In trying to align IT with business goals, organizations often find that IT landscapes consisting of processes, information, technology and people have taken on a life of their own and are not easily managed. Because of this, CIOs find it nearly impossible to answer important questions such as the following:
- What projects do I have running now?
- Which projects are planned?
- What business initiatives and strategy are they in support of?
- Which projects can I kill without adversely impacting my strategic route and progress and how much will I save?
- If I postpone projects, what will happen to my IT strategic roadmap and the business strategy?
- Is my operational budget following the changes in priorities for the business domains?
- Where do I risk providing IT support for business that is based on obsolete or nearly obsolete technologies, skills sets etc?
Enter IT planning, which supports effective and consistent decision-making about how IT should be deployed and managed. IT planningís raison díÍtre is to facilitate decision-making. In particular, it provides support for effective decisions and ensures that decision-making is performed in a consistent way suggesting a framework, methodology or process. Letís consider each of these points separately.
Effective Decisions Are Elusive without Good Planning Abilities
When are decisions made? And what makes them effective? To ensure IT is focusing on the right projects to deliver on business and strategic requirements, IT and business need to come together. Business stakeholders need to properly formulate their requirements instead of demanding specific solutions; e.g. "letís take CRM system XY" and IT needs a sufficient accurate intelligence upon which to base its decisions. Today IT supports core business processes (indeed, in some industries such as financial services or telecoms, IT is the core business process) improving competitive advantage, decreasing time-to-market, increasing customer value, enhancing the customer experience and empowering workers with information. The application landscape is extremely complex with old technologies entangled with the new. The accelerated pace of business means that necessary changes to business processes due to M&A, new branches, new service and product lines, new IT systems, regulatory requirements and the like, need to be decided upon faster. The decision-making environment is now more complex. Itís an environment that, in addition to dictating speed and technical complexity, has several diverse dimensions: the relationship of business to IT, the relationship within and across business units, the technical relationships among the IT systems, the relationship of operational to strategic plans and the time dimension as the enterprise moves forwards. So how do we ensure that decisions taken will be effective in the face of these challenges?
An effective decision implies that its realization will result in the desired change with tightly controlled risk to the enterprise. It will bring about the desired change because it has taken into account all relevant information. Thus, the decision-maker must have all the relevant information at hand, and it must be current and presented in a consistent format. A good IT planning process can deliver this; it must, though, include comprehensive information on the IT landscape. For too long, IT planning has been an exercise in number-crunching, too shallow in its consideration of the impact to the architecture, forcing parsimonious decisions that are more than shy in achieving desired results. A well-defined planning process supports consistent and fast decision-making
Consistency in Decision-making
Now letís turn to the second issue: consistency in decision-making. Consistent decision-making requires a defined framework, methodology or, in short, process. So if — as the above definition prescribes — IT planning consists of all of the activities that support consistent decision-making, then the IT planning discipline has to be made up of activities performed in a process that is repeatable, has defined responsibilities, has a defined order to the activities and is auditable. To make quality decisions the process should provoke the right questions and supply the information that can support the decision-making.
So Why Is ERP a Must-Have for IT?
Timeliness and inherent consistency of relevant information are critical for decisions quick enough to render the IT agile. Add to this a high degree of automation in the information gathering, compilation and reporting process and we have the recipe for successful decision-making. Business solved this problem for the business side of the enterprise long ago with Enterprise Resource Planning (ERP). ERP brings together the relevant people, processes, tools and information to create an information-based, process-centric information platform on which to base decisions. It stipulates a uniform methodology that is shared across stakeholders — this is key to collaboration and enablement of decision-making.
No large company today would be able to compete without a strong ERP system that drives and integrates business processes, building and maintaining a high-quality information base for making business decisions. Even colleges and universities have ERP systems that cater specifically to higher education institutions. IT planning requires the same approach: a centralized information base that is fed by integrated processes, updated with every plan made and every decision taken. This allows for accurate information to be provided to stakeholders at the time of decision-making.
The IT Planning Dynamic Duo: Process and Information
In any large enterprise, changes in strategy and technology result in new demands and opportunities imposing constant volatility on the original plan to get from the current to the target architecture (and the milestones in between). It means, in fact, that the original plan no longer exists in the form it was: new demands beget new IT initiatives which will change at least the planned milestones if not the final target architecture. An IT organization must embrace this volatility and implement a steady, continuous process and information management to manage it — adapting and always moving towards the target architecture. Hence, IT planning cannot be performed as an annual exercise if it is to be effective. It needs to be done continuously in a way that constantly delivers increasing and optimized business value. IT planning is not about drawing static pictures of various architecture states and then frequently redrawing them to keep up with re-planning requirements. Itís about being on top of architecture change: capturing the state of each individual architecture element (operational, in development or planned), managing the changes to these states and ensuring that the changes are transparent to all stakeholders as they are being made.
