Hold That Golden Spike

What does business/IT ''alignment'' look like?
CFO StaffMarch 17, 2004

Rarely has a topic engendered so much agreement yet so little progress as IT/business “alignment.” Last year it topped the priority list among members of the Society for Information Management (SIM), a professional organization of CIOs that has been actively studying the issue for three years and extolling its importance for longer than that. And earlier this year, the sixth annual “Technology Issues for Financial Executives Survey,” conducted by Financial Executives International (FEI) and Computer Sciences Corp. (CSC), found alignment very much on the minds of CFOs, with companies that considered themselves “aligned” reporting a high return on their IT investments more than twice as often as those that don’t (24 percent to 10 percent).

Advising CIOs and CFOs as to how to achieve alignment is a consuming, and lucrative, interest of academics and consultants. But what does alignment actually look like? Most agree that it entails a defined IT strategy that’s in sync with corporate strategy. Given that 60 percent of the FEI/CSC respondents said that their organizations have no strategic IT plan, that’s one place to look.

But there are others. A long-term study begun in 2001 by SIM in conjunction with The Conference Board found that while many companies have created liaison positions to bridge IT and business units, most of the time the people who occupy those positions tend to communicate IT information to business units and vice versa, rather than to develop meaningful ties between the two. Often, the report says, IT is viewed as a separate career path within companies, with little managerial rotation through IT or encouragement of talent transfer between IT and business units. IT tends to be viewed as an enabler of strategy, but not a driver.

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The study, directed by Jerry Luftman, executive director of Graduate Information Systems Programs and Distinguished Professor of Information Systems at Stevens Institute of Technology, in Hoboken, N.J., recommends that the role of liaison evolve from communicator to relationship-builder; that better metrics be adopted to measure IT; that IT be included in strategy-setting; that specific technologies, including data mining, supply-chain management, and others, be exploited for their business value; and that career-development programs be established to encourage job rotation and IT-business crossover.

Clearly there is a long way to go. Only 7 percent of the FEI/CSC respondents said that their company’s IT plan is fully aligned with corporate strategy, another 30 percent could point to some alignment, while the remaining 63 percent reported none at all.

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