Does Business-IT Alignment Really Matter? Study Says 'Yes'

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August 03, 2007

Does Business-IT Alignment Really Matter? Study Says 'Yes'

One of the most oft-stated goals of SOA is achieving the long-sought "business-IT" alignment that has eluded organizations for generations. Supposedly, under an SOA regime, businesspeople and IT folks would communicate often and work in harmony toward common shared goals.

But does does this Utopian vision translate into real dollars and cents for the business, or is it more of a feel-good thing promulgated by consultants? Well. a new study seems to say, yes, business-IT alignment will equate to business success. (Consultants, breath a sigh of relief...)

The BTM Institute looked at the state of companies across 50 industries in 2002 and again in 2006, and actually connects the dots between success and “converged technology management.” The study, called the “Business-Technology Convergence Index,” finds that in various metrics, well-aligned (or better yet, "whole-brained" enterprises) fared far better in their markets then their mal-aligned counterparts. (PDF of the study available here.)

The numbers are impressive. The report states that companies with well-aligned IT-business operations saw 12% average annual growth versus four percent for their industry groups. In addition, the aligned IT-business companies saw 36% average annual earnings per share growth versus seven percent for their industry groups.

So how did BTM determine which companies are “whole-brained” versus not-so-whole brained? BTM said that it looked at factors such as process maturity, process automation, and governance. Across the more high-level organizations studied, you can see the natural relationship between well-managed and repeatable processes and SOA, which encourages such best practices:

Governance: “…there is a consistent, managed process for ensuring that business management is fully engaged in decision surrounding business technology… …there is clear communication of business technology initiatives…”

Strategic technology investments: “…there is a standardized means of structuring projects and of ensuring that they are managed in accordance with enterprise standards…”

Enterprise architecture: “…there are documented, integrated business and technology architectures which describe the organization fully and which represent the business technology necessary for it to reach its goals.”

Enterprise data model: “For these organizations, data has become information. …this information is available through and managed in an integrated, enterprise-wide automated system that facilitates decision making…”

Posted by joemckendrick in Management | Digg This | Add to del.icio.us