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| Business and IT Alignment: Five Strategies |
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| (by George Lin, Harris Kern - March 25, 2005) |
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At this stage, the IT organization is both better aligned internally and better aligned to the business. The business’s perception of this well-aligned IT organization is that IT has become a more valuable
service provider, and can be counted on to deliver additional tactical value to enable business success. But this is only the beginning. By leveraging and building on these achievements, CIO’s can elevate IT to the next level: becoming a true business partner.
While IT may now be better aligned to the business, they need to ponder whether the business is well aligned with itself in the pursuit of its goals. All of them have experienced the common “islands of information” phenomenon in one way or another. This phenomenon may be mistaken as a systems problem, and the blame conveniently placed
on IT. But if a business system is merely a representation of the business itself, the “islands of information” problem reflects how an
enterprise really operates: business and functional units working in silos rather than in a cross-functional, collaborative way.
This is when the CIO role becomes strategic, and why CIO’s should step up to deliver strategic value as a business partner. This role is strategic because it can profoundly shape the business in a cross-functional way.
Like most business projects, it requires some form of IT support, and inevitably have IT components, whether they are application, infrastructure, or service-related. Sadly, we know that business/functional units don’t always collaborate well with one another; they are the silos of an enterprise. But even silos would need something from IT in order to execute their projects, so they all must work with IT. If IT is well-aligned to the business and is viewed as an effective service provider and a valuable business enabler, therefore, it can then become a central touch point that everyone works with.
CIO’s can passively support these projects or can take on an active role. By leveraging IT’s cross-functional role, a CIO can create a subtle but powerful influence to help the forces in various business and functional units to unite and focus on common goals.
How effectively can an IT organization become if it is well aligned internally? This holds true at a larger, enterprise level. If all business and functional units within an enterprise are well aligned and work collaboratively and in support of one another, the enterprise can achieve far greater success than it otherwise could.
There are five important strategies a CIO can use to help align his or her business:
- Start with business processes
- Be a diplomat: empower all constituents to seek win-win
- Cultivate business partnership
- Mandate customer participation in IT projects
- Provide thought leadership
How can a CIO use these strategies in his or her role as a business partner to entice forces in various business and functional units to unite? Not only can the CIO add strategic value to the business in a cross-functional way, but also he or she will find that the problems and challenges commonly associated with large IT projects disappear as if by magic.
BEGIN with Business Processes
IT organizations are traditionally responsible for implementing
business systems and rolling out major applications. IT staffers are usually experts at the technology aspect of such projects, like programming. Today, however, technology is more about packaged software solutions. So we find IT doing configurations, customizations, tuning, upgrades, and system management.
Setting the technology aside, all these systems and applications are really tools to help automate business processes. No system or application can help a business process if the process is broken to begin with. As a matter of fact, automating a bad business process can quickly worsen the business; in such cases it is better not
to automate it in the first place.
CIO’s need to help both IT and the business focus first on business processes. Figure out the current process. Understand the goals and how they want the right process to look like. Do a gap analysis so that we can devise a realistic strategy to migrate the business from its current state to its goals.
Focusing everyone on the business process gives IT the obvious benefit of business insights so that IT can deliver the right systems and applications. But going through the business process exercise yields two other significant results, which are beneficial to the business as a whole:
- The business may discover that incremental improvements do not necessarily require an additional investment in technology. Sometimes, even improving certain manual processes can yield immediate and significant gains without a huge capital investment in technology;
- Understanding the business process helps the business to
understand handoff points and interdependencies. This is the key to fostering meaningful cross-functional collaborative work.
Be a DIPLOMAT: Empower all Constituents to Seek Win-Win
The business has to come up with its own solutions to solve its own problems; there is no way around this. What the business needs in business process work are facilitation, methodology, objectivity, encouragement, and common sense. IT can certainly act like a consultant and provide the business with these value-adds. And
unlike an outside consultant, IT possesses insights available only to an internal organization, such as an intimate knowledge of the people, organization, culture, and history involved.
Obviously, IT has an ulterior motive in facilitating business process work; a clear and efficient business process is the prerequisite for IT to deliver a successful business system implementation. Adding up these reasons, it does make sense for IT to engage.
There is little doubt that when IT delves deeper into business
processes, disconnects within organizations and between organizations will surface. Even in the best-run companies, opportunities for improvement abound.
Mr. Lin’s experience is that if we put motivated people in a room and tell them where the dis-connects are, 9 times out of 10, they will figure out a workable solution, often a good one. The problem has always been that people assume others know, but they often don’t!
I am oversimplifying, but that is the essence.
