Seven Rules of Business Alignment

This article originally appeared in the The Cutter Journal on 30 November 2008.

Abstract

In this article, I describe an operating model for business alignment drawn from 27 years of experience, working for both consultancies and major end-user organisations in a variety of industries. The key points that come out of this experience are:

  • Alignment among all parties involved in business change is the issue: the business consists of multiple parties that need to be aligned; IT is just one of these parties.
  • The start point for alignment is communication.
  • Enterprise architecture is a vehicle for facilitating alignment.  It provides an information base that shows us where we are and allows us to assess potential futures.
  • Enterprise architecture as an approach has a part to play in business strategy, business change, and its traditional home in IT.
  • Enterprise architecture provides tools to understand, plan and govern change but for  effective delivery it must be integrated with program management
  • The information, stakeholders, and processes used to manage alignment through enterprise architecture are different but related for business strategy, business change, and IT.  Our change management organisation must draw on people from across the organisation at all levels.
  • Whereas alignment must be driven from “the Business”, it may not always be best equipped to do this, in this case it may need support in the form of “Business Architecture as a Service”

Communication

Anglo-American business communication has evolved a terse and concise style that is accepted as conventional wisdom.  I am guided by the editorial guidelines to adopt that style.  However, I will not fully comply.

Why?

I have learned both through instruction and experience that to communicate with those of differing backgrounds and cultures that saying the same thing in multiple ways, providing additional context and painting rich word pictures are essential.  If I do it and equally if those that I am communicating with do it then there is a greater prospect of mutual understanding.

This point is relevant in the discussion of alignment.  Alignment is a personal thing influenced by background and previous experience.  Misalignment is caused by misunderstanding.  Business effectiveness is better served by waffling to mutual comprehension than by adopting the cultural norm of clipped, brief and cryptic messages that are misunderstood.

The first rule of alignment is effective communication.

Definitions

Before I get into the core discussion, I need to set out some definitions to try to avoid misalignment of understanding and expectation:

TermDefinition
AlignmentThere is alignment between different areas of an organisation when they are working to towards mutual compatible goals and their actions to achieve those goals are coordinated and compatible.
Positive AlignmentIn addition to the actions being coordinated and compatible, the actions and activities that different areas of the organisation carry out are synergistic; they reinforce each other and create additional value.
ArchitectureArchitecture is the process that ensures you do the right things right.
IT ArchitectureIT architecture is the process that ensures that the right IT systems (i.e. they meet business functional and non-functional needs) are implemented in the right way (i.e. they make effective use of technology and resources).  It is requirements management and solution design at the enterprise level.
Business ArchitectureBusiness architecture is the process that ensures the business has the right internal and external boundaries, has correct governance, effective processes and capabilities to deliver its customer propositions, appropriately managed risk while meeting its financial targets.  It operates at the strategic, transformational and operational levels.
Enterprise ArchitectureEnterprise architecture is an encompassing governance framework that ensures that all areas of the business, including IT, operate in an aligned manner.  It negotiates between each area and balances the constraints that one area puts on another with the enablers that one business area puts on others.
Macro ArchitectureMacro architecture is concerned with the grand design of things.  It ensures that we have defined and agreed a conceptual solution.
Micro ArchitectureMicro architecture is about the implementation of our grand designs.  It ensures that we have dotted all the I’s and crossed all the T’s.  We have removed the straw that will break the camel’s back and we have found the devil in the detail.

The second rule of alignment is develop a shared vocabulary.

Problems of non alignment

In all cases where I have been involved in setting up the control functions to ensure alignment during business change, it has been a clear and vividly communicated statement of the impact of failure that has persuaded the organisation to invest.  Key participants in the changes have understood, from their own or others past and painful experience, huge potential for serious error.  The following examples are taken from major organisations that did know better but did not act.

