Chapter 3: Alignment and Planning - Doing the Right Things

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Introduction

Information Week and other respected IT industry trade journals regularly publish lists of the best chief information officers (CIOs) and IT organizations. Admittedly, some of these competitions are mere beauty contests or have a contestant pool biased toward very large enterprises with enormous IT budgets. However, drilling below the surface of these industry surveys soon reveals at least one attribute that distinguishes the winners of these contests: the strength of the alignment between the information technology needs of these enterprises and what their IT units actually deliver. In other words, properly aligned IT organizations are seen as regularly delivering the right stuff to their customers.

In this sense, alignment is a tangible quality that may be measured in terms of the degree to which the IT organization takes direction from and delivers on its commitments to the business, contributing tangibly to the enterprise's bottom line and to customer satisfaction. At the same time, alignment is also about perception: business managers believe that they truly provide direction to the IT organization and IT leaders consciously determine their priorities and resource allocations in light of this input. To be sure, alignment along these lines is essential if the corporation's investment in IT is to enable the realization of business goals and objectives. Alignment does not just happen. The successful application of IT within the enterprise requires the coordinated and collaborative efforts of both business and IT management. When these parties are aligned, the ownership of information technology initiatives is shared, and the costs and risks associated with IT deployments are better appreciated and taken into account by all corporate stakeholders.

As important as alignment between business and IT is in any enterprise, achieving such an alignment does not come easily. First and foremost, the effort requires the full backing of the enterprise's leadership team. Management must recognize that getting it right requires an investment of its own time in defining current and anticipated information technology needs and then in prioritizing proposed initiatives to address those needs. Because available IT resources are invariably constrained, decision makers must limit the range and scope of the IT undertakings in a given fiscal year, and even jettison pet projects that do not make the cut.

For their part, IT managers must understand the business; intuit competitive opportunities and operational needs; and discuss the real benefits, costs, and risks of IT investment options in terms that the business side of the house can appreciate. They must also ensure that each chosen project encompasses the total cost of ownership (TCO) inherent in that undertaking. This means that they must be clear with their line-of-business colleagues about the added infrastructure enhancement and upgrade costs, IT staffing and support costs, and ongoing maintenance costs associated with any envisioned initiative.

Understandably, neither business nor IT leaders have the time, the interest, or perhaps the courage to master the details of their counterparts' areas of expertise. Somehow, this gap must be bridged and a shared vision of the role of IT within the enterprise established. By taking a proactive role in framing the alignment discussion within the enterprise, IT management can ensure that the business team focuses on realistic information technology opportunities and issues. IT leaders must also ensure that their business colleagues are well informed to make proper choices among IT investment alternatives. To this end, the IT team would be well advised to adapt the IT internal economy model discussed in Chapter 1 to frame this complex discussion. In addition, the leadership team must draw on the enterprise knowledge of its customer relationship executive (CRE) cadre and the process expertise and support of its project management office (PMO).

In employing the internal economy model, enterprise management is obliged to examine systematically the extent of current IT team resource commitments. After accounting for all nondiscretionary IT expenditures, including the incremental, ongoing costs of projects already in the pipeline, management can project what resources may be available for new initiatives. In brief, managers will know where the corporation currently sets the bar for IT investing. If the priority list that emerges from the alignment process exceeds this amount (which is almost always the case), the leadership must either cut back the list or add to the IT organization's resource base. Alternatively, management may agree to reduce the current investment in ongoing IT operations and even eliminate some offerings to enlarge the pool of funds available for new investments. These are often tough decisions. The advantage of a planning and alignment process is that final choices are made collectively and owned by the very lines of business that will fund the final list of new IT projects. Thus, the pain of denial or change associated with the adoption of technology initiatives for the year is shared by all stakeholders in the process.

This chapter explores a systematic approach to IT alignment and planning within the enterprise. Because it is very much in the IT organization's interest to get this process right, I advocate a proactive approach in which the IT leadership that engages the business side of the house in a constructive, informed dialog about enterprisewide IT investment options, and in which PMO personnel serve as working session facilitators, scribes, and timekeepers.

Beware! These conversations can be perilous because they could let loose unrealizable customer expectations. To avoid such circumstances, the process must educate participants about the fiscal, technical, and human resource constraints of the situation. At the same time, it must afford the business side of the house final say over initiative priorities. In this way, the ownership of process outcomes, as well as ultimate IT service and project deliverables, will be shared jointly by the enterprise's business and IT leaders. Finally, to ensure a common, clear understanding of the decisions made, the alignment and planning process must be documented to identify those accountable to articulate clearly the commitments themselves and the metrics of delivery.

Getting the business side of the house to participate in the process presents its own challenges. Even if enterprise management is committed to playing, managers may not have a deep enough understanding of information technology to differentiate among options. The next section of this chapter explores techniques for involving the nontechnical management team in defining IT goals and objectives. Then comes consideration of a number of approaches to achieving alignment, borrowing heavily on the author's own field work and on a methodology developed by Tom Murphy. ^[1]

Lastly, the chapter offers a model for the documentation of and reporting on IT planning and alignment commitments. This section will also speak to the need to market the IT plan, educating line-of-business management and other internal IT customers about the scope of these commitments, how results are to be measured, and what operating values and assumptions the IT organization intends to bring to its service and project delivery efforts. A series of simple frameworks will help focus and drive discussion and provide a comprehensive reporting tool for capturing and communicating IT plans and priorities across the enterprise. PMO personnel are ubiquitous in these activities but remain largely behind the scenes.

^[1]For an overview of Tom Murphy's approach to IT portfolio planning within the enterprise, see "A Portfolio Planning Approach for IT Investment," Enterprise Operations Management Journal, 42-10-50 (August/September 2003).

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