profession

Aligning IS and Business Strategy

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As will be a tradition this week, I present an introductory rant about the topic at hand, and since today is Tuesday it’s IT Strategy day it’s time to talk about strategy.Â

It’s a given that IT strategy ‘must align with business strategy’.  Yet it is quite difficult to get this right – not least because it is hard to align an IT strategy with a business strategy when there isn’t a business strategy.  There is another article on this site (‘Getting IT Right!‘) that talked about those things that need to be done to ‘Get IT Right!’.  There was a follow-up presentation to that, which I will post in due course, that used the COBIT framework to identify 20 core business goals, prioritise those goals, the best  accounting tools for business and then map those goals to fundamental IT activities – which of course should provide direction to IT strategy that is aligned with the business.

These business goals, as outlined by COBIT, are:

Financial Perspective
1. Expand market share
2. Increase revenue
3. Return on investment
4. Optimise asset utilisation
5. Manage business risks
Customer Perspective
6. Improve customer orientation and service
7. Offer competitive products and services
8. Service availability
9. Agility in responding to changing business requirements (time to market)
10. Cost optimisation of service delivery
Internal Perspective
11. Automate & integrate the enterprise value chain
12. Improve & maintain business process functionality
13. Lower process costs
14. Compliance with external laws/regulations
15. Transparency
16. Compliance with internal policies
17. Improve & maintain operational & staff productivity
Learning and Growth
18. Product/business innovation
19. Obtain reliable and useful information for strategic decision making
20. Acquire and maintain skilled and motivated personnel

COBIT is a very useful approach to use in IT consulting, and although it was originally developed as an IT Audit tool, it makes a lot of sense to adapt COBIT to a ‘doing’ framework as opposed to an ‘assurance’ framework.  BDO Kendalls uses COBIT as its framework in all consulting services to our SME clients, and it is a very valuable tool for that purpose.Â

Those in the know will recognise these business goals as driven by a balanced scorecard philosophy.  Using COBIT, it is possible to rank these goals, and then identify the IT activities and focus that align with the business goals.  I will be posting more around this approach in this area of strategy, but essentially if a business cannot identify its business strategy in a cohesive form – which, alas and alack, is often the realpolitik IS professionals must deal with – a process to rank these business goals can be very useful in identifying what IT activities are needed to align IT with the business.

Next week:  how to go about ranking the business goals.Â

IT Governance Day: Is IT governance just for geeks?

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Well if it’s Monday – and it isn’t (at least not in Australia) -  that means it is IT Governance day at the blog.  I could start with a fundamental overview of the world of IT Governance and set out an agenda of blog entries for the next few weeks – but I won’t.  That would probably be too ambitious – so I’ll start with a fundamental flaw in, apparently, just about everyone’s thinking.

Tying this post back to the subject line, not only is IT Governance not just for geeks, it isn’t for geeks.  IT Governance is ensuring that the entirety of the IT system works towards achieving business aims and strategy.  It relates to ensuring that the portfolio of IT people, processes, and technologies is in balance.  That role absolutely has nothing to do with IT speak.  And yet I have been approached by journalists and clients alike in the past with the absolute underlying assumption that IT is very technical and that it cannot be managed without an understanding of the technicalities below that threshold. That is absolutely not true and in fact the opposite is true – it is probably less-than-helpful at a Board and committee level  to have that technical understanding of IT.  You do not need to be an IT geek to be on the Board and governing IT operations.  All members of the Board are equally responsible for IT Governance, not just a board member with technical expertise. 

No-one expects a board member to understand how the engines in the fleet of delivery vehicles work – and, news flash, the modern vehicle is fairly complex!  Yet information technology instantly draws shudders of revulsion from some quarters and dark murmuring of witchcraft, magic smoke, and database normalisation (all of which are the blackest of black magic and therefore clearly evil and not to be understood by anyone).  The role of the board member in IT Governance is, in my view at least, to focus on the portfolio of activities, require monitoring and feedback regarding the performance of IT, and to provide direction in the allocation of resources.  Certainly this requires advice from IT professionals – particularly around the area of resource allocation – but good IT Governance does not require that the mechanic be at the board table just because he or she knows how to rebuild an engine.  .

I think the situation that we have has come about because in the past IT professionals have been guilty of portraying IT as some form of dark magic rite, as that was felt to give power and direction over IT.  There is certainly a danger for IT professionals in comjmunicating only half the story behind IT to the board.  I have met with more than a few IT professionals in the past who complain that their IT budget has been slashed because they opened up and tried to explain to the board what was needed.  In most casese, the board listened, heard mutterings of dark magic, and then found a language they could understand – the language of the bottom line.  Which, with great glee, the board slashed – with little regard for what that meant to business outcomes.  The danger here is that IT is seen as a cost rather than a benefit – and the lesson for IT in dealing with the board and those responsible for budget allocations is to focus on the benefits of IT rather than just the costs.