ScenarioUnintended consequences
Functionality in a customer service system is de-scoped in order to reduce timelinesThe functionality that was de-scoped would have saved 2 minutes per call in a call centre with an average call length of 5 minutes.  This issue was not identified until go-live.  However, call centre staff had been made redundant in line with the expected productivity improvement and call centres were understaffed for several weeks until functionality was completed.  Customer service was adversely impacted in this period.
Functionality in a back office system is de-scoped in order to reduce timelinesThe functionality removed was required to automate back office validation of high value distributor orders to support straight through processing for new B2B web channel.  Retaining the manual step would have meant that contractually agreed SLAs with distributors would have been breached.  Organization went live without any checks of high value orders in order to achieve SLAs and avoid losing the confidence of new distributors.  This put the organization at risk from fraud until the functionality was completed.
Go-live for a new eCommerce site was scheduled just after the peak trading for a retailerThis resulted in key user inputs being scheduled during the planning period for peak trading. These key users could not be made available resulting in major schedule slippage which damaged the business case. The consultancy carrying out the delivery work did not understand the business calendar and its implicit timing constraints in sufficient detail and did not communicate the implications of the schedule at a detailed level.
Operational business readiness was considered as a “business-as-usual” activity and not tracked by the project delivering and a new customer service systemThe delivery of new procedures, procedure manuals and training for call centre and back office staff was managed as part of the delivery project.  There was no budget available to pay overtime or bring in temporary staff in order to free up key staff to carry out these activities.  No-one was made accountable for business readiness.  The outcome was that at go-live the business was only part ready. Services targets were missed resulting a backlog of cases which took several weeks to clear through working extended hours in the call centres.
Business partner communication was considered as a “business-as-usual” activity and not tracked by the projectA financial services company was launching new products through its distributor channel.  The marketing function ran roadshows with the distributors based on the originally planned capabilities to be provided to distributors and delivery schedule unaware that both had been changed.  To its embarrassment, the company had to realign expectations through an additional communication program.
A customer service application was re-platformed in a change that was supposedly “transparent” to the business. Therefore the business were not informed of the changeThe performance characteristics of the new IT platform were markedly different to the old platform under real operational conditions.  Response terms were very poor at peak times resulting in staff resorting to manual paper operations.  A backlog of cases built up which was cleared over six weeks in overtime.  IT could be criticised for poor testing but, by not informing the business of their plans, they did not allow the business to assess the risk and put in place contingencies.
An IT supplier outsourced its B2B website delivery to its incumbent static website developerEarly releases were successful.  Then a release failed, the developer did not have a roll back plan and the web site was out of action for nine weeks resulting in a major revenue loss.
A call center system that had been upgraded to support a product launch.  The system was allowed to run with a number of problems for a weekThese “teething troubles” resulted in a large and growing backlog of cases and it was decided to roll back.  The roll back was cancelled when the huge scale of manual processing that would be required to support the new product was understood.  Instead the organisation hired temporary staff to process the backlog cases over several weeks.

Some of these examples, which are based on real issues within real organisations, should help develop an understanding of how small actions deep inside the organisation can have major impacts. They show that it is essential to have micro-level controls to deliver macro-level changes.

These examples show the consequences of poor management of change.  In summary,

  • At the strategic level, getting the macro structure wrong may mean significantly higher costs of operation, longer process execution times, longer time to market, and reduced competitiveness.
  • Similarly, with poorly defined business processes, there are likely to be higher costs of operation, longer process execution times, longer time to market, and reduced competitiveness.
  • Without a clear view of current business processes, target processes, and progress of all solution elements, delivering business change is likely to be very painful.
  • If business change is not under close control, then it will be near impossible to ensure that IT releases are coordinated with business change.

The third rule of alignment is understand the consequences of failure.

Alignment scenarios

Having defined alignment as an abstract concept, let us now consider some situations where is a necessity:

Scenario TypeScenariosIntended outcomes
Strategic change planningDivisional reorganisation, change in market structure or conditions, exploring new market propositions, reacting to competitor activity, major regulatory change, international expansion, merger/acquisition organisation design, channel strategy.A new operating model and change program has been designed that has commitment from all key stakeholders.  The model has been rigorously tested to ensure it will deliver its objectives.  The program has been tested to ensure it is deliverable.
TransformationMajor computer package implementation, customer service program, execution of merger, shared services, business process re-engineering, business process outsourcing.Closely choreographed set of activities by multiple parties potentially inside and outside the organisation.  Risk, issues, deviations and exceptions identified early and controlled.  All aspects of change remain aligned.
Business as usual changeBusiness process optimisation (e.g., handheld device store scan routes, call centre computer telephony integration), management information, data quality improvement, introduction of new communication approaches.Close coordination of activities within the project.  Full understanding of impacts and dependencies on other projects and vice versa. Coordinated scopes, deliverables, dependencies and timelines among projects
Technical changeOperating system, hardware, storage, network, software, telephony version upgrades and patches, re-platforming,Full understanding of the business impact of failure or poor performance, rollback plans, communication of the benefits and risk to the business, agreed scheduling and acceptance of the risk with the business.

These examples are again based on real situations within real organisations, and the view of success is what was used by those organisations. The examples start to indicate the micro-level controls required to deliver change successfully.

