Consultants' Corner

Aligning Business and IT: The Keys to Synchronization

Steven Callahan
Insurance Experts' Forum, July 6, 2011

Have you had the opportunity to watch the Thunderbirds or Blue Angels air show? A squadron of jets operating at extremely high speed performs a series of complicated, rapid, and perfectly coordinated maneuvers. From the ground, the smooth synchronicity is both breathtaking and impressive, depicting perfectly aligned efforts acting as if they were one invisibly connected net of jets. Their nimble agility is achieved through detailed planning, a clearly defined partnership, focused efforts, and constant communications. And, of course, a great deal of practice. Not surprisingly, the shows always create a crowd generating “Wow!”

Valuable lessons can be learned from these teams that effectively apply to the increasingly critical dynamic between business and technology within our industry. While IT and business alignment is a long standing and well documented challenge with years of solutions and studies available, it remains one of today’s greatest business challenges. Survey after survey reinforces the importance of alignment, the need for partnership, and the continued difficulties with achieving successful change. Faced with reduced margins, lower investment returns, near-commoditized products, increased competition, shifting distribution channels, increasingly segmented markets, well informed consumers, and a constant influx of regulatory oversights, our industry’s challenges are compounded by accelerating advances in technology, the influence of social media, deteriorating legacy systems, disjoint data repositories, threats to reputational credibility, and increasingly rigorous consumer expectations. In the words of one market analyst, today’s business and technology leaders are being forced to jointly drink from a fire hose of change.

Within the success of the Thunderbirds and Blue Angels disciplined routines lay the keys to improving business and IT alignment:

* Planning: The squadrons know exactly what they will be doing at every second of the show, and practice it rigorously. The most critical but oft missing element of alignment is the IT Roadmap, which must be collaboratively developed with the business, aligns IT plans and investments with the vision and key strategies, creates a clear path for what technologies will be used and how they will be integrated, translates technological investments into operational improvements, and is adaptable to changes in the business environment, able to evolve with the business. Experience has shown that to be successful, the roadmap must meet 10 criteria: complete buy-in, business strategy driven, business owned and technology enabled, future oriented describing how things will work, cover both the systems needed and the processes involved, incorporate a review of the starting point or current systems, provide high level qualitative and quantitative cost benefit analysis, lay out the implementation stays, describe the governance processes from project structures to implementation methodologies, and be communicated thoroughly throughout the organization.

* Partnership: If management ran the squadrons, marketing would want to run a loop over the crowds to get greatest exposure, sales would want the loop to go over the VIP seats for revenue, and operations would want to stay in the clouds for better fuel efficiency. Yet for the shows to work, the goals have to be aligned to achieve the optimal combined results, not a maximum specific result. By collaboratively developing the roadmap and underlying plans, both IT and the business are able to determine where the best tradeoffs can occur in order to achieve the overall highest positive impact to the business. While the game may be a zero-sum one for budgetary reasons, optimization will achieve better returns than maximization.

* Focus: The intensity of flying in formation at high speeds cannot be matched by any business activity. Every sense is aware of the surrounding environment, speed, position of the other jets, orientation to ground and sky, instrument panel readouts on immediate performance, all while factoring in the next move and the ones that follow. Successfully translating a plan into reality, while not carrying the physical risks inherent in jet flying, requires a similar type of intensity that many companies have yet to incorporate. The rate of change is so fast that intermediate check-ins no longer suffices; a constant scanning of internal and external environments, plans, actions, resource utilizations, business results, changing strategies, and priorities is required. Without focus, inefficiency and misdirection creep into the plans as inevitably as entropy enters into closed systems in the world of physics. There is a bias towards chaos and disorganization that exists in all organizational endeavors; focus provides the energy that shields the effort from that influence.

* Communication: In the air, the exchanges between pilots are concise, timely, and relevant to the immediate needs while setting the stage for the next action. The same is required to maintain alignment, otherwise an inevitable “drift” will occur as interpretations begin to vary, degrees or relevance change, and differing senses of urgency are applied. The only way to ensure staying on path is a constant messaging process asking: what is working, what is not working, what else is needed to succeed? Status reports, progress reviews, milestones, post mortems, change management, are all IT methods of communication; sales strategies, marketing plans, distribution intentions, product concepts, service differentiators, operational priorities are the business equivalents. The exchanges must be two-way, timely, relevant, and thorough to ensure that all parties are aware of not only what the current situation is but the expected next series of strategies and tactics.

