadership
group is the provider of assessment information. As discussed earlier, a company
may go through stages in this, as described in the above in the section on Assess-
ment Performance. Note 14, “Scoring for Portfolio Assessment,” on this book™s
website contains suggested scoring and further descriptions for each of the Port-
folio Assessment components.
160 MAKE THE RIGHT DECISIONS


EXHIBIT 8.26 Choices for Functional Alignment Assessments
Assessment Specific Assessment Assessment Focus
Service Level Availability Availability as a problem for workflow or
business processes.
Responsiveness Responsiveness to the needs of the
workflow or business process.
Quality Functionality Functionality of the applications,
infrastructure, or service, related to the
needs of the workflow or business process.
Accuracy Accuracy of the data or service performed
by the applications, infrastructure, or
service, related to the needs of the workflow
or business process.
Technology Architecture Compliance with enterprise architecture
standards.
Vendor Support and Stability Degree to which vendor support is a
problem in meeting delivery requirements.
Technical Support Degree to which support is required of the
technical staff (this is an ongoing cost
issue).
Availability of Support in Degree to which needed support is
Market or Industry available.
Intensity of Use Dependency Degree to which the application,
infrastructure, or service is important to the
business process, organization, or individual
user.
Breadth of Use How widely within the company the
application, infrastructure, or service is
used.




MAKE THE RIGHT DECISIONS WITH PRIORITIZATION
AND ALIGNMENT
The right decisions lead to controlling the IT spend and improving, or maxi-
mizing, IT™s bottom-line impact. Two NIE Practices provide the tools to sup-
port decision making. These decisions occur in the Strategy-to-Bottom-Line
Value Chain, as described in Exhibit 8.27.
Note that this is not a mechanical process. Prioritization and alignment
practices do not automatically result in resource decisions. Management teams
do that, supported by the prioritization and alignment tools. The Prioritization
and Alignment NIE practices, though providing critical information for decision
making, may not result in the final decisions about projects or lights-on budgets.
For projects, considerations such as staff availability, mandatory projects, and
scheduling also play a role. For line-item budgets, considerations such as the cost
of abandoning applications, organizational dependencies, and corporate budget
practices play a role
161
Make the Right Decisions with Prioritization and Alignment


EXHIBIT 8.27 Management Decision Making Using Alignment Results
Value Chain Decision Making based on Decision Making based on
Element Prioritization Alignment /Assessment
1 Business Strategic Relative importance of each
Intentions Business Strategic Intention
2 Assessed Portfolios Alignment assessment of
lights-on asset pools; identify
high- and low-performing
resources
4 Strategic IT Plan Use of alignment assessments
to define IT strategic plan
5 Strategic IT The priorities of IT Use of alignment assessments
Requirements requirements (bottom-line to decide on Strategic IT
impact) requirements
6 Projects (Business case definition of
bottom-line impact)
8 Annual Project Plan Prioritization of projects
(resource allocation)
9 Annual IT Plan (Scheduling and technical Use of alignment assessment
resource allocation to projects) to establish tactical objectives
10 Projects Budget Decision on projects budget

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