Companies Falter at Aligning IT to Business

September 10, 2007 from CIO Insight – “CIOs have been talking about it for years, decades even—preaching alignment with the business as the silver bullet for making IT departments most effective. But a new study reveals that most companies have, in fact, done a poor job with both.

In a yet-to-be-released survey, the consulting firm Bain & Company found that companies grew faster and lowered costs more dramatically by first focusing on making their IT departments effective. Those that favored alignment before effectiveness, on the other hand, faced tougher growth prospects and higher spending rates...

One major problem, in Puryear's eyes, is that technology and business executives misunderstand the concept of alignment. Instead of synching up strategies, companies tend to allot IT resources to different business units and call that alignment. But that process leads to increased complexity—rife with fragmentation, redundancy and subscale operations. "By definition, that complexity is going to drive up spending," Puryear says.

Bain polled technology and business executives at 450 publicly-traded companies, asking two questions. First, the executives were asked how IT is aligned with the business organization. Bain defines alignment as the IT department fully understanding business priorities and having adequate staff to respond to those needs.

Second, Bain asked how effective—getting projects done as specified, on budget and on schedule—those IT departments have been. Based on that definition, 85 percent of respondents characterized their IT operations as ineffective…

With those findings in mind, Puryear urges companies to focus first on effectiveness before tackling alignment.

180 View – Bain defines effectiveness as “getting projects done as specified, on budget and on schedule”. We think that Bain and most project managers are ignoring the most important measure of effectiveness, which is whether the project helps the organization achieve its Critical Success Factors (CSF’s - those things that an organization must do well in order to be successful). And guess what, if the project does help achieve CSF’s, then it’s aligned.