The McKinsey Quarterly published an article (registration may be required) last month about the need for CIOs to adapt to the “new normal.” The term, coined by McKinsey worldwide managing director Ian Davis, refers to their prognosis that recovery from the recent economic downturn will not follow a traditional pattern. The economy will fundamentally restructure – a “new normal,’ marked by persistent uncertainty, tighter credit, lower consumer spending, and greater government involvement in business.”
The implications for CIOs, argue the authors, is that IT must play a much larger role in delivering on broader company goals and providing competitive advantage in the marketplace. The authors specify three key imperatives for IT:
1. IT must be more closely aligned with business, ideally through organization models that promote joint decision-making. Having stronger business understanding and skills will be a critical success factor for IT.
2. IT will have to deliver more than marginal improvements in productivity and cost cutting. The goal for IT is to deliver transformational technology that radically improves the cost structure or operating model of the business.
3. Business and IT both need to look for technology innovations that drive competitive advantage in order to adapt to the new normal.
The article does a better job of articulating the point I was making in an earlier post about IT delivering greater business value instead of focusing on marginal gains in labor productivity. I see business architecture and the role of business architects as a key accelerator of the IT-Business alignment.
There are not many functions within IT whose job is to understand the business. Business analysts, to some extent, have to understand the business processes and the business users of IT systems in order to translate business requirements into IT requirements but the altitude at which they operate not to mention their function may preclude them from having visibility into the larger business direction.
IT account mangers – to the extent that they exist – should have better visibility of business strategy and priorities, however, they may lack specific insights into the business processes and information flows that might inform their recommendations. The IT account managers I’ve worked with tend to be very senior people since they are relationship owners with the business. Typically, they aren’t going to conduct the in-depth analysis to inform business priorities and their teams – generally made up of IT solution owners and business analysts – may not be able to fill that gap due to their functional focus.
Enter the business architect – a role whose purpose is to understand the business strategy, priorities, and operations and develop high level plans to orchestrate business and IT investment in order to enable the strategy. While this may sound like the role of account managers, the business architect is focused on how to execute the strategy while account management is focused on building and maintaining the business-IT relationship. Another way to think of it is that while the account manager is accountable for the work that the business architect is responsible for developing.
A well-developed business architecture function can bridge the gap between business and IT, providing IT with a comprehensible perspective into the business goals, priorities, and operations to inform IT investments. Moreover, this perspective can enable the opportunity to discuss how information technology can create transformational opportunities and competitive advantage for the business.
If McKinsey’s recommendation that adapting to the “new normal” requires a stronger linkages between business and IT, then business architecture is a vital enabler to make it happen.
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