BRM - Module 2: Strategic partnering
The video below is the first lesson in this module, and is part of the Business Relationship Course
The ‘Business Relationship Management Professional’ foundation course
Module 2 – Strategic Partnering
Lesson 1 – Business-Provider Alignment
Welcome to module 2 lesson 1!
In this lesson we’ll be studying business-provider alignment.
Topics covered include:
The Business-Provider Alignment Model Strategic relationshipsAnd
Strategic Partnering and Demand Shaping
Ok, we’ll start by taking a look at the Business-Provider Alignment Model. You can see it illustrated on your screen now.
Before I describe this model in detail, I think it’s worthwhile reminding you of the relationship of the service provider to its business partner: the provider exists to serve the needs of the business; its purpose is to deliver value to the business in the form of services. This is probably a statement of the obvious but I find that it useful to restate the obvious from time to time. In practice the value delivered is often less than optimal – expensive IT systems that do not provide adequate return on investment, for example. This is often because the provider and its partners have different objectives, culture and incentives.
Now back to the Business-Provider Alignment Model. The model provides a framework for analyzing and understanding these differences between the provider and its partners. It also enables a constructive dialog between the two parties.
You can see that the model has four components: the environment within which the business operates; the strategic context for the business; the IT strategy; and IT portfolio.
The environment box includes some examples of relevant environmental factors which are classed as opportunities, threats or constraints.
So, new emerging technologies provide opportunities for the business to engage with its customers in innovative ways. They also provide opportunities for the Provider to reduce the cost of its services while at the same time improving performance. Of course, new technology can also be a threat. For example, it can make it easier for competitors to enter our market: think about bookstores and Amazon.
The business does not have complete freedom of action; it operates within external constraints such as regulatory or legal requirements.
These, and other, environmental factors impact both business strategy and the portfolio of services that the provider is able to offer.
The strategic context relates to the Business Partners products, markets, investments and customers. You’ll see that within this box are four interacting elements: strategic intent; current strategy; core competency; and business governance.
Strategic Intent refers to a business paradigm that encourages an enterprise to set itself very ambitious goals and drive itself to compete in innovative ways. A more traditional and very common paradigm is for the enterprise to limit its ambitions to what its current resources and capabilities can deliver; the strategic intent paradigm gears up its resources and capabilities to match its ambitions.
The IT Strategy is driven by the strategic context of the business. It articulates how the Provider will enable its Business Partners to achieve their objectives. It derives from answers to questions such as: what business outcomes must we support? What services must we offer to support those objectives? What architectures should we adopt? What capabilities will we need?
In this context the IT Portfolio describes the total investment in IT; it includes all technology, services, people, and capabilities. This investment should be aligned with the chosen IT strategy.
The pyramid within the box represents the mix of investments as they relate to business objectives:
Informational investments provide better information for the business. Strategic investments help the business to gain competitive advantage, perhaps by enabling major innovations to how it engages with its customers. Transactional investments reduce the cost of doing business. Infrastructure investments provide the base capability.
Okay, the Business-Provider Alignment Model illustrates how thingsoughtto be but as I’ve said, this is often not the case – there is often a disconnect between the Provider and its partners. You can see from the diagram that the IT portfolio ought to support and inform the strategy of the business but that is often not the case. Not only might IT not support the strategy but it might also restrict the strategic options.
Our goal must be to align the business’s strategy, the IT strategy, and the IT portfolio. There are four barriers to this: the expression barrier; the specification barrier; the implementation barrier; and the contextual barrier. You’ll see them illustrated in the diagram on the screen.
The expression barrier refers to the lack of clarity of the business strategy. This can mean a poorly defined strategy such as ‘increase domestic sales’. Well, that’s probably a good idea but it’s not at all helpful in providing direction to IT; the result is usually that IT does its own thing and devises a strategy for IT in isolation. In some cases the business strategy is continually shifting which makes it impossible to develop an appropriate IT portfolio. The expression barrier can also take effect within the business; line managers may not have the same understanding of the business strategy as the senior executives. Business Relationship Managers will get very mixed messages in their discussions depending on who exactly they work with.
The specification barrier relates to the difficulty of determining just what the business wants IT to do. Does it see IT as an enabler or a strategic driver? What capabilities should IT develop? How should capabilities and services be sourced? These difficulties arise from a communication gap between the business and the provider which leads to misunderstandings and poor decisions. You’ll see immediately that BRM has a key role in overcoming specification barriers.
