Business Strategy and Technology Alignment

Helping Organisations Achieve Maximum Performance

Topics Included in This Paper?
Definition and Introduction Why Align to a Strategy? Bringing a Strategy to Life Steps to Enable Change Use a Defined Process to Align Your Business Strategy and Technology Measurement

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Definition and Introduction

alignment /lnmnt/ (noun) The act of aligning parts of an organisation so that it is able to operate at its most effective, exceeding customer expectations and driving maximum yield for its shareholders aligning (the present particle of the verb align) To place or arrange parts into a straight line or their correct relative positions A lot of consulting firms talk about strategic alignment. Linked to the use of balanced scorecards and strategy-focused organisations by Kaplan and Norton, it is often seen as a pseudo-academic term designed to drive consulting revenues. Our objective in this paper is to strip away the hyperbole and look at why aligning your objectives, technology spending and people development is not some disconnected consulting notion, but the very heart of effective management and as such, something that all of us do every day. The most appropriate definition of management is the art of empowering, encouraging and enabling individuals to work together to deliver against a shared goal. Senior managements primary mission is to create and manipulate the environment so that your team can be more successful than the competition (inward and outward focus). Everything else is just mechanical ways of delivering on various roles. If you take that approach, alignment becomes common sense the glue that holds everything together and this starts with a common-sense strategy. In this white paper, we will examine how to define and articulate a strategy from a number of key perspectives; then we will look at how measurement and performance management support alignment programmes, driving adoption and buy-in as well as allowing the management team to understand and manipulate the environment.

The Goal: Achieve Competitive Advantage through Business and Technology Alignment

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Why Align to a Strategy?

Back in the 12 century, a Chinese general called Sun Tzu famously said, Strategy without tactics is the slowest route to victory, but tactics without strategy is the noise before defeat. We all had a plan when we set out in business: for some this was a granular strategy with objectives, targets and goals; for others more a general notion of where we wanted to be and a rough plan of how to get there. Either way, for many businesses, day-to-day operations and business as usual tend to divert focus towards getting the work out of the door, and away from monitoring progress against a grand plan. Our strategy becomes stagnant and detached from the day-to-day running of the business. Tactical planning, reacting to events as they unfold, and fire fighting become the controlling focus. Its incredibly difficult to break out of this mind-set and see the wood for the trees. Some organisations become incredibly proficient at managing chaos. (I have certainly worked for a few!). However, if Sun Tzu was right, the lack of an overarching strategy can mean that all other efforts will ultimately fail. This doesnt mean the company will go under, just that it may not meet its potential or be acquired or sold off at less than it is really worth. It also means that customer service, profitability, ability to grow and capitalise on economies of scale and ultimately the ability to define its own destiny may be significantly compromised for want of a joined-up and aligned operational, investment and people strategy. The recurring theme you hear from the private equity and venture capitalist community these days is that the organisations they engage with have two clear breaks in their business model. One is between the day-to-day operations of the business where what the people do on a daily basis is completely disconnected from what the managers believe they are trying to achieve. The other disconnect concerns process and technology as an investor looking for exponential growth, you need to know that the organisation is scalable and that it can turn growing revenues into earnings. Often the management team is advised to go back and take a look at the way their strategy translates into initiatives, programmes and decision-making on the ground. The phrase you cant see the forest for the trees is often quoted, describing how obvious changes to process and approach would resolve issues that currently suck up valuable management time and company resources. By this point the damage is done the valuation is hit, the risk profile set and the preference multipliers already decided. There are two key benefits an experienced investor has when it comes to looking at an organisation. One of these is an external perspective the ability to look without emotion at the clutter of business as usual and evaluate if what is happening makes sense. The other is an instinctive feel for how well an organisation is working. What is this sixth sense based upon? An evaluation of how well in tune the various parts of a business are and how well the organisation works end to end put simply, they are judging how aligned the organisation is across the breadth of its decision-making.
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Bringing a Strategy to Life

Every organisation will have a unique strategy, defined by its products and services, target customer base, market sector and what the senior team believes their USP (unique selling proposition) to be. Strategy can be viewed as a framework used to drive effective decision making and provide a map guiding all members of the team to an agreed destination using a defined, although not rigidly set, route. If the strategy is the map, tactics are the on-the-ground decisions made daily to stay as close to the target route as is sensible and expedient. Strategy is generally made up of seven important elements: 1. High-level statements defining intent, ways of working and general principles; these can take the form of mission statements, core values and corporate targets (be the biggest, the best, the natural choice, the leader, etc.). 2. More detailed objectives at the corporate level that are specific, timely, deliverable and most importantly measurable. 3. A re-statement and translation of the strategy from a number of different perspectives; traditionally these were financial, customer, process and development, but the actual perspectives you choose depends upon the organisation and what it is you are trying to achieve. 4. A business model driven by the strategy, the market and, most importantly, how your customers see your value. 5. A set of initiatives to move the business from where you are today to where you want to be; each initiative will have its own set of programmes, projects and activities. 6. Defined critical success factors for the short-, medium- and long-term growth of the business. 7. A measurement strategy to prove where value is being created, monitor the on-going validity of the strategy and ensure progress remains on track. A business will have some of the above in place, but it is only when you have all of the above working effectively that true alignment can be achieved. All pain points, barriers to success, and challenges to growth will generally come out of a failure in one or more of the above areas.

