When Worlds Collide: Getting Business and IT on the Same Page
Keep these four key goals in mind to ensure your business/IT alignment strategy is a success
As most corporations worldwide rely on technology to connect employees, customers, and suppliers, IT has become the linchpin for a business’ success. No longer an ancillary expenditure or independent budget line item, IT is the great business-enabler, powering growth, profits, innovation, globalization, and market success. For this reason, even in times of economic downturn, we continue to spend hundreds of millions of dollars on IT.
However, because of its criticality, IT is now subject to the same scrutiny and measurement that we’ve always held to other components of business. With the advent of the Sarbanes-Oxley Act, CEOs and CFOs are now looking to their CIOs for IT governance that will ensure strategic alignment, performance measurement value delivery, and risk management.
Now more than ever, IT is under the gun to demonstrate its impact on the bottom line, and for the first time we are challenged to communicate this value using the metrics that other parts of the organization understand. For a discipline that worships at the altars of 100 percent uptime and NASCAR-worthy speed, this means that we must learn to convey the value of IT in a somewhat unfamiliar language.
As the keepers of IT, we understand the costs of downtime, transactional delays, errors, and poor support time. But as CIOs, we must also fully grasp the effects these IT demons have on overall business productivity: on revenues and on profits. We need to be certain that we’re basing our IT strategy and decisions on this knowledge.
As CIOs managing post-Internet-bubble technology budgets and attitudes, we are presented with a unique opportunity—a responsibility, really. We have the chance to define a new and challenging role within our organizations—a role that will bring the technology discussion to the boardroom. The onus is on us to prove that IT that can boost operational performance and efficiency, provide superior customer service, accelerate time to market, achieve a leading market position, and evolve or transform business models to achieve greater efficiency and competitive advantage. It is our duty to get business and IT on the same page.
Last year should be known as the year we all decided to “align business with IT.” A Google search of this phrase turns up thousands of software and services vendors promising to “focus IT on business goals,” “fuse business and technology decisions,” and “align technology solutions with business needs.” All jargon and marketing buzz aside, what does this really mean? How, as CIOs, should we go about this monumental task?
At the simplest level, “Aligning Business with IT” involves making sure IT investments are serving the most important business priorities, and that we proactively communicate IT performance in vocabulary the business can understand.
To do this, we must prioritize IT service demands against resources, adopt a common language to communicate IT performance throughout the organization, and invest the effort and discipline necessary to view the entire business infrastructure as a whole to assess how well IT underpins, supports, and facilitates the main business objectives.
Consolidation is King
While we are adept and comfortable measuring the performance of infrastructure, applications, and transactions in different silos, we have difficulty in measuring and reporting IT performance as it relates to business. CEOs, CFOs, and other C-level business executives lack a clear understanding of IT performance, which imposes on us the additional burden of defending and justifying IT budgets.
As a first step in the process of aligning IT with business, begin viewing IT as a service—one that exists to support the different business processes of the enterprise. Alignment strategies should begin with an examination of the interdependencies of these different silos to understand the consequences of IT decisions.
Unfortunately, human resources, marketing, finance, and other business stakeholders have evolved as separate entities, impeding their ability to perform and hampering the CIO’s ability to view and measure IT’s role as a pervasive thread that serves all areas of the business. A solid alignment strategy begins with the implementation of processes and tools that enable the CIO to define, view, measure, and manage the performance of infrastructure, applications, and transactions in different silos in order to assess and report IT performance as it relates to the business objectives.
Optimize IT Through Intelligent Prioritization
Once a framework is in place to view how the entire business demands and uses IT, the distortion between where IT dollars are spent and the business focus becomes all too apparent.
Many years ago, I managed a $100 million IT budget for a Fortune 500 company. A proposal once crossed my desk for a $7 million project to overhaul the process by which we procured indirect expense items within the company. Seven million dollars would revolutionize the way we bought our paperclips—a worthy goal. However, when we consider that we had yet to allocate IT resources to improve the processes and technology that powered our customers’ procurement process (a chief source of revenue accounting for $15 billion dollars annually), this proposal drew our attention to our organization's seriously flawed IT priorities.
The next challenge to bridging the IT/business gap is to effectively prioritize IT projects. Begin by managing demand by setting in place a strategy to aggregate and track IT service requests, from bug fixes to major development projects. All requests, projects, and IT expenditures (whether capital or operations) must be ranked and prioritized with urgency and resources allocated to those with the most impact and influence on the bottom line.
Next, put in place a mechanism to manage resources. Most IT organizations have a handle on their capital expenses. It is simple to track software licenses, hardware purchases, and network service costs. However, managing and tracking operating expenses is a trickier proposition. CIOs must find a way to track the costs of time and IT skills needed to execute IT products and services.
Once a clear picture of the organization’s IT demand and resources is established, implement a process for planning and defining projects. Set goals and measurement metrics, calculate the total cost of IT projects, and optimally schedule IT resources and activities as dictated by the business priorities.
Marketing Alignment Achievements
To deliver business value, IT needs to meet the business expectations and IT goals in the areas of cost, productivity, and quality of services. To manage the message back to the business effectively and demonstrate the business value of IT, CIOs need to adopt proven performance management techniques that are widely understood and accepted by business leaders.
It is critical to measure and report IT performance in business terms. Because there are few tools to do this, CIOs and IT executives are measuring and reporting IT performance in IT terms, expending a great deal of manual effort that is also prone to errors and delays.
After achieving a holistic view of how IT is used by different organizational silos and prioritizing this demand against available resources, the CIO has invested a significant amount of energy into measuring the business value the IT department is delivering. In order to truly bridge the gap between the IT department and the executive team, it is the CIO’s task to translate and communicate this effort in metrics that the CEO, CFO, business executives, and other key stakeholders can understand.
What Alignment Really Means: Delivering and Communicating Greater IT Value
There is no question that getting business and IT on the same page is a daunting undertaking, but it is critical to demonstrating that IT does, in fact, deliver a solid ROI—a return that is helping companies to run, grow, transform, and succeed. Keeping the following goals top-of-mind will help ensure your alignment strategy is a success:
- Make sure your IT investments are serving the most important business priorities, and proactively communicate IT performance in vocabulary the business can understand.
- Extract the most from your IT investments, while delivering business and shareholder value for the money you spend.
- Measure and manage the IT performance, making effective decisions by uniting data spread between independent silos into meaningful information.
- Minimize business impact, cost and time over runs, and effectively mitigate business risks across all IT projects and services.