This demonstrates the importance of process and information, and the necessity for their integration with each other. Whereas the documentation of the current architecture is important and can often show redundancies in which savings can be made, the "as-is" situation is not really the problem. And whereas itís important to have a plan on how to achieve the target architecture, this is also not really the problem. The problem is the coordination of the 20 to 200 transformational projects that are being planned at one time, as is the situation in any large enterprise. This is magnified by the desire to run various scenarios for each of these transformational projects during the course of planning, assessment and decision-making. How can the solution designer or project planner ensure that he or sheís not running the risk of adverse impact from another solution designer planning another project? Or planning a solution that will latently rear its ugly head in other solutions? Every designer, planner, business analyst and architect; in short, every decision-maker needs to be aware of every planned and executed change to the IT landscape. This is IT planning that works.
The IT Planning Framework
So what activities encompass IT planning, what aspects of the enterprise are the focus of the activities and what processes integrate the activities into a collaborative process that will create an information base to support effective and consistent decisions for deploying and managing IT? There are four aspects of the enterprise that determine what IT will be implemented and thus need to be balanced across the planning process: strategy and demands; enterprise architecture; program portfolio; and cost and budgets. These four aspects need to be balanced across the planning process.
Demand and Strategy: Demands and strategy provide direction for IT. By linking business goals with the IT that supports them, or is needed to support them, ITís mandate becomes clear. Identifying and managing this relation-ship is critical for being able to make the right decisions on what changes need to be made to the IT landscape to drive business improvements.
Enterprise Architecture: IT planning has to be architecture-based because it is the enterprise architecture (EA) that delivers the building plans for IT, which artifacts will be used, what is their purpose and how they relate to each other. Enterprise architecture is necessary for understanding the intrinsic dependency of the IT/business relationship, for example, the depen-dency between business capabilities and services. Additionally, the enterprise architecture is at a level of abstraction that is suitable for planning: too much detail, for example, at the level of project planning, only makes the planning process unnecessarily complex and slow. For this reason, operational IT management solutions such as a configuration management database (CMDB) or business service management (BSM) solution are unsuitable for planning as well. The EA information base needs to provide different views onto the architecture to adequately inform the many stakeholders involved in the architecture planning process.
Program Portfolio: The program portfolio delivers the plan of action for IT. Key to the effectiveness of program portfolio management is the seamless integration with enterprise architecture management (EAM) processes so that architectural risk is minimized and opportunities to migrate, enhance or retire current applications or other IT artifacts are not ignored.
Cost and Budgets: Costs and budgets provide the range in which IT change needs to be carried out. Cost management needs to be conducted with an awareness of the enterprise architecture and project portfolio. In doing so, it allows enterprises to map their budget to value-producing IT components and transformational initiatives.
Process Lends Structure to IT Planning Activities
What planning activities are key to the planning process? These can be broken down into basically three main process categories: strategy management, enterprise architecture management and IT planning.
Strategy management works under the premise that understanding business strategy is the key to an aligned IT. Primary activities include operationalizing the business strategy. Strategic intentions of the enterprise are typically defined at very high levels of abstraction. They are not readily relatable to the discussions and activities in the enterprise architecture.
Yet architectural considerations are an important part of any strategic transformational program. EAís role has expanded from defining technology standards to include planning for business applications and services. As such it is important to establish a framework and process that are going to allow it to work with the business to define business goals and requirements in a way that removes any room for interpretation. Such a framework supports:
- Definition of business strategy down to a level that can be translated into specific changes to the EA in general and the business architecture in particular thus ensuring business validity of EA actions
- The ability to link to business capabilities at a business function level
- Bottom-up definition of ITís own strategic plan
- Governance and management processes in business and IT
- The project portfolio review process by providing a more precise business context
Assess Current and Future Business Capabilities: To be confident in the enterpriseís ability to achieve its business strategy, organizations need to ensure that required capabilities exist and have the required quality. Many organizations use business capability management to assess this. Business capabilities prescribe a view of the enterprise based on business activities that are independent of specific business processes and organizational silos. An enterprise can use them to identify which business activities are critical to enterprise success and which need improvement most urgently. With the capability approach, the traditional IT management focus on services/ process, information and communication technologies (ICT) architecture and ICT operations is extended to a super-ordinate "capability layer" that enables two key abilities.
First, the capability layer helps to articulate and document business needs in a structured way that is meaningful for the business. Second, the concept of a capability can easily be translated into IT functionality. Business capabilities are the missing link for enabling a business-related view onto IT functionality. They promote better understanding between business and IT by enabling the business to formulate their requirements in a non-technical yet functionally precise way.
Agree and Communicate the IT Strategy: The gap analysis on the basis of the business capability assessment can now be turned into ITís own strategic plan to steer project assessment and portfolio decision-making. The IT master plan is the ideal tool for this, describing the tactical plan to achieve the IT strategy starting from the IT planning baseline and focusing everyone on one common plan of action.
