Six keys to lasting alignment with your business partners
Many in the IT profession believe that alignment with the business is all about managing expectations. "Managing expectations" is a ridiculous term that should be stricken from CIOs' lexicon. It conveys false hopes that, through artful manoeuvring, delivering less is okay. Nothing but food satisfies hunger, nothing but money pays the rent and nothing but a "yes" satisfies IT's business partners.
Smart CIOs improve alignment by figuring out how to say yes in a way that works for both the business and IT. Overall, business-IT alignment has improved over the past five years, due to the institution of executive committees, rigorous priority-setting, active portfolio management, "skin in the game" accountabilities, standardized technology and processes, strategic sourcing and improved customer relationship management.
In spite of the improvements, alignment continues to top executive surveys as a critical initiative. CIO magazine's "State of the CIO" research shows that alignment remains the top management priority for CIOs. At a recent breakfast meeting for CIOs that I facilitated, participants shared stories that highlight the persistent barriers to improved alignment. They discussed strategic plans that aren't actionable, the challenge of working with decentralized business units, project justifications that put form over substance, funding decisions that are designed to keep the peace, constant pressure on non-capital IT costs, the difficulty of staying the course with technology plans, and the leadership gap between CIOs and their direct reports.
This discussion highlights the multifaceted complexity of the alignment problem, which encompasses the domains of strategy, governance, technology and organizational structure. To tackle alignment, CIOs must first accept the fact that IT's business counterparts will always want more for less, without delay. CIOs have to learn to balance the limited supply of IT services with the seemingly infinite demand in a way that is acceptable to the business. This is done through strategy and governance practices that force the business to acknowledge limits and say "no" to themselves. IT capacity constraints (which are people, more often than money) can be relieved by designing technologies and organizations that "flex" as business volume and project demands ebb and flow.
There are six promising concepts to help CIOs face the challenge of improving alignment. I will briefly review them here and will discuss them in more detail in my next three columns.
1. REAL-WORLD STRATEGY. Business strategy is usually informal, and it changes frequently as new learning occurs. CIOs need an ongoing, participative process for deriving business strategy and weaving IT strategy within it. The New CIO Leader, by Marianne Broadbent and Ellen Kitzis, presents a simplified strategy-making process that is baked into the governance process on the premise that business is moving too quickly to separate planning from doing (see "CIOs: Adapt or Croak, cio.com.au/index.php?id=406047659).
2. EMBRACING VALUE. Investment governance doesn't really work if IT value is a paperwork exercise. For IT to be viewed as an investment rather than an expense, CIOs have to make value realization practical by incorporating operational measurements in projects. Value must be centre stage when CIOs determine the approach for an IT project, manage the scope and enforce accountability.
3. ACTIONABLE PRICING. The ugly baby of IT is the 70 percent of costs that are not really understood and therefore are not really managed. After-the-fact chargebacks based on spreadsheet allocations are neither credible nor useful in influencing future demand and forecasting necessary expenditures. A slimmed-down version of activity-based costing is a practical first step in helping CIOs articulate services, consumption and pricing in a way that helps the business act as true consumers.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.