In today's rapidly changing business environment, IT executives are faced with the challenge of finding the best way to align their department with business goals, and prove their value to the organization. Compuware recently conducted a roundtable discussion with a group of IT leaders from around the world, to discuss how other IT executives can achieve success within their department and in the eyes of the business. Ellen Kitzis, Vice President, Gartner, Inc., and co-author of the book, "The New CIO Leader," moderated the roundtable.

CIOs will see one of two very different scenarios in the future. The first possibility is technology becomes totally commoditized. This would require IT leaders to become more operational in nature. The second possible scenario depends not on technology becoming commoditized, but rather on it becoming a strategic advantage to the business. This scenario demands a new type of IT leader who is not just a technologist but more of a business leader who contributes to leveraging technology to help the organization’s business strategy. And this is the type of leader we see becoming predominant in IT executive management.

To be more strategic, IT leadership is moving deeper into integration—combining technology, applications and people to interact and create something that is greater, and better, than the parts. This is challenging because IT has to continuously maintain the infrastructure, keep a clear view of existing and planned applications, manage the various projects in process and control every new challenge along the way. Adding to this mix of responsibilities, roundtable attendees stated that risk was increasing in importance and because of that, businesses are making a substantial investment in security. Depending on the industry and level of government oversight, risk and compliance are becoming almost a full time job for IT management. With all these varying aspects of IT management on the table, integration—particularly when it comes to gathering the right people to strategize the priorities of the right projects—plays a key role in creating that something great to provide value to the business.

Aligning IT with the Business

Aligning IT with the business helps maximize the value of IT by having IT work on the most vital tasks. This requires understanding the real business priorities. Business stakeholders are frequently adept at saying how much money they are willing to invest, how much they want to grow or by how much they want to cut spending. But frequently they are not clear in outlining their business priorities. The roundtable attendees said IT must clearly understand the business priorities so IT can formulate a strategy to address them.

During the roundtable, attendees concluded that the goal of improved alignment should be to bring the business and IT teams together, with IT meeting or beating the business’s expectations in maximizing the effective use and value of IT. Alignment of IT and the business is ultimately a key criterion by which the business will evaluate the IT organization.

One of IT’s ongoing challenges is getting management and business users to agree on how effectively they are addressing business issues.
There are typically type A, B and C companies with type A being aggressive users of IT and early adopters. They are typically right there at the beginning of the life of a new technology.

"Being the CIO in that type of organization (type A) can be very exciting because you are at the edge of everything that the organization wants to do," stated an attendee. "On the other hand, it can be challenging because you are in an organization where everybody wants to be developing at once, and you think, ‘Well, it isn’t even in my forecast yet. I am trying to make this first thing work.’

If you are the CIO in an organization that is lagging in terms of adopting to new technologies (a non-type-A organization), and want talk about how IT contributes to the business, it’s unlikely that anyone will be listening. The only measure of IT in these organizations is the ability to deliver under budget and on time. In these instances, you need to modify your communication approach based on the type of organization.

Regardless of whether it’s an aggressive or lagging organization, IT still needs to align with the business to be effective. And it’s the CIO’s responsibility to drive communication in the context of the type of organization. This often includes taking varied communication approaches and changing messaging based on the level of technological understanding for that particular department—it can not be a one-size-fits-all approach across the entire organization.

How does IT know when it is really contributing? It’s when an opportunity surfaces that has the potential to help the business compete more aggressively in the market, changing the speed to market, customer focus, competitive positioning, cost model, pricing and all of those things, and IT can deliver on that. That is when you know IT is contributing.

Managing Supply and Demand

The attendees also spoke of the importance and the challenges of managing both the supply and the demand sides of IT. It is critical that IT managers address the demand side--which is really about creating, enabling and opening up potential change into the organization through collaboration with the business in leveraging current and new technologies--along with the supply side, which requires the ability to develop and nurture the team to create a high performing organization.

Roundtable attendees noted that CIOs are struggling to demonstrate to the business that IT can step up, make a difference and contribute more value to the enterprise.

