Aligning IT with Business Strategy:
Doing it smarter way

MTI Consulting’s expertise on how best to use technology to meet business challenges and spur growth and innovation

By Nizla Naizer

The role of IT in business has come under a lot of scrutiny in recent times as top management strives to decide if it’s actually worth the money in times of global recession where other issues take priority and Chief Information Officers strive to keep their budgets in tact and still contribute to growth through technology.
With this background, Bahrain based global consulting firm, MTI Consulting organised their Technology Forum at the Ceylon Continental last month with the intention of bringing both sides of the story and to understand the way forward where aligning IT with business strategy can bring greater benefits to all parties concerned.
MTI conducted a survey among top Chief Executives (CEOs) in the country to determine the role played by Information Technology within businesses and created their own Technology Model. While many respondents highlighted the importance of IT, it was evident that top management failed to see the relevance to a business as in most instances, lack of communication and comprehension resulted in failure of implementing projects and no proper support meant the full potential of the IT project was never harnessed.
According to MTI Consulting Chief Executive Hilmy Cader, MTI’s Technology Model focuses on business challenges that can be tackled through technology for business optimisation and technology delivery management while dealing with risks and focusing on innovation.

Dealing with Business Challenges
“The question we must deal with is, how can technology add value?” Cader asked the gathering of technology officers and top management, “From a business point of view, if technology cannot provide the solution to the issues they face, what is the point?”

Yusuf Ali Isaam, Technology Consulting MTI Consulting

Hilmy Cader, CEO MTI Consulting

Rohan Muttiah, Chief Information Officer, Commercial Bank

Srikanth R, Research and Analytics MTI Consulting, India

Madu Ratnayake, General Manager Sri Lanka Virtusa

From a company’s point of view, he explained that their survey determined that from a company’s point of view they were dealing with value-seeking consumers who rationalized purchases, were willing to pay for core services and uses and were willing to have deferred payments. “Businesses are also looking towards cost optimisation with a lot of businesses attempting to rationalise their products, brands and customers. Even technology is under scrutiny as to its rationale and importance within the system.” However, the challenge lies in creating operational process efficiencies where technology can play an important role, he pointed out.
Other challenges faced by businesses were unleashing the power of the supply chain to free cash and an integrated approach with the importance of working capital firmly in mind. “If you can’t make money selling, then make it buying,” Cader pointed out. “Businesses are also focusing on reaching customers and the possibilities of narrowcasting instead of broadcasting and the customer relations management.” However, he explained that in many organisations, humanware is still doing what systemware should be doing. “A lot of human indiscipline has been masked by technology due to this feature prevalent internally in many organisations,” Cader declared.
He said that through MTI’s observations, it was clear that while businesses are looking more towards a variable cost structure to make a more agile enterprise, sustainability and environmental concerns have become a real issue.

Technology for Business Optimisation
With these challenges in mind, how can technology create total business optimisation was the question asked from Virtusa Sri Lanka General Manager Madhu Ratnayake. He said that
while technology can be organised around customer and core value delivery with an ‘End to End process focus, in many organisaitions, IT is supported by various links of the organisation.
“When you focus on end to end processes, it is easier to meet customer experiences by doing it right the first time,” he explained, “End to end processes could be indentified as lead to cash, order to cash, procure to pay, concept to market, trouble to solve or hire to retire.”
Some of the challenges faced by business leaders and Chief Information Officers outlined by Ratnayake included helping business deliver solutions faster, reduce cycle time, multiple implementation of same processes, reduce IT costs, maximize IT investments, no central customer view, improving quality and getting it right the first time.
Amidst these challenges he pointed out that a new IT model within businesses can be focused on to operationalise a customer centric core process driven organisation. “Have a Business Process Focus where you focus on the Customer or Process not Systems, End to End (E2E) everything so the process, errors, challenges and bottlenecks are clear, Business Process Management (BPM) and Optimisation is also key,” he explained, “Then consider your platform architecture. Eliminate redundant capabilities, design for reuse and focus on continuous Improvement.”
Finally, he informed that the new model should focus on agile governance with a Shared Executive Vision, align stakeholders and prioritise (Hot Houses), have Time Boxed cycles, customer involvement, Join the Dots through Measurements and Dashboard, and visualize Business Processes.
Explaining the concept of Hot Houses, he said it’s a purpose built room with the core process laid out where key business stake holders, users of technology and business owners team up to discuss the challenges and focus on innovations within a 90 day period to come up with answers.
“Through the above, you can move towards an organisation with improved business performance stemming from better customer experiences, getting it right the first time, reduced cycle time and lower costs.”

