Keeping IT strategy aligned with business strategy is something CIOs have become masters at doing, but it is still one of the areas that causes a lot of work.
Aligning business with IT and infrastructure refreshes are still causing concern
Keeping IT strategy aligned with business strategy is something CIOs have become masters at doing, but it is still one of the areas that causes a lot of work. MIS UK research this year has put it as the third biggest concern, up from fourth place last year, and closely followed by its stable mate, refreshing the IT infrastructure.
Refreshing technology infrastructures and keeping the backbone of an organisation’s IT up-to-date was the tenth biggest concern for IT directors last year. Its movement up the table to fourth place seems to indicate that it now has a direct link to aligning IT with the business. Catering and support services company, Sodexho is an example of how a technology refresh can help to align IT with the business.
It has been carrying out an infrastructure refresh, moving one of its old mainframe finance systems to HP UNIX and upgrading to SAP 4.7. “We have a very complex payroll system – as many of our staff are temporary or part-time – and operate in different sites all over the country. Working on our infrastructure like this will really make a difference,” says Gary Barr, UK CIO. The company is also rolling out broadband to the entire Sodexho estate to further aid alignment.
"Everything is about agility now, how to get the product or the solution to the customer faster"
– Maria Pardee, CIO, BT Retail
Reaping the benefits of consolidation
Steel maker Corus is consolidating its IT and its business, and the company is really seeing the benefits of aligning the two. CIO Bruno Laquet says work on the IT infrastructure is split into four domains: datacentres; end user computing; networks; and collaborations. A global leader has been appointed for each domain and there is a synergy programme aimed at consolidation.
Laquet says on the applications side it is still difficult as there are so many old legacy systems to deal with. “It is difficult to remove mainframes from the environment, but it is too costly to maintain them.”
Corus uses SAP and is gradually putting all its business processes on to that platform. “Bit by bit we are moving from the old to the new world. It is a nightmare, but we are getting there,” he says. The company already had 15,000 SAP users, but they were in silos for 20 different product environments. “Now we are concentrating on master data management,” Laquet comments. “We have global business process owners who are empowered to organise master data and drive the migration plans. We can’t address it all at once, it will keep us busy for years.”
It seems obvious that IT should be aligned with the business needs of an organisation, but the piecemeal development of IT systems over the years, together with the fast changing needs of businesses mean that it is easier for the two to work in parallel rather than together. This was the case at Corus.
For companies that have been on the ropes results-wise, aligning business and IT, and then refreshing the infrastructure that is left can reduce operating costs and improve efficiency.
Anglo-Dutch consumer goods giant, Unilever had to issue a profits warning for the first time in its history back in September 2004, but global CIO Neil Cameron says that it made the company take a careful look at its strategy, regroup and focus on growth again.
Effective cost cutting
‘One Unilever’ was the company’s plan to cut €700 million from costs through streamlining and simplification by this year. For example, in Europe there used to be two systems for food and personal systems, but now the organisation operates as one, not as a series of federations, according to Cameron. IT is now closely aligned to the business both globally and regionally, and business processes and information have to run as a single entity, as part of One Unilever.
Competition is also a strong motivating factor for both aligning IT with the business and refreshing the infrastructure. CIO of BT Retail, Maria Pardee, says from a technology point of view everything concerns competition in the face of a very fast changing business environment. “IT has to be fast and innovative to continue to earn trust and additional business. Currently speed, agility and innovation are critical,” she comments. “Everything is about agility now, how to get the product or the solution to the customer faster. This is affecting BT’s methodology and means it is looking at closer business alignment with reusable tools and assets.”
Business alignment is, of course, key, with company IT departments that are either back-office providers or working side-by-side with the business, according to Pardee. “BT’s IT is obviously side-by-side with the business,” she says. “We achieve this by having senior skills, a good understanding of business and a seat at the leadership table.”
BT is building applications that are flexible and reusable, based around a service-oriented architecture.
“The biggest push is in simplifying the business. BT’s history means it is wildly complex. Customers don’t and shouldn’t have to care about all this. It should be simple – as Henry Ford said, the car may be complex but the customer just wants to put the key in and turn it,” says Pardee.
In the financial services arena, Barclays is putting significant resources into its infrastructure to ramp up its competitive edge. “Infrastructure investment is a key activity at the moment,” says Kevin Lloyd, IT director for UK banking at Barclays.
"“Customer-facing channels like the website, the call centres and the branches are all undergoing a major update in technology”"
– Kevin Lloyd, IT director for UK banking, Barclays
“Customer-facing channels like the website, the call centres and the branches are all undergoing a major update in technology. This includes self-service options in the branches and of course we have been having a re-branding exercise as well, so our branches have had a face lift too. In fact all the channels, underlying infrastructure and the brands of both Barclays and the Woolwich have been undergoing these changes.”
The increase in concern over keeping up with technologies and refreshing the infrastructure is a symptom of the need to update systems not only for competitive edge, but also to meet compliance and security needs, and much of the work being done by IT directors on infrastructure reflects this.
For example, BT Group has Ofcom mandates as well as Sarbanes-Oxley to worry about.
“They are a huge regulatory hurdle to get over. Like Sarbanes-Oxley on steroids,” says Pardee. “However, we are turning the compliance requirements into something positive. Firstly we adhere to the law, but also we get to rethink the way we are delivering service and the infrastructure. We are taking a methodical and measured approach to compliance.”
Refreshing technology infrastructures, and using the most current technologies to give business benefits go hand-in-hand with aligning business and IT. All three areas will always be high on the average CIO’s list of concerns, but given their ambitious natures, challenges are guaranteed.