The Three Stages of Business-IT Alignment

By Jennifer Zaino

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Innovation can be free—for those IT organizations that have climbed the IT-business alignment ladder.

“What happens is that almost by accident you start to uncover opportunities,” says John Hughes, CEO of IT and management consultancy GrowthWave, which focuses on improving IT's leadership and governance and its alignment to business objectives.

“The business says they have a great opportunity and they never would have said that to IT in the past, and IT will say there’s a technology coming out that corresponds to that, and simply because of this conversation—and no deliberate investment in trying to uncover innovation—they create innovative opportunities,” Hughes says.

But organizations won’t get to the innovative alignment stage unless they first get to strategic alignment—and they won’t get there before they’re tactically aligned. Each stage builds on the one before, but ultimately all stages will co-exist together in the best-aligned organizations.

At its heart, Hughes says, all IT-business alignment is making sure that an IT organization is always working on the right things for the business, and that those right things are the things that deliver the highest value to the business.

“The only way to accomplish that is for IT to be in continual communication with the business,” he says. IT can’t be in the position of deciding on its own what the priorities will be, and making decisions for the business—which happens all too often.

Hughes recently spoke to bITa Planet about the three phases of alignment, and how to achieve them.

bITa Planet: Define tactical alignment.

Hughes: Tactical alignment is the key stage, because most IT organizations are still not very good at it. I hear from CEOs and business leaders all the time the question, “Am I getting value out of IT?” And that’s because IT organizations still struggle with tactical alignment. Businesses don’t see IT's value until you move into strategic alignment, where IT helps grow the business or increase profitability.

At the tactical level, what’s frustrating to the business is that IT organizations are notorious for being firefighters. The whole point about tactical alignment is to get the day-to-day business support, whether infrastructure, maintenance, or help desk, with the least number of people, and least dollars, and automate as much as possible. You want to create dollar and people capacity. And then invest that capacity you’ve created through tactical alignment in strategic alignment, and that’s where the business starts seeing returns on investment.

IT organizations are good at creating capacity to do more — that’s the point of technology, but within IT we typically dump that right back into firefighting.

But IT departments often pride themselves on being firefighters.

I was brought in as interim CIO at an organization where the IT director said he loved firefighting and created an environment where IT was about firefighting — that was outrageously inefficient. I told the business that for a period of time IT would do perceptively less in order to stop IT people from just moving from one task to another. I wanted them to optimize the amount of tactical work they did in order to create capacity.The role of IT and the role of the CIO is changing. Those IT leaders who don’t see that won’t become business leaders, and we’ll find business leaders becoming the next CIO. Those who are about tech heroics are talented, but their talents are misdirected. My mission is to get the CEO and CIO interacting at a business leadership level, but the business guy doesn’t want to talk to the CIO if all the CIO wants to talk about are the newest technologies and look at the cool things we did.

How do you set the stage for strategic alignment?

The CIO has to set expectations around the capacity for strategic alignment that could be created. One of the things I tell the IT organization is that we can’t say yes to everything; IT will always have more demand than ability to meet that demand. So the expectation has to be set up front that we must do more strategically for the business.

Historically, what we’ve done is increase budget and staff—but that’s the wrong initial step to take unless you’re completely understaffed. The first thing is to see how much capacity there is in IT to do more for the business, than look at how applications are supported, how much help desk resources are consumed…Is there overabundance of spending in those areas?

A CIO has to have the guts to say that we have too many people in this area or are spending too much time on an application that doesn’t provide a lot of return for the business. Then other areas might be reduce telecom costs, renegotiate contracts with software vendors to create those dollar capacities. But the big expenses are around people and reducing the amount of people-effort that goes into day-to-day support for the business.

How should CIOs expect the business to take that?

The metric is productivity for the business. If you make a change to moving from misalignment to tactical alignment, you actually do less for the business, so productivity goes down….But as you retool the IT organization and position people in different areas, your productivity will overshoot where you started.

You’ve got to give the business the reason why you’ll do less. Business leaders love it when it’s explained to them in business terms. In practice it gets tough because you are delivering less in the short run.

What are a couple of the practical steps to take to drive alignment?

We need business leadership within IT and IT leadership within the business. We also need effective IT steering committees—they need to be called by the CEO, because if the CIO calls them, most heads of business units will show up only if they have time. If it’s called by the CEO, they show up. The whole point of an IT steering committee needs to be that this is the business leaders’ opportunity to be a leader of IT.

Our model is to hire IT strategists whose job is to live within IT but who are assigned full time to be business partners. They can’t be pulled off into other projects—they live with and help the business become aligned by helping the business prioritize tactical and strategic needs. Their model is ongoing education, communication, and collaboration. That’s their full job.