A Better Way to Think About IT Alignment

I'm always surprised to see "business alignment" amongst the top five priorities of senior IT staffers across virtually every sector (including government) year after year in just about every IT management survey conducted. Surprised, because it hasn't lost its status in two decades.

It begs the question: Do we need a new way of approaching the often dreaded alignment task? One technique that is picking up steam advises IT managers to align their capabilities and investments to their organization's competitive strengths, versus its organizational functions. It sounds subtle, but this technique helps you synch your priorities with the inherent strengths of the business.

But before I give you an example, a brief tutorial might help.

One technique advises IT managers align their investments with their organization's competitive strengths, versus its organizational functions.

How does your business compete?
Does your organization compete with product innovation? Customer service? Or operational effectiveness? Rarely do companies compete with all three.

My motives for shopping at service-superstar Nordstrom are satisfied much differently than when I shop at super-efficient Wal-Mart. Apple and Sony pull customers from Dell with product innovation. They do not aspire to offer the lowest price. Nor are they stellar service providers.

If you don't know which of these levers constitutes your organization's business advantage, ask. Or read your annual report. It's in there. Good IT organizations proactively reach out to the business with ideas that demonstrate knowledge of their organization's competitive levers. It's a great way to enhance your credibility and position IT as a true business partner.

Does your organization compete with product innovation? Customer service? Or operational effectiveness? Rarely do companies compete with all three.

Pick up a rifle vs a shotgun
Rather than shoot your resources at everything (in marketing, we call it shotgun) try the reverse approach (which marketers call rifle) by targeting your capabilities and services to the one or two things your company does well. Sure, you'll have to do the other things too, but by applying the bulk of your resources to your company's strategic advantage, you set yourself up to make a measurable difference.

For example...
Consider two insurance firms. One says, "For a good deal, buy our products online."  Another says, "If you need us, we're there."  Much different leading messages and much different IT organizations.

The price leader has superior transaction processing and has made big investments in improving the productivity of its online user interface. In fact, it may have outsourced the face of its online store to an expensive expert like TandemSeven, who helps companies build hugely intuitive web-based interfaces that scream with productivity and make online shopping a breeze.

The  other firm (that competes on customer service) invests in its brokers. Its sales force automation system significantly outperforms that of our online provider, and it offers far more personal touch and tailored insurance services (at a higher price). Its agents also have superior tools for producing highly customized insurance proposals in record time. One IT organization invests in customer touch points, the other in broker touch points - to satisfy their different business strategies.

One says, "For a good deal, buy our products online."  Another says, "If you need us, we're there."  Much different leading messages and much different IT organizations.

Remove your own bias
One of my clients was hugely disappointed when he proposed an investment to improve customer intimacy at his firm. It was shot down and he was hugely confused. After all, it's what he wants when he shops. But it's not the competitive driver the CEO of his organization had selected. And in fact, he lost credibility by failing to acknowledge how his organization not only competes -- but competes to win. Had he proposed a system that encourages customer self-service, he would have gotten the ear of his CEO.

...He lost credibility by failing to acknowledge how his organization not only competes, but competes to win.

Focus on your organization's most prized assets
Another way to approach the alignment exercise: identify your organization's most prized assets. Do they include your customer database? Your large set of patents? Your supplier relationships? If you help improve (or protect) asset value -- you'll help preserve the things your company needs to sustain business advantage. 

Notice where Wal-Mart's IT priorities lie. Wal-Mart may be cheap, but not when it comes to making investments in its supplier network - which gives its vendors access to one of the best supplier transaction systems in the industry. Suppliers do business with Wal-Mart at a fraction of the cost of other retailers. The result? A loyal supplier network, with low turnover, that is easier and cheaper to manage.

So, before you start your next IT Alignment exercise, do some homework and validate your organization's competitive strengths and prized assets. It will help you set priorities and draw those hard lines.