Understanding your business: Aligning IT

By Clark Rainer

 

Many of my friends seem to have a misunderstanding about what it is IT folks do for a living. Especially those of us who manage IT, develop strategy, and serve in roles like CIO, CTO or director.

My background is business having earned my BBA in General Business Administration after completing over 300 hours of undergraduate study (it took 192 hours to graduate). During my studies I managed the auditing department of a large amusement park, and rather than taking a job lined up by my grandfather with a large bank after college, I was given an opportunity to work in IT, reporting to the finance department of that same large amusement park.

It was here that I realized that IT touched everything and every department in the business, from grounds maintenance, to merchandise, food and beverage, purchasing, art and design, cash control, games, vending, maintenance, sales, marketing, human resources, finance, parking, attendance, customer service and, yes, even the rides. What I also realized was that the top executives and corporate headquarters were woefully disconnected with what was going on in the day-to-day workings of the business.

My first assignment in IT was to work with the new time and attendance system that was installed utilizing wireless time clocks and ID cards. The idea was that all the kids working in the park would not clock in until they arrived at or near their stations to actually work (imagine 15 and 16 year old kids taking their time to get from wardrobe to their work station). A return on investment study was presented by a skilled sales team, and it would save hundreds of thousands of dollars per year for the park (on paper). What they didn’t take into account was that another program meant to decrease employee theft removed all pockets from costumes and uniforms. The time clock system was ultimately a failure because 15 and 16 year old kids were expected to keep up with a credit card size ID with a magnetic stripe while wearing their costumes with no pockets. The owners and executives did not understand the business they were supposed to be in charge of running. Three months later the amusement park was undervalued and bought out.

Way before we can begin to talk about technology: the computers, the applications, the phones, the printers, the iPads, tablets, cameras, and all the other cool stuff executives and my friends seem to think is what I do in IT, we first must really understand the business, which is the real value of IT. I contend that most executives, owners, elected officials and the like have a less-than-perfect understanding of their business.

Like the businessperson who gets elected to a county commission or city council seat on the grounds that he/she will "run government like a business," or like a political hack who attempts to open their own consulting firm, most people have no real understanding of what their business (or government) is about in detail.

Ever heard the phrase "The Devil is in the Details"? This is why banks require written documentation in the form of a business plan before they will entertain loaning a dime. In terms of real understanding, a business plan is but the cover of the book, the cliff notes version, or merely an outline that is typically based on guesswork at best. If you think you have no information technology in place today, I would bet two things. First that you do, and second that you only think you understand how your business works.

Understanding your business is far more complex than a simple balance sheet, chart of accounts and profit-loss statements, or thorough knowledge of your customers and vocation. Constructing information technology will allow you to understand far more about your business in terms of solving problems, increasing efficiency, being more agile, smarter, decreasing time to make decisions and even allow you to predict the future with surprising accuracy. If you cannot currently predict what your customers will want or do next, then you currently do not truly understand your business. Information technology can help bridge the gap, provide insight, foresight, speed and efficiency to your business. As an added bonus, IT can help with pesky regulations and requirements as well.

Understanding your business or government or agency means knowing what you do, who you do it for, why you do it and how you do it. It also means knowing how and when to change what you do and who you do it for. Give it a shot – can you answer these questions with absolute certainty?

1.How much do you know about who your current customers or constituents really are?

2.Who are your competitors? Even local governments have competitors. Surrounding communities, neighboring states and, today, the rest of the world works to attract the best and brightest citizens (people and companies).

3.How well do you understand who your employees are?

4.Who will your employees be tomorrow and in five or 10 years?

5.What is the political environment in your business or government? What will it be tomorrow?

6.What problems exist today that have not been solved? What is the rate of change in your industry or government?

7.Is the rate of change speeding up, slowing down or remaining constant?

8.Does your business or government have and communicate effectively, a strategic vision and list of priorities to meet that vision?

9.From whom or what sources does money come in from? Where does it go out to?

10.Can you identify every piece of information that contains, for example a name and address? What about a phone number? How about a social security number? Credit card number?