There is a great publication that I was involved with two years ago through CPA Australia called IT Governance:  A Practical Guide for Company Directors, and it is a very accessible and usable publication with great ideas for implementing IT Governance.  It can be purchased here and is something that any company should consider purchasing if they are serious about seeing value from IT. 

I will use this guide as a framework for my future posts around IT Governance.  I will make the note here and now that, as chair of the ITM CoE for CPA Austrralia, there is a publication focussed on the business management of information technology in the pipeline, and a publication of the IT Governance Guide aimed squarely at SME’s.  These will be interesting future publications – probably coming out in the second half of 2007 and first half of 2008 respectively.

Travelling to Sydney for clients and other stories

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I have just finished running a workshop as part of developing a knowledge management strategy for a client. I am now sitting in Sydney Airport, where it is all bedlam let loose upon the world with delayed flights due to fairly impressive storms and hail. I am on a 5:00pm flight out of Sydney – hopefully it isn’t delayed – but looking at the departure boards that may be wishful thinking. I guess I will find out one way or another – skies look fairly clear.

This is the view from the food court (I am flying Virgin Blue although every trip I have taken with them has had a delay in the past year and this one looks like being no different – jury’s still out because it requires evidence beyond all reasonable doubt).

And I know – the new active blog hasn’t got material added to it yet. I never said when I was starting, as I recall; will create a post on the plane on the way home.

(Post Update: The plane was half an hour late – due to a storm cell over Sydney this morning that delayed flights all day. All handled very well, and professionally, and QANTAS was probably delayed too. Still, that’s 3 of 3 now).

Horwath and BDO Merger

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No, it isn’t just another merger.  As predicted in my earlier post, there are real problems for accounting firms seeking to merge in Australia.  Most of the national associations have to ‘battle’ the federated system, which makes it difficult to get consensus and a merger of more than one or two offices over the line.  And mergers with big four, although I am sure professionally rewarding for the individuals involved, don’t really help with the lack of diversity in the profession.

According to the PR fact sheets that have been released, the new firm is in the vicinity of $180 million in fees, 140 partners, and 1200 staff.  Those kind of numbers make you think that as a combined entity we can do just about anything we want, and knowing to a certain extent at least the depths of talent in the gene pool of both Horwath and BDO, I think that’s an accurate assessment.

Like all mergers, no doubt there will be fun times ahead for all, but I have to say that it is probably professionally worth it.  I know the outcome from the Brisbane merger four years ago was really positive in the end, and means we can provide services to a whole range of clients that we never had access to before.

For me it will be good in that some of the people I used to work with at Horwath – like Craig Stephens, Peter Moltoni, David Stevens, Michael Delaney, Margaret Maunsell, Peter Sander, Nick Burne, Bruce McMenamin, and Mark Tomsic – are still there, so I hope to renew old friendships at some stage (Cairns, even though it’s 2000 kilometres away, is I am sure quite close to us and has lots of growth clients – hint hint hint!).  In some ways though it’s obtuse to me that the current Brisbane office isn’t joining us since I know three of the directors there already – Naresh, Ron (served on a CPA education committee with me once) and Ken – but that’s professional life and I think I can

I have been casually observing the media and have noticed what is to me a complete lack of interest in the whole accountancy profession thing – maybe journalists think ‘numbers, pah’ – but in anyway I thought I could indulge my obsessions and put some links in here:

I know there was a brief article in AFR by Mark Fenton-Jones, but since the AFR doesn’t freely give away its content, I can’t link it.  Anyhoo I think it’s all positive and I hope that the final merger can proceed as currently mooted (current press releases seem to imply it ain’t all over yet).  Kudos and congratulations to those that managed to pull the merger together – from the little I know a lot of work would have been needed.

Wow. Not just another merger!

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Wow.  The accounting profession just got that major shakeup that I was hoping for in an earlier post. It’s now in media releases so I guess that means I can blog about it – The BDO and Horwath networks are to merge, subject to apparent due diligence by the look of things.

I believe, from reading the press release, that the Brisbane (and Darwin?) offices of Horwath are not merging with the network.  More details here:  http://www.bdo.com.au/insidepage.asp?sectionID=4&submenuID=502#3938
I believe the new firm will be part of the BDO network.  Way to go! That will put the cat amongst the accounting pigeons.  Looking forward to the new wave.
More details later.