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IT in the business.5 See Exhibit 11.2.
The matrix focuses on the actual role of IT as it applies to operational issues
(Would the company stop work if the systems stopped?) and the competitive
issues (Are customers choosing the company because of its IT activities? Does
IT give the company value or cost competitive advantages?).
The matrix also characterizes the cultural implications. If a company is truly
in the support quadrant, meaning that IT has neither operational nor competi-
tive importance, then it is likely that the management culture also does not treat
IT as an integral part of the business. On the other hand, if the business is in
fact strategic, with both high operational and competitive dependencies on IT,
then a management culture rooted in the support quadrant would pose a real
culture conflict.
Such a culture conflict would limit IT™s business role. If the culture is “Sup-
port” or “Factory,” then IT™s role in the business is based solely on aligning itself
with the current business strategies and operational requirements. “Strategic”
and “Turnaround,” on the other hand, would add innovation to the culture,
where IT™s effect comes from enabling new business strategies.
Part 3: Classification of Business/IT Culture

Summary of Category 1: IT™s Business Role
Culture issues about the role of IT cover all NIE practices. If IT is not seen to
be important, then business managers are predisposed not to pay attention to
planning, not to participate fully in prioritization and alignment, not to view
performance measures as important, and not to see IT as a source of innovation
and future business strength.
IT™s role will change over time as the business context changes and the man-
agement culture surrounding IT lags. IT™s expected role is subject to the exter-
nal forces of new technologies and business competition. Again referring to
McFarlan™s matrix, this means that the expected role of IT can quickly move
from Factory to Strategic. However, the internal management culture and the
processes that successfully supported the Factory role are now less appropriate
and, indeed, can become active inhibitors to IT™s moving to its new Strategic
role. This ongoing dynamic is characterized by the expected changing of IT™s
role in advance of the culture and management processes. This means that the
Strategy-to-Bottom-Line Value Chain can operate with greater effectiveness and
efficiency when cultural and management process gaps and inhibitors can be
regularly identified and addressed (corrected or compensated for).

Category 2: Business and IT Relationship ” Culture Defines
the Organizational Relationships between Business and IT
This class of culture elements is about the beliefs, values, and principles about
how business and IT work together, and deals with such matters as governance
and accountability. These elements are certainly connected to the role and
impact of IT; the way managers view IT impacts the organizational relationships
between business and IT.
These elements deal with the separation of business and IT, whether ex-
pressed in terms of silos, individual line of business autonomy, separate IT
organizations, poor governance processes, or poorly working business/IT teams.

Silo Orientation
The common theme in the silo culture is a parochial, localized focus on those
things that will make the silo successful. Decision making is often decentralized
and relatively autonomous, with an emphasis on locally optimized solutions that
may or may not support an enterprise goal or strategy. Silo priorities are viewed
by silo management as the priorities. In this context, IT is viewed as an opera-
tion to support the silo, and IT resources that are spent in other areas of the
company are of little concern except as resources that could be redirected to the
silo. IT planning is usually done on a silo-by-silo basis, with IT management
responsible for balancing resources across silos, often in a politically sensitive
process. Silo orientation is very similar to line-of-business autonomy.

Line-of-Business Autonomy
This is a powerful cultural characteristic, which describes whether individual
business units have corporate permission to go their own way in matters like IT.
It is related to the silo orientation, but here, the goals are just part of the prob-
lem. Even if the corporate goals across all business units are the same, individ-
ual business units may still be able to pursue their own strategies and initiatives,
and their own IT implementations. The implications for IT lie in both infra-
structure and applications. The degree to which infrastructure needs to be com-
mon and company-wide is ultimately a business decision, but things are certainly
more difficult, the more diverse the infrastructure is. In this culture, company-
wide initiatives are made much more complicated.

IT/Business Separation
This characteristic is that the IT organization and the business organization are
separated, perhaps physically and organizationally, certainly culturally. Out-
sourcing can be a major contributor to this culture characteristic, as can shared-
services organizations.

