The challenges of IT-business alignment

1. The challenges ofIT-business alignment A presentation for Microsoft’s TechNet IT Director’s Strategy Day Neil Macehiter, Partner

2. Agenda • A brief introduction to MWD • Aligning IT and business • Understanding business processes • Understanding managed IT services • Summary © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

3. A brief introduction to MWD • Strategic advice and consulting • Focus on issues concerning IT-business alignment • Driving more business value out of enterprise IT • Not about the “nuts and bolts” of individual technologies • Core: two highly experienced industry analysts / practitioners • Sun, Oracle, Sybase, Ovum, Deloitte Consulting, etc • Based in UK, Europe-wide capability © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

4. Aligning IT and business advising on IT-business alignment © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

5. IT-business alignment: multiple angles It’s not just about “building stuff that the business will use” Business Investment in capability Change capabilities, limitations Change implications Delivery of value IT © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

6. Why now? • Globalisation • Customers, partners, suppliers – and competition • Connectedness driving sophisticated value chains • Transparency • Industry regulations, consumer pressure and competition driving openness • Service focus • Differentiation and shareholder value increasingly derived from service experience © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

7. From a UK perspective • A healthy economy – albeit growing at a low rate • Spurred by public sector investment • With a knock-on effect on the IT market • Globalisation • >4000 (+400/year) UK-Sino joint ventures • Vonage launches UK VoIP service (01/05) • Tesco enters mortgage market with First Active (11/04) • Transparency • Corporate Responsibility (CORE) coalition • Government initiatives e.g. Extractive Industries Transparency Initiative • International Financial Reporting Standards (IFRS) • Service Focus • BT launches mobile music service with UBC Media and Virgin Mobile (06/05) • Amazon Services Europe to underpin M&S e-commerce systems (04/05) © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

8. The real world Buy AND build AND integrate Application implementation Front office and beyond Business area investment focus Productivity desktop + global access to resources IT access environment Communication, collaboration, integration “Multi-sourcing” Technology innovation focus Capability supply From Towards Build, or buy vs. build Back office “Personal productivity” desktop Data processing Outsourcing vs. in-house delivery Older approaches fail to capture reality re: integration, communication, collaboration, supply complexity © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

9. A common language is the essential starting point “Investment prioritised in terms of business need” “Systems that deliver value to the business” “Clear direction from the business about focus, strategy” “Collaborative approach to implementing business change” A common, agreed representation of business activity, goals + A common, agreed view of how current and future IT provides structured support to the business in this context Business ? IT © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

10. Reflecting the environment in IT-business alignment Business B U S I N E S S S T R A T E G Y Business process Business process Business process Business process Business process Managed IT service Managed IT service Managed IT service Managed IT service Managed IT service A P P L I C A T I O N S & I N F O R M A T I O N I N F R A S T R U C T U R E IT Business processes form the foundation of a common language IT defines and delivers “business level” services which support the right processes, the right way © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

11. Understanding business processes advising on IT-business alignment © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

12. The challenge Business process Applications Activities, processes Data The business The real world doesn’t “decompose” nicely – and IT isn’tjust about things you build in-house © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

13. Providing structured support for business processes means understanding scope & scale of interactions Towards B u s i n e s s p r o c e s s Loosely-coupled resources provide services which are designed to support the interactions that take place within a business process From B u s i n e s s p r o c e s s Data design tightly coupled to application design, and application design to “user requirements” – very restricted view of process needs © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

14. IT approaches must consider business process support more broadly Transactional services Information services Communication & collaboration services B u s i n e s s p r o c e s s Support scenario: a mesh of interactions We have to model more than just transactional applications © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

15. A universe of business processes [1] A hierarchy of business processes “Strategy” processes – instances oversee instances of management processes S “Management” processes – instances oversee instances of execution processes M M M “Execution” processes – instances handle particular units of work within business activities E E E E E © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

16. A universe of business processes [2] Contribution to competitive differentiation S S M M M M E E E E E E Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility) © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

17. Observations on the nature of business processes Increased collaboration, ad-hoc nature Increased structure, predictability S S M M M M E E E E E E Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility) © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

18. A resulting (wider) view of technical architecture “Strategy”business processes Collaboration tools High “Management”business processes Business intelligencetools “Pure” BPMS Level of process abstraction “Execution”business processes Simple portal Workflow “Traditional” app. Development tools & frameworks Low Composite service-based application development & integration Business functions Non-differentiating Differentiating © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

19. Understanding managed IT services advising on IT-business alignment © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

20. So what is an IT service? Line of business perspective IT operations perspective Developer perspective “Provide automated support for my sales force” “Update customer details” “CRM database” © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

21. Managed IT services – aligned with business processes Users’ experiences of “managed IT service” Infrastructure services Providing the platform Lifecycle services Managing the lifecycles of business functions and infrastructure Business function services Automating business functions © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

22. Contracts bring obligations for suppliers and consumers QoS Terms Message Format Message Sequence Functions Security Response Time Throughput Functional Terms Usage Cost Liability Clauses Trust Commercial Terms © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

23. An organising model for service-oriented IT in the context of IT-business alignment Functional contract aspects Quality-of-Service contract aspects Commercial contract aspects How can we align flexibility / reusability requirements for business software functions, to business needs? How can we trade-off flexibility / reusability of business function services with efficiency / openness requirements? How can we ensure that the right consumers get the right kind of experience from these services, and do so cost-effectively? Business function services How should infrastructure elements provide their services to different business functions? How should infrastructure be optimally managed? How can QoS responsibility be delegated to infrastructure in a way that is easily flexed in response to changing requirements? How can we minimise the cost and risk of overall process support while creating an business support environment with more moving parts? Infrastructure services How should we differentiate lifecycle service levels for different kinds of business function, infrastructure? How should we define and enforce development, fault-fix and change-request priorities? How can we demonstrate the overall value of the services that the IT organisation and its resources provide to the business? Lifecycle services © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

24. An example – business function service design Reusability importance increases “Strategy”business processes Openness, flexibility demands increase High “Management”business processes Level of process abstraction “Execution”business processes Efficiency demand increases Activity functions Low Technical functions Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility) Business activity role © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

25. Summary advising on IT-business alignment © Macehiter Ward-Dutton 2005 www.mwdadvisors.com

26. Summary • Today’s business environment brings IT-business alignment to the fore • In terms of investment, delivery and change • Business processes provide a common language • But the organisational context of real-world business processes is complex • Managed IT services must align with business process priorities • It’s about more than business function services • Services and their contracts provide an organising model for service-oriented IT © Macehiter Ward-Dutton 2005 www.mwdadvisors.com