Most CIO leaders today come from the "supply mold" and the reality is that supply management consumes much of their personal attention but does not actually deliver innovation. Typically, new CIOs spend too much on the supply side because they understand that part of the organization—much better than they understand the demand side. In the opinion of the roundtable attendees, the CIO mindset is often to get internal processes in order before switching their focus to the demand side, which is an enormous mistake. CIOs must address the demand side right from the beginning in order to increase business impact.

"From a supply perspective, it is frankly about how a lot of you spend your time," one roundtable member said, referring to CIOs. "You spend your time building your team, hiring, firing, coaching, mentoring, picking the right people and defining the competencies for the organization. IT managers are spending a considerable about of time managing risk, not just for IT but for the enterprise."

It is the job of the CIO and the entire IT management team to direct the demand side of IT and to be accountable to the supply side. The challenge of managing supply and demand is one of the motivators for CIOs-- and why IT leaders-- want to outsource more. Responding to demand requires managing peaks and valleys. There are going to be times when demand increases and IT must be able to address that. IT must be able to identify appropriate skill sets, both internally and from an outsourcer. Not only is it important for a CIO to expand the focus to managing both supply and demand, but also to govern IT based on a vision shared with the business.

IT Governance

One of the top jobs for an IT leader is to build a vision that incorporates understanding people’s expectations, testing the ideas, communicating the vision and sharing it with the constituency. It’s IT governance that allows you to achieve this vision by leveraging your investments in the right way to do the right thing for the business. It’s just not sorting out a priority of projects in terms of the resources we have. If it was simply a resource management issue, then there are many ways that sourcing could help IT do twice as many projects than it does today. However, the goal is to do the right projects and invest in the right things to drive the business. To accomplish this, IT needs to merge business and IT strategy into one vision, which is challenging.

One attendee stated that, "In our company one of the biggest demands for IT hardware and software comes out of the development organization. Without governance in place outside the organization development could just run wild." And that’s exactly what governance is suppose to do, because most IT professionals are not business people and they’re driven by new hardware, new software, new technology, and don’t really think about the costs involved.

The important thing about a governance process is to have an exception process. Without that, the organization will find that it changes governance every twelve months and that’s not effective. It’s hard enough to get people to understand governance and then going in and changing it is really hard. When you develop a governance process, you need to understand who is involved when an exception is required. Once you know that, you need policies around what you define as an exception and who is responsible for making the ultimate decision for that exception- and that is what keeps your governance process going.

"Organizations that really work have one integrated strategy that speaks to how IT is going to participate with, and contribute to, the business and its overall strategy," stated one of the roundtable attendees. Another attendee said, "We need to ensure that the IT vision is not in isolation to the vision of the overall business. When it comes to an IT leader’s ability to actually influence, check expectations, create governance and clearly get a feeling on performance, we need to look at it in terms of how people are doing."

It is statements like those that make it even clearer that the governance process is an integral part of maintaining that unified vision between IT management and the business. What’s more, how the two groups remained aligned with the overall strategy is directly affected by the exception process when unplanned or new projects are brought to the forefront.

Conclusion

The roundtable discussion primarily focused on three key areas as important priorities for IT leaders. First, how IT needs to engage with and effectively support the business. Second, how IT should address the challenge of managing supply and demand. Lastly, what is the role of IT governance and how can it help organizational success. Taking into consideration these three factors and the importance of properly managing each, it is clear that IT departments will continue to be a major contributor to an organizations success if a common vision toward business goals is created from the beginning.

All the IT executives who participated in this roundtable are current users of Compuware Changepoint, a leading IT portfolio management solution that provides supply management, Project Portfolio Management (PPM), Application Portfolio Management (APM) and other vital functionalities that have helped them effectively align their department to meet the needs of the business. Using Changepoint, each of these executives have been able to take a comprehensive approach to managing supply and demand, to leveraging IT investments and to communicating value back to the business—all the necessary components they identified as an integral part of IT management and business success.