The fourth rule of alignment is understand what “good” looks like.

Strategies for delivering alignment

In my examples, I have emphasised alignment of delivery rather than alignment of objectives.  My experience is that many large organisations concentrate on getting the goals right and getting “buy-in”.  The follow-through is often weak or missing.  Agreeing to conceptual corporate goals is easy, developing delivery plans is harder, and maintaining those plans and delivering alignment is more difficult still.

We need an end-to-end change delivery process that ensures alignment of goals, investment, plans, solutions and delivery.  So what is the process that we need to go through?

process

The strategies to be adopted are:

sd

The first key question that we need to answer is – Where do we want to go?

Once we know this, we need to do some due diligence. We need to be able to model various operating model scenarios against business objectives.  We need to bring these models to life in a way that enables key stakeholders to visualize operations, run scenarios and consider intangible dynamics such as customer satisfaction and brand awareness as well as the hard numbers.  We also need to understand the numbers, our prospects of success and our capability to deliver.  We need high-level operational models to validate the assumptions in the spreadsheets.

If IT have the correct profile within the business to be invited to the strategic table, then they have a role.  How will IT support the proposition, the capabilities, and the internal and external organisation models?  If IT are not at the table, then the probability of a failure of alignment is magnified.

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Once we have a direction, we need to understand our destination, determine the route, agree the investment, plan the actions we need to take to get there and shape a program to deliver them.  This is simply a standard approach to program planning.  But I am describing it here because experience tells me that often this stage is done extremely poorly.

What does the future look like?  To plan a large-scale program, we need to understand what we are building.  To motivate people to change, they need to understand their future and the part they play in it.  We need to create an initial “business roadmap” which describes the key changes to processes, organisation and IT systems over time.  This is a core enterprise architecture activity which is a key driver for the structure of the change program.  It provides a sound basis for understanding risks, issues and dependencies, and it provides a baseline for managing change.  It ensures that all change activities have plans that are in alignment.

What do we need to do to get there?   Each stage of the roadmap dictates a coordinated set of changes to processes, organisation, locations, and IT systems.  The projects that need to be delivered, the major milestones for aligning projects, the key resources, the stress that the organisation will be put under all emerge from the plan.

Is our plan safe?  Major change programs are normally under huge pressure to deliver benefits and to achieve a return on investment.  Very often entirely foreseeable issues arise during the program that threaten the business case.  The enterprise architecture roadmap provides a good basis for understanding these threats, each element of the roadmap can be perturbed in such a way to test the effect on the overall plan – e.g. what if we can’t hire the right skills, what if a business partner pulls out, what if the technology doesn’t work, what if the new building is delivered late, what if key people leave.

Once we have a secure plan, we can ensure we have the skills, funds and time to deliver.  Unfortunately, too many change programs are launched with too little thought, they fail to deliver as much as they could and they fail the people involved.

pd

Delivery is all!  We must turn our plans into positive operational business results.

A secure plan has to be executed; it also has to be changed to take account of changed needs and unforeseen reality.  A business change program requires complex choreography of many moving parts – suppliers, buyers, resellers, partners, customers, employees, sales, marketing, customer service, logistics, training, investment, processes, organisation structures, and IT systems.  All of these must be aligned.

It is difficult enough to ensure that all areas of a business operate in alignment when things are relatively stable.  When we are trying to change the business, alignment becomes very much harder.  The solution is an old one – it is a Program Management Office, a PMO.  But not a normal PMO, an enriched PMO.

An enriched PMO manages delivery alignment by managing the delivery of the “business roadmap”.  To do this it needs to be enriched by business and IT people who ensure that the roadmap is delivered at the detail level. The roadmap changes when it needs to change. A single vision of the future and a single plan to deliver it is assured.  The enriched PMO works at the detailed operational level; it manages the devil in the detail.

bau

Transition of a change into successful business operations starts at the beginning of the change program.  At the start of the process, we were talking about bringing possible futures to life through models; we must continue to bring the future to life to test the future and gain acceptance of the future.  Acceptance is a process that takes time; there are techniques that bring the future architecture to life – conference room pilots, prototyping, model offices, simulations, etc.  These are typically used to explore the solution and improve it.  But they are equally valuable in helping people understand what the solution will look like when the roadmap is delivered.

The fifth rule of alignment is have a change management process that includes and integrates program management and enterprise architecture.

Information requirements

In order to deliver an aligned business change, we need to be taking several perspectives on information.  The pervasive IT-centric view of enterprise architecture typically has three core IT related views (applications, information and technology architectures) and a single business architecture view.

