Proving the value of technology/business alignment

The holy grail for IT management has been to prove that IT investment makes the overall business more successful.

To those of us in the business this makes intuitive sense but can be hard to prove.  Unfortunately, those wishing to believe that IT adds nothing but cost have had a strong hand ever since Nicholas Carr famously kicked the IT industry where it hurts in 2003 in the Harvard Business Review by claiming that IT doesn’t matter – backing up his claim with an analysis of business success against IT investment.  (To be fair, Carr argues that it is needed to be competitive but won’t give one company a strategic advantage over another – which is a subtle point and one easily missed)

Of course one of the central planks of SOA is that of alignment between business and IT produces significant benefits for the business.  This again makes intuitive sense but can be hard to prove.  Therefore, I was delighted to see some research into the benefits of deep IT/business alignment by the BTM institute.  Their recently published report comparing Global 2000 with what BTM call “converged business technology management” and those without. While SOA isn’t explicity mentioned, reading the report (available here) it is clear that a company succesful with a SOA strategy will tend to fall within this definition:

“[In such companys] This means that technology not only enables the execution of current business strategy but also anticipates and helps shape future business models and strategies”

In reviewing the study, CIO magazine highlights 4 dimensions:

governance and organization; strategy and planning; strategic investment management; and strategic enterprise architecture”

Again very much inline with SOA thinking of what is important.  And finally, what is the win for converged business technology management?

“This is not about a project or ROI, but it’s about overall performance of the company,” Hoque [chair of the BTM Institute] says. For example, those companies with converged business technology management had 12 percent average annual revenue growth, compared with 4 percent for their industry groups. They also achieved 36 percent average annual earnings per share growth versus 7 percent for the industry groups.

Pretty impressive.  Of course, this report covers a period when SOA was only emerging and did not focus explicity on SOA.  What will be interesting to see over the next five years is whether firms where SOA is entrenched do better than those who have not taken the SOA route.

Ronan

Posted in Imported, investment, SOA.

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