A common scenario when engaging with business stakeholders is that demand tends to be driven purely from their perspective, which is neither unreasonable nor entirely unexpected. Typically, these demands entail fixes to systems that alleviate a productivity issue in one small part of the business, without taking a broader, more benefit-driven perspective into account across the whole process. In addition, in order to sustain long term support to the business, there are frequently IT initiatives that may not demonstrate short-term benefits, but require investment nonetheless to enable other strategic business initiatives later.
In order to balance investment between small productivity issues and larger IT projects, a change is required—not only in the IT provider and business stakeholder’s perspectives and approaches, but within the nature of the relationship between the IT and business function as well.
Our starting point assumes that the CIO’s primary objective is to deliver value to the business. Here is an example of how we can map the value of a particular IT initiative to that of the business:
- The business strategy increases top-line revenue, which drives
- An increase in customer retention, which drives
- The use of social media to increase advocacy, which drives
- The gathering of feedback from monitoring the conversations about products online, which drives
- The rapid deployment of Application Programming Interface (API) technology to integrate with third party service providers, which drives
- The development of an Enterprise Application Integration (EAI) architecture
In the above example, it is clear that the capabilities required to drive business value from the CIO’s standpoint are Enterprise Application Integration (EAI) architecture and software skills that can then program APIs. Therefore, in order to drive value, the CIO needs to ensure that the required capabilities are optimised towards the business strategy.
A discussion can be then held with the business stakeholder to articulate how the IT strategy delivers business value, allowing IT proposals to be discussed in business language.
Evidence of Strategic Partnerships
How do you know you have achieved strategic partnership with your business stakeholders?
- You and your business stakeholder’s objectives are the same
- You understand how your business stakeholder’s function supports the way the organisation makes money
- You and your business stakeholder discuss risks and opportunities about the Business environment that affects objectives and the way the business function works.
- You are able to address business issues using a common language that both you and the business stakeholder understand
- You are able to provide insight on how technology can create value and opportunities for the business
- Communication is both regular and insightful where issues are forewarned rather than discovered
- You both trust each other and acknowledge that what is said is delivered.
The evidence above then describes what we call the Relationship Maturity. This is the level of expectation, commitment, convergence and engagement that both business and IT have. From the perspective of the IT department we define it in three steps 1) Passive Supplier, 2) Service Provider and 3) Strategic Partner. Strategic IT Partnerships is our goal.
Critical Success Factors
To deliver strategic partnerships the following criteria need to be understood:
This concept is used to describe the level of business change undertaken within the organisation and to what level the organisation is coping with it. A recent merger or acquisition may bring together different cultures, values and expectations that can cause disruption and loss of productivity. It may be the call to action that requires strategic partnerships; and collaborations forged during such periods can help drive towards strategic partnerships. However, if the focus is purely on operational issues today then the question remains - what needs to be done tomorrow? Additionally, unwillingness to cooperate, infighting, a silo mentality and a blame culture are difficult chasms to cross. Selecting allies in the first instance to trial a strategic partnership approach can give sufficient momentum for the approach to be deployed elsewhere.
This criteria really identifies the level at which the business stakeholder understands the impacts of their needs, strategy and the manner in which demand is expressed to the provider organisation. Frequent scope changes, last minute notification, Focus on prescriptive technology solutions demonstrate a low demand maturity. The level of interest in having a strategic partnership is also an indicator.
In order to be effective in partnering strategically, there are techniques, skills and behaviours that the person can adopt. Emotional awareness, political awareness, communication skills, consulting skills, business insight and change management are some. Driving innovation, ideation and value realisation are key activities that support the effective deployment of this competency.
The ability of the IT function to deliver its core services and projects are a significant test of how it is perceived amongst his peers and the organisation. Additional capabilities that should not be overlooked are: Governance Management, Risk Management, Strategic Business Analysis, Value and Benefits Management, Portfolio Management, Enterprise Architecture Management. If business stakeholder attention is focused purely on service and project delivery; then trying to discuss long-term strategy and collaborative behaviour will be similar to trying to decide where to place the windows in a house, when the house is on fire. It will be necessary to put the fire out first.
Business and IT Strategy
If the business strategy is to maintain market share, maximise revenues then the IT strategy needs to reflect that. An example would be to leverage existing ERP investments and drive process efficiencies. The point is they need to converge. If there is a lack of clarity, or strategies are divergent then this may be one of the causes of organisational stress mentioned above.
Capacity and Finance
Creating the space to understand strategy and think longer term than immediate requirements requires capacity (effort, manpower) and finance over and above the existing project and service spend. Hence the business case around strategic partnerships needs to rest firmly on the benefits mentioned above.
The benefits of having a strategic partner approach is that it’s much easier to justify capital spend on such things as EAI and API, as the reasoning and rationale will always link back to the original business strategy.
In addition, there is assurance that the IT function will be working on the right project with the right scope at the right time. This means that the opportunity cost of failed projects will be less. Moving the IT department away from a tactical, cost centred approach to a strategic revenue approach means that consultation on revenue generating projects can occur, with discussions on how technology shapes the business model. This ensures that information technology and 'digital' is at the heart of customer engagement.
As a direct result of the above two benefits, the scarce resource you have available to deliver enhanced capabilities will be focused much more on project that delivers real value to the organisation, resulting in a higher return on investment, reduced risk and increased revenue.
The responsibility of developing strategic partnerships rests firmly on the CIO and Business Executive’s shoulders, meaning that strategic partnerships across the organisation will therefore need sponsorship from the Board of Directors. However, the maximum potential for strategic partnership depends on the organisational context and the desire to achieve change. In getting to the strategic partnership state, it is worth considering the delegation of a strategic partnership’s day-to-day delivery to staff within the organisation who already have other day-to-day responsibilities, although capacity constraints may drive the requirement for a full-time role with supporting analytical staff. As you most likely know, this role is typically called a 'Business Relationship Manager' or especially in the UK 'Business Partner', and they have competencies outlined in the “Relationship Competency” section above. Some staff in the IT organization may be fulfilling the role fully, in part, or not at all. If the latter is the case, then a key enabler of Strategic Partnerships is missing.
How Baxter Thompson Associates can help
We help IT understand the opportunity with business partners through our Reconnaissance for IT framework and can help implement a business relationship management capability to ensure that the Value in IT is delivered. The framework includes the criteria mentioned in this post and is applied though a short diagnostic comprising mainly of interviews and workshops. The outcome being a report on recommended changes, options and a business case for implementation. We also provide training, coaching, recruitment and change management.