There remains one other point to the analogy of business and IT alignment with precision jet squadron flying. For decades, up until the early 80’s, our industry moved at a stable pace with relatively long product cycles creating well-entrenched processes and structures. Starting in the 80’s, product innovation, the personal computer, and market changes combined to compress the innovation cycle, pressuring long established operational foundations. Shorter life cycles and a more dynamic market place drove many to implement theoretically intermediate standalone solutions and add-ons that remain to this day. Over this last decade, change has exponentially accelerated. Nimbleness, relevance, responsiveness and agility in products, markets, distribution, and operations are driving competitive survival. The industry has moved from gradually walking through the park along a known trail to jet-speed shifts into new realms like social media, imposing constantly changing demands for new practices and tools. Intense management focus, customer centricity, leveraging advancing technologies, rapid-decision making, and tightly coordinated teamwork are today’s requisites for growth and profitability. Successful leaders are effectively translating these demands into actionable strategies with near-term deliverables at an incredible pace. Winning management teams have adapted to the new dynamics, achieving the jet squadron’s equivalent of focused synchronicity in translating shared plans to targeted results.

Steve Callahan is a Senior Consultant and Practice Development Director for the Robert E. Nolan Company, a management consulting firm specializing in the insurance industry.

Readers are encouraged to respond to Steve using the “Add Your Comments” box below. He can also be reached steve_callahan@renolan.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (2)

Thank you for the informative and insightful response. You bring up a number of excellent points. Let me address them in three parts. First, with respect to alignment, and in particular your comment that if your boss said you needed to get your department aligned with the business, etc, I admit to spending a bit of time reflecting on this perspective and eventually came to the potentially incorrect conclusion that it is the use of the word alignment that may drive the issue. If by alignment you assumed that means to get in line with the business, that is not the intentions. The use of alignment was meant to imply that all of the various operations are working towards the same set of strategic goals in the same organizational priority. Each area will bring their expertise, innovation, and solution set to the achievement of these goals, but they will all be in recognition of the same goals. We find in many cases that companies that are not strategically aligned may have the marketing focused on revenue growth strategies, sales focused on business quality strategies, and information systems focused on operational efficiency. While these may be appropriate, they need to be consciously determined based upon an overriding set of enterprise strategies. That is what the alignment in the article is meant to imply. Your further thoughts on this are of course appreciated.

The second comment is in respect to the team role mentioned in your first paragraph. Here, to be frank, the analogy I used doesn't entirely work because each of the pilots have the same skillset. In a business, each of the players bring a very unique set of expertise to the table that complements one another versus duplicates. Perhaps a better analogy would have been sailing in a race, where you have people on the lines, steering, navigating, counterbalancing weight, etc - all playing key, but different, roles in winning the race. Still, your point about equality of partnership is critical and correct, and in too many instances we have seen the empowerment that innovative technology can bring to an organization being missed due to the role that the IT staff is relegated to. There are many excellent articles in today's journals outlying the importance of IT as a strategic player at the executive table. Two excellent examples are one referencing Forrester research:

http://blog.aefeldman.com/2008/07/28/cios-taking-on-more-strategic-role-talent-in-demand/

And one reference PWC:

http://www.pwc.com/us/en/technology-forecast/2011/issue2/features/strategic-cio-role-innovation.jhtml

Many others can be found. Equal partnership, equal membership on the team, is, as you point out, a critical necessity for success.

This is related to the third item, which is placing blame on the CIO. While I can't address your specific circumstances, I can speak in general terms about the trends I have seen regarding this issue. The shift to accepting CIO's as strategic partners consists of several components, only one of which pertains to the CIO's realm of influence. Others relate to organizational maturity, the politics of power and hierarchical structures, cultural constraints, and the skillsets of the staff within IT. Still, as a leader, and especially given the trade press coverage of the necessity, most CIO's should be working to become heard at the executive table as a strategic partner. The transition is not always easy, and sometimes may be beyond the ability of the individual in the role - a condition I've seen sometimes handled by the separation of duties into CTO and CIO roles to reflect technology versus strategy. Each company has to assess the readiness of their organization and their staff to make this transition, but at the end of the day, I do agree that it becomes critical for the CIO role to be recognized as a source of strategy, innovation, and business growth enablement.

Again, thank you for your insights, and my best wishes for successful developments in your particular arena.

Posted by: Steven C | July 13, 2011 3:22 PM

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Here is the one and major problem I have with your entire analogy - every pilot in the squad is an equal partner in the team performing, no pilot is trying to "align" itself with the rest of the team to make it work. IT should be in the position of being considered an equal team player, we should be one of the pilots and not the refueling guys down on the ground and that is how we should think.

I recognize this is not reality in many companies but I put the blame on the CIOs first and foremost. They are the ones who keep thinking first in terms of the technology and second in terms of the business. Often they would rather spend their time reading about the latest cloud advances, going to technical conferences, and thinking about the project plan for virtualization instead of first thinking about the company's strategic goals, what marketing is trying to accomplish, what are the pain points for the claims department, what are the competitors in our industry doing, etc. and then considering how their particular expertise could help.

If my boss came to me and said I need to get my department aligned with the business I would start looking for another job because either (1) that company does not understand the value of IT for that business so I do not want to be there or (2) I do not get it and I need to get out before they fire me.

Posted by: dchandler | July 11, 2011 4:56 PM

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