by Vicki Hamilton
March 2, 2011
For eight consecutive years, the Society for Information Management (SIM) has reported “IT and Business Alignment” as one of the top three concerns for senior-level IT professionals.
Even prior to the economic downturn, this highly regarded benchmark of IT industry spending, salaries, job scope and technical/business trends suggested a paradigm shift in how technology and business units are aligned. Organizational fluctuations reflect that shift, with 31% of CIOs and senior IT executives reporting directly to CFOs in 2010, up from just 25% in 2006.
Are companies beginning to approach technology assets differently? Is it possible to maximize alignment and efficiency without sacrificing quality and technological competitive advantages? Are CIOs evolving into CAOs (Chief Alignment Officers?)
Leveraging the performance management framework of a Balanced Scorecard (BSC) may be the answer. Developed by Dr. Robert Kaplan and Dr. David Norton, this methodology aligns execution to the vision and strategy of the organization, and can ensure technology decisions are being made holistically, with business consequences firmly in mind. This framework is from four perspectives:
· Financial – Is each technology investment being fully leveraged or are ‘cool’ capabilities being adopted without regard for ROI? Should a technology capability be adopted simply because others in the marketplace have adopted it? Beyond direct financial results, what is the positive impact in market share, brand recognition or consumer loyalty?
· Customers – Will the technology investment reinforce the organization as a service or product provider and will this investment increase the customer base? Does it improve the customer experience, and if so, how? Will the result be an increase in revenue? Bottom line, how does the technology capacity impact the (internal and external) customer?
· Processes – Are the internal processes necessary and can they be streamlined? What value does each process make and what do we expect to receive from them? Can the infrastructure change to provide solutions easier, faster and more effectively? Is the technology closely aligned to the organization’s core competencies? Does “in-sourcing” within the company makes sense?
· People – Is the organization preparing talent for the next crucial skill or is the focus primarily on the resource demands of today? Is retention targeted for reducing turnover costs or is it about ensuring tomorrow’s competitive advantage? Could “in-sourcing” increase supply chain efficiency?
The underlying question throughout is “What is the true value of each technology initiatives?” Aligning to current and anticipated strategic needs of the organization in partnership with all business units is the key to beginning this transformation. “CAOs” are using this litmus test:
As a company, are we effectively leveraging our most valuable technological assets, including people? Are we implementing short term execution and long term culture to support enterprise-wide results? Are we ready for the hard decisions of prioritization, return of investments and cultural change management? If we are adequately aligning technology to the changing relationship between business and IT, then, the answer is yes.
Vicki Hamilton is a Senior Vice President, Digital Operations & Performance who has held multiple Technology, Operations & Strategy leadership roles in leading media organizations including Turner Broadcasting System, Inc. and The Weather Channel Companies.