Both CIOs and CFOs report they want to be more involved with corporate strategy.
This makes perfect sense. Determining strategy is one of the most rewarding activities for anyone with an interest in running any kind of business.
Unfortunately, it would appear “business as usual”
gets in the way as usual.
Let’s take one widespread, pernicious problem: the alignment of IT with business.
According to the American Institute of CPAs, “IT Strategic Alignment is the implementation of information technology (IT) in the integration and development of business strategies and corporate goals. Aligning IT and business strategy is the most fundamental factor that must be addressed in order to secure high levels of return on IT investments.”
Back in 2002, a study by the CIO/Balanced Scorecard Collaborative had only one-third of respondents (634 participants, split evenly between IT and business executives) claim that their IT organizations were aligned with corporate strategy.
In 2008, the Mckinsey annual survey on information technology strategy and spending, affirmed the “continuing importance of IT for strategic success” and found that:
- “Two-thirds of their respondents indicate having IT strategy tightly integrated with business strategy is the ideal – but only 16% are there now.”
- “Non-IT executives continue to say they want to forge a closer partnership with IT in order to improve performance”
In April 2010, a survey of Palladium Hall of Fame practitioners of strategy management had 75 percent of respondents rank alignment as the most difficult aspect of strategy execution.
In another 2010 survey by the CIO Executive Council, CIOs ranked aligning IT initiatives with business goals as the number one activity in terms of where they spend most time. Not surprisingly, this same group, when asked where they wanted to spend most of their time responded:
- Driving business innovation
- Identifying opportunities for competitive differentiation
- Developing and refining business strategy
In CIO Magazine’s 2012 State of CIO survey, we find that fewer CIOs report to the CEO, with 23 percent now reporting to the CFO. And this same report also corroborates that CIOs’ favorite things to do are focus on business innovation and strategy development.
Conversely, CFOs increasingly want to be more involved with strategy—particularly doing a better job with execution. Most recently, Deloitte’s CFO Signals reported the top CFO financial challenges as:
- Providing metrics/info/tools for business decisions (remains the top challenge at 50 percent)
- Influencing business strategy and operational priorities (39 percent)
- Ensuring business initiatives achieve desired outcomes (34 percent)
So, a random set of surveys over ten years show aligning IT and business still remains an issue. At the same time we see both CIOs and CFOs want to be more involved in strategy, and improving performance is a top priority.
Aligning IT and Business: Technology Can Help
While technology alone cannot magically resolve these issues—we are, after all, dealing with a three-legged stool (organization, process, and technology)—it gives us a framework to better address these issues.
According to the McKinsey study cited above, improving both the perception of IT and the value it provides to the business first requires giving business more transparency into the planning and execution of IT projects. This, in-turn, permits IT to demand increased business involvement and accountability for the delivery of these projects—as oppose to taking the blame when projects fall short of expectations.
Performance management applications help:
- Reduce response times/increase speed of decision making. Scorecards and metrics allow us to quickly gauge performance and drill down to determine the root-cause of issues. Alerts provide early warning of issues. And collaboration capabilities allow users to discuss issues in context without having to send emails—eliminating email chains)
- Create happier customers by being more service oriented. Better prioritization of initiatives and improved visibility into IT capabilities (resulting in an improved understanding of how the business benefits from IT) helps increase IT satisfaction scores and more requests from business users for IT services.
- Improve IT efficiency by delivering more projects on schedule and under-budget, with improved ability to measure and manage the delivery of IT services
- Increase IT effectiveness by responding faster and resolving IT production incidents quicker, identifying and mitigating recurring incidents better, and identifying the root-causes of problems
Why Then Are Companies not Investing in the Technology?
If the typical IT project overrun is 27 percent, then we waste $270K wasted for every $1Million spent on implementation (for more on this topic, see “Avoiding Olympic-Sized Overruns: Set Realistic Expectations). So why not do something?
The most common argument is “We’ve got other projects/implementations we need to spend money on/ do first.” Yet, I hear from customers that they only get half the projected value from their business investments!
This argument doesn’t hold water. The reality is, you won’t have the skills in house to implement a performance management application—that’s what consultants are for.
As for the cost, assume your enterprise-level strategy management application will cost $300K (licenses and implementation). The money you’ll lose in terms cost overruns on your first $1million in IT implementations next year will pay for it.
So, CIOs and CFOs, are the surveys wrong? For the benefit of all of us, tell me what I’ve got wrong here?