Too often, the answer to this question is , “We don’t know.” Technology decisions are often made with little understanding of how, if at all, an investment will drive the business forward. Many times, business leaders perceive IT as a cost center – an expense they must manage, rather than a vehicle to help the company achieve its goals.
How IT Strategy and Business Strategy Become Misaligned
In most organizations when IT and business strategy are misaligned, it’s a result of one of two common scenarios: first, the organization has never included IT as part of strategic planning; or, a once thoughtfully aligned relationship has gradually become disconnected as the organization’s needs and priorities have changed.
As these changes occur, business leaders update their strategies accordingly. More often than not, however, they neglect to focus on the impact to IT. Marketing, sales, supply chain, delivery, etc., all evolve over time, and those evolutions often occur with little thought as to how IT must adjust in order to best support these changes.
Likewise, technology evolves at a breakneck pace. Organizations see the significant capital investment they have made in certain technologies, and are hesitant to abandon legacy systems in favor of new and possibly outsourced solutions because of the additional costs and challenges. In all likelihood, many organizations operate with outdated technology that forces their IT department to tread water rather than push boundaries.
After a while, the organizational friction and pain points become obvious, but company executives might not immediately pinpoint the heart of the issue: the business strategy has evolved, but the IT strategy has stagnated, or worse yet, diverged.
What Role Does Your CIO Play?
In many companies, the role of the CIO has evolved over the years, perhaps more so than almost any other executive position. In the past, CIOs were typically “at the mercy” of the rest of the leadership team. Their role was to implement the technology that business leadership requested. Their priority was operations, and they rarely, if ever, participated in developing the business strategy.
Today, however, technology has officially crept into every corner of business. As a result, every department has its own technology demands and the potential for IT budgets to grow unchecked has skyrocketed. These changes have led business leaders to require more and more technology related leadership and advice to help drive the strategic decision-making process.
In many cases, despite a company’s dependence upon technology, the CIO continues to be excluded from strategy sessions. He or she does not have adequate visibility into what’s happening in the marketing department, the shipping department, or customer service, even though the CIO oversees IT operations supporting those departments. Despite the importance of technology in daily operations, CIOs without a seat at the planning table have little of the necessary insight to make technology decisions that support organizational initiatives.
Give the CIO a Seat at the Table
CIOs usually aren’t intentionally excluded from strategy sessions; organizations just get used to doing things a certain way. Everyone – including the CIO –is familiar with the old way of doing things; the leadership team hammers out a strategy, then takes that strategy to the CIO and says, “Make it work.” This is misalignment at its worst.
Technology leaders know a great deal about industry trends that can help to drive business strategy. CIOs should participate in discussing strategy and business direction, but they don’t necessarily need to chart the course. They know what’s coming on the horizon, and they know which tools and technologies competitors may be adopting. They know what’s working and what’s not working in the field. Their inclusion provides valuable insight to the rest of the leadership team, but it also ensures that the CIO understands why aspects of the business evolve and how every piece of the puzzle fits together. This comprehensive understanding encourages the leadership team to budget accordingly for IT proposals that clearly drive the business toward its goals.
Is there Alignment in Your Organization?
The easiest way to identify misalignment in an organization is to ask one simple question: is the executive team happy with their IT department? If the answer is no, and if executives feel they are not getting the most from their investments in technology, misalignment is likely the root of the problem.
To dig a little deeper, a Business Value Analysis can be extremely useful when it comes to assessing business strategy and IT strategy alignment. This is an involved process, but the steps include:
- Determining whether or not IT leaders have a firm understanding of the organization’s strategy and goals for revenue, growth, etc.
- Identifying the business functions that drive those goals.
- Cataloging the technology services and determine how they align to the business functions identified in step two.
- Classifying the services into standard and value-added services. Standard services are necessary but do not directly support organizational goals. Depending on the nature of the business, they may include things like email, voice communications, etc. Value-added services do support the organizational goals.
Once the team has identified value-added and standard services, the organization can begin the process of focusing the efforts of their in-house IT team on those services that will drive the business toward success.
Correct Misalignment: Plan and Delegate
Moving out of misalignment poses challenges difficult for a company to work through internally. Egos and company politics can derail alignment efforts. An outside expert brings objectivity to the table, and he or she can help the organization identify the areas to work on.
For example, a company may have chosen to manage email through its own data center. To do that, they purchased servers and hired engineers to install the software and keep everything running. A third party consultant would be able to show executive leadership precisely how much this costs year to year –right down to the added electricity costs. Furthermore, they can demonstrate how a solution like Microsoft Office 365 would reduce those costs and free up IT talent to focus on strategic initiatives, rather than managing utilities.
Alignment: You Can’t Set It and Forget It
Aligning business and IT strategy is an ongoing process: leadership should review IT strategy each quarter alongside business strategy to keep a finger on the pulse of how technology is helping (or potentially hindering) growth. When the leadership team identifies misalignment as the root of their IT woes, it can often be beneficial to bring in a third party expert who can guide the organization through the challenging – though highly valuable – process of realigning their business and IT strategies. When the two work in tandem, technology supports the overarching goals of the business in virtually every department, which leads to better investments, and more productive IT teams.