As many Australian organisations are preparing for a digital future, the issue of business-IT alignment is growing in significance. This is because a gap between IT and the business means a gap between digital strategies, which dramatically reduces their likelihood of success.
In response to the COVID-19 pandemic, the Australian government has increased their focus on strategies to develop a digital economy to "secure its future as a modern and leading digital economy by 2030". In Europe and Asia, the effects of the pandemic have similarly accelerated the pace of digital transformations. But business leaders can't – and shouldn't – take the transition lightly, nor should they take a scattershot approach to digital transformation.
(Read more: How do you align technology to business goals?)
For a digital strategy to be successful, it needs to be a structured, organisation-wide endeavour. There’s no use in one department becoming digitally enabled when the rest are still working the old way.
Traditionally, the IT department had total control of technology spending, and the CIO, as the resident IT expert, acted as the gatekeeper of technology procurement. Being in this position meant IT had the authority to dictate to the business what its technology needs were, and how they would be met.
If line of business (LOB) staff were frustrated by the organisation’s technology solutions, they had to put up with it or leave. And so the ‘us versus them’ mentality between IT and the business was born.
Now, things aren’t so black and white in the corporate IT world. As the workforce becomes more tech savvy through the course of daily life and consumer technology infiltrates the workplace, IT is being rivalled for technology ownership.
The ubiquity and accessibility of technology empowers employees who can easily find a solution elsewhere if they don’t like what IT is prescribing. And, as increasing numbers of employees are continuing to work from home, the ability to police these individual decisions also diminishes. While this decentralisation of IT can drive efficiencies and increase productivity within the business units, it widens the gap between the business and IT.
A study conducted by SAP and The Economist Intelligence Unit (EIU) highlighted the impact of this misalignment between IT and the business. Their survey of more than 800 IT and business executives showed that digital initiatives were not as effective when they did not include the whole organisation.
Of the 21% of respondents in companies that have implemented organisation-wide digital strategies, 93% described their digital initiatives as “highly effective”. Of the 79% whose digital strategies are misaligned, only 63% could say the same.
Considering alignment is a much harder task for larger organisations, it’s no surprise then that “95% of enterprises are woefully unprepared for digital business” – as Information Age stated, referring to a study conducted by Dell EMC and Enterprise Strategy Group (ESG). In line with the EIU’s findings, this study found that “IT transformation is often correlated with a more cooperative and effective relationship between IT and the business.”
So, what is an ‘ineffective’ digital strategy? If IT and the LOB are not aligned on digital strategies in their organisations, it means the degree of digitisation varies considerably between departments.
Not only does this lack of coordination further entrench silos and add to the disjointedness of interdepartmental communication, but somewhere down the line they will need to interact, which means any efficiencies created are done so in vain.
For example, the marketing department might be steaming ahead with a new digital strategy and the latest marketing automation software, but if it’s not talking to sales, the process will eventually hit a roadblock. Is the new marketing software integrated with the sales tools and CRM? Is there capacity within the sales team to pursue the extra leads? If such things haven’t been addressed, much of marketing’s efficiency-creating efforts will go to waste.
The evidence is there – both the EIU and ESG studies identified a link between the success of business-IT alignment and the success of digital initiatives. Effective digital strategy is dependent on a cooperative relationship between IT and the business.
As VP of Marketing at SAP, Rob Glickman, told TechTarget,
“Companies can innovate in pockets – such as marketing, sales or procurement organisations – and achieve some gains, but they won’t get the full benefit of digital transformation if business and IT strategies are not aligned.”
This article was first published on 5 May, 2017 and has been updated on 7 June, 2021.
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