11.Do you have current business process maps of the way information flows through your organization?

12.Do you have a current operational risk analysis?

13.Have you documented exactly what would happen if your headquarters burnt to the ground? Do you have a Continuity of Operations Plan? Is it current?

14.Have you documented how you measure success? Failure? ROI?

15.Are governance policies for how you manage business process, circumstances and scenarios clearly defined and documented?

16.Who are your stakeholders and are they clearly documented and defined?

17.What emerging technologies and environmental variables may affect your business or agency?

18.Do you know what every person in your organization does?

19.Are there any processes that duplicate services (two people doing the same work)?

20.Have you defined and documented short- and long-term plans that align with the strategic vision?

If you can’t answer some of these questions with absolute certainty, then there is a good chance you need some work understanding your business. Politicians who don’t understand their business get voted out of office. Business owners who don’t understand their business go bankrupt. Before the first piece of IT infrastructure should be purchased (or even dreamed about), we need to be able to answer all the questions above (and many others).

So where to start in grasping a better understanding of your business or government? Luckily there are several real-world exercises that can help guide a company or government through a process of understanding their business, how it operates, what is really important, what needs to go, what needs more resources or attention, where gaps exist and how to document it all. There are many business tools that are taught in management, finance, marketing, etc., classes all over the world and online. The best way I have found to really gain traction is to find a project that touches every stakeholder in an organization. Several have been mentioned already, and others will be discussed later in detail, but my example is from my second full-time job working in IT many years ago when I was hired as IT analyst (which was really a jack of all trades in IT) for a county government.

My first day on the job, after some brief introductions around the building, I was met by the county manager who said: "You must be the new IT guy, we are sure glad to have you. The commissioners sure would like a website. You can do that can’t you?" Having never built a website or written any html code in my life, two years out of college, I said: "Of course I can make that happen!"

I had all of a sudden put myself in a position for which I had no existing skills, but what I did understand was that this would give me the opportunity and excuse, as the new guy, to interview and learn every single department in the county government inside and out. What I did not expect was there were 53 departments, agencies and courts. I did have a great foundational business degree and went forth for the next six months interviewing each department director and many staff members. I produced detailed outlines, business process maps, and created the first full org chart the county had produced in some time. I discovered what was important internally to management, departments and employees, and what was important to customers. I discovered that customers were not just citizens, but they were business owners, prospective businesses looking for a home, property owners (many of whom lived far away and never had seen their property), other governments at all levels (Federal, State, County, City), other government agencies within our own county, our own employees, elected officials and anyone who was a "customer" of the courts (defendants, lawyers, real estate, probate issues, historians, etc.).

Not only had I learned who all the players were, but I also learned a lot about what role every person in every department filled. I understood why each department existed (or why they thought they existed), and their rational for why they performed their jobs the way they did.

In each department after an overall 30,000-mile overview, I would ask the department head to take a walk with me around their department. I would ask questions about how a certain process got started (maybe getting a building permit or adopting a dog for instance). I found lots of forms that were used for initial collection of information, and it seemed like every form started by requiring a base set of data (name, address, phone number, fax number and so on). I would learn what happened to each form as it was filled out, and made its way through some bureaucratic process. These forms would ultimately be filed or shredded never to be seen again. Another practice I made was asking the receptionist to go through their log sheet and come up with a top-10 list of what citizens wanted when they called. Each time I would document, map and learn more.

As it turns out this county government, then listed as the third-fasted growing county in the United States, was a vastly complex organization. There were 53 individual departments, many with sub-departments, over 300 funding sources (property tax was just one of those), many separate sets of rules as to how each funding source could be used or not. Through this process I learned that for a simple DUI case where the defendant plead guilty and agreed to fines and community service that 12 different people entered the same information into 13 different systems 13 different times. I also learned the top three reasons citizens would call or inquire the county government: Third on the list: "How much is my ticket?" The second most-requested piece of information: "Is someone in jail?" And the number-one reason people called the county government: "barking dogs." The point here is don’t count on your intuition; learn to appreciate and use the facts for decision-making. I also discovered that the county government was keeping little statistical records related to call volumes, requests, etc.

