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Four steps to successful IT/business alignment

Business alignment remains a top priority for IT executives. James Champy offers CIOs advice for turning IT into an integral part of their business operations, and no longer just a service center.

I am always surprised by how many companies -- large and small -- struggle with the issue of aligning IT with the business. I suppose the problem persists because IT is still thought of as a function that "serves" the business, rather than one that plays an integral part in the business's operations.

If IT is managed more intelligently, the work of the technology group can be more aligned with the business. Here are four steps CIOs can take to ensure better IT/business alignment:


  1. Focus your work to affect your company's ultimate customer
  2. One of the greatest mistakes an IT organization makes is to consider its own company its customer. It's an artifice used in many companies, especially large ones. However, this type of thinking focuses IT internally and restricts it from seeing beyond the walls of its company. It also encourages a company to do business with itself. I have been in endless meetings where IT managers and line business managers are negotiating as if they were two foreign, warring countries.

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    There is only one real customer for IT, and that is the company's customer. IT needs to focus on how its company's processes and systems affect and serve the external customers. If you sell directly to consumers, it is relatively easy to see how customers use your products and services. You can go directly to consumers to find out how technology can improve their experience with your company's offerings.

    But if you sell to another business that integrates your products and services into its offerings, it's more challenging to see how improved IT operations might make your business customers more successful. You have to understand how your customers create value for their ultimate consumer. This behavior requires a fundamental shift in thinking, from IT as an internal services function to IT as an integral part of a company's operations, creating value for real customers.


  4. Establish service levels that are driven from business needs
  5. Most IT organizations maintain some set of internal service levels: error rates, down time, service response times. But few IT organizations focus on the metrics that really drive the performance of the business: product/service error rates, order-to-cash time, order fulfillment time, customer help desk response times -- and the simple but critical metrics of growth and profitability. Businesses today do not allow a blank checkbook, and IT managers need to moderate or accelerate their spending as a function of the company's condition and ambitions. Brutally facing the reality of your company's financial fortunes -- whether good or bad -- gives you the business context that you need for real alignment.

    Next, identify a few business metrics that IT can improve -- like solving a real customer's issue on the first service desk call or reducing the total landed cost of your company's offerings. When you start solving real customers' problems, issues of alignment will go away.


  7. Operate as one management team
  8. If all or part of your IT operations have been outsourced, it's important that you and your IT service provider operate as one management team. Otherwise, you will be managing between three entities: your service provider, your company and your company's customers. You will have too many masters to satisfy, and your business partners will not know where to go to solve problems. If there is a breakdown in IT operations, the business will still hold you accountable. Finger pointing won't work.

    So supply your service provider with full transparency and demand the same back. Face the business with a fully integrated set of operations. It is easy to get misaligned when there are too many moving parts.


  10. Jointly review breakdowns
  11. One way to assure that you are aligned with the business is to hold regularly scheduled sessions to review breakdowns in operations and failures in service levels. Be sure -- in the spirit of transparency and integration -- to have your IT service providers at the table. You will quickly learn what's really important to the business.

    And finally, be sure to break out of your office or cubicle from time to time to visit real customers. Walk in their marketplaces and understand the issues they face. Ask how technology can affect their competitiveness. You will quickly see why IT needs to be part of operations, not just a service function.

James Champy is chairman of Perot Systems Corp.'s consulting practice and head of strategy for the company. He is also the author of the best-selling books Reengineering the Corporation, Reengineering Management, The Arc of Ambition and X-Engineering the Corporation.

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