Can IT Effectiveness and Business Alignment be Separated?
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Jerry Luftman, the noted scholar on IT-business alignment, questions whether IT's effectiveness and its alignment with business needs can be separated. |
The associate dean and distinguished professor at the Stevens Institute of Technology's Howe School of Technology Management responded to a CIO Insight article, Companies Falter at Aligning IT to Business, written by my colleague Brian P. Watson that reported on a Bain & Co. study 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.
A year ago, Luftman released a study of 140 senior-level IT officers that showed IT's lack of alignment with overall business remains a festering problem and business unit integration of IT is still far off. (Read Achieving Alignment Detente, an article Luftman wrote for CIO Insight.)
Here's what Luftman wrote to Watson:
"Bain defines alignment as the IT department fully understanding business priorities and having adequate staff to respond to those needs. They go on further to separate effectiveness from this definition. It is no wonder that aligning IT and business strategies has been among the leading concerns raised by IT executives since 1980 (SIM annual survey).
"First of all, I just do not see how one can separate effectiveness from alignment? Demonstrating the value of IT is a fundament part of mature IT-business alignment. Alignment goes well beyond having IT just understanding business priorities. It also must ensure an appropriate governance process that enables IT and business partners to discuss strategies, priorities, projects, plans, and resources (financial and people). Alignment addresses both how IT is in harmony with the business and how the business is in harmony with IT.
"There is no silver bullet to addressing the alignment conundrum ... however research has identified six components (each with multiple criteria) that must all be focused on, as described in CIO Insight in 2001:
1. Communications
2. Value Metrics
3. IT Governance
4. Partnerships
5. Technology Scope
6. Human Resources
"Recent research in banking and pharmaceutical industries has demonstrated the contribution of this maturity assessment by demonstrating the relationship between profits and IT-business alignment maturity; the higher the maturity level, the higher the profits."
Do you agree or disagree with Luftman? What are your thoughts? Please respond in the box below.
Comments (2)
I couldn't agree more with Mr. Luftman.
Alignment and effectiveness are the same thing. For IT to be effective, it has to be doing the right things, working on those priorities that would give the business the greatest returns for their investments in IT.
Getting projects done as specified, on budget and on schedule isn't being effective; that's being efficient.
But efficiency is critical. Its through continually improved efficiency that IT creates capacity to do more for the business...as long as that new-found capacity is pumped into strategic and innovative opportunities and not back into the costly fire-fighting bedlam IT is so good at.
True, business-IT alignment is the critical issue facing CIOs and IT organizations today. But we need to be clear and consistent about what business-IT alignment is and build better models so companies know how to pursue and achieve it.
Posted by John Hughes | September 13, 2007 2:03 PM
Luftman is right. Alignment is a subset of IT effectiveness, aka "doing the right things to achieve business goals." The other main piece of IT effectiveness: being able to execute the right things.
But there is a Maslow-like hierarchy here: IT effectiveness does not emerge as a issue unless IT delivers adequately on the basics (keeping the lights on).
So the good CIO first makes sure the lights are kept on at low cost, then worries about alignment and execution.
Posted by Tom Lodahl | March 10, 2008 10:42 AM