Importance of aligning IT Strategy with Business Strategy

Importance of aligning IT Strategy with Business Strategy

Information Technology & Business are becoming inextricably interwoven. I don’t

think anyone can talk meaningfully about one without talking about the other – Bill
Gates

Technology & Business are almost inseparable. We cannot even imagine a business without
computers, internet & software today. Information Technology plays a very vital role in the
efficient functioning of a Business. In this article, we will focus on understanding the
importance of aligning IT strategy with business strategy.

What Is Business IT Alignment?

Business strategy is the roadmap to achieve the company’s business objectives. The
business strategy consists of defining business goals, planning the course of actions,
business processes, and taking decisions to achieve specified business objectives.

IT Strategy or Information technology strategy provides guidelines on how technology

should be used to help the business achieve its objectives.
Business–IT alignment is a process where businesses leverage information technology
(IT) to achieve strategic business objectives, such as expanding the reach of their products,
improving financial performance, or more. E.g. Companies that only sell their products
through physical stores, can leverage IT to launch an eCommerce website & carry out
online sales to expand their reach and increase market share

Why aligning IT with business strategies is the need of the hour?

“Our future success is directly proportional to our ability to understand, adapt and integrate
new technologies into work” – Sukant Ratnakar

The business scenario is changing rapidly. Customers’ expectations have also increased.
They want the right quality product, at the right price to be delivered to them right away.
Adopting technology is inevitable for improving customer experience & satisfaction.

With advancements such as computing power, internet, mobility, cloud computing,

automation tools, application software are now widely available & affordable. Technology
is now well within the reach so, companies must leverage IT to meet and overcome current
business challenges and stay ahead of the competition.

Why Senior Management/Business Leaders must demand more from Information

Technology?

Digitization, Mobile, Internet, have changed the way we connect and communicate.
Whether it is our employees, customers, suppliers, partners, or more. As Bill Gates
mentions in the book, Business @ the speed of thought, NOW is truly a time to create
a digital nervous system for the company. Business leaders must focus on achieving:

1. Complete Business Visibility

Business Leaders or Senior Management should aim for digitization & automation to get
complete visibility of their business processes, streamline their processes, and improve
employee productivity, efficiency.

2. Real-Time Data
Digitization & Automation enables gathering real-time data across various departments,
locations, units of the organization, even from field staff. This provides real-time &
complete visibility of all areas of business
3. Single Source of Accurate Data
When companywide data is stored in a central server, the right information is available to
the right people, anytime, from anywhere. They can closely monitor & make informed,
timely decisions conducive to achieve business objectives.

4. Improves Collaboration & Communication

Instant access to accurate data means better coordination among different teams that
improve their efficiency. This will result in the optimum utilization of resources as well as
higher productivity, which enable achieving business objectives

5. Improved Customer Service

Greater insights into customer behavior and customer requirements helps companies to
serve their customers more effectively, and improve customer satisfaction. Happy
customers provide repeat orders as well as references that play a significant role in
growing business revenues.

6. Define KPIs & Monitor Progress

With the help of IT & ERP, companies can specify criteria for performance measurement
and monitor progress frequently. This will help to identify problem areas quickly & achieve
continuous improvement.

Let me share an example of how IT enables making informed decisions towards

achieving business objectives:

Suppose, one of the business goals is to Reduce Inventory Costs by XX% or from XXX to XXX
Implementing ERP Software or Material Management Software will contribute towards
achieving this goal by:

 Implementing Inventory Management Rules & Disciplines

 Setting up Standard processes, Reports, KPIs, and review system
 Specifying Lead Time for inventory items
 Determining Max Stock levels & Safety Stock levels
 Defining Reorder Point & Reorder Quantity to ensure optimum inventory
 Set up Alerts & Notifications for the effective management of inventory

This will ensure that the company can order just enough quantities, required for the
production process, just in time, and it will help reduce procurement cost as well as
inventory holding costs.
Advantages of aligning Business & IT

 Transparency and Complete Visibility of Business

 Faster Production by eliminating wastes, delays & bottlenecks
 Assured Product Quality by ensuring Strict Quality Control measures
 Speed in Business achieved by turbocharging existing processes
 Optimum utilization of resources
 Excellent Customer Service
 Improved Profitability

Summary
Business Strategy & IT must go hand in hand. When IT is aligned with business strategies,
companies can leverage IT effectively to achieve business objectives such as growing
market share, increasing productivity, higher profitability, and more.