In-Depth

Business/IT Alignment: What CIOs Must Do

Is your IT organization battling its users instead of working with them? Here's what CIOs must do to improve IT/business communications.

• By Patty Azzarello
• 06/08/2004

Early in my career, a wise manager at a customer site pulled me aside after a demo I had delivered and said, “Patty, you can’t solve a social problem with technology.” My wonderful demo was not going to overcome the fact that the users in this company were in two organizations which were completely unmotivated to work together. I have never forgotten this. Such behavior remains the source of many an organization’s unfulfilled strategy and failed IT project.

Why do we keep talking about “aligning IT with the business?” We don’t talk about “aligning finance with the business” or aligning “marketing with the business,” so why does IT/business alignment remain an unfulfilled goal in so many organizations?

There are special challenges when it comes to IT's natural alignment with the business. IT organizations spend a lot of money. Period. Sit in any corporate staff meeting where the annual financial plan is being discussed and you see each division or business unit being pressured for more revenue and more expense cuts. Everyone sits around the table and looks at the plan, and they look at the line item for IT. Often it is a single line item, and often, it’s a bigger number than the entire profit of the company. No one understands it or understands why. This builds resentment. Strike 1.

There is no organizational memory regarding past IT investments. For example, if a company makes an IT investment to install automation to reduce inventory costs and achieves great success, a year later no one (other than the CIO) remembers that you have to keep paying for that system. Strike 2.

CIOs spend 70 percent of their time and resources keeping the operation running. The CEO thinks the CIO spends most of his or her time on strategic issues, and the line-of-business managers think the CIO spends most of his or her time developing new business functions. No one can understand why there isn’t “more progress”, and the CIO often gets blamed for not being “strategic enough.” Strike 3.

CIOs are under personal attacks in their organizations to prove they are delivering value for the money they spend. Further increasing the pressure is corporate governance driving IT governance, an increasing dependence of the business on IT, therefore increasing risk, and a constant competitive necessity of doing more with less.

The answer for CIOs lies not in technology alone, because a big part of the problem is “a social issue.” Leadership and communication are the only answers to a social issue. Technology does help, but not unless the CIO takes a personal and proactive role in deeply understanding the key business initiatives, demonstrating how the IT investments are driving business goals such as revenue growth, customer reach, cost reduction, and compliance.

I talk to a lot of CIOs. Those that have solved this problem have done so by leading, and ultimately getting to be at the table as the business strategy is formed. There is leadership required in understanding that it’s entirely up to the CIO to make the journey to the business side. It requires a new kind of communication. The “business” is never going to understand the millions of moving parts that is IT. The communication obstacle for IT organizations is that they are not naturally understood by the business.

IT has grown with its own vocabulary, which is technical, complex, and loaded with jargon. IT is simply not understandable by non-IT people. It is up to the CIO to build a culture of being understood by the business, and to give a new voice to IT.

Moving From Contention to Cooperation

The gap needs to be bridged in two fundamental ways. CIOs must do better and look better.

To do better, a CIO must:

• Measure the real performance of IT by adopting the definition of success defined by the business, not as defined by IT. Then deliver consistently against those standards.
  
• Increase the value IT delivers by specifically aligning IT spending with business priorities.
  
• Make a personal investment in communication. Unfortunately, good work doesn’t stand on its own—it needs to be explained and shared with others.

To look better, a CIO must:

• Proactively show how what IT is doing aligns with business priorities, such as customer acquisition, revenue growth, channel expansion, and supply chain efficiencies, rather than explaining its actions in IT terms (network availability, server up-time, and transaction performance).
  
• Transform communications from IT vocabulary into the language of the business, such as a balanced scorecard or Six Sigma report.

Personal leadership and effective communication underlie any business alignment initiative, which always has a social aspect. CIOs must accept that they have everything on their shoulders, sometimes in a hostile environment.

Still, the payoff is worth it. Alignment serves both the CIO and the business, and gets IT out from under the perception of being a resource “black hole” and into being a trusted strategic resource that can be valued, managed, and governed with confidence by the full executive team and the board of directors.