Strategic Partner Considerations: Delivering Value to the Business

Introduction

A common scenario when engaging with business partners is that demand tends to be driven purely from their perspective, which is neither unreasonable nor entirely unexpected. Typically, these demands entail fixes to systems that alleviate a productivity issue in one small part of the business, without taking a broader, more benefit-driven perspective into account across the whole process. In addition, in order to sustain long term support to the business, there are frequently IT initiatives that may not demonstrate short-term benefits, but require investment nonetheless to enable other strategic business initiatives later.

In order to balance investment between small productivity issues and larger IT projects, a change is required—not only in the IT provider and business partner’s perspectives and approaches, but within the nature of the relationship with the strategic partner as well.

Our starting point assumes that the CIO’s primary objective is to deliver value to the business. Here is an example of how we can map the value of a particular IT initiative to that of the business:

• The business strategy increases top-line revenue, which drives
• An increase in customer retention, which drives
• The use of social media to increase advocacy, which drives
• The gathering of feedback from monitoring the conversations about products online, which drives
• The rapid deployment of Application Programming Interface (API) technology to integrate with third party service providers, which drives
• The development of an Enterprise Application Integration (EAI) architecture

In the above example, it is clear that the capabilities required to drive business value from the CIO’s standpoint are Enterprise Application Integration (EAI) architecture and software skills that can then program APIs. Therefore, in order to drive value, the CIO needs to ensure that the required capabilities are optimised towards the business strategy.

A discussion can be then held with the business partner to articulate how the IT strategy delivers business value, allowing IT proposals to be discussed in business language.

Evidence of Strategic Partnerships

Mapping the business value to an IT initiative is insufficient on its own, when it comes to actually delivering the IT initiative. Having the debate with the right people at the right time depends on a strategic partnership with the decision makers in the organisation. How do you know you have achieved strategic partnership with your business partners?

• You and your business partner’s objectives are the same
• You understand how your business partner’s function supports the way the organisation makes money
• You and your business partner discuss risks and opportunities about the business environment that affects objectives and the way the business function works
• You are able to address business issues using a common language understood by both you and the business partner
• You are able to provide insight on how technology can create value and opportunities for the business
• Communication is both regular and insightful and issues are forewarned, rather than discovered
• You trust each other and acknowledge that what is said is delivered

Critical Success Factors

In order to deliver strategic partnerships, the following criteria must be understood by all involved:

Organisational Stress

This concept is used to describe the level of business change undertaken within the organisation and the level at which the organisation is coping with it. A recent merger or acquisition may bring together different cultures, values, and expectations that can cause disruption and loss of productivity. However, it may also be the call to action that requires strategic partnerships, and collaborations forged during such periods can help drive towards these partnerships. However, if the focus is purely on operational issues today, then the question remains: what needs to be done tomorrow? Additionally, unwillingness to cooperate, infighting, and having a silo mentality and blame culture are difficult chasms to cross. At the first sign of these issues, selecting allies to trial a strategic partnership approach can give sufficient momentum for the approach to be deployed elsewhere.

Relationship Maturity

This concept describes the level of expectation, commitment, convergence, and engagement that both partners have. It is the measure of strategic partnership.

Demand Maturity

This criterion identifies the level at which the business partner understands the impacts of their needs, strategy, and the manner in which demand is expressed to the provider organisation. Frequent scope changes, last minute notifications, and a focus on prescriptive technology solutions demonstrate a low demand maturity. Another indicator is the level of interest demonstrated in having a strategic partnership.

Relationship Competency

In order to be effective in partnering strategically, there are techniques, skills, and behaviours that a person can adopt, including but not limited to emotional and political awareness, communication skills, consulting skills, business insight, and change management. Some key activities that demonstrate the effective deployment of this competency are driving innovation, ideation, and value realisation.

IT Capability

The ability of the IT function to deliver its core services and projects is a significant test of how it is perceived amongst its peers and the organisation. Additional capabilities that should not be overlooked are: Governance Management, Risk Management, Strategic Business Analysis, Value and Benefits Management, Portfolio Management, and Enterprise Architecture Management. If business partner attention is focused purely on service and project delivery, trying to discuss long-term strategy and collaborative behaviour will be akin to trying to decide where to place the windows in a house while the house is actually on fire. Needless to say, it is critical that the fire be put out first.

Business and IT Strategy

If the business strategy is to maintain market share, reduce the cost base, then the IT strategy needs to reflect that. An example would be to leverage existing ERP investments and drive process efficiencies. The point is they need to converge. If there is a lack of clarity, or strategies are divergent then this may be one of the causes of organisational stress mentioned above.

Capacity and Finance

The creation of the space to understand strategy and think longer term than immediate requirements requires the capacity (e.g. effort and manpower) and finances over and above the existing project and service spending. Conclusively, the business case on strategic partnerships needs to rest firmly on the benefits mentioned below.

The Benefits of a Strategic Partner Approach

The benefits of having a strategic partner approach is that it is much easier to justify capital spending on things such as EAI and API, as the reasoning and rationale will always link back to the original business strategy.

In addition, there is assurance that the IT function will always work on the right project with the right scope at the right time. This means that the opportunity cost of failed projects will decrease.

As a direct result of these two benefits, the scarce resource that is available to deliver enhanced capabilities will be more focused on projects that deliver real value to the organisation, resulting in a higher return on investments in the long-term.

Conclusion

The responsibility of developing strategic partnerships rests firmly on the CIO and Business Partner(s)’s shoulders, meaning that strategic partnerships across the organisation will therefore need sponsorship from the Board of Directors. However, the maximum potential for strategic partnership depends on the organisational context and the desire to achieve change. In getting to the strategic partnership state, it is worth considering the delegation of a strategic partnership’s day-to-day delivery to staff within the organisation who already have other day-to-day responsibilities, although capacity constraints may drive the requirement for a full-time role with supporting analytical staff. As you most likely know, this role is typically called a Business Relationship Manager, and they have competencies outlined in the “Relationship Competency” section above. Some staff in the IT organization may be fulfilling the role fully, in part, or not at all. If the latter is the case, then a key enabler of Strategic Partnerships is missing.

How Baxter Thompson Associates Can Help

At Baxter Thompson Associates, we help IT understand the opportunity with business partners through our Reconnaissance for IT framework, and we can help implement a BRM capability to ensure that the value in IT is delivered. The framework includes the criteria mentioned in this article, and is applied though a short diagnostic mainly comprised of interviews and workshops. The outcome is a report on recommended changes, options, and a business case for implementation. Additionally, we also provide training, coaching, recruitment, and change management.

 

Previously published on baxterthompson.com, October 2015.