By Tom Burzinzki
In 1962, a former IBM salesman, H. Ross Perot, spent his nights driving around Dallas, Texas searching for computers to process data for the customers of his new company, Electronic Data Systems (EDS). He knew that it was not uncommon for even Fortune 500 companies to power down their computers at night; there just was not enough demand or available business applications to require running them 24 hours a day. Perot in effect “rented” the excess capacity on these underused machines and in so doing created the first national computer services business.
Since the days of Perot’s nighttime drives, information technology (IT) has matured from supporting a few part-time business functions to becoming a key enabler of any company’s strategic success. Unfortunately, many businesses continue to under- (or even mis-) use their expensive and limited IT resources due to a lack of alignment between the delivery capabilities of their IT function and the strategic goals of their business.
Businesses are demanding that IT demonstrate value and deliver real and lasting results that directly support the business. Success in today’s fast-paced and demanding business environment requires that the IT organization be aligned (and periodically re-aligned) with the goals of the business. This alignment (or re-alignment) needs to occur along several dimensions, including IT capability vs. business strategy, the strategic role of IT, portfolio management, human capital and relationship management.
IT Capability vs. Business Strategy
Aligning IT with a company’s business strategy is a long-term and never-ending process. It requires a technology leader (CIO, VP of Technology, etc.) with a solid understanding of both business and technology (the day of the IT lead as a technical “geek” is over). To be effective, this process requires the business to perform an honest and frank analysis of where IT is today, where it needs to be in the future, and how to bridge the gap between the two. When completed, this process will align business goals with IT capabilities, quantify IT financial value, create and sustain IT credibility, provide the business with technology consulting, and allow IT to grow into a full member of the company’s strategic team.
The Strategic Role of IT
As strange as it may sound, many executives do not understand the capabilities of their IT functions. Even senior IT leaders often have only a murky view of how they do, or should, support their business. A key task in the IT/business alignment process is a determination of where the IT function is today and how to elevate it along the IT “value chain.” Expanding IT’s sphere of influence, from tactical order-taker, through business partner and consultant, to full-fledged business strategy leader is key to any successful alignment effort.
Portfolio Management
Even companies with a solid project management culture often do not have an effective portfolio management (PM) process. PM means that the business and IT have agreed on, and are working on, only those projects with the greatest strategic value to the company. Although the portfolio management responsibility rests with both the business and IT, invariably IT leads this effort. Companies without a solid PM process tend to be reactive, provide poor quality deliverables (due in large part to no or low-quality requirements), routinely go over budget, and in general deliver poor business satisfaction. Companies where portfolio management is effective establish and meet business-driven expectations, are financially responsible, overcome obstacles and unanticipated problems, and provide solid customer service.
Human Capital
No IT/business alignment effort can succeed without an IT culture that has business savvy on top of its technical competencies. Senior IT leaders and their staffs must understand the business drivers of their company, the trends of their industry, and the wants and desires of the customers they serve. IT organizations that do not stress business understanding at all organizational levels risk retarding their move up the IT value chain and damage to their credibility.
Relationship Management
You cannot change what you cannot measure. Establishing solid relationship management goals and reporting the results back to the business on a regular basis is a must for any alignment effort. Measures may take the form of service-level agreements, customer or employee surveys, post project reviews, and/or financial audits. Many organizations employ a program manager or relationship management whose job it is to maintain two-way tracking and communications channels, establish area accountabilities, and help IT understand the requirements of the business. Studies have shown that the failure of an IT/business alignment effort is often a direct result of the mismanagement of the IT and business relationship.
With computer systems running everything from mission-critical applications to managing the security, air conditioning and lighting in our office buildings, the days of turning off computers at night is long past. By not aligning the critical IT function with the goals of the business, we risk wasting a valuable business resource.