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Steps to Enable Change

As a consulting practice focused on technology-enabled change, we have our own set of perspectives we focus on when helping an organisation maximise their effectiveness and move towards an aligned approach. These would generally be developed in addition to the financial and customer perspectives. The most important are: Operational o The processes and interfaces between processes that exist across the organisation.

Technology o How technology touches the business today and what needs to change to deliver against the business objectives. Technology is a critical aspect of enabling change and achieving competitive advantage.

Measurement o What is critical to the customers view of success, what are the critical success factors for the change programme, what needs to change and where are the expected benefits to be realised from each specific change to the process?

People Development o Where are the gaps in the current team, what additional resource is required to manage the transitional period, and how does the future state affect the makeup of the team?

Always remember that the aim of a strategy is to accomplish four objectives: 1. Identify where customers get value from the business 2. Align the decision-making, expenditure, people development, value proposition, technology development and people within an organisation 3. Provide individuals with clear guidelines for their interaction with customers, suppliers and with each other 4. Steer the organisation down a pre-defined path of high growth coupled with maximum returns and ever-increasing customer value Alignment is about making sure that this strategy is relevant to, and understood by, all areas of the business impacted by it and that the entire organisation buys into its execution.

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Use a Defined Process to Align Your Business Strategy and Technology

Companies have two imperatives in todays economy: First, to grow revenue faster, while continuing to delight their customer base. Second, to streamline operations and business processes to increase margins and leverage economies of scale. The ability to do these two things creates enormous competitive advantage.

Business and IT must row together to ensure success

The technology alignment process appeals to companies that want to drive bottom-line growth in a down economy, those who want to use technology to drive business performance, and companies who have failed to see the expected returns on prior technology investments. Specifically, value engineering allows you to: Integrate and get the most out of your current technology solutions. Align your technology spend to the strategic objectives of the organisation. Unlock the value in your people, your enterprise software supply chain and your technology ecosystem. Reduce unproductive tasks, eliminate duplicate data entry and automate manual processes. Gain more visibility into and control over every important aspect of your business metrics.

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The Importance of Measurement

The saying goes: What gets measured gets done. If you want to change something - measure it and then monitor it closely. The problem with measurement, especially in todays technological world, is not so much its absence, but rather an overload of information. You can obtain metrics on almost every aspect of your business, mostly aimed at measuring efficacy of resources or lag indicators based on financial metrics. Canned business intelligence (BI) solutions claim to provide hundreds of metrics on all aspects of your business but there is an issue here. Until you understand what is important to deliver the strategy, how do you know what or how to measure? Furthermore, metrics are only the starting point for measuring business performance. To make them meaningful and relevant, individual metrics need to be balanced and combined to form KPIs (key performance indicators). KPIs need to roll up to provide dashboard views of all aspects of the business. The optimal dashboard is a single page a portal or short report with enough information to allow you to know where to dig down, but broad enough to be able to provide an at-a-glance view of the health of your organisation, your customers and the progress of your change programmes. Achieving this necessitates a final stage to the alignment process aligning measures to the defined strategy. By using techniques like target-intervention modelling and weighting metrics as you bring them together into rolled-up KPIs, it is possible to clearly communicate progress, identify areas of weakness and proactively manage performance. This is especially true if you utilise KPIs over time so that they not only show you where you are today, but also as a fairly reliable predictor of future events. Ensuring that you only measure what is important to you, bringing these together in a way that tells you something about your business and presenting the result in a highly graphical, easy-to-understand way is central to your performance management strategy.

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About KeyedIn Solutions KeyedIn Solutions was founded by veteran ERP industry executives to transform the traditional enterprise software systems market through a suite of integrated business applications delivered on a true SaaS platform and a consulting organisation rich in business, industry and IT expertise. KeyedIn SaaS Solutions replaces rigid, on-premise enterprise systems with more agile, feature-rich and cost-effective integrated business applications that scale to any size environment. With applications developed in .NET for its ubiquitous nature and deployed via the Cloud using a true SaaS model, integrated business applications from KeyedIn SaaS Solutions represent the next generation of enterprise systems for specialised vertical and micro-markets. The KeyedIn Consulting Group provides strategic and tactical consulting services around existing or planned systems, helping organisations achieve a strong return on their IT investment and realise a true business advantage in their market. Whether engaged independently, or in conjunction with the companys leading edge technology platform, the KeyedIn Consulting Group delivers results for a wide range of businesses and industry types worldwide. This winning combination of industry expertise and transformative technology has positioned KeyedIn Solutions for rapid growth. Customers look to KeyedIn Solutions for innovative, integrated business applications and results-driven consulting services delivered with integrity and a laser-focus on their needs. You should too. Keep up with us at www.keyedin.com. KeyedIn Solutions - UK Offshoot House 68 The Grove Ilkley West Yorkshire LS29 9PA Phone: +44 1943 604543 Email: ondemand@keyedin.com Learn more at www.keyedin.com KeyedIn Solutions - US 5001 American Blvd W Suite 1010 Minneapolis, MN 55437

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