Charles Steinmetz was once called out of retirement by General Electric to help it locate a problem in an intricate system of complex machines. Having spent some time tinkering with and testing various parts of the system, he finally placed a chalk-marked 'X' on a small component in one machine. GE's engineers promptly examined the component, and were amazed to find the defect in the precise location of Steinmetz's mark.

Some time later, GE received an invoice from the wily engineer - for $10,000. Incredulous, they protested the bill and challenged him to itemize it. Steinmetz did so: "Making one chalk mark: $1," he wrote. "Knowing where to place it: $9,999."

This knowledge that Steinmetz exhibited is not unlike the deftness of a good CIO that knows where to place the mark in regards to IT strategy and business alignment. Just like the intricate system of the GE machines, many corporations have intricate business strategies, adding a complexity to achieving business alignment.

According to Computer Economics, Inc., over 65% of companies polled report their business alignment to be either somewhat effective or not effective at all. This isn’t surprising if multiple business strategies make alignment extremely challenging. For such a situation, optimizing IT’s core strengths in a strategically flexible manner can reduce the feeling of ineffectiveness.

This requires a diligent CIO that understands where the company is headed. If, for example, the corporation’s primary business strategy is to be the market leader in their field by reducing production costs, then the CIO is strongly motivated to run a lean IT shop, establishing IT as a low cost, optimized work force to all lines of business.

At the same time, imagine this same corporation also has a business strategy of achieving full financial transparency through their corporate governance initiatives. The savvy CIO implements activity-based costing and correlates this information with lines-of-business throughout the enterprise. Strategic IT value initiatives are identified and measured to manage the causes of IT costs instead of the cost itself.

In the background to being a market leader and supporting corporate governance, this same corporation has a robust business strategy to expand into untouched global markets. The CIO must maximize IT’s assets, accurately assess new investments and coordinate an infrastructure that is agile and robust while achieving IT operational excellence.

Surrounding this entire scenario are other IT projects jockeying for position, claiming urgency and creating competition between senior managers supporting various projects. The discipline required of the CIO to identify the projects that truly align with business strategy becomes imperative.

IT Portfolio Management
The pressure for IT to find the mark of alignment in regards to business strategy becomes impossible without the aid of tools that support this process. If we are to take Steinmetz’ example in precisely identifying the defect within the intricate system of business alignment, it may rest with a lack of business process within IT.

In the financial world, portfolio management is a method of maintaining a healthy diversification for maximum return, the premise being that a portfolio of investments minimizes risk, unlike a individual investment. By absorbing this method from the financial world, a CIO is positioned for success. Defined processes are in place for reviewing IT projects and how they coordinate with business strategies. From an IT perspective, portfolio management is the process of creating and managing a portfolio of projects as they best relate to and support the overall business strategies of the enterprise.

This requires business intelligence to rate projects from the following perspectives:

Placing the mark in regards to IT strategy and business alignment stems from the deftness of the CIO and the business intelligence and communication supported across all lines of business. Learning to visualize projects from multiple perspectives enables stronger prioritization and evaluation when it comes to identifying projects to invest in. Ultimately, identifying alignment despite the complexity of strategies leads to delivering meaningful value within the enterprise. And value, as Steinmetz pointed out, is everything.

Ruby Gates
Editor