IT needs to be firmly aligned
with business objectives. The CEO and CIO should work
together to achieve this alignment
IT must be closely aligned with
business objectives. This can help reduce costs, enhance
customer service, promote innovation, improve communication,
and drive quality improvementsin short deliver
on the very promises for which IT is implemented in
the first place.
As per the results of IS 2003,
almost 80 percent of the Indian CIOs believe that their
IT goals and business objectives are closely aligned.
This alignment between IT and business is claimed to
be much closer in BFSI and Telecom/IT/ITES verticals
where technology and business go hand-in-hand.
This is surprising if one considers
that just a few years ago IT was anything but aligned
so long ago
Just over two years ago, IT was considered the end-all.
In many cases technology was implemented for technology's
sake; rarely were the overall benefitstangible
as well as intangibleevaluated carefully before
making an implementation decision.
CIOs were under constant pressure
to follow the technology model adopted by the company's
closest competitor. There was no clear rationale behind
adopting a particular technology.
Companies failed to realize
that every organization's business needs and issues
were unique and that the replication model would not
hold good. It was only events like the dotcom bust followed
by the economic downturn that forced many companies
to take a hard look at their technology investments.
Improving IT and business alignment
was the only way out for most companies which had al-ready
invested sizeable amounts on miscellneous technologies.
When CIOs were asked why they think IT and business
were not aligned, the most popular reasons were, Business
goals are considered more important, It
is not the main objective of the company or We
are currently working to bring IT and business goals
together. While reasons like Lack of vision
or IT is not essential to the company's success
This highlights the fact that
even though IT has gained prominence within an organization,
it is still considered as just another department, and
not a catalyst for growth. It's true that IT alone cannot
drive growth, but it can act as the key growth enabler,
and companies need to realize this.
27 percent of the organizations
realize the need to align IT and business goals together
and are already working towards that objective.
This brings us to our next
question: How does one align IT with business?
Aligning IT with business is more of a management issue
than a technology one. For IT to be aligned with business,
there has to be a clear understanding between the CEO
and the CIO. For this, the CEO needs to step a level
below to understand how a particular technology initiative
will affect his company. At the same time, he needs
to consider the CIO as a strategist, not just a technology
The CIO needs to evolve. He
must understand the core business issues and try to
fit them into different technology scenarios. This way,
he will be able to contribute significantly to the company's
growth and future strategy.
As per the survey nearly 83
percent of the CIOs form a part of the company's core
strategy team. This percentage is significantly higher
in the BFSI segment where IT is a crucial component.
But the same cannot be said
about the CEOs involvement. If one analyses the
key people involved in decision making, the CEO plays
a significantly lower role. In certain areas like Enterprise
Wide Applications, Security, and Outsourcing, less than
50 percent of the CEOs are involved in direct decision
making. In fact, in most cases the Functional Heads
play a more significant part in decision making as compared
to the CEO.
A CEO needs to play a more
proactive role when it comes to Process automation or
Security, since they affect the organization as a whole.
Enterprise-wide IT strategies also need to be discussed
frequently at the board level. Currently, only 35 percent
of companies discuss IT strategy frequently at board
- 80 percent of
CIOs believe that IT and business goals of their
organization are closely aligned.
- The alignment
between IT and business goals is much closer
in case of BFSI and Telecom/IT/ITES sectors.
- The main reason
for lack of alignment of IT with business is
that Business goals are considered more
- 1/3 of organizations
are working towards aligning IT and business.
- More than 80 percent
of CIOs form a part of the company's core strategy
team. This number is significantly higher for
the technology-driven BFSI sector.
- Only 35 percent
of organizations discuss IT strategy frequently
at board meetings.
- IT should be closely aligned with business.
Then only will the organization be able to derive
the maximum benefit from an IT implementation.
- Improving IT and business alignment is the
only way out for companies, which have already
invested sizable amounts in technology.
- Instead of replicating a competitor's technology
model, organizations should be focused on analyzing
their own pertinent business issues and how
these can be addressed using technology.
- The CEO and CIO should work closely to align
IT with business.
- The CEO should understand how a particular
technology initiative will affect his company.
He should also consider the CIO as a strategist,
not just a mere technology solution provider.
Enterprise-wide initiatives like ERP or security
should be driven by the CEO.
- The CIO should understand the core business
issues to step into the role of a strategist.
- IT strategies should be discussed frequently
at board meetings especially in verticals like
BFSI, Telecom/IT/ITES, where IT acts a business
Vohra, General Manager, ICICI Bank Limited, believes
that a good amalgam of business and technology
will occur when the CIO and his team have had
some exposure in the business domain they're trying
Why must the CIO
and business heads align IT with business needs?
The CIO and business heads must align IT with
business needs because business is the raison
d'être (reason for a thing's existence)
of IT. Technology does not have an existence unless
it serves something that adds value to the stakeholders
like customers, shareholders, and employees. For
example in a bank, technology performs a support
and enabler function.
You can't force an
alignment. It needs to be natural. This will happen
only when the CIO is aware of what the business
is trying to do. The CIO must understand that
he/she is there because there's a business running.
And this business sells products and services.
So the IT functions must be performed as efficiently
and cost-effectively as possible.
How much of business
operations and processes should a CIO understand?
