Defining Your Business Alignment Strategy

What strategic approach do top-performing, breakaway organizations share? According to the IBM Institute for Business Value study Breaking Away with Business Analytics and Optimization, it is the use of business intelligence and analytics. Using BI, analytics, and performance management eliminates information overload by making sense of the massive amount of information that is now available in the enterprise. In order to become a breakaway organization, companies need to establish both a vision about the strategic use of information and a plan to implement this vision.

We know that most organizations have an understanding of one or more of the basic elements of corporate business strategy. They typically define, at least on an annual basis, their top corporate objectives and business unit strategies. They analyze their markets, determine their direction, and create a plan to ensure that resources are available and stakeholders informed. However, it is apparent that most organizations do not sufficiently link these plans to daily operations or manage execution effectively. And while it is recognized that BI technologies can be an enabler to successful execution, many do not have a business alignment strategy that allows them to plan their strategies via data-driven metrics and BI or to map these corporate objectives in order to effectively monitor results to ensure objectives are achieved. This area is often either overlooked completely or implemented on an ad hoc basis versus as part of the basic success of the business strategy.

In fact, according to a study conducted by IBM in September2010, only 22 percent of organizations are successfully linking strategy to execution with BI and performance management. And we know that when companies fail in strategy execution, company results can suffer.

On the flip side, however, this means that roughly one in five companies is successful in its strategy execution. Such organizations can reap the benefits of overall performance improvements, gaining competitive advantage, finding new opportunities, and creating business impact that is aligned with their goals. They have enabled visibility into the information that matters and improved decision-making capabilities. With the ability to understand, anticipate, and shape outcomes through innovative technologies, these organizations can help to increase efficiencies and effectiveness throughout the key areas of the organization.

Our task in this chapter is to explore considerations and identify steps in developing an effective business alignment strategy for a strategic business intelligence initiative. It should map to corporate business strategy to enable successful execution, a critical first step in the strategic BI initiative. This includes the following:

1. Assessing Your Current Situation — Understanding the corporate strategy and identifying how your organization is currently managing its business strategy and monitoring and measuring outcomes

2. Developing Effective Strategies for Linking the Business Strategy to BI Initiatives — Examining strategies that are used today and determining how your organization can develop an effective business alignment strategy that improves outcomes and results

3. Involving Key Stakeholders and Priority Business Areas — Understanding how to determine, prioritize, and involve key stakeholders who can influence the business and execution strategies

4. Implementing Sound Solutions — Learning how proven practices can transform the effectiveness of the organization

An Introduction to Strategic Management Approaches

So how can strategy be managed to achieve the desired outcomes? Many different strategic management approaches may be in use within the organization.

Organizations use various methods today, and others have been used in the past. As examples, some of the highly common ones include, but are not limited to:

• Balanced Scorecard (BSC) — A strategic planning and management system that aligns business activities to the strategy of the organization. BSC offers the following:

[much greater than] Stresses the communication of the strategy — both internally and externally — and monitors the progress of the organization against strategic goals

[much greater than] Adds strategic non-financial performance measurements to the financial metrics to provide a more balanced view of organizational behavior

[much greater than] Applies metrics to the decision-making areas of finance, customer, internal process, and innovation BSC became popular in the 1990s and is used today by entrepreneurial firms as well as some government departments.

• Six Sigma (6S) — A very rigorous system of management tactics that seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. 6S does the following:

* Uses a set of quality management methods, including statistical methods

* Creates a special infrastructure of people within the organization (Black Belts, Green Belts, and so on) who are experts in these methods

* Follows a defined sequence of steps and has quantified targets; these targets can be financial (cost reduction or profit increase) or whatever is critical to the customer of that process (e.g., cycle time, safety, delivery)

Six Sigma was originally developed by Motorola in 1981 and was used first in manufacturing. Its roots are based heavily on Japanese quality improvement initiatives in the automotive industry. It focuses on quantifiable bottom-line results that are tied to strategy.

• Total Quality Management (TQM) — A management concept that is often associated with developing, deploying, and maintaining organizational systems required for various business processes. TQM achieves these goals:

* Reduces the errors produced during the manufacturing or service process

* Increases customer satisfaction

* Streamlines supply-chain management

* Modernizes equipment and ensures workers have the highest level of training

TQM is closely associated with Six Sigma and differs mainly in its approach. W. Edwards Deming is considered the founder of this management model, which preceded Six Sigma.

All of these are solid approaches to managing strategy, and chances are good that management decision-makers use more than one of these, in addition to other management tactics, to control and direct the organization. However, whichever one is used, some common themes arise from these approaches:

• Goals — The definition and selection of strategic objectives and/or goals

• Measurements — The consolidation of measurement information relevant to an organization's progress against these objectives and goals

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