Technology delivery management
MTI’s CEO survey had determined that micro managing technology delivery had several issues including concerns on Security with 50% concerned about Viruses, Malware, Disruptive Elements, 37% on Unauthorised External Access and 30% on Unauthorised Internal Access, Cader informed.
Their survey also revealed that although 63% of the IT teams found remote and automated technology management important, for many it may be just ‘pipe dreams’. “Only 56% believed that the IT function is process is dependent,” Cader revealed, “While IT is still considered a fire fighting function with 36% believing their role is reactive.”
In 48% of the cases, responsibility for Information Security lies at Head of IT level, he explained while the survey had revealed that what gets measured gets done with key focus on availability, delivery and satisfaction. On IT funding, Cader informed that only 22% have a component of performance based pay, while 81% hoped to optimise on current spending levels and did not expect a raise in budgets. “But this maybe a knee jerk reaction to the current global scenario,” he pointed out.
Speaking from a company’s perspective, Commercial Bank Chief Information Officer Rohan Muttiah said that in a time where there is increasing demands on IT to deliver value, there is a disconnection between Business Strategy and IT Strategy which can result in loss of time, money, and organization reputation. However a ‘new breed’ of Technology Managers linking IT to Business may be the way forward he pointed out.
“Businesses must ask themselves, will IT help them compete in their relevant business landscape?” he informed. Using Porter’s Five Forces model, he said that if a business can identify how technology assists the company in the factors identified by the business model there would be less ‘IT-Business Disconnect’.
“This Disconnect has resulted in costly ramifications in the past,” he explained, “From the USD 186 million Denver Airport Baggage Clearing System in 1994 to USD 500 million Sainsbury Supply Chain management system it is clear that you must use an IT Governance Framework and Follow an Infrastructure Optimisation Model to link IT delivery to business strategy.”
Speaking on proper IT and enterprise governance, he said that implementing practices such as COBIT and COSO can prevent this disconnect. “COBIT for one incorporates major international standards,” he pointed out, “It has become the de facto standard for overall control over IT, where it starts from business requirements and is process-oriented.”
COBIT or Control Objectives for Information and related Technology created by the Information Systems Audit and Control Association (ISACA) has become successful across the globe and allows the business to conduct proper IT governance while COSO (Committee of Sponsoring Organizations of the Treadway Commission –US) and Balanced Scorecards can handle Enterprise Governance with Best Practices Standards monitored by ISO certifications and the Procedures and Practices required handled by Quality Analysis, Security Principles and ITIL (Information Technology Infrastructure Library).
He said that while CXOs have decided that IT must be proactive within a business, a clear IT strategy is still a challenge for many. “Can you talk IT Strategy when immediate business needs are not being addressed?” he asked, “So focus on an Infrastructure Optimization Model like the one created by Microsoft. Get your basics right in all elements of your IT strategy first and then move up the ladder.”
Characteristics of the Basic stage in this model is where elements of the IT strategy is Reactive, Ad hoc, Problem-Driven and is Avoiding Downtime while the next Standardised stage has IT elements Stable, Request Driven, with Change Management and Planning and focused on Keeping it Running. The next Rationalized stage has these elements Proactive and Accountable, with Increased Monitoring, Formal Change Management, Improvement and Predictability and is Quality Driven.
“The final stage is when IT becomes Dynamic,” he explained, “Here it is Proactive, focuses on Optimizing Costs and Quality, is Agile, Self Assessing and Continuous Improvement and Takes the Lead.” He concluded that such models enable businesses to plan and understand the investments required to align their IT strategies with the business while cost of ownership can be cut by 50% as the business move up the various stages.

Risk Management
Speaking on the survey, Cader revealed that 78% of the respondents consider that key IT projects are driven by Head of IT while User or Process Owner Driven is the remaining 22%. He pointed out that although IT strategy is important for the overall future of the business 63% do not have CIO representation on the Board with no intention of being on it.
Speaking on Risk Management Millennium IT Chief Operating Officer Anush Amarasinghe said that high levels of technology dependence results in high risks unless properly managed. “And that is why we believe technology should be scoped according to business needs and not technical needs,” he informed, “And that is why we use simple words to articulate our propositions. Business Managers find it hard to understand IT needs and IT managers fail to explain their projects as a necessity for business continuity.”
If a business is non operational, not competitive, not monitored or not compliant it becomes unviable and results in the entire business going out of business and Amarasinghe said that several high profile project failures have taken place because IT has not been scoped and designed correctly or has not been in tune with the business needs or its budget.
To counter these issues in communication Millennium IT enlists the help of industry specialists and analysts to talk to the customers. “Here too, the business analysts communicate directly with the business heads then graphically illustrate their needs using a mind mapping tool,” he explained, “If you talk the same language, the customer’s business folk would understand.” The mind mapping tool is then translated to a ‘business requirement specification’ and he said that with correct scoping, clear communication, delivery on time and within budget an IT project can be successfully implemented.
He said that it is more successfully to enlist the business heads of the business right from the start and keep the technical officers only informed on what needs to be done.

