Yes with No Regrets

Six keys to lasting alignment with your business partners

Many in the IT profession believe that alignment with the business is all about managing expectations. "Managing expectations" is a ridiculous term that should be stricken from CIOs' lexicon. It conveys false hopes that, through artful manoeuvring, delivering less is okay. Nothing but food satisfies hunger, nothing but money pays the rent and nothing but a "yes" satisfies IT's business partners.

Smart CIOs improve alignment by figuring out how to say yes in a way that works for both the business and IT. Overall, business-IT alignment has improved over the past five years, due to the institution of executive committees, rigorous priority-setting, active portfolio management, "skin in the game" accountabilities, standardized technology and processes, strategic sourcing and improved customer relationship management.

In spite of the improvements, alignment continues to top executive surveys as a critical initiative. CIO magazine's "State of the CIO" research shows that alignment remains the top management priority for CIOs. At a recent breakfast meeting for CIOs that I facilitated, participants shared stories that highlight the persistent barriers to improved alignment. They discussed strategic plans that aren't actionable, the challenge of working with decentralized business units, project justifications that put form over substance, funding decisions that are designed to keep the peace, constant pressure on non-capital IT costs, the difficulty of staying the course with technology plans, and the leadership gap between CIOs and their direct reports.

This discussion highlights the multifaceted complexity of the alignment problem, which encompasses the domains of strategy, governance, technology and organizational structure. To tackle alignment, CIOs must first accept the fact that IT's business counterparts will always want more for less, without delay. CIOs have to learn to balance the limited supply of IT services with the seemingly infinite demand in a way that is acceptable to the business. This is done through strategy and governance practices that force the business to acknowledge limits and say "no" to themselves. IT capacity constraints (which are people, more often than money) can be relieved by designing technologies and organizations that "flex" as business volume and project demands ebb and flow.

There are six promising concepts to help CIOs face the challenge of improving alignment. I will briefly review them here and will discuss them in more detail in my next three columns.

1. REAL-WORLD STRATEGY. Business strategy is usually informal, and it changes frequently as new learning occurs. CIOs need an ongoing, participative process for deriving business strategy and weaving IT strategy within it. The New CIO Leader, by Marianne Broadbent and Ellen Kitzis, presents a simplified strategy-making process that is baked into the governance process on the premise that business is moving too quickly to separate planning from doing (see "CIOs: Adapt or Croak, cio.com.au/index.php?id=406047659).

2. EMBRACING VALUE. Investment governance doesn't really work if IT value is a paperwork exercise. For IT to be viewed as an investment rather than an expense, CIOs have to make value realization practical by incorporating operational measurements in projects. Value must be centre stage when CIOs determine the approach for an IT project, manage the scope and enforce accountability.

3. ACTIONABLE PRICING. The ugly baby of IT is the 70 percent of costs that are not really understood and therefore are not really managed. After-the-fact chargebacks based on spreadsheet allocations are neither credible nor useful in influencing future demand and forecasting necessary expenditures. A slimmed-down version of activity-based costing is a practical first step in helping CIOs articulate services, consumption and pricing in a way that helps the business act as true consumers.

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4. AGILE TECHNOLOGY. Architecture and infrastructure can hinder alignment efforts. Layered architectures, services and capacity on demand are reducing the cycle time of delivery and therefore expanding the supply of IT.

5. BOUNDARY-LESS IT. IT is too often a delivery bottleneck. CIOs can create virtual capacity by enabling the business's self-sufficiency and leveraging strategic sourcing. Gartner's IS Lite organization concept calls for creating a boundary-less IT organization where the work of IT is shared with strategic partners and the business (see "Building a Management Team for IS Lite", cio.com.au/index.php?id=709671507).

6. LEADERS AT ALL LEVELS. The glue that holds together the strategy, governance, technology and organizational components of alignment is leadership. Alignment surveys indicate that while the leadership cadre at the CIO level is sufficient, there is a gap at the levels below. CIOs need to expand IT's leadership capabilities by changing their leadership development approach from "survival of the fittest" to "development of the fittest".

Over the next three issues, I will unpack these concepts by reviewing theory, discussing success stories and providing suggestions for further study. I invite you to be part of the discussion by sharing your alignment stories - both good and bad. Together, CIOs can learn how to improve alignment by saying yes without regrets.

Reader Q&A

Q: Saying no is a way of letting people who don't know IT's capabilities what is possible and what isn't, and what is a good use of money and what isn't. Whenever the sales VP asks me for something, it's his way of testing the importance of his idea. He knows I will work with him if it's a good idea. But not everything is a good idea or is a better idea than what we're already working on.

A: It sounds like you have a great relationship with your sales executive - congratulations! Without strong relationships, the word "no" causes people to dig in on their positions. That's a difficult reaction to overcome if you hope to get to a solution that works for both parties. People react to (and learn from) questions better than statements. The goal of IT-business alignment is to set up mechanisms so that business executives are able to evaluate the merits and implications of their IT-enabled ideas without having IT play the heavy.

Q: If business-IT alignment has improved over the past five years, as you say, then why were there so many sob stories at the breakfast you attended? Alignment is one of those problems that never goes away, unlike technical issues. Alignment can never be "fixed". It requires continual work and communication on the part of IT executives and every member of the IT department.

A: Alignment has improved, but you are right that requires continual work and communication. The CIOs in that breakfast meeting weren't lamenting this state of affairs; they were discussing alignment with the goal of learning from each other and developing a sense of how to reach the alignment grail.

Q: In addition to the six points you're writing about, I'd like to see you address executive committees - aka the IT management committee, IT-business oversight committee or what have you. What are the best ways to set up this kind of group, who has to be on it (the must-attendees versus the nice-to-haves) and what does it need to accomplish?

A: Management committees are essential to effective governance. Real-world strategy requires that an effective senior-level IT council exists. Please see research by Peter Weill and Jeanne Ross of MIT's Centre for Information Systems Research, including "A Matrixed Approach to Designing IT Governance" in Sloan Management Review and their book titled IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, as well as their CIO magazine article titled "Recipe for Good Governance".

Susan Cramm is founder and president of Valuedance, a California-based executive coaching firm