What do IT and business alignment, IT governance, and strategicplanning really mean? If you think the question is simple, thinkagain.

BY MAREK JAKUBIK

There are two places where I most frequently meet with the wordalign. Every couple of years I hear it from my friendly carmechanic. And about every other day I read about it in another CIOsurvey. Could the two be connected? And why, oh why, do the ITfolks keep talking so much about the need to align?

The connection appears to be rather tenuous. It seems while wequite easily borrowed the term, were not sure at all what to dowith it and what exactly it means. And so, while the mechanics keepworking, we keep talking.

If business were a car and IT were the tires, what would we beobliged to do? We would keep the tires fresh and innovative(everybody needs good traction after all), and yes, we would wantthem to point in exactly the same direction as the cars body. Easy,isnt it? If any car mechanic can do that, surely, so can CIOs. Ifonly it were that simple.

Watch Your Language

In engineering, whether of the social or business sort, nothingis simple. Never-theless, this is where the use of simple words orphrases not only creates an impression we comprehend something butalso conveys a sense it might be easy to do.

CIO magazine recently listed the Top 10 Information ManagementConcerns including the following: IT and business alignment (#1),IT strategic planning (#4), IT governance (#8).
Henceforth, here is my top concern: All these terms generally aremisunderstood. Meanwhile, by liberally sprinkling them aroundsurveys and articles, we propagate a fantasy we actually know whatwe are talking about.

To effect a shift from talking to doing, we must first explainthese concepts to ourselves in much plainer language.

Align = Involve + Prioritize

That is the essence of aligning IT with business. First, CIOsmust work hard on creating an environment in which theyre genuinelyengaged in all discussions concerning business strategy, tactics,and key day-to-day business issues. They must take proactiveinterest in all critical issues confronting the business anddemonstrate ability to add their constructive views to thediscussions. Through that process, they must achieve the status ofbeing a respected and active member of the Executive Club.

Then, and only then, will CIOs put themselves in a positionwhere they can genuinely requestor even demandthe business leadersreciprocate and become involved in the relevant issues of IT.

The bosses (whether theyre CEOs or CFOs) can greatly accelerateand smooth the process of such bilateral involvement. Ask your bossfor help. (For more on this subject, see CIO Chronicles: If I Werea CEO . . ., July 2004.)

Say No to HR

The second key step in aligning is to understand and prioritizeITs focus and expenditures. Far too often, CIOs, almost by default,assume a position that IT has to help everybody in the enterprise.That is precisely the wrong approach. What CIOs must do is todecide where the strategic priorities lie and consequently adjustand direct IT resources. This may require saying no to folks in HRand Finance, for example. It may require deferring some otherwiseimportant projects.
It also necessitates a forum in which a structured, constructivedialogue with the business leaders can take place.

IT Governance to the Rescue

All complex systems require rules and regulations, andespecially those systems aimed at defining, controlling, anddirecting the administration of strategic policies. IT governance,our second frequently misunderstood term, provides exactlythat.
Imagine a country organized along the federal/state model that hasno well-defined authority nor accountability boundaries vis–vis itsmajor strategic decisions. The fact we do not know of such anation-state indeed may prove an entity of this kind would beungovernable. Yet this is how many organizations still operatetheir IT.

The focus of IT governance is on two wordsauthority andaccountability. To be specific, a good IT governance programclearly must delineate:

scope and levels of authority for IT decisions among companyexecutives and

accountabilities for those decisions.

The rest is a lot of hard work. Communi- cating and selling ITgovernance takes time. CIOs have to be prepared to spend at least ayear until the key practical aspects of IT governance becomeinternalized by the organization and become an effective foundationfor its decision-making processes. Among other things,internalizing means:

familiarity and involvement of senior executives with theprocess,

ability to define clear business objectives for ITinvestment,

processes for managing exceptions, and

consistent procedures for making IT decisions from year toyear.
IT governance matters because it influences the benefits receivedfrom IT investments, says Peter Weill, director of the MIT Centerfor Information Systems Research, in his 2004 paper.