It defines the incremental steps or milestones bridging from the as-is landscape to the target landscape defined in the IT strategy. Each incremental step is associated with prospective realization time periods and approval statuses. The master plan is derived from the central IT planning/EA inventory and feeds back into the inventory when changes occur and is thus able to represent the IT landscape at any point in time. The master plan is a highly condensed representation of the strategic plan, and is an easy to comprehend, single point of reference, hence an excellent medium for discussion at decision boards. A business capability map shows gaps in required and actual strength of business activities.
Enterprise Architecture Management (EAM)
Enterprise architecture management (EAM) secures ITĎs ability to support the business. The main activities include the following:
Impact Analysis: An important element in implementing the technology strategy is understanding the impact of proposed changes and understanding these early on so as to avoid surprises half-way through an implementation. This improves predictability and reliability in the overall IT plan and also serves to control risk.
IT weakness and cost-driver analysis: Analyzing for cost inefficiencies, architectural risk, non-compliance and the general health status of the IT landscape is necessary to ensure that IT can deliver and improve on its support for business initiatives. Assessing the risk entailed in the enterprise architecture is a key element of the IT management process. The analysis of the applications that support certain business processes is an important feed for the overall risk assessment. Targeted portfolio analysis gives users quick insight into the risk exposure of applications and allows them to initiate mitigation appropriately.
Technology Life-cycle Planning: In IT, standards are set in order to ensure that the IT landscape makes continual progress towards the enterpriseĎs architectural vision and is in step with new technologies. The enterprise architect continually searches for opportunities to streamline processes across federated environments by defining standard components and pre-configuring these into standard platforms to be used as the base platform for individual projects. Continual research of the existing environment for upgrade potential is necessary to rid IT of outdated, inefficient technologies. Coordinating the many roadmaps in a large organization is also a challenge as demands for technology changes are submitted - whether originating from strategy operationalization, business capability gap analysis or those coming in on an operational basis.
Process-based IT planning leads to defensible investment decisions. And this is where the strength of an IT planning solution becomes obvious in its ability to capture and deliver all relevant information on several solution planning projects in a real-time manner. In a "demand-to-budget" process, all demands and projects are thoroughly evaluated as to their support for IT and business strategy, architectural viability, business case, implementation effort, technology and architecture risks, overlap with other initiatives and impact.
Demand Consolidation: The business analyst can see demands from all areas of the enterprise and assess these as to redundancy or possible synergy with each other. Also demands are analyzed for their compliance with business goals and strategies and their possible impact to the architecture (current and future).
Architectural Due Diligence: Those demands worthy of further consideration go on to the next step in the process which is creating alternative solution architectures, taking into account defined standards and impact to the current and future architectures. As in demand consolidation, with information on other planning projects and their planned or envisioned artifacts (or retirement of an artifact), solution architects can be confident that the solutions they are proposing are based on current and reliable information on the state of the architecture at the time of implementation.
Project Portfolio Selection and Monitoring: With business cases and resource estimates as part of the proposals, projects are now ready to be evaluated in the context of the rest of the portfolio. Projects are prioritized and budgets allocated for IT investment. Prioritization is based not only on financial metrics but also considers strategy alignment, viability of the proposed architecture, and architectural and implementation risk. During this whole process the data arising out of the demand-to-budget process will be committed to the inventory for everyone else involved in planning in their enterprise domain to see and be aware of. Most importantly, the data committed to the inventory is associated in its different planned states (envisioned, planned, operational) to certain points in time.
A Word on Collaboration
IT planning takes place in a rapidly changing business environment and involves an overwhelming volume of data — many thousands of artifacts in multiple locations. Complex interdependencies between distributed specialists, critical business processes, IT support services and the underlying technical infrastructure can be significantly disrupted by isolated actions and incidents. Though most business managers inherently know that well-orchestrated teams can have a dramatic impact on the success of a business, organizations often struggle to create and execute the IT plan because this work involves tight co-ordination of decision makers with diverse interests, budgets and reporting lines, especially between the IT organization and business divisions. Given the complexity, collaboration is a necessity to ensure transparency and accelerated productivity in project planning cycles. Thus, integrated IT planning is only possible with a platform that supports collaboration among stakeholders.
Three pre-requisites need to be met in order to plan and manage an organizationís IT so that it can optimally support the business: access to all architecturally-relevant data, well-defined processes to avoid redundant efforts and ensure seamless interaction between users involved in the process, and involvement of and communication between all relevant stakeholders. In the same way that almost all large companies deploy enterprise resource planning systems to remain competitive, they should also examine IT planning systems--the ERP systems for IT--to ensure their IT systems are aligned with their business goals.
About the Author
Erik Masing is co-founder and CEO of alfabet, a strategic IT planning and management software provider. He has received numerous awards of distinction for business innovation. In 2000, he received an "Elite of the Future" award by the German Economist magazine and in 2001 he was won the Ernst & Young "Entrepreneur of the Year" award.