There is no shortage of research, advice, tools and recommendations concerning IT/business alignment. A Google search will surface more than 12 million results. Yet, CIO Magazine's "The STATE of the CIO '07" revealed that alignment remains the most common top-five priority of IT leaders. So why does alignment continue to elude IT organizations? One reason may be, despite all the self-examination, most organizations do not completely grasp what IT/business alignment really means.
IT/Business Alignment Defined
Alignment has become an overused buzzword. Companies tout business and IT alignment as key to success in managing IT effectively. Failing to achieve strong alignment has been blamed for the demise of many IT leaders.
But what is IT/business alignment? Simply put, when a company arranges, coordinates and organizes its capabilities around an agreed vision and set of priorities, it has successfully achieved alignment. Specifically for the IT organization, successful alignment means that IT is actively and directly enabling business objectives; following the same game plan as the other business functions. Ideal IT/business alignment results in a complete lack of distinction between business and IT investments and initiatives. They are the same.
At its heart, IT/business alignment is about expectations management. When a company sets business objectives, the expectation is that all functions, including IT, focus sufficient attention and resources on achieving them. In that sense, alignment applies to all business leaders. For the IT leader, it is particularly relevant due to IT's prevalence throughout all enterprise business capabilities.
Why is IT/business alignment important? Alignment is a highly powerful concept. When a company rallies all of its resources to work together towards a common goal, it functions as a seamless unit, of one mind, optimizing its ability to perform in the marketplace. For the IT organization, alignment with the business means that the IT organization is deploying its resources and capabilities to best meet top business priorities.
The importance of IT/business alignment is easiest to see when it is missing; when IT resources appear focused on initiatives out-of-sync with business objectives. For example, if a business has a strategy to grow share but IT resources are focused on process efficiency and cost reduction, there is misalignment. When IT is leading the enterprise initiative to improve information security protection, but business heads are not engaged, there is misalignment. The absence of alignment results in misdirected resources and reduced overall value to the company shareholders.
It is IT's pervasiveness that is the source of alignment difficulties. Each business leader develops plans to optimize his or her function's contribution to business objectives. These plans invariably require IT resources and know-how. But, IT is a finite, scarce resource. The IT leader needs to find ways to manage competing demands while demonstrating that s/he is marshaling the resources of IT to achieve overall company objectives. IT leaders who fail to navigate through alignment challenges will encounter growing frustration from his/her peers and C-level executives, ultimately affecting their career.
The Elusiveness of IT/Business Alignment
Advice on how to achieve alignment is everywhere and wide-ranging – communicate more, establish metrics, raise the business acumen of IT staff, spend more time with business executives, develop strategic and project plans collaboratively, prioritize based on value, formalize decision making. The list is endless.
A clue to why IT/business alignment is so hard to get right rests in the fact that there are so many cures. Alignment is not the result of any single approach, process or technique.
In fact, when IT leaders talk about alignment they discuss a variety of issues and concerns that can range from process discipline and metrics to relationship and communication style.
Info-Tech's point of view is that IT/business alignment is really comprised of five dimensions:
- Personality Alignment
- Organization Alignment
- Strategic Alignment
- Tactical Alignment
- Financial Alignment
Dimension |
Description |
|
Personality |
Like individuals, companies exhibit personality traits; reflections of values, behaviors and traditions:
- Military-style, hierarchic decision-making versus trusting in the judgment of the front lines.
- Discipline and rigor versus expertise and action.
- Collaboration and teamwork versus individual achievement.
The IT organization itself is often stereotyped:
- Logical and analytic.
- Rigorous and disciplined.
- Very knowledgeable of and comfortable with technology.
When an IT organization adopts practices and approaches to improve its efficiency or effectiveness without considering personality, it may run afoul of company cultural norms. |
|
Organization |
The way a company structures itself reflects how responsibilities are divided, how resources are controlled and managed and how work gets done.
- Centralized – decisions made from corporate.
- Decentralized – business unit management empowered to use their discretion.
- Hybrid – common functions like finance, human resources and procurement organized into a shared service unit while product development and market-facing function kept within business units.
A feature of good IT/business alignment is easy and open, two-way communications for business leaders to express their needs and objectives and for IT to convey accomplishments and priorities. An IT organization structure that recognizes and formalizes these relationships is achieving organization alignment. |
|
Strategic |
Setting long-term objectives and developing plans of action to achieve them is important to give an organization focus and direction. Given that IT is a pervasive element of these plans, ensuring that IT priorities match those of the business is vital. In fact, IT priorities should be derived from business objectives and plans.
A simple test:
- Outline the top three long-range objectives and associated business strategies. For example, an objective to reach ten percent market share in three years may have a strategy to extend services into another geographic region, another strategy to rework pricing, and a third to launch a product innovation.
- List IT's top ten strategic priorities.
- Map each IT strategic priority to one or more of the enterprise strategies.
Too many gaps, IT priorities without business strategy counterparts, and vice versa, may indicate strategic misalignment. |
|
Tactical |
If strategic alignment is about talking the talk, then tactical alignment is about walking the walk. Maintaining tactical alignment ensures that IT is balancing two sets of demands:
- Working today on projects that contribute towards long-term strategies.
- Responding when the business needs to react to immediate regulatory, market and operational concerns.
The IT organization cannot ignore near-term business issues while solely working on strategic initiatives. As an IT leader effectively balances between strategic initiatives and immediate demands, s/he is attaining tactical alignment. |
|
Financial |
How an organization allocates its funds is often considered the clearest form of communicating priority; as in the adage, "Putting your money where your mouth is." In an IT context, financial alignment shows how IT resources are being used to advance business priorities.
To test financial alignment:
- Calculate how much is being invested to develop new and improved IT systems and capabilities. Given the tradeoff between company strategies and affordability, does the overall amount seem right?
- Map the investment amounts to each of the enterprise strategies, to tactical issues and to "other."
- Compare the amount of tactical investment to strategic investment. Does there seem to be an appropriate balance? What amount of investment appears to be targeted to initiatives not considered of strategic or tactical importance?
When the split between strategic and tactical is unbalanced, or if there is a large amount of investment funding that was not mapped to either set of strategic or tactical initiatives, financial misalignment is occurring. |
Key Takeaways
- IT/business alignment is vital. For a company to get maximum benefit from its investment in IT, leaders need to focus resources necessary to support and enable enterprise priorities. With alignment, the IT leader is demonstrating IT's role in achieving strategic company objectives and the value IT is contributing. IT leaders ignore alignment at their peril.
- Do not expect a silver bullet. IT/business alignment is a complex subject involving company behavior and culture (Personality), positions of power and lines of communication (Organization), long-term objectives and priorities (Strategy), immediate responses to market conditions (Tactical) and funding (Financial). An IT leader should examine symptoms of misalignment and determine which dimension is askew.
- Easy to test, hard to deliver. Attaining and sustaining IT/business alignment is a adventure, where the journey itself is the goal and there is no destination. Effective alignment with business leaders is not something an IT leader achieves and then moves beyond. It is more like a marriage. When partners are not on the same page trouble ensues; the relationship requires continuous attention and effort.
Bottom Line
Has the ideal of IT/business alignment become the holy grail of IT leaders? The promise of IT/business alignment is to focus investment and activities, increase the value of IT, and integrate IT more closely with business initiatives. IT leaders need to look beyond the symptoms of misalignment to recognize the multiple dimensions of IT/business alignment.
