by Minda Zetlin

Why IT-business alignment still fails

Sep 26, 2018
Digital TransformationIT LeadershipIT Strategy

With the push for digital transformation, relations between business and IT seemed to be improving, then they took a left turn. Here’s what’s worth addressing to improve alignment in your organization.

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Do your company’s IT leaders and top business executives have the same understanding of IT’s role within the organization? Back in 2012, researchers at Capgemini asked this question of more than 1,300 senior executives. Sixty-five percent of them answered yes.

Perhaps a number closer to 100 percent would have been ideal, but the fact that nearly two thirds of companies surveyed believed business and IT were on the same page was very good news. It represented enormous and hard-won progress from the bad old days when business executives saw technology professionals as pointy-headed geeks, and technology professionals saw business executives as soulless and money-obsessed.

In the past six years, though, alignment between business and IT has gotten much, much worse. Asked that same question this year, only 37 percent of executives thought business and IT leaders agreed on IT’s role, according to a newly released study by Capgemini. And that’s not all. Only 35 percent of respondents think IT and business executives agree on how technology can increase productivity, down from 59 percent in 2012. Just 36 percent think IT and business leaders have the same view of IT investment priorities, down from 53 percent six years ago.

This decline in business-IT alignment happened in an era when IT leaders finally started getting the “seat at the table” they’d always wanted. Whether or not business leaders believe that “every company is a software company,” they all recognize the game-changing power of technology across all industries — and they’re expressing that recognition with cash. IDC forecasts that total worldwide spending on digital transformation technologies will exceed $1.3 trillion in 2018.

In other words, over the past few years, business leaders have come to value IT as never before. At the same time, their trust in the people who manage IT has plummeted. It’s time to ask: What went wrong?

There’s no single or simple answer to that question. But here are some explanations worth considering — and worth addressing if you want to improve alignment in your own organization.

1. The pace of change is tough on everyone

The blinding speed of technological innovation these days is putting a strain on IT leaders and employees who work in technology. So it’s easy to forget that rapid technological change creates major concerns for business leaders in the C-suite as well — concern that can turn to panic if they believe their organization is at risk of being left behind by established competitors or new disruptors.

“The pace of technological change is more dramatic than it’s ever been,” says Harry Moseley, CIO of the video conferencing company Zoom and former CIO at KPMG. “Feverish is the word I use. I think it’s compounding itself, and I think some businesses are challenged on how to keep up — they’re almost hyperventilating.”

This can cause business-IT mistrust, he explains. “If you were a business leader and you felt like you were falling behind while everyone else was moving ahead, you would say, ‘I need more control. I need my hands on the wheel. I can’t leave it up to someone else.’”

Meantime, IT leaders are running as fast as they can to keep up with speeding innovation. “The pace of change in today’s society is also taking their attention away from maintaining those business relationships and creating visibility into what’s happening in IT,” says Adam Tallinger, vice president at healthcare IT consulting firm Impact Advisors. Those dynamics aren’t helpful, and things can get even worse when business leaders request or demand digital transformation. “‘We’ve done so much in the past few years. We’re exhausted. And now you’re asking for more.’ That could be the IT perspective,” he says.

There’s nothing an IT leader can do to slow the pace of technological change. But you can prevent that rapid change from derailing business-IT relationships if you make sure business leaders always fully understand what IT is doing — even when work overload makes it tempting to skip this step.

“There’s always been a lack of transparency in IT,” says Peter Yared, CTO at workflow software startup Sapho, and former CIO/CTO at CBS Interactive. “As costs start to creep up, that creates a lot of dissatisfaction and then people don’t spend what they should. A lot of this can get fixed with greater transparency.”

2. Having a seat at the table creates new challenges

“In the 2000s, IT was looking for a ‘seat at the table,’” Tallinger says. In the past, IT leaders were often left out of the discussion until after a major project or purchase was already underway. “It used to be, ‘IT, we bought this system, now you need to install it for us.’” As a result, he says, some of those new systems never got used.

That’s changed now that IT leaders are routinely included in strategic decision-making. “There is that discipline of saying, ‘You need to vet this,’” Tallinger says. “But that takes a lot of time. In healthcare, I’ve seen a simple request for a change in an electronic medical record system take 100 hours of analysis before we could see if it was feasible, much less implement it and test it and go through the process of making it work.” In this new reality, he says, “It became easy for culture and business relationship efforts to get lost.”

At the same time, IT’s growing stature may disturb some C-suite executives because it shifts the balance of power, Zoom’s Moseley says. “No matter what industry you’re in, you’re dependent on technology. And for every company, the dependence on technology has become so much more critical than ever before. If they’re not creating new capabilities and predictive technologies, they’re going to lose out. So business leaders, while they don’t understand what they need to do from a technical perspective, feel that they need to have a strong part in it. They want to have much more control than ever before over the vision of what’s being done.”

