On IT-business alignment and related things

In the past couple of days I’ve read a couple of articles (”IT can’t be a service provider and a partner too” and “Run IT as a business – why that’s a train wreck waiting to happen“) that riff on the same theme: that the exhortation to “run IT as a business” leads you down a road to organisational exile.

Put briefly, the thinking seems to be: if you set an IT organisation up to run as a business, you create a supplier-customer relationship with other parts of your wider organisation – and this relegates you to being a simple order taker. You’ll have to implement the requirements you’re given, and often these will be out of whack with what the organisation will really need and will raise IT costs over the long term, making an internal IT operation even less attractive and making you more likely to be outsourced.

In my experience this analysis is plain wrong, and comes from simplistic thinking about what the phrase “run X as a business” might mean. Being more business-focused has multiple facets to it, and blindly interpreting the idea leads you to daft, simplistic conclusions. Applying similar thinking to cooking would lead to the advice “don’t use sharp knives; if you do that it’ll only be a matter of time before you chop a hand off”.

To be clear: my experience and advice diverges with these other opinions not because I disagree about the risks of IT becoming a “simple order-taker”; but rather because I disagree that running IT as a business means you have to become a simple order-taker and everything else is excluded. There’s much more to it than that. The key is to see the relationship between IT and other areas of a business as having three key layers.

When I look at IT leaders who have really become strategic players at board level (and I’ve been talking to them ever since my work on The Technology Garden), it’s not the case that their organisations have stopped becoming service-focused and focus wholly on hanging out with senior business managers. If anything their organisations are more service-focused than the norm.

In the best-performing organisations, the “run IT as a business” idea is primarily about an inward-looking perspective. It’s about putting repeatable processes in place, creating a service culture, figuring out the actual costs of delivering IT services through IT processes, and looking for ways to increase IT process efficiency and effectiveness.

In high-performing IT organisations, when it comes to the outward-looking perspective (the relationship between the IT organisation and other parts of a business) the relationship has at least three layers:

1. As a foundation, IT teams have to deliver reliable operational services in line with clear promises and in the context of defined cost expectations and budgets.
2. When it comes to using IT to enable business in new ways the relationship works at a higher level, using different teams, reporting structures, skills and incentives within multidisciplinary joint IT-business teams.
3. The top layer acts to mitigate the risks of individual business units driving change that is counterproductive to the organisation as a whole, typically through some kind of IT governance structure that helps to ensure that significant IT investments are considered in their proper strategic context and that the costs and risks are properly understood by all.

That’s three layers: IT operation/service delivery; IT-business engagement; and governance/strategy. You can be focused on service provision and also on partnering. As long as you understand the bigger picture.