Having been assigned the opportunity to build the first website for a fast-growing suburban county government gave me great insights in how the "system" operated. After an intense six months of research and discovery, I had carnal knowledge of the intricacies of county government. It is this level of carnal knowledge that, when coupled with other tools and methods, I could start thinking about building an information technology framework and infrastructure to support the organization, and in this case, begin to build a website that included what was needed to communicate.

To accomplish the other 90 percent of my job as IT analyst, I would need to implement and engage several other Business 101 tools. Below are a handful of tools used by the business analyst and strategic planner to help. These are some of the basic things every organization should go through as a course of annual review and good business practice. Developed organizations will constantly update these tools and include them for everyone to see as a dashboard (think NASA Launch Control). And these are only a handful of business tools used for insight into your organization. I encourage readers to research many of these tools, try many of them out and discover which ones work best for your individual organization. Then implement them.

1.SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

2.GAP Analysis

3.Creating Problem Statements

4.Return On Investment (ROI – for every project)

5.VMOSA – Vision, Mission, Objectives, Strategies, Action Plan

6.Mind Mapping

7.Balanced Scorecard

8.Porter’s Five Forces

 

When it comes to information, it is important for anyone who is building an IT Department to continue to ask why and who and how and what about the organization’s information:

1.Why do we record this information?

2.Why do we do it this way?

3.What will happen to the information after it is recorded?

4.Who will have access to the information?

5.Why do they need access to the information?

6.Who else in other departments might need access to this information?

7.How about other agencies?

8.How long will the information be valuable to someone?

9.How long am I required to keep this information?

10.Will this information be a burden or liability to possess?

11.How and when will I need to produce this information in the future?

12.How can I find this information when I need it?

13.What would happen if my competitor got this information?

14.How much would it cost to replace this information?

15.Could I replace this information?

 

I could have written an entire volume of books on this one subject, but there are many books written on understanding business. There are entire degrees with various levels of specialization around understanding business. There are also plenty of consultants, MBAs, and advisory programs and groups that can help with this. The bottom line is that if you, as an executive, don’t understand it, and your CIO/director/consultant don’t understand your business, IT will likely be a costly undertaking with little results. If, on the other hand, you and your team developing IT understand the business inside and out, they should be able to build models and studies showing what the outcome of a successful IT department launch will mean to your business and/or government.

Aligning the Business with IT

Before deciding your company or government needs an IT department, it is important to understand this is not just something you are able to do once and then the IT people sit in some dark corner or basement making sure all the lights stay on.

If implemented correctly, IT will become as much of your decision-making process as finance, HR, legal and marketing. The CIO should have equal seating in the board room as the CFO, HR director (CHRO), general counsel, chief marketing officer and other senior management positions.

Know that the job of IT is to understand how everything – and I mean everything – works in an organization. IT should take the lead, though collaboratively working with other senior-level departments to strategize and work to implement strategy. IT is certainly about increasing efficiencies, but it is also about producing better information for decision-making. The only way to do this is for planning to take place that encompasses IT from the pre-planning phase of any project or decision.

IT is about understanding information’s value to an organization. Presenting information in a way that is easily understood, consumed and used. IT is also about information flow, information storage, information retrieval, information delivery, information comparison, risk management, and how information is used in making decisions in order to build a properly sized and suited IT department to provide the best value to the organization. It can be argued that just about every decision should come down to an IT Risk Analysis decision.

In later articles, I hope this will become more apparent, as we discuss business process mapping, understanding people, the importance for having a clear and well defined vision, and looking at the IT maturity model as it helps guide us towards creating a strategic IT plan. We will go through why building an IT foundation that is flexible is important and how to govern and structure the department through the use of a variety of staffing solution methods. We’ll also understand that the technology is the easiest part, and that being disruptive and changing culture is really difficult. Security will be discussed throughout and we’ll end up talking about costs metrics and measurements and how to measure and improve, and to continually improve and protect the investment we have in IT.