The term "IT-business alignment" has been part of IT industry lexicon for many, many years - and so you might be tempted to think that any story we could tell about how organisations ensure that their IT investments and operations really serve their businesses will have run its course long ago. Still, though, debate rages on - the issue clearly hasn't gone away. Why?
A perpetual process
Our research over the years (we started MWD in 2005 with the aim of anchoring all our research in the context of "advising on IT-business alignment" and it's been something we've been tracking ever since) has led us to the conclusion that although the term makes it sound as if IT-business alignment is a project, the reality is very different. The organisations that have made the most significant strides in this area realise that IT-business alignment is a perpetual process, not a project with a defined end-date and target. There are two reasons for this.
Firstly, things change - all the time. IT priorities and capabilities change; business priorities and strategies change; and personnel change. The target is always moving, in other words. Secondly, there's always room for improvement - any organisation that's embarked on a business process re-engineering exercise will understand that.
Clearly, the current economic environment has shifted the IT-business alignment "target", from both business and technology perspectives. To get an update on what IT-business alignment means for top-level IT executives in the current environment, I recently talked to Ian Dobb (former CIO of Channel 4 and now with Ionico) and Rorie Devine (former CTO of Betfair, currently working with bwin).
Is IT-business alignment important, and how is the issue changing?
First off, I wanted to check - do Dobb and Devine feel that IT-business alignment is still an important topic? Devine was quick to answer, and also echoed the idea that alignment is a process rather than a project: "Asking if alignment is important is like asking someone if making their marriage a success is important.Clearly it takes effort to get things right, but there's no question that it remains important."
At MWD, our experience is that the pressures brought about by the current economic environment mean that the relationship between business and IT has to become closer, rather than more arms-length (we explored this further in our last article, on the topic of IT Governance). So how do Dobb and Devine feel about how the "alignment environment" is changing in the current economic environment?
"In the past, when talking to business leaders we focused too much on the ‘how' and not enough on the ‘what'", says Devine. "However I'm finding that in the current environment, at least here in the UK, there's much more evidence of ‘outside-in', more business-driven thinking - and that's a good thing." Dobb agrees: "There's definitely a new balance in the debate about IT investment. Previously we had frivilous enhacements tabled to change the colour of an application interface because it didn't fit with the company's branding. Those requests have died off.
There's a much more reasoned, sensible environment now." There are still pockets where things aren't so rosy though, as Devine outlines: "just as you can have old-school CIOs, you can have old-school CEOs - people who just see IT as an order-taking organisation that needs to do whatever is requested."
You can't manage investments without knowing where to put your effort for the best return
With this in mind, the discussion turned to the issue of application customisation - something that seems to swing into and out of fashion. If you choose to purchase and then customise a packaged application, are you working against IT-business alignment - and how do you decide where purchasing a package makes sense?
Dobb and Devine were in clear agreement on this: when it comes to application software that encodes business processes, you purchase a package if you want a commodity process; if you want to differentiate the business based on a process, you shouldn't buy a package. Says Devine: "If you are looking for competitive advantage it's really stupid to put in a one-size-fits-all package. The chance of success is far better if you don't customise. If you take an off-the-shelf package you are buying standards. Focusing on the customer expectation is where you will find competitive advantage - not in the customisation of a packaged application."
The bigger picture is that you need to optimise your sourcing and spending depending on the value that a particular investment has to the business. "At Channel 4 we kept the commodity technology as cheap as possible, but reliable and secure, so our investments went into important, differentiating areas like the advertising sales systems - a source of competitive advantage and efficiency - such as publishing content to multiple channels. Here we drove effectiveness and efficiency through innovation," says Dobb.
Advice for other IT leaders
It's clear that IT-business alignment has multiple success factors: some are technological, but many more are related to culture, process and change management. One thing I always ask senior IT decision-makers when talking about IT-business alignment, with this in mind, is: if you were approached by a fresh-faced, newly-appointed CIO and she asked you for your advice in how to pursue IT-business alignment, what would you say?
Dobb answered first: "First, you need to understand the board's expectations. Are you expected to be a commidity order-taker, a service provider, a business partner or more of an entrprenuerial innovator? Second, make sure you have the right team around you - you need to be able to delegate on detail issues with confidence, so that you don't have to constantly check that the email is working OK. Third, you need to be proactive and learn how to influence. If you have some good ideas, make sure you are tabling them with business leaders. Be aware of the business and board and their learning styles; some people like numbers, some like pictures. Don't talk techie, talk business."
Devine followed: "First, you have to understand your opportunity and the environment. You have to really take time to understand the context and challenges that the business is facing - what you're there for. Second, make sure you realise the potential of your team. Communicate well; your people want to see a clear vision and a plan. Third, don't let one issue (for example your SAP system's performance) become synonymous with what you do - don't become a single-issue team. At the same time though it's important to avoid focusing purely on the big picture - you have to deliver too! Lastly, measure your performance as a team and try to keep getting better and better. If you don't measure, how do you know you are getting better? It's vital to choose the right things to measure - things that matter to the business and the strategies and priorities that are in place. We've found that it's really productive to form specific teams to take those key metrics and take responsibility for improving performance in those areas."
With all this in mind, what's the feeling about whether CIOs have to have technology backgrounds in order to be effective? Dobb was clear on this point: "You need to know enough not to have the wool pulled over your eyes, but you don't need to be a deep techie. If you have the right team around you that you can trust, you should be able to rely on them to translate deep technology issues for you."
Want to know more about the CIOs in this debate?
Read the full CIO UK interview on how Rorie Devine bet on his staff at Betfair here.
Ian Dobb was CIO for Channel 4 for 10 years, read the full CIO UK interview of his career with the famous broadcaster
About this article
This Debate article draws in part on a round-table discussion between UK-based analyst firm MWD Advisors and members of the CIO UK community. If you'd like to participate in the research for our next article, please contact register with CIO UK or join our LinkedIn community.