IT Alignment Dialog - Failure Factor #3

This is perhaps the most frequent and the most controversial of the failure factors we have uncovered in the last 25 years.

Failure reason #3: Managerial, cultural and attitudinal roadblocks.

While both business and IT prefer the view that all IT issues can be resolved with a technical solution, the truth is unfortunately very different. Most of reasons for failure of IT and business to align are not technical in nature. Primarily they revolve around territorial issues, management capability, management resistance, attitudes, and/or cultural conflicts such as:

1. The things we need to do are too hard, take too long, don't know how, too risky, not my job, don't have authority
2. We don't need to do anything because we are aligned (our data show that 90% are not and 10% are only partially)
3. Don't want or fear of a report card
4. The IT and business managers have relationship issues (personality or cultural) and can't/won't work as a team
5. Territorial -- Fear that sharing information will result in loss of power, influence, etc.
6. Business managers do not believe IT can execute even if funding is adequate
7. Business and IT managers want a one-shot, silver-bullet, forever fix (Not going to happen)

In the past, unfortunately, IT and business had an adversarial rather rather than a team relationship. The fault in the past was on both sides. IT professionals harbored a deep (but unspoken) set of beliefs that they "knew best" because for several decades only they could use and understand the computer. Business managers resented their dependency.

The state of technology is now such that everyone has a "working" knowledge of computers and systems. Therefore, business managers want to take back control -- but, they can never be IT specialists enough to avoid disasters.

Alignment requires both IT and business to work together as seamlessly as marketing and sales, finance and operations, etc. IT cannot and should not operate in a vacuum -- business cannot and should not design IT projects. Teaming together, IT can bring the best solution to the business manager's projects to maximize efficiency, effectiveness, and success.

In short, in today's world there is no room for these problems. If they exist, they need to be identified and rectified. If the problems are cultural or personality conflicts -- bring them into the open and bridge or resolve them. If the problems are managerial, territorial, or attitudinal -- resolve or replace people. If doing the work to get aligned is too hard etc, get help to do it or get over it.

What are your thoughts, experience, stories.....

What is IT Alignment

IT Alignment continues to be a hot topic as evidenced by at least one article on IT Alignment showing up in almost every issue of any IT magazine. In the lastest issue of CIO magazine an article entitled "The Fabric of the Company" led me to address the question, "What is IT Alignment". It seems every article I read has a different "take". In the article mentioned, the definition provided by the CEO of a leading textile company indicated he knew his IT was aligned with his business because, "I have data to make decisions."

Other definitions we encounter include:

"Business and IT are aligned because we only do projects requested by business." (Does business always ask for the right projects - our data says No!)

"We are aligned with new product development." (Is new product development the only need for the business as a whole - our data says focusing on one aspect of business leads to poorer overall alignment.)

"We are aligned because we have a request system which is subjected to a rigorous top management prioritization process." (Still depends on the right projects getting into the prioritization hopper and the luck of the power struggle in the prioritization process for IT $.)

"We aligned with the implementation of an ERP system." (How long ago was the implementation of the ERP and how dynamic is it to business changes - our data shows this long term solution does not address the fast dynamic business changes of todays world.)

The definitions vary but the one we have found best over the last 25 years is:

IT is aligned with business when IT projects leverage and remain in sync with business strategy and goals.

The test for this definition of IT alignment is:

IT's contribution or leveraging of business goals consistently impacts profitability, ROI, ROA, or some other objective business outcome measure.

What is your definition of IT Alignment?

IT Alignment Dialog - Failure Factor #2

We will continue to post a list of factors that in our experience contribute to the failure to implement or maintain IT Alignment with business goals. To see all the factors listed to date, review previous posts.

IT Alignment Failure reason #2: Belief that IT is only a cost center and cannot make a difference in business outcomes (profit, market share, ROE, ROA, mission accomplishment).

I admit that this one baffles me and I sense it baffles some of those posting comments to this blog. But, in the almost 25 years of working in this domain I am forced to recognize its reality. I hark back to a presentation made at one of the top IT research organizations where CIO's from most of the largest organizations were in attendance. When presented with evidence that IT can make a significant impact on profitability they expressly refused to believe it. A direct quote from one of the top CIO's in the nation was: "How can we make such a big difference in profit margin when we cost only 1-2% of revenue." I was stunned. How could an expert in any field desire to deny that they have an impact on outcomes? How could any top manager fail to understand that leverage on revenue, profit, and profit margin can or is in many cases disproportionate to its cost - that is in fact the basis of profitability (Revenue minus Expense)?

Even managers in businesses we have worked with that have become aligned, can fall prey to "cost center" thinking. The CEO of one company we worked with that enjoyed tremendous success in aligning IT with business goals which resulted in improved profit margins asked the following question of his CIO: "When will we be able to cut IT spending while we keep the competitive advantage generated by IT?" "Never." responded the CIO. "Only by managing IT based on contribution which means funding the IT projects in support of the top prioritized business goals, can we keep our competitive advantage - we can't just set some artificial level of IT spending and expect to remain an industry leader." Both we and the CIO were mystified since the spending on IT had resulted in many times its cost in increased profit. But it illustrates that "cost center" thinking, even for those that have seen the results of managing IT based on contribution, is a tough mind set to break.

If CIO's (CEO's, CFO's etc) do not believe that aligning IT with business will make an impact on profitability or any other outcome measure, then where is the incentive to align.