Alignment: The Business of IT Is Business

Aligning IT with the business is not at all about "managing expectations."

Many IT professionals believe that alignment with the business is all about managing expectations. But the phrase "managing expectations" is ridiculous and should be stricken from CIOs’ lexicons. It conveys false hopes that, through artful maneuvering, delivering less is OK. Nothing but food satisfies hunger, nothing but money pays the rent, and nothing but a "yes" satisfies IT’s business partners.

Smart CIOs improve alignment by figuring out how to say yes in a way that works for both the business and IT. Overall, business-IT alignment has progressed during the past five years, due to the institution of executive committees, rigorous priority-setting, active portfolio management, "skin in the game" accountabilities, standardized technology and processes, strategic sourcing and better customer relationship management.

In spite of the improvements, alignment continues to top executive surveys as a critical initiative. CIO magazine’s "State of the CIO" research shows that alignment remains the top management priority for CIOs. At a recent breakfast for CIOs that I facilitated, participants shared stories that highlighted the persistent barriers to alignment. They discussed strategic plans that aren’t actionable, the challenge of working with decentralized business units, project justifications that put form over substance, funding decisions that are designed to keep the peace, constant pressure on noncapital IT costs, the difficulty of staying the course with technology plans and the leadership gap between CIOs and their direct reports.

This discussion highlighted the multifaceted complexity of the alignment problem, which encompasses the domains of strategy, governance, technology and organizational structure. To tackle alignment, CIOs must first accept the fact that IT’s business counterparts will always want more for less, without delay. CIOs need to learn how to balance the limited supply of IT services with the seemingly infinite demand in a way that is acceptable to the business. This is done through strategy and governance practices that force the business to acknowledge limits and say no to themselves. IT capacity constraints (which are more often people-based than money-based) can be relieved by designing technologies and organizations that "flex" as business volume and project demands ebb and flow.

There are six promising concepts to help CIOs face the challenge of improving alignment. I will briefly review them here and will discuss them in more detail in my next three columns.

1. Real-world strategy. Business strategy is usually informal, and it changes frequently as new learning occurs. CIOs need an ongoing, participative process for deriving business strategy and weaving IT strategy within it.

2. Embracing value. Investment governance doesn’t really work if IT value is a paperwork exercise. For IT to be viewed as an investment rather than an expense, CIOs have to make value realization practical by incorporating operational measurements in projects. Value must be center stage when CIOs determine the approach for an IT project, manage the scope and enforce accountability.

3. Actionable pricing. The ugly baby of IT is the 70 percent of costs that are not really understood and therefore are not really managed. After-the-fact chargebacks based on spreadsheet allocations are neither credible nor useful in influencing future demand and forecasting necessary expenditures. A slimmed-down version of activity-based budgeting is a practical first step in helping CIOs articulate services, consumption and pricing in a way that helps the business act as true consumers.

4. Agile technology. Architecture and infrastructure can hinder alignment efforts. Layered architectures, services and capacity on demand are reducing the cycle time of delivery and therefore expanding the supply of IT.

5. Boundaryless I.T. IT is too often a delivery bottleneck. CIOs can create virtual capacity by enabling the business’s self-sufficiency and leveraging strategic sourcing.

6. Leaders at all levels. The glue that holds together the strategy, governance, technology and organizational components of alignment is leadership. Surveys indicate that while the leadership cadre at the CIO level is sufficient, there is a gap at the levels below. CIOs need to expand IT’s leadership capabilities by changing their leadership development approach from "survival of the fittest" to "development of the fittest."

In the coming months, I will unpack these concepts by reviewing theory, discussing success stories and providing suggestions for further study. I invite you to join the discussion by sharing your alignment stories—both good and bad. Together, CIOs can learn how to say yes without regrets.

Copyright © 2005 IDG Communications, Inc.

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