Results of the latest SIM CIO Survey were announced at SIMposium 2008. Once again, “IT and Business Alignment” was number 1 on the list of top IT management concerns (it’s been number 1 for a lot of years). [Note: as of 2014 it’s still number 1, and it’s been number 1 for eight out of twelve years.] It’s amazing to me that CIOs haven’t yet learned how to solve the IT alignment problem, so in this article I’ll explain what IT alignment is all about, and in a follow-up article I’ll explain in more detail how to achieve business/IT alignment.
Unaligned IT is like driving blindfolded
First, I’ll use a metaphor to describe the problem. Suppose you’re a CIO driving a car, with your CEO in the front passenger seat. But in this example you’re blindfolded behind the wheel and so the CEO has to give you extremely detailed instructions on how to drive: “Turn just a little bit left. Prepare for a right turn. OK, turn NOW. Slow down just a little bit. A little bit more. Now speed up.”
Do you get the picture? How frustrating and nerve-wracking would this be for you as the driver? And how would it be for the CEO? If you were CEO wouldn’t you be incredibly frustrated that you have to spend so much time telling the CIO what to do? Why can’t the CIO just figure it out for him/herself?
Now take the blindfold off, and do some advance planning. Suppose you – the CIO – get together with the CEO prior to your trip and make plans for your travel. Together you pick a destination, and you jointly decide on criteria for picking a route: fastest, most scenic, most economical, whatever is important to the two of you. Then you – the CIO driving expert – recommend a route that will get the two of you to the destination in the best way possible, optimizing those selection criteria on which you just agreed. You discuss the recommended route with the CEO, make changes as necessary, and then start on your trip. You’re in the driver’s seat, but you’re no longer blindfolded.
Along the way things will happen. Your destination might change. Your route selection criteria might change. You may have to revise your route to adjust to unexpected weather, bad roads or traffic. But you make all of these adjustment decisions jointly with the CEO, and so you both agree that you’re doing the best that can be done.
This second approach – advance planning with no blindfold – is an example of alignment, but the first approach – driving blindfolded – is an example of what most unaligned IT organizations do instead. IT is driving blindfolded because most CIOs don’t have full visibility on where the CEO and other senior executives are trying to take the business. Instead, the CIOs are given short-term tactical statements of direction (e.g., implement this system, expand this data field, improve Help Desk service, improve transaction performance) rather than letting the CIOs drive IT for themselves with full knowledge of the destination, an agreed upon route, and the ability to respond to local driving conditions along the way.
Just like the CEO passenger in our blindfolded CIO driver example, the CEO and senior business executives are highly dissatisfied with an unaligned IT organization. They’re frustrated with having to constantly give detailed directions, they’re dissatisfied with the slow rate of change in IT, and they dislike the high “accident” rate (failed projects) that comes from blind driving. Everyone – in both IT and the business – hates operating under the blind driver model of IT. But in most organizations no one has ever taken the steps required to change the approach.
What is Business/IT Alignment?
In my experience, you achieve alignment between business and IT when all seven of the following criteria are met:
- The Business strategy is understood by the business and by IT.
- The IT strategy is understood by IT and by the business.
- The two strategies agree, and don’t contradict each other.
- The IT strategy supports the Business strategy.
- The Business strategy supports the IT strategy.
- Business people and IT people trust each other to follow the strategies they’ve agreed on.
- Business people and IT people agree that the business and IT are aligned.
Let’s go through them one by one:
1. The Business strategy is understood by the business and by IT.
This is one of the problem areas most cited by CIOs when they’re asked about alignment. Many CIOs – particularly CIOs who don’t report to the CEO – claim that they aren’t part of the executive “inner circle” and that they frankly don’t know where the business is going. Although I understand their concerns, I don’t see membership in the inner circle as a necessary prerequisite for IT alignment. Often it’s enough to have a “pretty good feel” for where the business is going – a total understanding of the business strategy isn’t required. In fact, many CIOs would be surprised to find out that even the CEO doesn’t have a total understanding of the business strategy, since some of business strategy is “played by ear” and adapted to business conditions as they change and to business opportunities as they appear.
The most important aspect of this criterion is the communication of business priorities. The CIO must understand what’s important to the business, and what’s not as important. Alignment can be achieved only if IT is able to focus on the things that are most important to the business.
