Netting It Out

Shush, don’t tell anyone—software projects fail all the time. Grady Booch writes that there are three main causes of software project failure. Projects fail because their sponsors are blindsided by technology, because there is inadequate risk management, or because the project builds the wrong thing.

Of the three, the most difficult software project problem is determining the right thing to build. Deciding what to build is far more difficult than making informed technology decisions. Once you know what you need to build, technology decisions can be based mainly on engineering criteria: better, cheaper, faster—all these apply as absolutes.

Building the right thing is a contextual question. What is right depends on what you are trying to do. Building the right thing is a matter of alignment: the software system to be built must be
appropriate to the environment in which it will be used.

Business strategy, business infrastructure, IT strategy, and IT infrastructure are the elements that define the environment in which software will be used. The essential character of aligning business and IT can be studied by comparing these four elements and how they relate.

At successful enterprises, there is an independent IT strategy, which complements the business strategy. In many cases, IT strategy is implicit in the IT infrastructure, which has accumulated over time. Business strategy and the business infrastructure are often more clearly recognized in an enterprise. It is easier to approach IT strategy by first comparing the IT infrastructure with the business strategy, and then considering IT strategy and business infrastructure.

We present here a simple exercise that can be used to make a start on improving IT and business alignment.

WHAT STRATEGY IS

If you are reading Enabling Technologies you are taking steps to avoid being blind-sided by technology. Risk management can be learned as a set of project or program management techniques. But what about building the right thing? How do you avoid project failures due to building the wrong thing?

Building the right thing is a contextual question. What is right depends on what you are trying to do. Building the right thing is a matter of aligning the system being built with the environment in which it will be used. Aligning IT systems with the environment is especially difficult, because significant information systems can alter the environment into which they are installed. If the new system changes the environment, then the new system must fit the environment as it will be, not the environment as it is now.

John Henderson of Boston University has developed a framework for aligning IT efforts, which can help cure the hardest IT project problem: building the wrong thing. We’ll apply this framework to learn how to build systems that fit their intended business and technical environments.

In Henderson’s framework, deciding what to build is a matter of strategy. “Strategy” doesn’t have to be a concept so abstract that is seems to be impossible to define. Strategy for an enterprise can be considered to consist of two parts:

• Business strategy—deciding what the enterprise will sell and to whom.
• Corporate strategy—deciding how the enterprise should then be arranged to make those sales.

IT STRATEGY COMPLEMENTS BUSINESS STRATEGY

There is an independent IT strategy that complements the business strategy. What are IT systems for? IT systems implement administrative, operational, or competitive functions for an enterprise.

Administrative IT support is probably the most familiar and longest standing business use of IT. Every business has IT support for payroll, accounts receivable, and so on. It is hard to argue that IT systems, limited to administrative support, require strategic consideration.

The success of IT in supporting administration has resulted in IT being deployed for operational support. This is where strategic issues arise, since many operational IT support systems force revision of the business infrastructure. At this point, IT begins to bump up against corporate strategy.

Clearly, IT systems that are implemented for competitive purposes are involved in business strategy in a fundamental way, since the IT systems affect what is sold and to whom. IT systems can no longer be considered as just elements of the business infrastructure.

WHAT ARE THE PRIMARY ELEMENTS OF AN IT STRATEGY?

We can use the business strategy and the corporate strategy to determine what the elements of an IT strategy should be. Implementing a corporate strategy creates a business infrastructure. This business infrastructure is supported by IT infrastructure.

IT is not itself facing a market, so the first element of business strategy has to be generalized, in order to arrive at a useful definition of IT strategy. Business strategy—deciding what to sell to whom— is a statement of scope. “Scope” applies well to IT. Corporate strategy—deciding on internal arrangements—transfers directly to IT. This provides a convenient way to discuss IT strategy.

The two primary concerns of an enterprise IT strategy are Scope and Infrastructure...