Business term of the day - Term for August 4, 2013: "Business-IT alignment"

Source: Wikipedia

Business-IT alignment is a dynamic state in which a business organization is able to use information technology (IT) effectively to achieve business objectives - typically improved financial performance or marketplace competitiveness. Some definitions focus more on outcomes (the ability of IT to produce business value) than means (the harmony between IT and business decision-makers within the organizations); for example,

alignment is the capacity to demonstrate a positive relationship between information technologies and the accepted financial measures of performance.

Enlarge image

This alignment is in contrast to what is often experienced in organizations: IT and business professionals unable to bridge the gap between themselves because of differences in objectives, culture, and incentives and a mutual ignorance for the other group's body of knowledge. This rift generally results in expensive IT systems that do not provide adequate return on investment. For this reason, the search for Business / IT Alignment is closely associated with attempts to improve the business value of IT investments.

Business-information technology alignment, the "holy grail" of organizations, integrates the information technology to the strategy, mission, and goals of the organization. There are six key characteristics in order to achieve this alignment. First, the organization must view information technology as an instrument to transform the business. This includes exploring other revenue streams and integrating other facets of their business into each other. For example, using one central database warehouse to combine two separate, but partnering businesses. Next, an organization must hold customer service, both externally and internally, at the utmost importance. This communication between the organization and their customers must not be lost. Thirdly, an organization must rotate both IT and business professionals across different departments and job functions. They must have the knowledge and experience of both sides of the business so that understanding and communication is achieved. Once those three characteristics are achieved, then an organization must provide clear and specific goals to both the IT and business employees. This will create and integration of both entities to achieve a common goal. The fifth characteristic ensures that IT and business employees understand how the company makes or loses money. This is important so that money is not carelessly poured into the IT department and there is no return on that investment. Lastly, organizations must create and vibrant and inclusive company culture. There must not only be informational unity, but a company as whole.

It is not unusual for business and IT professionals within an organization to experience conflict and in-fighting as lack of mutual understanding and the failure to produce desired results leads to blaming and mistrust. The search for B/I alignment often includes efforts to establish trust between these two groups and a mechanism for consensus decision-making.