The business and IT alignment discussion is dated. Even with the onset of mobility, cloud and the Internet of Things, IT is still often thought of as a service provider, not a partner in the business.
I came across a blog from two years ago in which Deb Smallwood, founder of Strategy Meets Action, admitted a certain misalignment of business and IT, stating that to “align implies there are two separate and distinct paths that need to be arranged in parallel lines.” Even back in 2014, Smallwood noted that the term “Business/IT Alignment” seemed outdated and even a bit misleading in terms of the requirements of that time. She instead offered the term “alliance” to describe insurers that pool business and IT resources to create a unified direction comprised of collaboration and corroboration to improve a company’s overall performance.
If this seems like a lofty goal, consider the fact that it’s been proven in other industries. For example, today, thanks to the new technologies mentioned above, along with infrastructure and software as a service, insurance IT organizations are under more pressure than ever to deliver better functional performance. According to the newest McKinsey Global Survey on business technology, “IT organizations that play a partner role—that is, actively collaborating with the rest of the business to shape an overall business strategy that effectively leverages technology—tend to perform better on a number of dimensions, including the delivery of core services and the creation of a healthy organizational culture.”
The results are telling, but in spite of technology taking a more central role in how business is transacted, the “put your money where your mouth is” goal still seems unreachable, because according to McKinsey’s report, most respondents, from both the business side and the IT function, believe the IT organization should be a partner to the business, yet few say IT plays that role today.
McKinsey bases its comments on the published results of a survey of more than 700 business and IT executives across several different lines of business, and plays to Smallwood’s present-day observations that business and IT are still misaligned.
“IT’s directive is to lower technical debt related to their portfolio of systems and the business needs to be innovative in products process and service and transformational,” notes Smallwood, “so this creates conflicts in priorities and resource and spend allocation.”
McKinsey’s report further drills in to where continued misalignment is occurring--between IT and business executives on IT’s priorities, the fourth survey in a row with similar results. And no big surprise: In the newest survey, 44 percent of those in IT say that cutting costs is one of their organizations’ current priorities for the function—ranked only behind improving the business process effectiveness and tied with improving the cost efficiency of business processes. “Business executives ranked cost cutting last, with only 16 percent citing it as one of their companies’ priorities for IT,” notes the report.
The best opportunities for improving IT’s overall performance, notes McKinsey, is in strengthening the model that the IT organization is structured, run, and managed around, and in defining more clearly IT’s role and priorities.
So is it time to restructure how the IT function is structured, run, and managed at insurance companies? Or just how it’s perceived?
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