Fostering Business/IT Alignment

By Allen Bernard

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For a long time now, business executives have looked to IT for many things: cost savings, enablement, innovation, productivity gains, etc. But, even though most of these exec's know IT is an enabler of these things and many more, there is still seems to be a disconnect between what IT delivers and what the business needs.

This is where the IT steering committee can make a big difference — if it is used correctly. If used incorrectly, everyone can still benefit from having a formal body that reviews IT's role in the business. But it won't be the place where strategic priorities are set that allow the CIO to move ahead with initiatives that help the business get where it's going.

"It's not a good use of senior executive brain-power if all their going over is the project plans," said Dan Gingras, a former, five-time CIO and now a partner with Tatum LLC, a provider of interim business executives. "It's really about setting the framework around which the business can use technology to achieve a competitive advantage."

To achieve this, steering committees need to stay away from the minutia involved in the day-to-day workings of individual projects and focus on where technology can move the business forward. It's all too easy to get lost in what a project is costing, or why it's running behind schedule; that's the CIO's and project manager's job to straighten those things out.

If the committee can stay focused on the general direction IT needs to take to, say, increase the company's competitive position or increase top-line growth or enable business process transformation based on a new set of technologies, that is where the greatest pay off will be, said Jeff Monteforte, president of Exential, a Cleveland, Ohio-based information strategy consulting firm.

"My definition (of IT/business alignment) is that the priorities of IT, the spending of IT, and the resources of IT are being used to enable or support the top priorities of the business strategy," he said.

Since the realities of project management cannot be ignored completely by an IT steering committee, Monteforte recommends a two-tiered structure. On the top tier are the CEO, CFO, COO, CIO, senior vice presidents and other company leaders. On the second tier, the steering committee includes the project managers, CIO (of course), financial managers (but not necessarily the CFO) and others involved in getting projects done.

This second committee is generally going to be much larger and more involved in the operational aspects of making sure things are being done and being done right.

"There are five competitive forces (defined by author Michael Porter) and you ought to try to align your projects with them," said Gingras. "But most people don't, so IT is seen as a cost. And when IT is seen as a cost then the business is always struggling to minimize the cost."

The Real World

By taking Monteforte's approach, Kristen McLaughlin, the senior vice president and COO of World Learning, and her colleagues were able to transform an IT department that essentially operated with no direction just six months ago to one aligned with the goals of World Learning's worldwide objectives.

"IT is absolutely critical to our organization given that were operating across 75 countries," said McLaughlin. "If you want to think about technology as competitive advantage … that's were the really exciting stuff starts to happen. And I believe that this IT steering committee model is going to allow us to get there by getting through the more infrastructure-type technology and tactical-type technology decisions so that we can get to thinking about technology as strategic advantage."

Prior to her arrival, things at World Learning got so bad the employees — on their own — put together a grassroots IT steering committee so technology request at least had a sounding board. Before that, there was no direction from the former executive team (which has since been completely replaced). If there were competing requests the person who yelled loudest usually got their project through — basically, the "squeaky-wheel" approach to project management.

Since putting into place the two-tier structure, a lot has changed.

"So, what we've started to see is (past) decisions about IT investments were being made based on who barked the loudest or by what IT staff assumed or guessed were the priorities, she said.

"Another issue is there would be decisions made about technology investments like upgrading to a VoIP phone network … but senior people in the organization didn't even know decisions were being made, so the communication issue."

Fostering Communication

Which brings us to the next benefit of having an steering committee made up of strategic thinkers: Selling IT's accomplishments to the most important buyers -- senior management.

According to a recent Forrester study of CEO's perception of IT, most respondents were happiest with IT's accomplishments if there was good communication between the CIO and senior staff (it also helped if the CEO hired the CIO, but that's another article).

"The steering committee really serves two purposes," said Tatum's Gingras. "It's primary purpose is to reconcile cross functional priorities, but almost a more important function for the CIO and that's really an extended marketing arm for the (IT) organization."

And this can go along way to making a hard job easier because perception, right or wrong, is reality. If you're IT department's perceived as a cost center this may be the way to change things — or not. Maybe it is just a sink hole. But if you've got a good story to tell make sure you tell to the people who need to hear it most.

"And there's where the communication can make a serious contribution to the organization; by forcing people to think about business benefits and quantifying business benefits," said Gingras. "And that's the way business people think."