[31.10.2007 first posted on silicon republic]
The ideal CIO may have sights set on a seat at the top table, but research shows that aligning IT and business is still a struggle for many organisations. And a report from a respected analyst firm suggests this may not be the best way to achieve results

Two events may not make a trend, but the news that two of the UK’s most prominent retailers recently decided to ‘retire’ the role of IT director may have caused senior IT staff elsewhere to cast anxious glances at their bosses.
The boutique store House of Fraser opted not to appoint a new IT director following the retirement of its most recent incumbent, Frank Berridge. Instead, under a new structure, the two staffers who had reported to Berridge will now answer to the company’s CFO. House of Fraser didn’t reveal why it opted not to fill the shoes of its outgoing IT head.
According to reports in the UK, the company is believed to have executed on its IT strategy to a point where all major implementations have been comple-ted and there are few new projects pending. There has been some speculation that, in the retail sector at least, CFOs are now taking a more active role in managing IT strategy.
In a similar move, the retailer Boots decided not to hire a replacement for departing IT director Robert Fraser, who had been with the company for 10 years. Fraser left following completion of a multi-year IT upgrade programme that cost a reported £300m sterling. Just about every facet of Boots’ IT systems was upgraded or changed as a result of the project, including a new SAP implementation, a pharmacy system and the IT infrastructure within the company’s stores.
Matt Dunstan, application platform group manager at Microsoft UK, said these developments do not necessarily mean that IT is being de-emphasised; the reverse may in fact be the case. “I’d take that as a sign of progress,” he said. “The retirement of the CIO, in some cases, is a good sign that IT has become embedded into the organisation.
“If you’ve got an organisation that has embraced IT in all of the departments and understands IT to a sufficient depth, then a more centralised role isn’t needed because the evangelising job has been done,” he said. “There’s always going to be the need for some leadership in IT, whether it’s driving down costs or delivering value to customers.”
The former certainly applies in Boots’ case: its target is to reduce the cost of running its IT operations by almost a third as a result of the modernisation programme - from £100m sterling to £70m sterling. It remains to be seen whether this focus on cost and the closer involvement of CFOs in IT strategy is specific to the retail sector or whether it indicates what the future may look like for CIOs across the board.
Speaking of boards, research commissioned by Microsoft in the UK has found that less than half (47pc) of businesses have IT representation at the top table. Larger companies perceive IT as less of a strategic asset, Microsoft concluded, saying that the research reveals “a level of discord between the perception and reality of the IT role and its function within a business”.
“I think this is probably something the IT community has been struggling with for a number of years. The struggle for relevance with the rest of the business and with the board is ongoing,” said Dunstan. “There are pockets of best practice in finance and retail but outside of that, IT is often seen as a cost centre.”
More than a third of large enterprises (37pc) cited better business/IT alignment as a key priority for current IT strategy. The reality is that companies are failing to execute on this.
This lack of alignment is causing a barrier to organisational success, Dunstan contends. “Better alignment of IT and business strategy equates to better operations, better visibility and better communication between the functions of an organisation.
“People create and run companies, but applications link them together. If people aren’t factoring this into the company at a board level, these ‘business bridges’ are doomed to collapse,” he said.
Synergies between application strategy and business performance are evident throughout the research: 83pc of businesses acknowledge that application performance problems have a direct impact on the business, with 76pc claiming that delays in bringing new applications cause difficulties 52pc of respondents are satisfied with the strategic impact that IT has on the business, but only 35pc are satisfied with the amount of time it takes to develop applications and introduce them to the business Just 16pc of IT departments believe that the user experience is currently a critical component of application development 27pc of businesses state that they have full automation and monitoring in place for core business applications 53pc of respondents view technology as a strategic asset within the business 47pc believe IT is perceived only as a cost centre by the board
Jon Collins, co-author of The Technology Garden – Cultivating Sustainable IT-Business Alignment, recognises the influence of one upon the other. “It is abundantly clear that alignment is not treated as a priority when it comes to setting and delivering on IT strategy. In our own research we have found that companies that see IT as a business enabler are better able to respond to change and reap greater benefits than those who still view IT as little more than a cost centre.”
But just as CIOs get to grips with the mammoth task of making business and IT work more closely together, the analyst firm Forrester has suggested they should give up trying.
In a report published earlier this summer, the firm says that aligning IT and business is futile and CIOs would be better prepared for BT, or business technology. According to the document, Debunking Alignment Nirvana, IT-business alignment will be replaced with BT Synchronisation. Forrester defines this as “a balancing of an enterprise level of focus, a networked balance of supply and a change agent role in the business strategy and processes of the enterprise”. CIOs should instead work with their CEOs to achieve BT synchronisation, the analyst firm suggests.
Forrester interviewed 20 leading experts and CIOs and found insecurity around three areas: demand, focus and change. Instead of chasing a state of nirvana – since business technology assumes alignment is impossible.
“BT’s broad technology use and focus on business results will morph the CIO’s alignment challenge into a strategic topic for all senior execs,” says Forrester.
Successful business technology synchronisation will depend on the people managing both technology and business initiatives. “The clichéd world of IT will end – the old world in which IT execs complain that they don’t have seat at the table, CIOs speak in buzzwords, and steering committees offer the illusion that alignment has occurred,” Forrester offers..
Instead, four things will happen with BT synchronisation: all top executives steer technology investments when making decisions; the top executive in the BT organisation will report to the CEO; business rotation will trump tech-centricity and constant communication will be the norm.
Forrester believes technology’s contribution to business results will be measured in non-technical terms and will talk instead of contributing to reduced cost, process improvement or revenue growth. A business technology executive will be freed from day-to-day operational work to concentrate on being an agent for strategic change.
Nirvana? Fantasy? More like further contributions to an ongoing debate. The CIO role is believed to have first been coined back in the Seventies - technology has done anything but stand still since then, so it’s only natural that prospective CIOs have been placing their flags in constantly shifting sands ever since.
By Gordon Smith