The implementation barrier refers to those things that prevent the development of an IT portfolio that adequately supports the business strategy. For example, a base infrastructure that is poorly integrated, possibly because of legacy technologies. Another example would be where some business units opt out of the shared infrastructure for some reason. Such infrastructures are costly to maintain and support, and limit flexibility, both of which limit the scope for more beneficial investments.
The contextual barrier refers to deeply ingrained factors such as organizational culture, rules of engagement, attitude to change, and whether it is rule or relationship driven.
Okay let’s do an exercise to develop your understanding of Business-Provider alignment. Plan to spend 30 minutes on the exercise. Because of its nature we can’t suggest a solution but it is important that you do it – it will help to clarify your thoughts and develop your understanding of the topic.
I want you to think about the organization that you work for, or another organization that you know very well. What Expression Barriers, Specification Barriers, Implementation Barriers and Contextual Barriers exist within your company?
What can you do to remove them?
You’ll remember that in Lesson 4 of Module 1 I discussed the Business Relationship Management Maturity Model. This model has five levels of maturity, the topmost one being Level 5 where the relationship between Provider and Business Partner is one of cooperation based on mutual respect and understanding. The Provider is seen as a Strategic Partner.
At this level there is a mutual understanding and appreciation of capabilities and needs; the provider’s service portfolio is appropriate to the needs of the business; the Provider is fully engaged in the Business Partner’s Decision Cycle; and there is an increasing sense of value from investments in Provider services and capabilities.
Let’s now take a closer look at the characteristics of strategic partnering at maturity level 5. I want use an exercise to do this.
In your Exercises booklet you’ll find a table showing both the business and the provider perspectives of strategic partnering in the context of the four core disciplines of BRM: Demand Shaping; Exploring; Servicing; and Value Harvesting.
I think that this table provides a really good insight into the nature of a strategic partnership. The fact that both the providerandthe business perspectives are addressed reinforces the idea of a partnership.
I won’t add any value just by reading this table to you so as an exercise please spend 30 minutes studying it and asking yourself how many of the statements would apply inyourorganization. You can consult your Study Guide if you want a reminder of what the four core disciplines are.
When you’re finished, move on to the next screen.
Ok, you should now know what characterizes strategic partnering. Let’s now look at the benefits that a Strategic Partnership brings.
A Provider operating as a Strategic Partner will see opportunities that the Business Partner doesn’t see or perhaps doesn’t want to see. Opportunities offered by emerging technologies for example.
The Provider should also persuade the Business Partner of the value of the opportunities.
Implicit here is the idea that the Provider must not only be a master of technology but must also have a deep understanding of the business and therefore of how technology can benefit it.
Now let’s take a look at how to create a partnership.
Partnership gets a lot of lip-service – the word ‘partner’ falls easily from the tongue, but the reality is that it takes at least two to form a partnership – I can’t be your partner unless you are willing to be my partner. There are some challenges to be overcome by both parties – the business and the provider. Here are some common examples:
We want to be loved for what we’re doing now
We want the other party to change, not us
And we want them to give their trust to us, we don’t want or expect to have to earn it.
The key message here is that a partnering relationship doesn’t ‘just happen’; it isn’t created by signing an agreement or by a CEO saying ‘it shall be done’.
A successful Partnership requires a Business Relationship Manager who has credibility in the eyes of the business.
Credibility has two components: expertise and trustworthiness. Expertise, I think, speaks for itself. Let’s look more closely at trustworthiness and examine where trust comes from. We tend to trust people:
Who have a similar background or worldview to ourselves With whom we’ve experienced positive interactions over time Who present themselves and behave appropriately in our eyes Who are consistent in their behaviors – especially in doing what they said they’d doYou can see that some of these are within the control of the BRM.
Now let’s look at what the BRM can do to build trust. First, though, a warning. A BRM may be a technical expert and the Business Partner may trust and respect their judgment and advice on technical matters. But technical expertise is not sufficient to earn the trust required in a Strategic Partnership. In fact, it might be difficult for a BRM who is seen as a technical expert to be seen as anything else.
Trust is built up over time through the skills of relationship management. Here are a few examples of how this can be done:
Active listening – we’ll discuss this in Module 7 Creating positive interactions with business partners Helping business partners become self-sufficient Responding well in difficult business partner encounters – for example after a major IT service failureYou’ll find some more examples in your Study Guide.
