Aligning IT & Business Strategies Still Elusive

Although information technology (IT) executives and corporate business leaders increasingly acknowledge the potential benefits of better aligning IT with business strategy, few have succeeded at making the link.

Ninety-six percent of IT executives surveyed predict a “significant” or “moderate” positive bottom-line impact if an IT strategy were specifically developed to closely align with and support the corporate strategy.

Only 10% of those same respondents, however, report their enterprises have been “extremely successful” in IT and business alignment efforts. Further findings reveal that clearly defined and communicated roles and priorities can significantly improve IT and business alignment.

“We’re seeing a change in the economy that is spurring renewed emphasis on growth and the reemergence of technology as a valuable contributor to business strategy and the performance of business operations,” said Ann Senn, principal, U.S. Leader of CIO Services and Global Leader of Deloitte Consulting’s CIO Advisory Services practice. “But IT departments cannot catch the wave if executives are unable to define the role of technology in the organization and agree on how CIOs should contribute to the organization.”

Confliction

While there is general agreement on the value of information technology within an organization, only a small percentage of respondents report a high degree of success in IT and business alignment efforts.

* Ninety percent predict that a “significant” or “moderate” positive
impact could be achieved by their enterprise if IT spending were
explicitly planned, and measured against corporate priorities.

* Sixty-five percent of IT executives say “ineffective communication of
business strategy and goals between business management and IT
management” represents a “significant” or “moderate” challenge.

* Nearly half (49 percent) say the “lack of defined business strategy” is
a “significant” or “moderate” challenge.

* Only 10 percent of respondents report their enterprises have been
“extremely successful” in strategy alignment efforts. These respondents
are five times more likely to say they are “extremely successful” in
aligning IT spending priorities with business spending priorities.

“Extremely successful” alignment continues to elude most IT executives. Sources of conflict that produce misalignment include unclear definition of IT’s role in the organization, lack of detail in top management’s plans, and shifting timelines.

“Most CEOs love the products, love the customers, and hate getting into details,” said Senn. “They are superb at delegating. In addition, technology infrastructures generally outlast the business models and the strategies they were originally intended to support. This leads to overly rigid infrastructures that limit flexibility.”

Overcoming Obstacles

To help organizations overcome the obstacles that prevent alignment, Deloitte identified three characteristics exhibited by organizations that are more successful in aligning IT and business strategies:

* Executive agreement on the role of IT — where and how it adds value to
the business.

* Executive agreement on the right priorities and focus areas for IT.

* Doing the right things right — follow through and deliver against
expectations.

According to Senn, “To be extremely successful in aligning IT with the business, the IT role and investment priorities must be clearly defined and executed against agreed-upon plans. As executives begin to understand the impact misalignment has on organization’s bottom-line, IT alignment becomes increasingly critical to the organization.”

Survey Background

In October 2003, Deloitte Consulting and IDG Research Services surveyed 200 IT executives, director level and above, representing manufacturing, finance, government, and consumer businesses with mean annual revenues of $1.8 billion.

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