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March 12, 2002

IT-Business Alignment: Week 1 There's a New Sheriff in Town

[ Continued from Page 2 ]

As Mills has said, most of the time people only give lip service to the alignment efforts and do a cursory job of it at best. People gather in a conference room honestly intending to work toward alignment. They do some IT strategic planning, put a bunch of great thoughts and ideas on some white boards, and agree it all looks good.

But the moment everyone walks out of the conference room, the plan is history. Why? Because the people involved in this work have full-time jobs to perform and doing an IT-business alignment correctly involves a serious amount of overtime. To be done right, an alignment plan needs to be carried forward. It needs to be put into action.

Obvious? Maybe, but in the majority of cases, this action never gets done.

Alignment action plans also need to be holistic in nature. They need to encompass so much more than just adopting some vague mission and vision statement. They are more than just choosing the right development methodology or Internet strategy. They need to take into account everything IT does and how it does it. More on this topic later in the series.

Developing a Plan

Well, enough daydreaming and philosophizing. For the rest of the meeting, our fearless leader went to the whiteboard and began outlining the way we will begin aligning ourselves with the business over the next few months. As you might expect, there was a lot of discussion about this and many unanswered questions.

In summary, HomeWorks will be aligned along three areas. They are:

1. IT strategic planning. The development and communication of an IT vision as a portion (or plank) of the larger corporate strategic vision.
2. Business systems' development and project prioritization. The tactical steps needed to develop and deploy software and hardware solutions to support IT strategic planning.
3. IT financial planning and administration. The processes and procedures needed to pay and account for business systems' development and project prioritization in a fiscally responsible manner.

I'll get into much more detail on each of the three areas in later installments of this series.

Fortunately, our alignment efforts at HomeWorks will be greatly helped by the fact the company has a defined strategic plan and vision in place that is being successfully executed. It makes aligning IT and business much easier when the organization has laid out clear goals and objectives, because ultimately, everything that gets done in IT's strategic plan needs to work toward some larger goal in the company's overall strategic plan.

Also, it's important to remember that each of these three areas is equally important. They all work together to align IT and the business. Like a three-legged stool, if you don't build each leg strong enough, the stool can fall over.

Points 1 and 2 of the alignment outline are areas people most often think about when they discuss IT-business alignment. Basically, understanding the business goals, defining an IT strategy, and then defining processes and methods for building and deploying software to meet those goals. Unfortunately, the third alignment point is often not considered part of the alignment when in reality it is often the very thing that builds the most IT credibility (as much as having systems developed correctly and up and running when needed.)

Remember what Mills said about running IT as a business? That's where point 3 comes in. In this context, this overworked phrase means that we will develop and manage budgets, and more importantly, we will track how the money is being spent while justifying future projects via an accurate assessment of ROI. Simply one of the best ways IT can prove its value to the organization is by not wasting money!

That means, among other things, that we know what we're buying, how much we're paying and if we're getting the best price, and that we're staffed at appropriate levels with the right people. It also means that we have a methodology in place to develop systems and install hardware so that time and money aren't wasted.

Follow the Money

To get a better handle on IT finances, Mills did something unusual (at least in my experience) in his first two weeks at HomeWorks: He hired his own accounting staff for the IT department. Actually, it was only one junior accountant named Steve.

"You want to do WHAT?" fumed Charles Fister, the CFO. "You can't be serious. Is this your idea of fiscal responsibility, circumventing the finance area entirely?"

"Think about it, Chuck," Mills replied. "Things are in chaos over here already — nobody knows how much is being spent on what. Nobody really understands how much is in the budget — and forget about tracking ROI. What better way to get a handle on IT spending than to bring in someone dedicated to doing just that?"

From what Mills told me, it was a pretty hard sell. But Fister is a strategic thinker. He was acutely aware of the financial mess IT was in and didn't have people to spare, so he was willing to give it a chance.

Keep in mind that this isn't something you'd do with every company. Obviously, the IT budget needs to be large enough to warrant it. At HomeWorks, our average annual budget is in the $45 million range — the largest department budget in the company outside of the stores budget.

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