It's one of the most popular buzz phrases in the tech world right now -- IT/business alignment -- but the concept itself is completely flawed. Find out why and what you should be doing to transform your IT strategy instead.
Last October, at a conference for IT managers and executives, I was chatting with George Spalding -- an ITIL expert from Pink Elephant -- about the popular concept of IT/business alignment. The fact that so many people in the IT field even talk about the need to align IT and business is evidence that IT is not very well aligned in far too many businesses. At least that was the conclusion that George and I came to.
"Do you ever hear companies talking about marketing/business alignment or HR/business alignment?" George asked."The glass wall between IT and the rest of a company has to be shattered."
Of course we don't. If there was a rift inside the company with the marketing department or the HR department, it would mean that there was a fundamental problem, and any good company would seek to root out the issue and fix it as quickly as possible. However, with IT departments, this type of schism has been tolerated for far too long in far too many companies.
The result is that many CEOs simply look at IT as a utility cost that needs to be controlled rather than an innovation driver for growth and expansion. The ones who do that are obviously missing a huge opportunity, and they are also driving many U.S. companies to outsource their IT departments and in some cases to send nearly the entire IT operation to overseas contractors.
For some leaders, the answer to this problem is better IT/business alignment. However, "alignment" still implies separation and that, ultimately, will not solve the problem. What's actually needed instead is a thorough integration of IT into the core business.
I've found some support for this idea in recent reports from the MIT Sloan School of Management and The Wall Street Journal. This week, I'm going to cover The Wall Street Journal's take on this issue. Next week, I'll evaluate an article on this topic from the MIT Sloan Management Review.
A diagnosis and prescription
The Wall Street Journal published the article How to Tap IT's Hidden Potential on March 10, with the summary, "Too often, there's a wall between a company's information-technology department and everything else. That wall has to go."
The general thrust of the article can be summed up by this line: "Success in the digital economy of the 21st century demands a strategic role for IT. And for that to happen, the glass wall between IT and the rest of a company has to be shattered."
The article put forth five factors that are keeping many IT departments disconnected from the business:
- Mind-set differences between management staff and IT staff
- Language differences
- Social influences
- Flaws in IT governance (defined as the specification and control of IT decision rights)
- The difficulty of managing rapidly changing technology.
Then the Journal put together a set of six recommendations for overcoming this rift:
- Begin with IT literacy -- and commitment -- at the top
- Hire an IT leader who sees the big picture
- Create demand for IT solutions
- Make sure nothing gets lost in translation
- Rationalize IT spending
- Create an IT portfolio by evaluating risks and returns
And here is a quick collection of some of the more poignant quotes from the article:
- "Unfortunately, the chief information officer often reinforces this separation. That's because he or she usually is an IT professional chosen to be a director of technology, rather than an executive who is expected to fully integrate IT into the company."
- "Another divisive factor is the persistent perception of those who are oriented toward science and technology as 'nerds.' The recent boom in IT outsourcing has worsened this estrangement. Now, IT professionals are almost pitied as dinosaurs whose jobs will soon be sent offshore."
- "Analysts estimate that hundreds of billions of dollars are blown every year on IT projects that fail to achieve the desired goals."
- "Many CEOs find the financial and business returns on their IT investments obscure and difficult to quantify, and feel that no matter how much money they spend on IT, there is always pressure for more applications, the latest hardware and software, more people and faster networks. So they focus more on containing the costs of IT than on tapping its potential."
I have not always been impressed with the Journal's coverage of IT issues. As you may remember, last year I blasted the Journal for its article that showed business users how to circumvent IT. At the time, I argued that users should always try to first go through the proper IT channels when they want to implement a new technology. I also noted that IT needed to do a better job of partnering with users to find new solutions that could drive the business forward.
These same issues are also part of this larger discussion of the role of IT in the business. Only this time, the Journal has gotten it right. Part of the reason is that the Journal didn't rely on internal writers for this piece but relied on a couple professionals who are much closer to the action in IT (for the record, that's the approach TechRepublic has always taken for the vast majority of its articles). In this case, the Journal used Dr. Amit Basu, a professor of information systems, and Chip Jarnagin, founder of a management-consulting firm.
My only complaint with the article is that I think you can break down the solution to this problem in three basic steps:
- Hire a CIO who has business savvy but can also gain the respect of the techies in the IT department
- Improve IT awareness/training among executives and team leaders throughout the business
- Improve business awareness/training among the company's IT managers
All of the other activities -- better explaining IT spending, getting other leaders to think of technology as a business enabler, translating between IT and the rest of the staff -- can all fall somewhere under one of these three. As you can see, this is not about IT/business alignment. It's about IT/business integration.
How well has your company integrated IT into the business? What do you think about starting with these three steps? Join the discussion.
Remember to check back next week when I'll revisit this issue by delving into a separate article on the subject of IT/business alignment from the MIT Sloan Management Review.