It helps a lot if the CIO understands the actual
business that needs to be supported. It allows
a better 'handshake' of IT with the business areas
in the organization. The 'handshake' ensures that
IT understands what the business wants to do,
and adds values by suggesting automation and changes.
A good amalgam of
business and technology will occur when the CIO
and others in the IT team have had some exposure
in the business domain they're trying to serve.
What is your role
in the IT-business alignment process in your organization?
I ensure that an expert from the IT team is associated
with the project from the planning till the deployment
stage. I'm a member of an internal product development
team comprising department heads of various business
areas. Any new product like a credit card, debit
card, and retail loan is put through a thorough
testing phase before being introduced into the
For example, a credit
card will only be introduced when the IT team
is sure that the systems will be able to support
the associated transactions, billing, and future
growth in users. The IT team works in conjunction
with other business heads to achieve results.
What is the role
of IT governance in an organization?
IT governance ensures that standards, procedures,
transparency, and robustness is introduced in
the systems. In the long term, attention should
be paid to predictability of various IT functions
in Indian enterprises are not as structured as
the companies would have liked it to be. And this
gives scope for consultants and partners from
around the world, suggesting certain models for
provisioning and deploying governance.
many banks in India have suitable governance policies,
although there is a need for processes in different
How do you measure
the success of technology initiatives in your
Technology in ICICI bank is embedded in the organization.
We don't use the classical approach, which says
that, technology investments need to stand on
their own, and you need to get ROI.
Some IT investments
are purely on core technology components. These
investments serve very specific businesses needs.
For example, products like credit cards, debit
cards, and retail loans depend on an IT backbone
to function. This backbone is integral to the
So when the product
is created, it is a part of the business. And
the profits brought in by the product, is able
to justify the technology investment. In this
case the IT investment is not considered a separate
technology budget. However, the business heads
for specific products need to be comfortable with
the IT spend.
There are certain
IT solutions, which may not be tied up with a
particular business. They may be Disaster Recovery
(DR), off-site availability systems, and investments
on the nationwide and global WANs. Of these, some
may be regulatory and some strategic.
If required by regulatory
norms, justification of ROI may not be possible.
In strategic investments like those on DR, the
ROI is the cost of downtime.
B. Mulki, General Manager, Information Systems,
Godrej Consumer Products Limited says that CIOs
should play a dual roleone of a technologist
and other of a business managerfor aligning
IT with business.
What is the importance
of aligning IT with business objectives?
It is extremely important to align IT strategies
and solutions with an organization's business
objectives and needs. And, the need to align has
become especially relevant in the present business
The situation in
companies was different around 15 years ago. EDP
was more of a service department. The actual benefit
derived from IT at that time was the speed at
which a few low-level operational reports were
The scene changed
around six years ago with the introduction of
useful and robust enterprise applications like
ERP. Some companies began to deploy them and it
triggered a kind of 'fear psychosis' among other
companies. If any company used a particular solution,
its competitor would jump into the same solution.
There would be no
rationale or consideration about its use. Companies
failed to identify whether the applications were
suitable for their businesses or not. They failed
to realize that every organization's needs and
business environments were unique, and irrelevant
to other organizations.
Around 1999, e-commerce
was the noticeable trend. Organizations poured
in money to enable e-commerce and hoped to derive
huge value out of these investments. This unfortunately
proved to be unsuccessful in many cases.
In the present day,
it's interesting to see that the amount of investment
in IT has not come down. IT investments are just
very carefully evaluated. This is why it's important
to align IT with business.
Earlier IT drove
business. Now business drives IT. And that's the
way it should be.
What role does
the CIO play to fulfill business objectives?
The CIO must keep abreast of the latest technology
advances, and should be able to choose the solution
that fits the enterprise correctly. The CIO should
play a dual role. One of a technologist, and the
other of a business manager.
For example, there
may be a dozen SCM solutions available in the
market. And these solutions may use a dozen different
technologies. The CIO is responsible for choosing
the solution relevant to every supply chain business
aspect of the company.
Success stories of
other organizations do not matter very much any
longer. Just because another organization has
been successful in adopting a particular technology
or solution does not mean that another company
will be successful as well.
Can you recommend
a standard approach or methodology?
The CIO has to be well-versed in business and
should know the core competencies. He/she should
be aware of the business and operational and productivity
levels, since these are the strengths of an organization.
The CIO should then look for IT solutions that
revolve around these strengths.
The technology should
augment the core competencies and result in better
services, better products, and better ways of
conducting business. Unless the technology introduces
a fundamental and visible change in the business
processes, it will not impact the bottom line
or the top line.
How does the CIO
evaluate whether IT deployment is successfully
aligned with the business needs?
Since most IT investments are large, they must
have performance indicators. For example, in an
SCM deployment, there should be a notable decrease
in inventory levels. Benefits of an IT investment
are tangible like cost savings, and intangible
like faster dissemination of information. These
could be the indicators. Before an IT investment
is made, the performance indicators have to be
agreed upon by the board. This helps the company
calculate and measure benefits.
How should the
CFO view the technology investment?
An IT investment is a strategic decision and is
thus made by the board, of which the CFO is a
member. Investment in IT should be viewed as a
core investment and at par with any other core
business investments, in a company. For example,
if the company wants to set up a new regional
office, there needs to be a robust IT infrastructure
at the location as well. The IT investment is
too vital to be questioned.