by CIO Staff

The ROI of Alignment

Jan 01, 20077 mins
Business IT Alignment

Simply put, if you match what you are doing in the IT department to the goals of your business—whether it be growth, building brand loyalty or entering new markets—you will, most assuredly, increase your chances for success as a CIO. Period.

How do we know? Because the results of this year’s “State of the CIO” survey couldn’t be more clear: Alignment brings the money.

CIOs who said they were aligned with the business reported that IT had enabled a new revenue stream more than twice as often as those CIOs who said they were not aligned (24 percent versus 11 percent). More important, more aligned CIOs said they had used IT to create a competitive advantage for the company than unaligned CIOs (38 percent versus 23 percent).

So how do you achieve this exalted state? Alignment is a skill that is less technical than it is social. How well an organization has aligned IT processes with the business strategy depends on “how well the CIO is communicating with C-level colleagues,” says Laurie Orlov, vice president and director of research for Forrester. “They need to be able to fully communicate what IT is doing and why that is important to the business strategy.”

But the sad fact is that few CIOs are aligned. Only one out of five CIOs said he’s aligned with his business’s strategic goals, according to “The State of the CIO 2007” survey. That’s a big problem for the other four out of five CIOs, says Albert Segars, a technology management professor at the University of North Carolina’s Kenan-Flagler Business School. If you’re not aligned, “you’re lost in space,” he says.

Be All Business

Alignment is not easy to achieve, but there are some ways to increase the odds. For Bill Crowell, CIO of Oregon’s Department of Human Services, it’s being able to talk in business terms, which is much easier to do if you have experience in business. Crowell says his education and background are what have given him the understanding of, and empathy for, the pressures and demands facing business unit leaders. Crowell has an economics degree and an MBA from the University of Virginia. He learned the mind-set of CFOs when he worked for four years as CFO for a division of McGraw-Hill and as assistant deputy secretary of financial systems for the U.S. Treasury Department. This experience, and his ability to speak the language of his colleagues’ business units, enabled Crowell to learn from his peers what resources they needed to meet their strategic goals and missions. “The business management group really didn’t have a sense of where they were and where they needed to get to,” he says. “They were looking for help, and I was able to provide some. I can’t say how important that was for me to establish credibility.”

A strong background in business is one characteristic that is common among CIOs who say they have aligned IT with an organization’s strategic goals, Orlov says. According to “The State of the CIO” survey, aligned CIOs still were more likely to have held a position in IT prior to taking the CIO position compared with unaligned CIOs: 71 percent versus 66 percent, respectively. But the survey also shows it is more likely that an aligned CIO held a position in a non-IT business operation than the unaligned CIOs (9 percent versus 3 percent, respectively). Although the percentages are quite small, Orlov and Segars say the rate could begin to climb. “You’re starting to see more and more CIOs coming from business units or being asked to run business units in addition to being CIO,” Orlov says.

Make Innovation a Routine

CIOs who are aligned frequently work within organizations that put a high value on innovation—indeed, nearly half of aligned CIOs said that their IT department is the source of innovative ideas, compared with 39 percent of unaligned CIOs, according to “The State of the CIO” survey.

Carolynn Chamoun, CIO at Telerx, a provider of customer support services for packaged goods companies and pharmaceuticals, has taken the lead on innovation by having one of her direct reports hold monthly meetings with a giant packaged goods customer (she would not identify the company). Telerx also has annual meetings that include staff from Telerx’s IT group as well as managers representing almost every business unit within Telerx. The Telerx team discusses with the client what problems and issues have arisen with, say, manufacturing or sales, what the industry trends and outlook are, and what Telerx can do better. At the end of the year, Telerx, with input from Chamoun, will make 12 recommendations that the client can follow to improve its business and product quality, which frequently involves IT playing a vital role to provide innovative solutions—such as enabling consumers to send digital pictures and videos of the products that they have problems with or questions about. “It helps a lot if innovation is made part of your routine,” Chamoun says.

Failure Is an Option

Aligning your IT projects and processes with the business’s strategies is a risky undertaking. After all, it puts the IT department on the front lines of doing battle in the marketplace, where failure is common. That’s why the aligned organization’s top executives must create a supportive environment in which the CIO and other executives quickly recognize what isn’t working, learn from it and recover.

That’s what Steve Strout, VP and CIO at Morris Communications, a privately held publisher of small-to-midsize city magazines and newspapers, says is one of the aspects of his company’s culture. For example, last year, when Strout tested a prototype CRM system, he found that the company’s clients failed to use an option within the system that allowed them to set up their own websites—a feature that Strout hoped would help raise revenue.

Instead of simply killing the feature, Strout hosted a meeting to openly discuss the problem. Jointly, the IT and business teams came up with an alternative that allowed clients to preview their newspaper ads, and they began signing on. “You have to understand that people are going to make mistakes,” Strout says. “I know I can count on the CEO or CFO to always pitch in and help me come up with alternatives when things aren’t working. And they know they can get the same support from me.”

Working on personal relationships that go beyond business are a start to creating that atmosphere. Strout makes it a habit to schedule at least once a week an out-of-the-office meeting with an executive who has direct P&L responsibility for a unit. The meeting can be a breakfast, lunch, or after-hours drink or dinner, or a Saturday round of golf. During that time, Strout will ask his colleague how projects are going or what issues there may be. “This allows you an honest and less threatening way to discuss any issues before they become bigger issues,” Strout says. “You’re looking for solutions, not trying to find blame.”

Avoid the blame game

And when you get down to it, blame is what a lack of alignment is all about. It is resentment that a service paid for does not deliver more business. Filling in that gap doesn’t simply make CIOs more likely to keep their jobs (though it does), it also gives them access to more of the resources they need—everything from more budget to more staff to a greater ability to focus on strategic IT (see “All That Data” on Page 85).

The proof is in the numbers: Alignment always pays.