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Key to IT alignment: Know your place

Paul Gillin

There's a new way of looking at IT, according to some analysts at Forrester Research Inc.

These analysts, led by Laurie Orlov, a Forrester research director, are proposing to divide IT into three categories called "solid utility," "trusted supplier" and "partner player." They suggest that a key to IT success is to know which category type your company needs.

Here's a look at what each category means:

  • The solid utility keeps the lights on and the machine running. This organization is typically focused on containing costs and ensuring a stable and reliable infrastructure. There is no particular strategic advantage asked of or expected from IT. The CIO usually reports to the CFO.
  • The trusted supplier is expected to deliver the applications requested by business managers and to do so reliably and promptly. In this role, IT is seen as strategic, but the business people call the shots. The

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  • CIO usually reports to the CFO.

  • The partner player is strategic. IT is expected to find opportunities to apply technology to the business in order to grow the top line. The CIO is usually a visionary and usually reports to the CEO.

Forrester intentionally uses positive language to describe each of these IT roles because it's important not to think of them as a hierarchy. In reality, a partner player organization needs good utility and supplier skills. But any of these roles can be of great value if aligned properly to the business. The problems occur when they're not.

The strategic role of IT

An awful lot of ink has been spilled over the last 15 years in the quest to define a strategic role of the IT organization. That effort has yielded frustratingly few results. The same old icons of strategic IT -- FedEx, Wal-Mart, Mrs. Fields -- keep showing up in the industry literature.

If you believe the Forrester model, this lack of results is due to the fact that most businesses don't really need a strategic IT organization. In fact, Forrester's Orlov estimates that about 45% of businesses need a solid utility, 45% need a trusted supplier and only 10% are actually looking for a partner player. In other words, nine out of 10 companies don't want IT to be strategic.

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I think she's got a point. Excellence in a job should be defined as doing what's best for the organization. The goal of turning IT into a strategic differentiator is a noble one, but it's probably impractical for many businesses. Take out the Yellow Pages and flip through them. Ask yourself how many of the businesses you see there really have a chance of leveraging IT before strategic value. My guess is that it's not many.

The reality is that most businesses get by on delivering relatively undifferentiated products at small profit margins. For them, keeping costs low and operations efficient are growing concerns. The IT organization is a key part of the business, as long as it doesn't overreach. If the boss wants you to make doughnuts, then make really good doughnuts. But don't branch out into fancy French pastry unless the company wants to go there.

IT alignment

We had to go through the exercise of trying to find a bigger strategic role for IT before we could get to the alignment stage. This new approach may prompt some CIOs to breathe a sigh of relief, but wait. What happens when the business changes? Or when a new CEO comes on board who does see strategic value in IT? I suspect the IT issues in the book business, for example, were a lot different in the days before Amazon.com came along. The CIO of a solid utility organization is probably not the person to head a partner player. That's when things get crazy again.

About a decade ago, there was a lot of debate about CIO turnover. One study estimated that the average job tenure of an enterprise CIO was 18 months. Then came the dot-bomb implosion and widespread disillusionment with IT. Now we're coming out of those dark times, CIO turnover is down and IT is talking about alignment rather than re-engineering. It's a good trend.

Technology has a tendency to disrupt entire industries fundamentally, which means the CIO's role could never be a safe one. However, having a good sense of one's place in an organization is a good starting point.

Paul Gillin is an independent marketing consultant and founding editor-in-chief of TechTarget. His Web site is www.gillin.com.


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