Include full list in Study Guide
Active listening Creating positive interactions with business partners Helping business partners become self-sufficient Teaching and coaching Responding well in difficult business partner encounters Avoiding defensiveness By building a multiyear capability roadmap and delivering or showing results against that roadmap
It’s not unusual for a Provider initiative to develop Business Relationship Management comes out of a need to repair a relationship that is broken. The big challenge the new BRM faces is how to do that.
Let’s use an exercise to do explore how a broken relationship can be repaired. Plan to spend 30 minutes on the exercise and afterwards check out your Exercise Solutions document for some of my ideas.
There are two scenarios I want you to consider:
The problem is the poor performance of the Provider
The problem is that the business has lost trust because of bad experiences with the Provider
In each case how might you rebuild the relationship?
Our next topic is Demand Shaping – this is often known as Demand Management but I’ll use the name chosen by the Business Relationship Management Institute.
You’ll remember that Demand Shaping is a core discipline of Business Relationship Management; one of the four pillars of the House of BRM.
According to the Institute, Demand Shaping is “A set of disciplines, tools, and governance mechanisms designed to surface, stimulate and shape business demand for Provider products and services in balance with supply constraints.”
“The goal is to identify that set of possibilities that will create the most value for the organization.”
Put more simply, how does a BRM surface and shape demand to get optimum value from limited IT supply? The word ‘optimum’ implies achieving some balance. In this case we are looking to balance supply and demand. In order to deliver IT services we need networks, storage devices and servers (amongst other things) and these cost money. If supply greatly exceeds demand then we have wasted money by buying unneeded capacity. However, if demand exceeds supply then business activity is adversely impacted. Demand Shaping also includes the idea of assessing the value of demand – it may not be cost-effective to satisfy all demand.
OK so now you know what Demand Shaping aims to do, next we have to think about how it will do it.
Obviously, perhaps, the Provider must take part in the Business Partner’s decision-making. It’s useful to think about this in terms of a decision cycle. The diagram on your screen illustrates what I mean.
You’ll see that this cycle starts at a high strategic level at the left and moves in six steps to selecting a solution. Ideally the Provider would get involved in this cycle right from the outset – at the strategic level.
Let’s go through these steps.
The first step is about identifying strategic possibilities – how might we develop and grow the business? At this level the Provider, as a Strategic Partner, uses its knowledge of emerging technology and industry trends to give the Business a rich picture of the possibilities they open up.
In the next step the business chooses, from amongst all the strategicpossibilities, the strategy it is going to pursue. The role of the Provider in this step is that of ‘trusted advisor’. It uses its knowledge of the technologies and its own capabilities to advise on the benefits, costs and risks of the options.
I won’t go on to describe the remaining steps – I’m sure you get the idea.
The diagram shows the relationship maturity level that is required in order to be involved at a particular point in the Partner’s decision-making. You can see that if the maturity level is ad hoc then the provider probably has no meaningful role in decision-making and will certainly not be invited to take part in any discussions of strategy.
You’ll understand, I’m sure, that the earlier the Provider gets involved, the more value it can bring.
Take a few minutes to study this diagram before moving on to the next screen.
Now I want to return to Demand Shaping and look at it in the context of the value chain.
You can see in the diagram a progression from ideas about how to leverage IT through implementation (described as execution in the diagram) and routine operation and on to retirement when the IT service has reached end of life. The goal of demand management is to facilitate the transformation of ideas for using IT into possibilities, from possibilities into opportunities. The BRMs role focuses on Demand Management and Use – optimizing the value actually realized from a provider investment or asset.
Demand and supply management meet when it’s time to think about how to actually execute a particular IT opportunity.
A key point: you tend to gain increasing clarity and structure as you move through the process
The table on your screen lists some examples of techniques that can be used to surface and shape demand. Maybe you have a few ideas of your own? Take a few minutes to study this table before moving on to the next screen.
Ok, we’re almost finished but before I wrap up this lesson here’s a quiz to check out what you’ve learned
OK that completes the lesson.
You’ve learned about business-provider alignment:
The Business-Provider Alignment ModelStrategic relationshipsAnd
Strategic Partnering and Demand Shaping
The next lesson is lesson 2 which deals with Strategic Relationship Management.
Move on when you’re ready