From an alignment perspective, this skew towards IT is not helpful.  The perspectives that we have looked at so far in order to drive alignment and the modeling capability required to achieve alignment are:

PerspectiveModels
Strategic Planning
  • Balanced scorecards
  • Strategy Maps
  • Product / proposition models
  • Capabilities models
  • Organisational models
  • Business environment interaction models
  • Business unit interaction models
  • Risk models
Business Change
  • Process models
  • Procedure manuals
  • Organisation models
  • Training courses
  • Locations
  • Transport schedules
  • Product configurations and parameters
  • Product documentation and literature
  • Partner, supplier and customer links
  • Customer service scripts, FAQs

And lots more…

Business as Usual
  • Process models
  • Procedure manuals
  • Organisation models
  • Training courses
  • Locations
  • Transport schedules
  • Product configurations and parameters
  • Product documentation and literature
  • Partner, supplier and customer links
  • Customer service scripts, FAQs

And lots more…

IT
  • Process models
  • Applications models
  • Information models
  • Infrastructure models

There are a several key points to note.  The point of commonality is business process; the critical point of alignment is around business process models.  The business change and business as usual lists are the same.  They are also the longest and they span the whole business, they are an expression of the detailed implementation of business process.

The sixth rule of alignment is develop a single shared business focused information base that shows where the business is, where it is going, and how it will get there.

Working structures

Now we have thought about a process and the information that we need to operate the process, we need to design an organisation to execute it:

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The best people to manage change in a particular area are people who know that area.  However, they need coordination, process, discipline and support.  This is the role of the Solution Authority.

The Solution Authority, as well as providing ensuring rigor through formal structure and process, should provide support and guidance.  The traditional British “bobby”, perhaps now largely historical, is a good model for any sort of governance organization.  Out there, friendly and helpful but also carrying a short baton and handcuffs.  In line with the current propensity to adopt a services approach, this might be termed “Business Architecture as a Service” (BAAAS).

The seventh rule of alignment is build a change management organisation that utilises the skills and capabilities of people across the organisation at all levels, and support to ensure rigor.

Conclusion

This discussion is intended as a starting point for developing a comprehensive change management function that can control large-scale change and deliver an aligned organization.  It is critical that alignment not be seen as an IT issue, because that will skew governance and miss the bigger picture of aligning the whole business.

Biography

Alan Inglis is a seasoned CTO and Enterprise Architect with over 10 years’ senior management experience.  His  career has been characterised by roles operating on the boundary between the business and IT in business strategy, IT strategy, enterprise architecture, and business transformations.  He has headed the architecture functions at 4 London Stock Exchange listed organisations.  He has advisory consultancy experience in the retail, insurance, utilities and telecommunications sectors.

Alan is a delivery oriented strategist who has developed business focused and practical IT strategies for a variety of major companies. He is a change manager who has led large complex business change programs, including ERP implementations, creating shared services customer services functions and outsourcing / offshoring.

Alan has developed productive commercial relationships with top industry suppliers enhancing value and quality of service through joint action to improve processes and exchange business information achieving cost reductions of up to 50% on multi-million dollar contracts.

As a passionate and committed leader, Alan has driven improvements in development and operations.  He is an enthusiast for the growth of others who has developed and led high performance teams that have a passion for their work and have fun doing it. He provides mentoring on both a formal and informal basis.

Alan is recognised as an industry expert in IT effectiveness (Effective IT Judge & Conference Expert Witness – 2007) and a thought leader in enterprise architecture.  His blog, Chief Architect (www.chiefarchitect.com), is listed in the Datamation Top 200 Tech Blogs

Alan has a broad technical background in development, support and infrastructure roles in IBM Mainframe, Windows, UNIX and AS/400 environments. He is a Chartered Member of the British Computer Society, MBCS CITP.

The hype cycle vs legacy…

I am going to talk about a consequence of the hype cycle that seems to be missed by many. I will use an anecdote to illustrate the point…

Some years ago, I was engaged on a short assignment to review a new technology organization’s customer service programs. The company had grown rapidly in a new market that was now maturing. They had 3 customer service systems. They had 4 main customer groups served through 4 sales channels. Each channel used different business processes to execute the same activities and accessed all three systems. The IT solutions had grown organically with the business and were a mess! But now, with the market maturing, there were mainstream solutions from major suppliers that could replace these systems that were starting to constrain the business. However, the cost of resolving this, $15M, was seen as too expensive.

