CXO

Why IT business alignment veers off track and how you can keep it on course

It's one thing to say that IT is aligned with business strategy and another to make sure it's happening. Understand where alignment goes wrong, and then take some simple steps to avoid that scenario.


One recent META Group survey reports that two out of three business deals are passed over by companies because the IT departments aren’t geared up to handle the business. Translation: The IT team wasn’t prepared and obviously missed the signals pointing them toward developing the capabilities the company needed to handle new business and add real value to the company—in short, they were misaligned.

Furthermore, Morgan Stanley reported that between 2000 and 2002, U.S. companies spent $130 billion on software and hardware that they ultimately didn’t need to support their businesses. According to figures by Gartner, this number jumps to $540 billion on a global scale.

How is it that IT teams become misaligned with business strategy and end up contributing to a poor showing on the economic charts as well as outright waste of IT investment dollars? The answer is found by examining what happens as business goals and expectations filter through layers of management. CIOs can follow several steps to avoid this erosion of alignment.

Uncovering the cracks in alignment
Several years ago, as the head of an IT team, I sent out an e-mail inviting the team members to meet so we could get to know each other. The team consisted of a number of managers who were my direct reports and their staff members.

I asked them to reply to a few brief questions before our meeting. The questions included the following:
  • What are the top five things that you do that add value to the company?
  • If you have people reporting to you, what are the top five things your people do that add value?

When I received the responses, I sorted them and batched together the responses by each team member with the responses given by that specific team’s manager. To my surprise, almost 90 percent of the items listed by the teams as their key objectives differed from the key objectives listed by their managers.

What’s more, the key objectives listed by the managers were different by almost the same margin from the key objectives I had been given by my new bosses.

I have, since that day, performed this survey several times with similar results. A director of a large, well known development organization recently told me his organization has had similar results in its studies. The organization found that, on average, even the better teams were still about 60 percent off in terms of having a correlation between what managers and their teams considered key objectives.

The puzzle we both faced was determining how the misalignment was happening. In my organization, there seemingly was strong communication—people in my team regularly attended company and team meetings where presenters talked about and outlined company objectives and goals. So what happened?

Deciphering the cause
There seem to be two major causes of misalignment: Messages are lost as they’re passed through various levels of management, and staff in the lower layers aren’t given clear insight on how their efforts tie into the bigger corporate picture.

The phenomenon that causes this erosion of alignment of purpose through layers of an organization was the topic of Management and the Activity Trap, by Dr. George S. Odiorne, who states, “People tend to become so engrossed in activity that they lose sight of purpose.”

I believe that most of us tend to reinterpret our objectives to fit the activity we’re involved in. That was the insight I got during my team survey experiences. It happens even in environments where senior managers get together with staff and talk about company goals regularly.

The managers, and people in the layers below, hear and understand what senior managers say about company objectives and goals, but aren’t given a clear map of how they and their teams personally affect these bigger picture items. They tend to go back to work and focus on individual tasks at hand without further reference to the big picture. They’re listening and understanding the alignment message but can’t translate the messages into “so, here’s what I need to do to contribute.”

Among the layers of organizations, there is clearly a deviation in the focus and priorities of each layer due to lack of clarity about how they can and should specifically contribute to the goals and objectives of the layer above. Information moves from the “aligned” CIO, to a slightly less-aligned VP, to the less-aligned director, to the even less-aligned managers and supervisors who are guiding the purchase of resources and the actions of the staff—which at this point is 60 to 90 percent off the original objective.

How do we as CIOs avoid this deviation of purpose and direction in our teams? We do it by putting in place a mechanism that enables team members, at every layer of the team, to see and focus on how they contribute to the goals and objectives of the company.

Here are three simple steps you can take.

1: Use and communicate a portfolio management vehicle as a means of categorizing IT investments
An IT investment portfolio model teaches IT executives to look at IT dollars as part of an investment fund and to regard themselves as fund and portfolio managers. Their goal is to allocate investments in a manner that supports the company's overall business strategy.

The model is an excellent tool that enables the IT function to link and drive technology investment decisions to conform to the company's business strategy. It also provides a means of communicating through the layers of the organization what their basic objectives are in the simple language of investment strategy.

If, for example, a manager is heading up a wireless research and development team that is classified as an IT venture capital fund, he has a basic understanding that his role is to make wise, moderately risky investments and keep his finger on the pulse of the key technologies so that he can adjust investments and focus according to developments.

On the other hand, another manager may be heading up an IT team classified as part of the investments made to profitably grow the current business. He or she will constantly seek to bring the best ROI in technologies that improve the company’s ability to run its current operation as profitably as possible.

Communicating the IT portfolio investment model to the entire IT management team provides a standard language for communicating investment objectives and the general rules governing the decisions around each type of investment.

2: Have every layer of the management team create and maintain an alignment chart
In its most basic form, an alignment chart can consist of a one-page document that outlines the objectives of the company, the IT alignment objectives that support the company objectives, the objectives of a team that support the IT alignment objectives, what actions the team must take to meet the objectives, and what the manager of the team must do to support the team’s success.

See Figure A for a general example of an alignment chart built around a first line help desk manager.
Figure A
1. Company Objectives
2. IT Strategy
3. Help Desk Strategy
4. Help Desk Actions
5. Managers Actions

• Grow profitability from existing clients

• Grow market share two percent each quarter

• Expand into the global market from the current national presence

• Reduce transaction processing costs

• Develop Client Relationship Management support

• Partner with a global eCommerce provider

• Provide an acceptable level of service quality

• Manage and reduce costs

• Give higher priority to issues affecting parts of the company that generate market share growth

• Use the Help Desk support application to segment high- and low-priority calls

• Stagger shifts to avoid overtime

Et cetera

• Identify and secure a consultant to work on customizing Help Desk support application

• Cross-train all agents so they can cover any shift

Et cetera


3: Teach every layer of your management team to focus on objectives
Teach your team to make good judgment calls and to adjust a task in order to meet the objectives rather than being “playbook” slaves, who are task-focused.

By effectively communicating how alignment objectives cascade through each layer of your team, you’ll fully engage your entire team in the process of alignment and greatly increase the overall production of business-impacting value.

By paying attention, incorporating strong communication approaches, and remaining diligent about the process, you can ensure that IT aligns itself, and ultimately advances, with the company’s business goals.

About the author
Joe Santana is coauthor of Manage I.T. He has over 21 years of IT experience and has held numerous executive-level positions with enterprise and outsourcing companies. Visit this site for more information on his book.

 

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