Innovation in Technology
IT maybe going green with 67% believing that the environment influences purchase decisions but Cader said they may just be colour blind as several of their decisions were trivial. While 85% believed that their operations were agile and flexible, he pointed out that only 60% of the CEOs had the same level of confidence.
Speaking on the importance of innovation, MTI Consulting, Technology Consulting Head Yusuf Ali Isam said that technology is an ‘Innovation Agent’ capable of driving the business and bridging the production gap.
“As a driver of business, technology can create operational efficiencies, provide a competitive advantage and create Blue Ocean opportunities,” he pointed out, “But great ideas are less likely to happen when there are many other things to do. Businesses have this mindset of ‘we have always done it this way’, but unless you take time to stop and think of alternative ways, it will always happen that way.”
Explaining that innovation can bridge the production gap he pointed out that the best sources of innovation for a business are its own people while open-minded management committed to listening and nurturing ideas and a healthy culture of innovation will give birth to great ideas. Structured framework for capturing, evaluating, progressing and realizing innovative ideas is also important.

Technology enabled project processes allow for scenario planning and simulation which in turn minimizes risk, he explained. However, he said that innovation is obstructed by the lack of communication on the upside of the development, with end to end project delivery and success a question where user involvement, ownership and buy in is unsure. Management approval and an IT team interested only in doing its part and not the overall success of the application further obstructs innovative technology and thinking. “We see a lack of comprehension and involvement and also a lack of self motivated effort to appreciate the business,” Isam concluded.
So how does one drive innovation within the business? Isam said it is important to allow quality time for ideas to be generated, filtered, tested and deployed. “There should be clarity on how systems work and information exists and what is not known and how to get the knowledge,” he informed, “Up to date knowledge of opportunities in better and faster end-user-delivery is also important with greater involvement in business change, not IT capability assessment.” He added that Internal Sales Capabilities within the company has great potential that many fail to see while project success is the platform for new opportunities.

Looking Forward
Cader concluded that if IT is to be successfully aligned with business strategy it is vital for the Board and the CEO to appreciate the strategic role of technology within their organization and the interest must go beyond the need for Capital Expenditure approval. “Strengthen the Strategic Management of technology,” he informed, “And rewire your technology team to obtain the optimal use out of them.”
He said that measuring the discipline and culture of the humanware or employees within the organization is important before the company decides to invest in Information Systems such as ERPs, while measuring the contribution of technology on the bottom line is essential to see how successful it has been. “Measure your Return on Technology Invested (ROTI),” he stated, “And the importance of IT in your business can be analysed.”

Professionals speak

Microsoft Country Manager, Sriyan de Silva Wijeyeratne – Microsoft Country Manager, Sriyan de Silva Wijeyeratne said that in many organisations the Chief Information Officer reports to the Chief Financial Officer who in return communicates to the Board on IT matters. “The minute you start going through an intermediary to voice your IT issues to the BOD there is a problem,” he pointed out, “There should be direct communication between the CIO and the CEO if you want the problem to be solved in the shortest time.” He said that the purpose of innovation must also be considered. “Is it continuous innovation, short term innovation or process innovation? Is it more convenient to take an existing technology and find new ways to use it as that is also innovation?” He said that monetising IT products will create a demand for IT. “It is time for the concept of ‘Business Technology’ and it is time for business leaders in Sri Lanka to champion IT.” JKH Executive Vice President and Head of IT, Sujiva Devaraja- Explaining that the only way to acquire benefits to the bottom line was by either reducing costs or increasing revenue, Devaraja said that IT must be used to tackle either one or both. “IT can be used to convert fixed costs to variable elemenets for example, which is a trend that we see increasing in several industries including tourism. Hotels traditionally were burdened by heavy fixed costs which didn’t change according to their occupancy rates. Now we have implemented systems where the costs are based according to the number of rooms occupied, which significantly cuts down on costs.” Further, with the use of cloud computing, he said that the servers are hosted by the systems provider which reduces costs further more. “Technology has also enabled revenue boosts with internet bookings and software that are programmed to make reservations and determine prices on a demand and supply basis as seen in budget airlines have helped revenue improve.” Sri Lanka Institute of Nano Technology CEO, Ravi Fernando – Representing an institute focused primarily on innovation through nanotechnology, Sri Lanka Institute of Nano Technology CEO Ravi Fernando said that IT is an enabling factor. “We are an innovation platform,” he explained, “We see IT as a means to an end, and not the end it self. We have 20 PhDs working towards providing global competitiveness to exporters and IT is a hygiene factor in this process. We need to understand what is out there, how to manage the projects we do, how to work on the patents according to international standards and all this requires a comprehensive use of IT.” Dialog Broadband CEO, Kavan Ratnayaka – Speaking on the future of technology in Sri Lanka, Dialog Broadband CEO Kavan Ratnayaka explained that broadband in Sri Lanka has been grappling with penetration with only 30000 businesses and SMEs and 250000 consumers. “Compared to the potential in the market place this is a small number,” he pointed out, “But the question is how you get everyone connected to an affordable service. And that is where our focus will be in the next few years.” It is estimated that a further 1% penetration of broadband results in ten times the contribution to the GDP of a country.