2. The IT strategy is understood by IT and by the business.
This criterion, on the other hand, is probably the biggest obstacle to IT alignment. Many IT organizations don’t have an IT strategy at all, and when they do, it’s often a document that’s used for communication downward to the rest of the IT organization. Seldom is the IT strategy put together in such a way that it can be clearly communicated upward to the business using business language. Yet upward communication of the IT strategy is even more important than downward communication. If business executives don’t have a good feel for IT’s overall direction, then they won’t trust IT (see #6), and they’ll try to micromanage the IT organization. This will bring you right back to the driving blind metaphor, and your IT organization will go into “order taker mode” where IT doesn’t have a strategy – it just does whatever it’s told.
3. The two strategies agree, and don’t contradict each other.
Once #1 and #2 are true (a pretty big step), then it’s usually fairly easy for business and IT leaders to discuss differences in strategic intent. Without those business and IT strategies, it’s impossible to carry on a rational dialog, since you’re trying to compare two things that are both nebulous and unwritten. But once you’ve got a business strategy that IT can understand and an IT strategy that the business can understand, it’s pretty easy to see if there are contradictions between the two documents.
When contradictions are detected, you can figure out why. Maybe a business assumption changed and IT didn’t know, or maybe an IT assumption about a certain system environment is causing problems in supporting a new direction for the business. Whatever the reasons for contradictions, the important thing is to revise the business strategy and/or IT strategy to eliminate the contradictions.
4. The IT strategy supports the Business strategy.
Having resolved #3, you have now eliminated contradictions between the business and IT strategies. But that doesn’t mean that the two strategies support each other. First look at the way the IT strategy supports the business strategy. Are there elements of the business strategy that cannot be performed given the current strategy for IT? (e.g., a move toward Internet selling that can’t be supported by your legacy systems) Are there elements of the business strategy that could be performed better with a shift in the IT strategy? Are there elements of the business strategy that have no support at all in the IT strategy? (e.g., the business strategy says acquire internationally, but the IT strategy doesn’t address the issues of multi-national, multi-language, multi-cultural, multi-currency systems) Modify the IT strategy as required to support the Business strategy.
5. The Business strategy supports the IT strategy.
Now that #4 has been accomplished, look at the two strategies from the other direction. Are there elements of the IT strategy that cannot be performed given the current business strategy? (e.g., business strategy calls for IT spending cuts but the business strategy also requires increased IT capabilities) Are there elements of the IT strategy that could be performed better with a shift in the business strategy? (e.g., business strategy calls for separate IT organizations for each business division, but IT project efforts for certain key business objectives will be duplicated in each division) Are there elements of the IT strategy that have no support at all in the business strategy? (e.g., the IT strategy calls for replacement of inadequate infrastructure but this investment hasn’t been factored into the business strategy) Negotiate modifications to the business strategy as required to support the IT strategy, or revise the IT strategy accordingly.
6. Business people and IT people trust each other to follow the strategies they’ve agreed on.
I’ve listed this as #6 but in fact trust is critical to every stage of the alignment process. As I’ve said in my book, Boiling the IT Frog, if your company doesn’t have a mutually trusting relationship with its IT organization, then IT won’t be successful, no matter how good you are at everything else. Read more about how to build trust in my book. There’s a whole chapter on the subject.
7. Business people and IT people agree that the business and IT are aligned.
This is the last step in achieving alignment. After you’ve done everything else and met all six of the other criteria, it’s important for business and IT people to specifically recognize the fact that they’re aligned. There are two reasons: (1) It will drive a stake into the ground to recognize that on a given date you actually had alignment, and (2) It will help motivate your organizations to put processes in place to keep business and IT in alignment.
You need to recognize that alignment is a transitory thing; it’s not enough to achieve alignment once – you have to keep working at maintaining that alignment. You can do this by periodically going through an analysis of the seven criteria, and by putting change management processes in place to deal with changes in business and IT strategy as they occur.
IT alignment is simple, but it’s not easy. Good strategies are short and to the point – we’re not talking about 100 page documents here. Unfortunately, many strategies are long documents that are just brainstormed lists of things we’d like to do someday. It’s hard to take something like strategy and make it simple, but if your strategy – for either IT or business – is too long or too complex, then it won’t be understandable, and alignment won’t be achievable. The real effort in alignment comes from focus: focusing on the things that are most important for the business and on the things that are most important for IT. By definition, focus means spending less time and money on other areas that aren’t in your focus. And that’s the key to alignment: spending most of your business time and most of your IT time on the same things.
In my follow-up article, I’ll get more specific about some steps you can take to make an IT strategy understandable to the business, and I’ll talk about how to deal with common problems in achieving alignment.