Strategic IT Management: Aligning Technology with Business Goals

Introduction: Reframing IT as a Business Partner

The most effective way to address senior management concerns about IT is to develop a comprehensive IT plan rather than answering each question separately. The questions — and therefore the answers — are so closely related that they cannot be considered in isolation from one another. The plan must include steps to change the perception of the IT organization. Today IT is a reactive, poorly understood cost center. To be effective, IT must reverse that reality and become a proactive profit center. To accomplish this, the mindset of those within IT must also change. Technology pursued for technology's sake no longer works. IT must become a genuine business partner, and by understanding the business it can determine which technology solutions are appropriate for solving real business challenges.

This all sounds compelling, but how do we make it happen? First, we will list the steps necessary to reach our goal. "List" is the appropriate verb at this point because we will need to prioritize those tasks later. A side benefit of going through this kind of process is that we will be practicing good project management — practices that can then be applied to all IT projects.

Let us start the analysis at the highest level, where company direction is set. The highest level does not mean the people occupying the corner offices; it means understanding what the goals of the company actually are. We are already adjusting the orientation of IT. Instead of never being told what the goals are — or receiving a biased view after interpretation has passed through several layers of management — we are going to get as close as possible to the people who formulate those goals.

Aligning IT with Corporate Goals and Strategy

As a brief aside: do not assume that the goals written down are the most important goals or the only goals. Interview individual senior managers to get their personal perspective on what matters. You will learn a great deal about how goals are developed and gain a sense of who wields real influence among the senior management team. Put yourself in a salesperson's position and qualify your leads. If a senior manager cannot secure funding for a project, spending your limited resources on that project is probably not the best way to earn support from the broader senior management team. You may end up investing a great deal of time and getting nowhere.

Now that IT has better visibility into senior management's goals, we can work our way down to the next level. What strategies does the company believe will help accomplish those goals? To learn about strategies, we will use the same approach used to gather information about goals: interview the people developing them. Generally these will be the people reporting directly to senior management. Go through the same process of determining whether the documented list of strategies represents all of the strategies. Also match strategies to goals. If there are goals with no supporting strategies, or strategies unrelated to any goal, dig a little deeper.

So why are we going through all of this? We have not written a specification or a single line of code — is that not what IT is all about? The answer is that without this groundwork, we have no idea whether we are doing anything that matters to the company. We cannot address questions about strategic applications if we do not even know what is considered strategic. Going to senior management and reporting that we wrote a certain number of specifications and lines of code will not land well if competitors are gaining ground and IT has done nothing to support company performance.

Speaking of what matters to senior management: there may be a knee-jerk reaction when they encounter reports about IT expenditures. Those concerns must be addressed head-on. First, we need to identify the source of the information generating so much concern. If the source is a magazine or journal we can subscribe to, we should do so and begin anticipating senior management reactions in advance. IT's response to senior management will be quicker and more effective once good project management practices are in place. Our responses will substantiate where money is being spent and which corporate goals are being addressed.

Justifying IT Expenditures and Managing Projects

Take the process a step further and conduct a thorough cost-benefit analysis, calculating the return on investment (ROI) for each project. The company already goes through this process to justify building a new plant; the same rigor should be applied to IT projects. Because IT has not had much practice with this kind of analysis, it makes sense to enlist help from colleagues in other parts of the company who have done it many times. On all projects, the build-versus-buy argument also needs to be considered. For example, there may not be enough resources available to complete a project by a hard deadline, or the business process may be highly standardized — payroll processing being a prime example.

IT is now better positioned to focus its effort on the right projects. Even so, IT has historically done a poor job developing project plans, communicating project status, and — worst of all — identifying when a project is falling behind schedule and making appropriate adjustments. IT must adopt consistent planning practices. For all large projects, project managers should document tasks, dependencies between tasks, start and end dates, and the number and type of resources required. Even though IT may not have done this before, now is the time to start. Developing a plan without historical data will be difficult at first, but the process becomes easier as more plans are created and managers can pull similar project templates from the archives.

One item that will often be defined externally is the project's end date — for example, "the new customer management system must be implemented by January 1." As the planning process matures, it will be much easier to respond to these kinds of fixed deadlines. The importance of tracking actual time spent on each task cannot be overstated for future planning. Everyone should begin accounting for their time — not down to the last minute, but at least in half-day or hourly increments.

Conclusion: Key Priorities for IT Leadership

A wide range of actions has been identified in this paper. There are several key areas of focus. Take deliberate steps to become a true business partner: learn what the company's goals and strategic objectives are, and work toward helping the company achieve them. Apply good project management techniques to run projects professionally and build a positive image for IT leadership. Where it makes economic sense, outsource projects — at least partially. Seek economic justification for IT investments the same way any major expenditure must be justified. These priorities, pursued together as an integrated plan rather than a series of isolated responses, represent the foundation of a high-performing, strategically relevant IT organization.