System Transformation Portal

Realigning IT with Business Strategies

By William Ulrich

Business executives face some difficult decisions as they examine the post-2000 landscape. IT analysts and business users have already spent considerable time and money preparing for the year 2000. Even so, many analysts believe that the hardest work, contingency management, is still ahead and likely to drain key resources into the next century. The resulting fallout from the millennium transition could last a few months or drag on for years depending on the level of one’s preparation. Regardless of the timing, business executives must reassess how they can more effectively leverage IT resources by realigning information architectures with corporate business strategies.

The Road Ahead -- Filled with Potholes

When most year 2000 projects began, IT had already boxed itself into a corner. According to a 1996 Standish Group study, IT projects were found to be behind schedule or cancelled more than 85% of the time. If this were not problem enough, the year 2000 problem consumed valuable resources during the 1997–2000 timeframe and further delayed the deployment of key projects.

At the same time that companies were launching their year 2000 projects, a number of IT organizations initiated multi-year super projects aimed at deploying ERP solutions. These super projects will ultimately cost in excess of $100 million. The ongoing struggle to implement portions of these packages into complex technological infrastructures raises many questions.

• Does a decision to implement business rules created by a third party software vendor imply that information systems no longer offer companies a competitive advantage

• What happens when strategic requirements change in a few years and ERP systems turn into anchors that decrease one’s ability to respond to market demands?

• Have executives evaluated the long-term impact of ERP solutions based on changing business climates or did they buy a package as an easy answer to a very complex question?

So what did frustrated users do while year 2000 projects consumed systems subject matter experts and multi-year ERP projects inched forward? The reaction of the business community could have been predicted. User-driven projects have resulted in the proliferation of thousands of highly redundant, poorly documented spreadsheets and distributed databases. Many companies will only appreciate the exposure that these end-user systems present when they go haywire near the year 2000 deadline.

The situation as it sits today raises more questions than answers for the IT executive. How will legacy systems be eliminated or interface with these new ERP systems? How will end-user solutions be impacted by new ERP systems? Will executives outsource ERP support or retain control of the IT management function? Companies will have time to ponder these questions as projects go on hold in late 1999 to stabilize technology environments during the millennium transition.

Business / IT Realignment Strategies

Much of the past decade was spent attempting to reengineer business processes and corporate infrastructures. Mergers, acquisitions and expanding markets outpaced the IT organization’s ability to adapt to these changes. Tremendous strides in hardware capacity and the Internet offered some hope to frustrated executives, but this technology has yet to be fully integrated into many organizations. Can executives and managers articulate business requirements to IT in a way that allows the two organizations to work as a synchronized unit?

What has been missing thus far at the executive level is critical thinking around how information architectures will ultimately be transformed to meet strategic business requirements. Executives should consider the following ideas as they craft post-2000 information strategies for their organizations.

1. Determine the strategic importance of information technology for various business units and functions within your organization. Typically, there are back office or transaction based functions that can be addressed using software packages and / or outsourced to a systems integrator.

2. Consider merger, acquisition, emerging market and regional activities as a key component of this critical analysis.

3. Once this critical assessment has been completed, identify if packages are appropriate for handling these functions and assess the leverage that can be gained by moving to off-the-shelf solutions for various business units.

4. Leverage analysis data that has been assembled by year 2000 contingency planning teams. These teams have crafted function-to-system impact models that depict how key technologies support various business units. These models provide valuable insights into the impact of major changes on information architectures.

5. Establish a road map for large-scale transformation projects requiring knowledge of installed data, systems and functions. This includes:
   
   Determining which systems are prime targets for package replacement and how this will be phased in over time.
   
   Assessing which legacy and end-user systems should be kept intact.
   
   Defining a phase out strategy for existing systems that are to be replaced by packages or other new technologies.
   
   Crafting a realistic approach for Internet enabling that consider the long-term impact of the business and technology trends and the complexities inherent in existing web enabling software.

6. Executives should also manage these initiatives under a common project office and timetable to ensure that information initiatives are gravitating towards a common goal. Historically, this has been missing in many organizations.

In parallel with these initiatives, management should rethink how IT is currently structured. Some companies have decentralize and re-centralized the IT function a half a dozen times over the past decade. Perhaps central IT should be a small service center that manages common technologies and vendor functions, while applications are managed within business units or under the auspices of third party service providers. While these decisions are made routinely in large companies, they should be considered within the context of the IT realignment points above.

The Bottom Line

If executives want to realign business strategies with information architectures, they must utilize a more cohesive planning model than those used in the past. The effort must be viewed as a phased transition process that leverages knowledge of strategic business requirements, the existing systems environment, package solutions and third party offerings. In addition to this, executives must apply critical thinking to achieve a practical transition plan that does not continuously repeat the mistakes of the past. Without these crucial planning elements, businesses will be doomed to continuing down a path of IT ineffectiveness for many years to come.