At the same time, he says, CIOs are better equipped to take a leadership role when it comes to new technologies. “The CIO is in the incredible position of having a full, 360-degree view of the business, not just the front office but the back office too, human capital, and finance, and we actually understand the art of the possible,” he says. “So there’s a conflict between IT leaders who are more senior and who have lots of experience and knowledge, and business leaders who want to lead that exercise.”

This is why Moseley believes it’s critically important for CIOs to report to CEOs — which more and more of them do. “I’ve read three articles today about the appointment of CIOs and they’re all reporting to CEOs,” he days. “If I’m the CIO and I report to the CEO then the business partners are my peers,” he explains. “We’re going to have a good dialog because we’re sitting at the same table. And boy, can you go fast and create change.” On the other hand, if the CIO reports to the CFO, then the CFO is the business partners’ peer. “The CIO becomes a supporting function.”

3. IT leaders lack the communication skill to match their new status

CIOs and other tech leaders can make better use of their newfound positions in the C-suite if they focus on the “soft” leadership and communication skills that too many technology professionals dismiss as superfluous, experts say. Without those skills, IT can never truly come into its own.

“We went through a whole cycle here of just being order takers,” says Keith Collins, CIO of SAS. “‘Whatever you want, we’ll make. Oh, woe is us, we don’t have enough resources.’ My role is to move away from that.”

IT leaders who want to make that same journey need get good at “demand shaping” — that is, understanding the business well enough to become a consultant, and influencing business leaders to ask for projects that IT can do well and that will have the most positive impact. “If you want to work on cool new stuff that drives revenue, then you better be good at that,” he says. In fact, he notes, college curricula for STEM students now reflect the need for good collaboration and presentation skills.  “Everybody’s more technology-savvy than they used to be in every line of business,” he says. “So if you’re going to do demand shaping, you have to up your game.”

A big part of becoming a better communicator and consultant is to understand which metrics matter to business leaders, and which don’t. Often, the data IT reports is not what their business counterparts find most compelling. Dawn Parzych, director of product and solution marketing at digital experience monitoring company Catchpoint Systems, says that what seems like a power struggle between business and IT leaders can sometimes be caused by misunderstanding, miscommunication, and not being focused on the same goals.

“Metrics used to measure success are constantly changing in some respects,” she says. “But at the top level, those metrics have been the same and will always be the same — they’re concerned about revenue, operational efficiency, and cost. When you look at individual departments and teams, they focus on other metrics that feed into those top-level concerns. But there’s not always an understanding of why the metric matters.”

For example, she says, take mean time to resolve (MTTR), the measure of time between when an issue is first raised to a help desk or support personnel and when it is solved. MTTR is one of the metrics IT people focus on, Parzych says. “‘We’ve got this number down low, we’re solving problems faster than before,’” she says. “But because of the way they’re doing it, there may be more problems. The number that the company’s leaders care about hasn’t changed, but because they’re focusing on MTTR, they’re not looking at the bigger picture.”

Thus, IT leaders can improve relations by thoroughly understanding corporate goals, she says. “Then be honest in communicating those goals and objectives downward and looking at how the metrics their teams are measuring map back to those objectives.”

4. Digital transformation marks a new phase of a familiar cycle

“Often, when we start measuring something because we see it going wrong, we get to a point where it’s improved,” Parzych says. “And then — great! — we don’t have to focus on this anymore. But this is something you have to keep constantly working on. As soon as you take your eye off that goal, things start to go backward. We stopped communicating and looking at the right metrics, and all the other elements that go into alignment, and we’ve had a backslide.”

So perhaps, as business and IT leaders once again recognize the need to work on better communications, relationships will return to their former levels. “All organic systems have cycles,” Collins says. “It’s a steady march as we evolve.”

IT’s relationship with business has already gone through several cycles, he adds. “We were all on the mainframe, and you didn’t have any choice. Then along comes the personal computer, and what did we say? The business units are in charge of their own technology budgets. But then there was loss of control, so we went through centralization again. Then software-as-a-service came along and everybody has their own budget. Then we have no complete view of what’s going on because all our data is siloed. So we’re seeing people understand the new role of IT is protecting the enterprise and doing all the integration that brings the data together.”

This new focus on IT by business leaders is at the root of today’s digital transformation trend, he adds. “Because everyone now realizes that their business runs on top of technology and you can’t turn it off. It doesn’t matter whether or not you have a digital transformation strategy — you’re right in the middle of it.”

In other words, the stakes are higher than ever, and these high stakes might explain why business and IT are less in sync than they used to be. “Everybody intuitively knows they can’t run without technology anymore,” he says. “No way to execute a business and be competitive without it. And each business is defining for itself how you turn technology into some kind of competitive value. That’s where all the struggle is.”