The CIO role is inherently a cross-functional role. We already possess the cross-functional know-how; it requires only minor effort to extend ourselves into a more strategic role as a business partner. To that end, CIO’s should learn to become effective diplomats to help various parts of the business become better aligned with one another. An aligned business is always a more profitable business.
How can we learn to become effective diplomats? Learn from our favorite statesmen. A quicker alternative is to use the Tao of IT Leaders. Religiously practice the five fundamentals discussed earlier: passion, humility, openness, clarity, and agility. They
give a better “read” of their constituents. Once they have the insight into everyone involved, becoming a great diplomat is not difficult. All they need to do is to “herd” their constituents towards common goals. Common goals create alignment.
Alignment sparks win-win opportunities.
Cultivate Business Partnership
If IT is to become a business partner, CIO’s need to actively cultivate business partnerships internally. CIO’s know how to cultivate strong partnerships with vendors and suppliers. Then why does it always seem difficult for them to have the same kinds of relationships
internally?
A partnership is a symbiotic relationship; a successful and sustainable business partnership requires all partners to benefit. If one partner loses, the partnership will not last long. With vendors and suppliers, CIO’s typically put effort into building and maintaining the relationship, including clearly understood benefits to all
partners, and they do the same in return. Each partner has incentive to maintain the partnership, and partners typically know what incentives are needed to keep the partnership strong.
Cultivating similar business partnerships internally encourages us to strive to ensure the success of our partners, because they benefit in return from the continuation of the partnership. Applying this mentality to day-to-day cross-functional collaborative work is very powerful, encouraging everyone to ask both “What’s in it for me” and “What’s in it for him?” Understanding everyone’s what’s-in-its solidifies relationships and generates the oomph behind whatever the partnership has set out to accomplish, say a major IT enhancement project involving IT a few other business and functional units.
Interactions within a partnership build stronger relationship among partners, paving the way for future partnerships and successes.
MANDATE Customer Participation in IT Projects
Generally, IT projects have an unusually low success rate when compared to non-IT projects within an enterprise. IT projects fail for many reasons, but seldom for purely technical ones. Most often,
failure is ultimately a result of people, process, and organizational issues. In post-mortem analysis, undoubtedly, we hear reasons like the business had unreasonable requirements, the project scope
crept, the timeline was too compressed, and IT wasn’t given enough money and resources, and so forth.
So how can a CIO improve the odds? It is actually deceptively simple: hold the business accountable for IT projects!
One root cause for the high failure rate of IT projects is that there are too many unnecessary IT projects—those with dubious benefits, unclear business ownership, and questionable business commitment.
A large percentage of all IT projects are unnecessary, and unnecessary IT projects are doomed to fail.
A CIO can significantly reduce the number of unnecessary IT projects by encouraging the business to work on business processes, playing diplomat to align conflicting business and functional units and their requirements, and being a trusted business partner - the three “uniting the forces” strategies that was discussed earlier.
The remaining IT projects, by definition, are necessary, must-do projects that the business can agree on and see a compelling value in executing. The CIO still has to ensure proper prioritization and implementation of these projects.
One strategy that I have employed very successfully in weeding out unnecessary IT projects is to mandate customer participation. Participation is not simply that the business sponsor receives weekly updates from IT, but rather that the business and IT are working together on the project, at all levels and across all functions, from the business sponsor to users, from project financials to project
management.
If an IT project is truly necessary—must-do—obtaining that level of
business commitment is easy. The business wants IT to succeed because the business has a vested interest; IT and the business are in the same boat. In such a situation, everyone is motivated to make
the project successful in order to reap benefits from it.
Another mechanism that we have employed very effectively to ensure that all IT investments are properly linked to business goals and attainable ROI’s is our funding and approval process for capital expenditure. Use a “business-funded” model to encourage
responsible IT investments (and for that matter, all capital
investments). The burden of justifying capital spending falls on the beneficiary business/functional VP. All capital funding requests, both IT and non-IT related, go to a Capital Approval Board, which consists of three members: the CFO, the Corporate Controller, and CIO. Funding approval requires the consensus of all three members.
Provide Thought Leadership
Providing the right thought leadership is important because it can compel people to think. Thought leadership also has the potential to change people’s behavior and organizational structure in a fundamental way. Such thoughts would tend to be simple, so that a large population can easily identify with them.
Providing thought leadership can be the hardest thing for a CIO to do … or it can be the easiest. Unfortunately, Mr. Lin doesn’t have a theory developed on how CIO’s can better provide thought leadership, other than to keep practicing the Tao of IT Leaders and look for appropriate opportunities.
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