Alignment is Dead
IT executives have pinged and ponged from one organizational approach to another over the years, switching approaches when things get too out of hand. These constructs have ranged from highly centralized and staffed organizations (like Wal-Mart) that may have struggled to sustain early industry pace setting. For others, they tried highly decentralized organizations that then overwhelmed the enterprise with a diverse hodge-podge of infrastructures. So the decentralized firms then centralized shared services for infrastructure (like Axa Group or United Technologies Corporation) and pushed development organizations into the business units.
This ever-elusive alignment of business and IT, then, was either sustained by centralized priority setting with steering from business organizations, or it was presumed to exist based on organizational structure: let the business units do what they want, with their own IT to make them happy. It would not be overstating todays status to say that most IT organizations still struggle to keep up with, i.e., remain aligned with, what they believe the businesses that sponsor them need and will fund.
The Impossible Dream
So, given the benefit of hindsight, it would not be overstating the obvious to observe that none of the traditional approaches have really worked as a permanent strategy, hence the ping and pong. To get more business injected into the centralized groups, business execs are brought in to run IT (Wal-Mart), or CIOs make sure that IT staffers are embedded or placed into the business units or geographies (Dupont). When business unit frustration overflows, chunks of IT organization are then pushed out to the units. Or business units pick up their budgets and hire their own consultants or staff.
The net result is that the degree of alignment becomes inversely proportional to the volume of complaint about IT (and the need to change the organizational structure).
From a holistic view of the enterprise, decentralization of IT decision-making has been a cost disaster; hundreds of unique applications largely performing similar functionsan influence cop-out of immense proportions that inevitably drives some form of re-centralization due to the long time lack of power and influence of the CIO. And highly centralized and steering committee-influenced IT is also a disaster, ultimately producing lack of flexibility and business change ability.
Alignment to Evangelism
So whats a CIO to do? First and foremost, stop thinking about alignment, it aint happening. Next, start your role and that of your staff as evangelists for positive business change. Begin speaking and educating across the enterprise about commonality of process from here to there and the fact the uniqueness is not a competitive differentiator.
Make sure you understand and can articulate the competitive differentiator for each business unit and the company. Hint: it probably isnt IT. Evangelize cost containment through selective and specific centralization of infrastructure. If IT is highly centralized, review your deployment and placement of staff: do your people understand the business metrics of the units they support? Do they have a feel for what those units need but havent asked for? Do business unit execs understand what improved IT utilization can do for their businesses? Does your boss understand?
For any type of organization, effective relationships with business leaders are required and will drive your gap analysisthe distance between how you and your team perceive IT effectiveness and how executives of the firm perceive it. If you see that yours is an insular management team, most comfortable with each other and their staff, least comfortable out and about with business peers, examine whether periodic job rotations will break old habits and expand relationships with the business, which is the reason for IT being at all.
And then, as your review of the state of the state is complete (with the slides to prove it!), then consider whether you have the organizational structure that your company needs. Are there services, including business services like any form of transaction processing or shared, technology-dependent expertise that you can help centralize to streamline processes and tighten costs? Are there senior business staff that you can recruit and count on to work out in the field to influence achieving changes that executives agree are necessary in these difficult economic times? Do you need to promote a COO of IT to run the day-to-day, freeing your time as lead evangelist?
Finally, but most important, get the metrics right. Choose business, not IT- centric metrics and assign them to your executives. Reducing energy cost, for example, is a business metric, not an IT metric. And therefore, incorporate the data center consolidation and virtualization cost savings into the firms general metrics for reduction of energy consumption. If there is no corporate metric, then lead the way to creating and tracking one. Your staff is now senior and business aware enough to help in understanding, articulating, and tracking metrics that matter.
Now an independent consultant, Laurie M. Orlov is a long time practitioner and industry observer. She has over 33 years of IT experience, the last 9 years as a VP and principal analyst, research director and consultant at Forrester Research. Prior to joining Forrester, Laurie held senior IT management positions in various high-tech companies, most recently as a CIO, driving the implementation of eCommerce-based ERP solutions for a mid-market PC reseller.