A few years later, the organization had lost its competitive position, had moved from number 1 to number 2 and was taken over by a foreign competitor entering the market. With a more complex product portfolio, more customer groups, a more complex sales model, the customer services systems were now seen as a major constraint to business growth. I happened to be engaged through another consultancy to look at the problem again. This time the cost of sorting it out had grown to $80M. Again the executive board decided that this was too expensive.

Recently, the organization merged with a major competitor. I heard that they had embarked yet again on a program to replace their legacy customer service systems. The market is now much more complex with many more products, it is also more competitive with tighter margins. The systems have grown in complexity since the last attempt to sort them out. I suspect the cost this time will be $150M or more. A ten times increase in cost in ten years. More importantly, the organization was the market leader 10 years ago but now it is in 3rd position with a likely drop to 4th.

The key point is that everything that you build before good practice emerges is likely to be poorly designed and poorly built. It should be thrown away and you should start over. If you don’t you will inevitably perpetuate bad practice. Future development will be compromised because time pressures to deliver tactical business change and the constraint of the legacy. And the cost of replacing it to deliver strategic business change will grow over time.

Sometimes I wonder why there is so much legacy. The answer is obvious if you overlay the adoption cycle with hype cycle…

So what are the lessons:

  • It is never too late to sort out your legacy
  • Don’t build on bad practice
  • The so called first mover advantage can be a handicap
  • Build knowledge before building solutions

Enterprise Architecture Migration Planning – Timing is Everything

Architects will often think of their work as having 4 major phases:

  1. Develop the As-Is model
  2. Develop a To-Be model
  3. Develop a migration plan
  4. Govern the plan delivery

I am interested here in the third phase, migration planning. Let’s define a migration plan…

There are two primary types of migration plan:

  • A formal transformation program – this will typically be a major replacement or upgrade of the IT landscape that underpins major business change
  • A set of policies that steers IT change

There will always be business and IT changes that fall outside formal change programs. These will require governance to ensure that they do not derail the program. A light touch approach to smaller changes avoids diverting scarce resources unnecessarily. The light touch is a set of policies managed into projects supportively (I have covered this approach elsewhere). I want to focus on transformation programs.

The original Zachman framework had columns for data, function and network – the traditional IT domains. It was later extended to include people, motivation and time. The importance of time dimension is often overlooked, particularly the top two rows which cover business cycles and business events.

It may seem obvious that the time dimension is critical when planning large scale change but I have seen on several occasions that no attempt is made to understand this. The result is that an otherwise well formed plan is rejected and the authors condemned as having no business knowledge. A devastating loss of credibility for an enterprise architect.

First, business cycles…

Pretty much all organizations have an annual financial cycle. This will include start and end of year, budgeting, budget revisions, internal and external reporting. There will be periods within this cycle in which the finance department and potentially some managers throughout the business will be no go areas for business or IT change.

Running alongside the financial cycle and closely related to it will be the business planning cycle. Again this puts load on certain managers and creates management stretch which reduces the capability of a business to adsorb business change.

Many organizations have seasonal sales cycles. Retailers, for example, will have peak sales in the run up to Christmas – changing retail systems or making business change during this period will not normally be allowed. To be fair, this is usually picked up, what isn’t always understood is the upstream effect of the peak period. The supply chain is full before the peak period as product is stockpiled ready for the trading rush. Therefore, the supply chain change freeze will start earlier than the retail change freeze.

Other industries will have their own cycles which need to be understood in order to create sensible migration plans. And there are other cycles such as recruitment cycles e.g. organizations that take on large numbers of graduates or schools leavers will have business cycles driven by school and university term times.

Next business events. Many businesses will have schedules of events such as price changes and marketing campaigns that cause localised stress on particular business areas and their supporting systems. These create what are effectively informal mini-change freezes throughout the year.

The next mistake that is often made is scheduling delivery too close to the change freeze. Changes must have time to bed down in the organization and systems often need to be stabilised. This should occur when processes are not under stress. Any fixes should not be severely time constrained.

The net result of considering business cycles and events is that the time periods when major changes can be released into the organisation can be very constrained. In addition, bringing in change before a peak in the business cycle can result in major benefits over bringing it in after. This means that we need to design releases carefully into the organisation’s calendar in order to drive maximum benefits. In turn, this means that we may need to compromise the solution from the technically ideal in order to ensure timely delivery. This compromise is best done in a planned way rather than as a reaction to schedule drift – i.e. rational compromise is far preferable to emergency surgery.