Measuring business-IT convergence

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Everyone talks about business-IT alignment. But what metrics can you use to measure it? Here's a look at some of those metrics to help you get started on your way to better business-IT convergence.

We have discussed in prior articles the importance of aligning the business and IT (see "What Do We Mean When We Say 'Business-It Alignment'?"). We also said that we want to move away from calling it "alignment" and use the word "convergence." However one of the questions I get from my clients is, "How do I go about measuring this alignment?"

The challenge has been that business and IT often do not communicate with each other. Business people speak in their language, and IT doesn't understand what they are saying. Likewise, IT talks to the business in its technical language, and the business doesn't have a clue about what IT said.

So with a lack of effective dialogue, it isn't a surprise that the business and IT aren't aligned. Check out my prior articles on effective communication between the business and IT ("How Effective Communication Can Improve the IT-Business Relationship" and "How the Right Language Can Improve Business-IT Relationships and Strategy")

Luckily we can get some assistance from COBIT 5.0, the leading framework for the governance and management of enterprise IT. Within COBIT, there are 17 IT-related goals. Note that it isn't just about IT (information technology). It's about information technology and all related technology.

For each one of these 17 IT-related goals, COBIT provides possible metrics we can use. Out if the 17 IT-related goals, these three relate to business-IT alignment:

  • Goal 1: Alignment of IT and business strategies
  • Goal 9: IT agility
  • Goal 17: Knowledge, expertise and initiatives for business innovation

In addition to these IT-related goals, there are 37 processes defined In COBIT 5. Without going into too much detail on what all these processes are and what they do, we will focus on only one. This process is from the Align Plan Organize (APO) domain. It is called APO 02 (Manage Strategy). The purpose of this process is as follows:

"Align strategic IT plans with business objectives. Clearly communicate the objectives and associated accountability so they are understood by all, with the IT strategic options identified, structured and integrated with the business plans."

While there are other processes we can explore, APO 02 is a good place to start and can provide us with a lot of information and assistance on how to measure the how well the business and IT are working together.

In APO 02, in addition to the IT-related goals, this process has own set of process goals (and related metrics). These process goals are:

  1. All aspects of the IT strategy are aligned with the enterprise strategy.
  2. The IT strategy is cost-effective, appropriate, realistic, achievable,
    enterprise-focused and balanced.
  3. Clear and concrete short-term goals can be derived from, and traced
    back to, specific long-term initiatives, and can then be translated into
    operational plans.
  4. IT is a value driver for the enterprise.
  5. There is awareness of the IT strategy and a clear assignment of
    accountability for delivery.

So how do we use this information? One way to begin is to look at the IT-related goals and their associated metrics. You would then collect the data and evidence required and create a baseline measurement. As you make changes you would take subsequent measurements and compare the differences. Here are the related metrics for each one of the IT-related goals:

Aligning IT and business strategies

  • Percentage of enterprise strategic goals and requirements supported by IT
    strategic goals.
  • Level of stakeholder satisfaction with scope of the planned portfolio of
    programs and services.
  • Percentage of IT value drivers mapped to business value drivers.

IT agility

  • Level of satisfaction of business executives with IT's responsiveness to
    new requirements.
  • Number of critical business processes supported by up-to-date
    infrastructure and applications.
  • Average time to turn strategic IT objectives into an agreed-on and
    approved initiative.

Knowledge, expertise and initiatives for business innovation

  • Level of business executive awareness and understanding of IT
    innovation possibilities.
  • Level of stakeholder satisfaction with levels of IT innovation expertise
    and ideas.
  • Number of approved initiatives resulting from innovative IT ideas.

Now that we have the IT-related goals and their associated metrics, let's focus on APO 02 process goals and their corresponding related metrics:

All aspects of the IT strategy are aligned with the enterprise strategy

  • Percentage of objectives in the IT strategy that support the enterprise strategy.
  • Percentage of enterprise objectives addressed in the IT strategy.

The IT strategy is cost-effective, appropriate, realistic, achievable, enterprise-focused and balanced

  • Percentage of initiatives in the IT strategy that are self-funding (financial benefits in excess of costs).
  • Trends in ROI of initiatives included in the IT strategy.
  • Level of enterprise stakeholder satisfaction survey feedback on the
    IT strategy.

Clear and concrete short-term goals can be derived from, and traced back to, specific long-term initiatives, and can then be translated into operational plans

  • Percentage of projects in the IT project portfolio that can be directly traced
    back to the IT strategy.

IT is a value driver for the enterprise

  • Percentage of strategic enterprise objectives obtained as a result of strategic IT initiatives.
  • Number of new enterprise opportunities realized as a direct result of IT developments.
  • Percentage of IT initiatives/projects championed by business owners.

There is awareness of the IT strategy and a clear assignment of accountability for delivery

  • Achievement of measurable IT strategy outcomes part of staff performance goals.
  • Frequency of updates to the IT strategy communication plan.
  • Percentage of strategic initiatives with accountability assigned.

For a demonstration, let's take the first IT-related goal: "Alignment of IT and business strategy."

This goal has three metrics. The first one is "Percentage of enterprise strategic goals and requirements supported by IT strategic goals." In this case you could get a list of enterprise strategic goals (could be the whole enterprise or a specific line of business). Then compare this with the IT strategic goals (perhaps from the CIO or BRM). In an ideal situation you would have a one-to-one ratio. If not then you are most likely not in alignment. If you have IT strategic goals without corresponding enterprise strategic goals, you probably have a rogue IT department. Likewise, if you have enterprise strategic goals without a corresponding IT strategic goal, it probably means that IT is not meeting the needs of the enterprise. Either way there is a misalignment.

The third metric is: "Percentage of IT value drivers mapped to business value drivers." Like the first metric, you would get a list of both IT and enterprise business value drivers and determine if you have a one-to-one correlation. Then you would go down the list of other metrics and collect the appropriate evidence. Then once the IT-related goals are done, you can do the same for the specific process goals and metrics.

Note that in all of these goals (IT-related and process), just because you have a one-to-one relationship doesn't mean all is well. The value system might be misaligned. Or the enterprise strategic goals might not reflect the real needs of the organization. In their book Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology, authors Weill and Broadbent discuss these four barriers to business and IT alignment:

  • Contextual barrier: What drives our behaviors.
  • Expression barrier: What we want to do.
  • Specification barrier: What IT must do.
  • Implementation barrier: What IT gets done.

In upcoming articles, I will expand on these barriers and the rest of the metrics highlighted here. I will provide tips and techniques on how to collect and unitize these metrics in your organization.

In the meantime I would love to hear from you. What is your business-IT alignment situation? Do you think these metrics can help you evaluate your alignment? What barriers to alignment are you facing?

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