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Moving toward alignment: a combination of strategy, process, organization and technology is key to unlocking the power of a company's information.

The mid-1990s were overrun by information technology advances and produced a number of attempts at "getting the right information to the right people at the right time." One global insurer charged a senior IT executive with implementing a data warehouse. Operationally focused and defined at a very high level from a business analytics perspective, this massive technology undertaking consumed so much effort in getting things done technically right, that being on target, on time and within the budget simply became impossible.

I once asked my MBA students, based on their work experience, to name strategic initiatives that were off-target in terms of satisfying user requirements or running wild on budget. Seven out of 10 brought up examples of data warehouses and business intelligence efforts.

Cutter Consortium's study on the role of data warehousing and business intelligence practices concluded that 41% of organizations experienced at least one project failure, and only 15% claimed their data warehousing efforts were a major success. Gartner Group says that through 2004, more than 50% of Global 2000 enterprises will fail to use business intelligence properly, losing market share to those that get it right.

The chief financial officer's access to funds and ability to champion, lead and win, as well as the chief information officer's digital backbone of tools, techniques and innovative drive should be the right ingredients for using this intelligence properly. But these two officers seldom recognize each other's strengths and rarely capitalize on them. They also fail to sew together the crucial threads of success--establishing what is known as "strategic alignment."

Strategic alignment can't be created overnight, but its recipe is no mystery. The components are:

* Content Strategy: Executives need to resist the temptation to focus on the "report we can produce by tomorrow morning." Instead, they must commit to a strategic, all-encompassing approach to enable decision-making at all levels, while maintaining a clear plan for delivery in small, tangible increments. Whatever the goal, you cannot afford to just "buy-in." You need to engage and drive this strategy.

* Process Improvement: Processes drive execution of strategy hence process efficiency is important. But one of the fundamental rules of process improvement is to avoid automating an existing process. Rather, look to improve it. You must identify processes that can be automated right away and, most importantly; those that need to be redesigned first.

* Organizational Positioning: To enable process execution ha the most efficient, economical way, you must have the right team and position that team for success. There are three basic elements of positioning: team composition, governance and management.

Team composition deals with creation of multidisciplinary teams, a team working on a new valuation system could include an actuary, accountant, investment analyst, process engineer and a technology expert. As these cross-functional, multidisciplinary teams are formed, choosing a governance model that properly influences the project becomes imperative for success.

Functional governance is the least intrusive for an existing organization, but it is the weakest option because the project leader and the team members continue with their daily duties. Matrix organization improves on this model by designating a full-time program manager and a full-time team, but the trade-off is that the staff members are pulled from their normal routines.

Creating a history of small, tangible wins is paramount to achieving great results. This management approach has a positive, spiral effect. You start at the core with a narrowly focused goal, and add complexity in a cyclical manner, advancing in scope and full implementation with each spiral. Such management style is quite different from the traditional "waterfall" approach in which the next phase does not begin before the previous one is signed-off on. While the spiral model is adaptive and agile, it mandates commitment and special management skills.

* Technology: We live in an age when technology is becoming a commodity. It is senseless to ignore advances in technology and continue moving data with spreadsheets. There are different tools available for data integration and there are platforms that combine two or more tools in the same package. Knowing what tools to use and when to use them is critical.

Alignment of strategy, process, organization and technology is the key to unlocking the power of information. It can be the difference between success and failure.

Alexander Korogodsky leads a Business Intelligence Center for Ernst & Young's Insurance and Actuarial Advisory Services Practice in New York. He can be reached at insight@bestreview.com.
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Title Annotation:Loss/Risk Management Notes
Author:Korogodsky, Alexander
Publication:Best's Review
Geographic Code:1USA
Date:Jan 1, 2004
Words:733
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