CHAPTER EIGHT Strategic Alignment Tim Campos IN TODAY’S BUSINESS, CIOs have tremendous opportunity to have a major strategic influence on their businesses. This opportunity arises from the rapid adoption of information technology over the past three decades across nearly every aspect of business. When a company wants to merge with another organization, the IT organization is one of the first corporate departments to be involved. When a new plant or facility is opened, the IT organization must be involved to help connect it to the rest of the company’s systems. Even when a company reaches into a new line of business, the IT organization is involved to help set up the information systems to support the new business. This opportunity, however, can also be the CIO’s greatest liability if the organization’s focus is diluted. IT has been adopted in nearly every business process, even those that are not very strategic. Nearly all employees at companies have e-mail accounts, and every corporation has a web site, regardless of whether it delivers products or services through that web site. Because all of these technology operations must function in order for the business to operate, CIOs must divide their focus and resources across the entire company. This breadth of demand creates tremendous challenges for IT organizations. It is not good enough simply to focus on those portions of the business that are strategic, to the detriment of everything else. Although this might work in the short run, over time the neglected business functions become a drain on the success of the business. (This is one of the reasons so many firms reimplement enterprise systems.) Moreover, what is “strategic” depends on whom one asks. A customer portal may not be that important to manufacturing, but it is critical to the strategy of the service organization. The resources allocated to the IT department are finite, yet the demands on the IT organization can at times appear infinite. It is this challenge that separates the mediocre from the exceptional IT organization. The secret to addressing this challenge is to strategically align your organization to the business. FRAMEWORK Strategic alignment results from structuring the IT organization around the needs of the business. To explain how this is done, let me break the operations of the IT organization down into four basic functions. Two are delivery functions: support delivery and project delivery. The other two are management activities: value attainment and strategic alignment. All activities of the IT organization can be categorized into one of these four functions, although, as we will see later, these functions are typically spread out across multiple teams, which is the source of much of the misalignment IT organizations face (see Figure 8.1). FIGURE 8.1 IT Strategic Alignment Framework These functions layer on top of each other such that failure at one level affects everything above it. Strategic alignment is achieved .