Aligning Business and IT: The Keys to Synchronization
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.
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