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the role of IT in the company

It is not difficult to pinpoint the role of IT in a Company. The simple view is something like: 'make sure the stuff is up and running to make life easier for everyone'.

But whether life really becomes easier for everybody is not just an IT performance issue. It is highly dependent on how the Business is organized, what the expectations are, how frequent the Business and the expectations changes, ...etc.

In literature on this subject we find terms like 'functional fit' (the way and the extent to which the IT Services provide for the need of Business) and the 'strategic fit' (the extent to which the IT Services can support strategic change).

To dig a little deeper into this 'Business / IT fit' we use an often quoted publication from 1993: Strategic alignment: leveraging information technology for transforming organizations van Henderson en Venkatraman.(apologies for the bas quality of the document) The publication is a summary of the MIT report that was published 4 years earlier.

These publications provide for a framework to visualize the alignment between Business and IT.

Alignment model Henderson - VenkatramanThere are very detailed descriptions available in these publications on the various roles IT can play, using the 'alignment model'. Highly recommended literature.

For our purposes we simplified the model to 4 main domains and their relationships:

Henderson matrix ITPM

From our practical experience we concluded 4 typical roles for IT, that can be derived from the dominant control direction in a company. These for typical roles are named after their added value to the Business:

1. IT is a facility:

IT is a facilityIn the level one IT shop, there is not much management attention for IT. The IT manager reports to the financial director. IT is not regarded as crucial for the success of the organization.

There is acknowledgement for the added value of IT, but this not very different from the appreciation of the other facilities. The only thing that does matter for the financial director is the total IT costs. These must be as low as possible, but the IT requirements must be met as soon as possible.

In these organizations you may expect simple package software, combined with smart home-grown applications. However, this is not always the case. The risk of this value level is summarized in the phrase: ‘penny-wise and pound-foolish’ if the focus on low-cost results in a focus on short-term.

2. IT is a service:

IT is a servceLevel two represents the self-assured IT department that has come to grip with its own processes and services. The IT service centre has done a good job in structuring its activities, adapting process reference models.

The IT processes and organization have been reorganized following an IT strategy study, where technical standards and guidelines were set for the entire organization.

This leads to a standardization and optimization of IT infrastructure, which lowers the IT costs significantly. These cost reductions improve the visibility of the IT department and its manager at Board level.

3. IT is a partner:

IT is a partnerIn IT value level three, the performance of IT is recognized as a critical success factor for the achievement of the goals and objectives of the organization.

Business strategy is reconsidered in a proper control cycle, and the impact on IT strategy and IT investments is analyzed automatically. In this way, the planning and control of IT investment is a direct consequence of the strategic business decisions.

The business is clearly in the lead regarding the future of the organization; IT is a valuable business partner.

4. IT is an enabler:

IT is an enablerIn value level four, IT is an important factor in the definition of and adjustments to the business strategy; probably, the business model would not be possible without intense usage of IT.

These are the organizations where there is no separation between business strategy and IT strategy: there is one business strategy, where IT plays a major part.

We talk about 'maturity levels' in the above. This doesn't mean that there is a necessary growth-path. Being a 'level 1 - IT is a facility' can be fine as longs as that is a conscious choice of the Business, that is understood and appreciated by the IT community.

Much can be said about those 4 roles (see our publication on IT Performance management). To give you an impression I give you an overview of the relative importance of Performance management goals:

Performance management goals