IT/Business Integration
This cultural issue is simple. Are the IT managers a normal part of the business
leadership teams that produce results? Or is IT management an add-on, someone
who brings special skills when necessary but ordinarily is not assumed to be part
of the management team? This issue goes beyond management. Do IT profes-
sionals participate in normal business management councils and activities? Or
is the IT organization separate and apart, conducting its management processes
without the benefit of teaming? The issue goes the other way as well. Does IT
include business managers and professionals in its normal activities and events?

IT Governance
This culture characteristic is whether management believes that the processes
for guiding and controlling IT are working or broken. If management believes
governance is working, then it is easier to adopt NIE practices that change the
existing governance environment. For example, doing prioritization immedi-
ately raises questions about authority, decision making, who should be involved,
and so forth. If management believes these processes are broken, then there is
greater difficulty and resistance to change in adopting such NIE practices.

Summary of Category 2: Business and IT Relationships
In all of these aspects of the business/IT organizational culture, the underlying
point is the cohesiveness of the business itself, together with the cohesiveness
of business and IT organizations. Any degree of separation ”whether expressed
in terms of silos, individual lines of business autonomy, IT itself being separate,
poorly working governance, or poorly working teams ” has significant impli-
cations for the success of company-wide IT activities.
Part 3: Classification of Business/IT Culture

Category 3: Business and IT Process ” Culture Defines
the Way IT and Business Managers Work Together
This category is about management systems and management practices and
behaviors. It deals with the specific processes and practices connecting IT and
business. This includes planning processes, planning results, business and IT
teams, and so forth.
The cultural characteristics in this area are related to the first set of culture
elements about the importance of IT in the business as well as the second set,
about the degrees of separation of IT and business in the company. Here, the
focus is on the ways IT and business managers work together. Although there are
connections to the first two, these characteristics exist in any company setting.
The significance of this culture category lies in the capability of the com-
pany to successfully undertake initiatives, particularly strategic initiatives, in-
tended to bring about change in the business itself. Whether this is in terms of
internal process change or competitive/customer change, the problems are more
severe if IT and business managers cannot work together.

IT/Business Planning Integration
These characteristics lie in management expectations for connection of IT and
business planning. The issue is what management expects about the following:
(1) IT may or not be involved in business planning; (2) annual plans and budg-
ets may or may not be specifically linked to or driven by strategic plans; (3) IT
and business planning may or may not be done separately, with weak or no
interactions and linkages; business planning assumes IT can react and respond
to requirements, and does not consider IT-enabled innovations; IT planning
focuses on technologies; and (4) IT planning may or may not be highly siloed,
with little or no planning across silos and with few company-wide initiatives.
In a culture that does not expect IT connection to planning, none of the
hoped-for objectives for connecting business and IT, or maximizing the impact
IT brings to the business, can be achieved. The consequences are easy to spot.
Organizations substitute tactical planning for strategic thinking and strategic
direction. IT organizations march to a technology drummer, seemingly unaware
of business direction and opportunity. Senior managers express frustration with
the large operational investments in IT, but without the clear strategic and com-
petitive results that they had hoped for.

IT Solution Orientation
In the minds of business managers, an IT solution can easily substitute for a busi-
ness goal. For example, the IT implementation of an enterprise resource plan-
ning (ERP) system can be management™s definition of the business goal. However,
the underlying business goal, such as standard operating processes throughout
the company and consolidated supply-chain management, is independent of the
technology. ERP is the means, but it is not the same as the business problem or
the business goal.

Strategic Understanding
The problem in many companies is there is little grip on exactly what the com-
pany™s strategies are. To be sure, most companies do have formal mission state-
ments, often with a high-level strategy statement. Strategic planning often is
ineffective, producing strategy statements that do not easily translate into
actions that people can take. An organization needs plans that let people know
what they should be doing tomorrow.

Role of Plans
The characteristic is whether managers think plans, and the planning activities
that produce them, are important and should guide their behavior. When thought
to be unimportant, plans fail to be specific and, consequently, cannot be used
as guideposts leading to the specific programs or initiatives needed to achieve
the strategies. Too often, the enterprise strategic plan is not actionable; business
units and IT cannot determine from the strategic plan what they should be doing.

