IT departments are often perceived to be ineffectual, slow to respond to business needs and even an encumbrance to corporate progress. Many CIOs believe that their IT departments are aligned with the business, but I've seen only a few companies actually achieve this and have the bottom-line results to prove it. A 2004 survey by CIO magazine showed that while 80% of IT senior managers believe that IT and business are aligned, only 30% of business senior managers agree.
Let's look at how to determine whether your IT group really is aligned and how to achieve alignment if it's not.
My experience in leading both operations and IT departments has convinced me that it makes sense to look at three areas: process, metrics and employee development.
Process: Have you established a cross-departmental process for prioritizing, approving and implementing those projects that add sufficient value to the business? Do you ensure that both IT and business are engaged throughout the entire project life cycle?
Involving IT throughout the life cycle of a business project can greatly increase the breadth and diversity of creative business solutions; ensure the consistent use of corporate systems, infrastructure and support services; and leverage economies of scale. As my colleague Galina Cherny, senior director of IT at Universal Studios, notes, "The desired functionality quite often already exists in some form elsewhere in the company, or there are other business units who would benefit from the same solution."
But leveraging IT across business units works only when IT understands business operations and challenges. For that to happen, IT and business have to work as a team.
Metrics: Do you integrate IT and business objectives and measurements of success? Do you use incentive programs that incorporate these integrated objectives?
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Troy D. Kinsey Image Credit: Manuello Paganelli | |
IT departments are typically measured and compensated based upon systemwide stability and problem-resolution response times. Business units are generally rewarded for adapting and responding to ever-changing customer needs. Because these goals conflict, departments' actions tend to conflict with one another. In addition, incurring technology infrastructure costs without agreeing upon a set of business metrics leads to mushy IT decision-making and corporate waste. The solution is to establish a consistent set of standards for measuring return on investment.
Employee development: Does your company have cross-departmental training and mentorship programs that enable IT personnel to understand the daily operational challenges and needs of the business and external customers? To keep IT integrated, IT staffers should be a part of the problem-solving team whenever the business faces a challenge.
How to Align
If the alignment between IT and the business falls short in your company, here are some tactics to improve it:
Increase the level of understanding between IT and the business. Any activity that increases communication between the two groups is a good starting point. Have IT employees spend time sitting alongside business employees as they work. At the executive level, the CIO should meet frequently with each of the business unit executives to learn more about the challenges that they face.
Develop a consistent strategy for prioritizing projects. Have each business unit agree on a strategy for prioritizing projects across all business units, and post an agreed-upon and prioritized calendar of all projects. That nails down priorities and commitments while increasing understanding of resources-to-projects constraints.
A caveat: All business units must agree not to establish renegade IT departments. I have seen more than one business executive effectively alienate the entire IT department by insisting that it support software that it played no role in developing.
Integrate IT and the business into a single project life cycle. Consistent improvement in merging business process re-engineering with technology happens only when you leverage the skills and experience of both areas. The alignment of goals, processes and incentives should apply to project managers, developers and users, including corporate management. Establishing a cross-departmental oversight committee or project management office can help project teams traverse political hurdles and engineer business change.
Establish a consistent cross-departmental incentive system. Some companies are so successful that they move their IT departments from cost centers to profit centers. They do so, in part, by ensuring that development projects tie directly back to measurable business goals. Project teams must continually ask and answer two questions: "Which business problem are we trying to solve?" and "How are we going to measure our solution's impact on this problem?" In my experience, these two questions are not asked often enough or with sufficient objectivity. Companies that ask these questions can then create and measure cross-functional (IT and business) projects based on standard bottom-line criteria. This upfront investment in clarifying common measurements of success focuses everyone's efforts on tangible business problems instead of technology or process agendas.
Strategic IT management is critical to the success of most businesses. The depressed and turbulent conditions of the past several years have left many companies with decreased staff levels, unfinished projects and ever-increasing customer demand. This is an ideal time for corporations to align IT and business priorities, consolidate strategic IT operations and standardize project development methodologies. In other words, it's time to reposition IT as a strategic value-add to the business.
Kinsey has more than 15 years of software engineering management experience in a variety of industries. He teaches Internet business and technology at the University of California, Berkeley, and project management for the operational management department at the University of Southern California.