In addition, we found that firms with above-average ITgovernance performance that followed a specific strategy had morethan 20 percent higher profitability than firms with poorgovernance following the same strategy.

And now for something that should warm CIOs hearts: Results ofthe MIT study that analyzed 256 companies IT governance programsfound, in general, the worst job at IT governance was being done bycompanies that excluded their IT executives from the process. Inthose companies, almost every large decisionwhether about the roleof IT in the company, IT infrastructure, or investment decisionswasmade between top executives and the business groups.

At the other end of the spectrum, the most successfulenterprises involved both IT and business executives in determiningthe role of IT and making investment decisions while leaving purelytechnical decisions about architecture and infrastructure to the ITorganization.

For those who made establishing an IT governance program one oftheir 2005 resolutions, I recommend an excellent book ITGovernance: How Top Performers Manage IT Decision Rights forSuperior Results, by Peter Weill and Jeanne Ross.

IT Strategy

While the concepts of alignment and governance still are babiesin the family of contemporary management tools (which may explainour difficulties in understanding them), the idea of strategydefinitely is a grown-up. Yet I find it still is confounding toomany CIOs.

If thats how you feel, take heart. Even the experts havedifficulties. Consultant Fred Nickols, in his abstract Strategy:Definitions and Meaning, outlines no fewer than eight variousdefinitions of strategy developed by famous management gurus fromLiddell Hart through Mintzberg and Porter to Treacy andWiersema.

Thats the good news. The bad news is you cannot use Nickolspaper as an excuse. Having a strategy is an essential element ofsuccess in any business. But if so, what is it? Where can we findthe necessary focus?

Nickols offers this advice: Strategy is all theseit isperspective, position, plan, and pattern. Strategy is the bridgebetween policy or high-order goals on the one hand and tactics orconcrete actions on the other. Strategy and tactics togetherstraddle the gap between ends and means. In short, strategy is aterm that refers to a complex web of thoughts, ideas, insights,experiences, goals, expertise, memories, perceptions, andexpectations that provides general guidance for specific actions inpursuit of particular ends. Strategy is at once the course wechart, the journey we imagine, and at the same time, it is thecourse we steer, the trip we actually make. Even when we areembarking on a voyage of discovery, with no particular destinationin mind, the voyage has a purpose, an outcome, an end to be kept inview.

My advice: To start, focus on the last part of Nickols viewthinkof outcomes and add to that key elements that make it a workable,executable plan. That pattern of thinking should lead you to (ornear) the following four elements that make up a strategicplan:

objectives (specific strategic goals to be accomplished)

choices (matching those ends to available means)

plan of action (how, when, and in which order we get there)

process of executing (linking strategy and tactics)

The last point may be somewhat contentious and needs a word ofexplanation. The best strategy is just your finest plan before theaction starts. Once the strategy is put into action, realities takeover. The only thing you can know for sure is your plan will changein reaction to events and forces you could not have predicted.Thats the time to employ tactics. And thats where the best-laid-outstrategic plans most often fail. Hence, the last and perhaps themost important point about having a successful strategyexecute.

Or as best-selling author Mike Davidson points out in his bookThe Grand Strategist: Grade A execution of a Grade B plan alwaysbeats Grade B execution of a Grade A plan, and he also quicklyadds, Note, it says Grade B, not C or D. Always keep that inmind!

Mastering the Mystery

Alignment, strategic planning, and governance all areintricately interconnected. The heavy dose of mystery associatedwith them often leaves CIOs overwhelmed. They shouldnt be.Mastering the necessary skills is a function of time, persistence,and experience. Today, these skills may be complex and mystifying,but chances are, tomorrow the organization will thank those whomade the effort.

, a former CIO of Zurich Financial and Pitney Bowes, is aco-founder and managing director of the Insurance Technology Group(www.insurancetg.com). He can be reached at 416-214-3445 or[email protected].