IT Alignment Failure Factor - #4 & #5

I have not been posting the IT alignment failure factors in any sort of priority order but instead, responded to articles. One on the InformationWeek Blog site intrigued me -- "Are CIOs Disappearing?' by Bob Evans ( see original InfoWeek Blog article:). In this article, he points out the big drop in the number of CIOs listed among top management on business websites. I have left a comment on the blog site, but the following is a more in-depth analysis:

Failure reason #4: IT needs to report at the correct level of the organization and be managed on the correct criteria.

Over hundreds of organizations we have consistently found that IT needs to report at high level in the organization -- preferably to the CEO or COO. There have been cycles over the years of IT reporting to the CFO. These cycles have generally been consistent with business downturns and downsizing when IT is being managed on the basis of cost.

It is critical that IT be managed based on its contribution to the organization rather than solely on cost. IT can contribute equally to revenue-increasing projects, quality improvement projects, competitive advantage projects as they can to efficiency and cost control projects.

IT budgets should be based on the IT projects required to be completed in order for the business to successfully achieve its top goals and objectives. This cannot be achieved by setting an arbitrary dollar amount, but must be based on the business/IT projects that must be completed for the business to profitable or meet its mission objectives.

In our experience, organizations that are adequately aligned have no IT budget issues. Projects get funded rather than IT organizations.

When the CIO does not report at a high enough level results in yet another typical failure factor:

Failure reason #5: IT not involved with the business planning process.

Of all the failure reasons this one probably has the biggest impact.

If IT does not sit at the table as equals with business managers during planning they cannot bring the technical capabilities and solutions to the business goals. In fact they cannot even clearly understand the goals themselves in order to provide the IT expertise upon which business success is now so critically dependent. Our data shows that less than 2% of business projects can be successfully completed without IT contribution. When IT participates in planning and conducts the type of alignment (Planning Interaction) meetings and processes we recommend, profitability and other outcome measures improve significantly. In fact, companies we have tracked that have implemented these procedures have experienced over $1.5 Billion higher profits over the years tracked. Companies that have succumbed to one or more of the failure reasons above have registered declines in profitability over the years tracked.

Let me know your thoughts.