3. IT Business Alignment - Simple Steps to Make it Work

I don't remember any time over the past twenty years when "Business - IT Alignment" has been lower than third on lists of top issues for IT Departments.  This is truly a sad state of affairs.  It is also, in my mind, a totally unnecessary state of affairs.

Consider three organizational structures:  

1. Divisional IT within an autonomous division

2. Corporate IT where there is only one division

3. Corporate IT serving multiple divisions

The first two have the same solution and there is no real reason it can’t be implemented.  The requirements are:

• IT has a “seat at the table” and is included in business strategy discussions.  They need to have an active role so that their constraints are considered along with other constraints.
• IT projects are then created in support of the business strategy. 
• If the overall business strategy changes then so does the IT component.

The third structure, while more complicated, also works.  A governance structure, usually some form of PPM (Project Portfolio Management), works best.   The portfolio of projects still needs to align with the Business strategy.  If each division has it’s own strategy, which is common, the Portfolio of projects needs to include, at a minimum, attributes for:

• Division
• Size
• Complexity
• Application Area
• Risk
• Potential Return
• Regulatory Requirement

Other attributes should be added based on the parameters considered for the business strategy.  Here some divisions may not get what they want when they want it.  However, all will know up front, and if the IT Group is able to flex its capacity with outside resources, these instances should be reduced.  That flexible capacity should be a requirement for any Corporate IT Group serving multiple divisions.

Another approach to help ensure business alignment is to divide the IT Development budget into:

• Major Project (goes through formal PPM process)
• Discretionary Project (each department (for 1 & 2, above) or division (for 3) agrees to a discretionary budget amount for smaller projects.  The prioritization process for this can vary by department / division based on their wants)

It basically comes down to communicating clearly, estimating well, looking for benefits and synergies, being flexible enough to adjust projects as priorities change, and reporting back on a regular basis.  

The only real exception to all of this is that if there is not a business strategy, there is nothing to align with.

As always, I welcome feedback and suggestions.