Undefined IT Role
This culture issue is the unstated expectation for the IT organization. No one
typically needs to define the role of marketing, or the role of finance, in carry-
ing out the enterprise activities. However, often the leadership team may not
fully understand what role IT could play. Here is where there™s opportunity for
innovation and new leadership expectations.

This issue has to do with senior management™s expectations for the accounta-
bility for creating business results with IT. In one typical case, business managers
were passive participants in business changes brought about by IT. The view was
that IT was responsible for producing not only the technology components of
an initiative but also the process change or other innovations. A different cul-
ture would have business managers take the leadership role, with IT providing
the technology but leaving accountability for the business result in the hands of
business management. The significance is both leadership and accountability.
From the leadership perspective, in the one kind of culture, IT bears the brunt
of finding business opportunities and responding to them with effective new ini-
tiatives. In the other, business leadership is expected to take this role. From the
accountability perspective, a similar dichotomy exists. A key difference lies in
business sponsorship of IT projects. In the one case, business management spon-
sors new projects and is accountable for the business results. In the other case,
IT sponsors new projects, is responsible for demonstrating the business case, and
is accountable for the results.

Summary of Category 3: Business and IT Process
As we noted in Category 1, culture about the role and impact of IT can pre-
vent companies from making progress with IT. In Category 2, culture about the
Part 4: Applying Culture Management Concepts

business/IT organizational relationships, especially those that separate business
and IT, can prevent companies from achieving strategic and operational excel-
lence that crosses organizational lines. Here in Category 3, culture impedes busi-
ness and IT managers getting together and inhibits their working together in
integrated and connected processes.

Our goal is to enable a company to move from its business strategies to IT action
to the right business results, and to surmount the obstacles presented by its man-
agement culture. The culture management support practice will help change the
underlying management culture to reduce barriers to changing management
processes and using the NIE practices.
We address culture management in three ways: (1) by identifying the as-is and
to-be culture; (2) by assessing the maturity level of the company™s management

EXHIBIT 11.3 Identifying As-Is and To-Be Culture
Section Description Focus
IT™s Role and 1 IT™s Business Performance Whether IT is important enough to include in
Value in the business planning and business thinking
2 IT™s Cost versus IT™s Value Whether management has confidence that IT™s
value, in the aggregate, is more than IT™s costs
3 IT™s Justification Management™s use of metrics (e.g., ROI) versus
achievement of strategic intentions
4 IT as Business Innovation Management expectations for alignment or new
business innovations
Organizational 5 Silo Orientation Whether there is an enterprise-wide view of IT as
Relationships an organization and a role being played
between IT and
6 Line of Business Autonomy Degree to which lines of business are
the Business
7 IT/Business Separation Degree to which IT and business are separate,
in culture, practices, and people
8 IT Governance Degree to which IT is driven by the business
through governance
9 IT/Business Integration Whether business and IT operate as a team
Management 10 IT/Business Planning Whether the IT Planning process, and the
Processes Integration resulting plan, is IT-driven versus business-driven
11 IT Solution Orientation Degree to which technology-focused goals are
surrogates for Business Goals
12 Strategic Understanding Degree to which actionable strategic intentions;
planning drives from strategic intentions
13 Role of Plans Whether planning is ineffective, shelfware
14 Undefined IT Role Whether IT is proactive versus reactive with
respect to delivering business results
15 Accountability Is IT or business management accountable for
applying IT to produce business results?

processes; and (3) by changing managers™ experiences. This section provides a
set of tools and diagnostics that enables managers to understand the specific cul-
tural hurdles they face and what they can do about them.

Tool 1: Identify the As-Is and To-Be Management Culture
Culture is based on management beliefs, values, principles, and practices, and
can be expressed in terms of the focus statements in Exhibit 11.3. Management
culture can be identified by examining what managers believe and what they can


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