The Importance of Aligning Business Units and IT Department

During the PNEC conference on May 20-22, 2014, there were multiple presentations showcasing their various level of success in IT and data management projects. One key theme that kept appearing was the topic of “aligning business units with IT departments” for a joint effort of implementation. However, for most of the presentations, there was no further explanation of how to make this happen.

This is an epidemic among multiple industries, but it is particularly severe in the energy space. For many organizations, IT departments work in silos, and business units do not know how to manage them.

The traditional role of IT department

Even though technology has evolved tremendously since its inception into corporation, the way of managing IT departments has not changed significantly. In many organizations, the main responsibility of the IT department is to support various operations, and the role of IT is usually tactical, not strategic.

These IT departments are usually a monolithic structure. By and large, the IT department is usually a distinctive sub-organization within a corporation. With this organizational structure, IT usually operates in a silo, and out of sync with the organization’s development. While IT needs to support multiple business units, it does not blend well with any one of them, since it needs special purpose and required talents.

As business units normally do not have a solid understanding of how IT works, the IT department is usually a mystery to the whole corporation. Operating under the impression of a black box (even worse if any part, or the whole set, of IT functions is outsourced), there is no measurement of how aligned the IT department is to the whole business, as long as the bare minimum of digital functions seem to work for the most part.

There are many articles on the internet talking about how to manage IT departments in new ways, for example decentralizing the monolithic IT department into smaller units, spread into different cross-functional teams. This may be an enormous task to many big corporations. However, we can look at managing IT projects better by discerning their different purposes and functions.

Organize IT Projects by different purposes

There is definitely no single way to categorize IT projects. Here, I would try to put IT projects under four categories by purpose, for better clarify and ease of management:

Digital Fabric: the infrastructure

This is the backbone of every IT project and all digital capabilities. These types of projects include everything from hardware to networking to server software to technology toolkits. Their main goal is to provide the organization with the best capability for developing its digital assets. The talents championing in this area are not necessarily good at facing end users; rather, they need the best technical excellence to ensure a robust system that is easy for other development teams to develop upon in a development-friendly manner, and with the best availability (uptime).

Common Services: cost- and operation-efficiency focus

IT departments have an inherit function to support the end users in various ways. Many of them are quite commonplace; they are about ensuring operation efficiency, reducing cost, and giving users (internal and external) non-invasive ways to continue their day-to-day operations. Implementing file-sharing services and shopping carts are some of the examples. Talents under this area excel in focusing on what the users want, user interface design, and serviceability.

Enterprise Solutions: extension of business capabilities

The truly interesting IT projects are usually not those focusing on cost reduction; instead, the most interesting IT projects belong to this category. The end goal for these enterprise projects is to extend and expand the company’s capability, in order to generate revenue and to gain competitive advantage. Enterprise software projects, custom application developments, master data management, etc. are all under this category. These are also the types of projects that get deeply embedded into business processes; once implemented, the solution would greatly enhance the process’s capability to achieve goals that are much more efficient and capable than pure human resources. The cost, however, is that once these solutions are so embedded into processes, they are not easily swappable; and the project duration tends to be longer. That’s why these projects need to be championed by someone who excels in both the technical expertise, as well as the specific business operations, such as business analysts. Enterprise solution projects require the most strategic attention in planning and resource management.

Analytics: the cutting-edge insights and researches

These projects help business make better decisions. Information and insights are the keys. Business Intelligence (BI) is one example. These types of projects are usually quite cutting-edge, experimenting and discovering new ways of looking at data and information to help business gain new insights, make better decisions, and discover new revenues. People who excel in this category are fearless and enthusiastic innovators.

 

How to align business unit and IT departments

As the above shows, even though traditional IT departments are monolithic organizations, they actually handle various types of projects that have different goals, and require different kinds of talents. One of the biggest hurdles for business units dealing with IT projects is about the wrong project-talent match: the project may be about cost reduction, and IT professionals who are more enthusiastic about innovation may find it boring. Another hurdle is that business units typically manage custom solution projects in the way of common service, not realizing the timeline, resource and strategic attention the project requires.

Entrance has extensive experience in custom solution development and BI projects. We have a proven track record of implementing solutions that extend business capabilities of clients to unprecedented levels, unlocking competitive advantage and preparing for the organization’s next wave of growth. We understand how to tie solutions to business processes for optimal efficiencies, as well as helping business owners make the best decisions with our BI expertise.