CFOs cite poor alignment between IT, business

CHICAGO (10/21/2003) - Although CIOs traditionally rank alignment between IT and business as a top priority, reactions from chief financial officers in a recent survey indicate that little progress has been made in closing the gap.

According to the survey, published this week by Boston-based CFO Publishing Corp., 44 percent of CFOs cited weak alignment between IT and business strategies, with another 4 percent saying there's no alignment between those groups at all.

The research, funded by Novell Inc., is based on responses from just 50 senior finance executives worldwide. But the results are consistent with earlier surveys of between 200 and 300 CFOs that CFO Research has conducted, according to Mary Driscoll, president and editorial director of CFO Executive Programs, the events arm of CFO Publishing, which is hosting a CFO IT conference here this week.

While several CFOs at the conference agreed that there is poor alignment between IT and business at their companies, many attendees were quick to defend CIOs for the challenges their organizations face in trying to achieve alignment.

"Most CFOs would agree that the alignment problem isn't the fault of IT," said Ian Downes, a vice president at Cap Gemini Ernst & Young U.S. LLC in Rosemont, Ill., who works closely with CFOs on IT issues. "IT departments are inundated with (project) requests and often find themselves in reactive mode."

With project demands streaming in from business units they don't understand very well, IT managers often have trouble translating requests into business requirements, Downes said. That's why he recommends that IT workers be assigned to work brief stints in other departments, such as finance or human resources, "to help them get a better understanding of how the business operates and what their requirements are."

To help achieve better alignment at Cisco Systems Inc., each project is assigned an IT and business leader, "and they're jointly responsible for the success" of the initiative, said Dennis Powell, CFO at the networking giant. "We changed our thinking about IT from a cost center to a strategic partner," with an eye toward getting employees to think about "how IT could generate value."

Poor alignment between IT and business "was absolutely an issue" at AT&T Corp., said Thomas A. Williams, chief process officer for the telecommunications company. In January, AT&T adopted an IT portfolio management approach to help it evaluate whether the more than 100 IT projects in the pipeline at any given time are meeting their targets, such as reduced costs or improved customer satisfaction.

The approach, which allows AT&T to "make conscious decisions on which (IT) investments to stop and continue," has helped the company solidify its IT governance model, said Williams.

Before adopting the portfolio management techniques, Williams said, AT&T's business leaders "often didn't know whether IT projects were delivering value."

Cathleen A. Benko, global e-business leader at Deloitte Consulting in Foster City, Calif., told conference attendees that only 35 percent of IT project spending aligns with the initial goals of a project. Benko, who is also a proponent of IT portfolio management, believes that IT departments are getting "a little better at alignment, but no one has cracked the code yet" and made substantial progress on the issue.

Several CFOs said much of the alignment gap is the result of people and personalities. Tom Goldstein, CFO at LaSalle Bank in Chicago, said that the relationship between business units and IT "wasn't that great" five years ago when previous IT leadership was in place.

Now, said Goldstein, "I trust the (the current CIO) very much, and we share a vision."

Some CIOs have faced cultural hurdles in trying to make tech-savvy IT professionals more business-focused. Oxygen Media LLC, a cable television network for women, is only five years old, "so it helps that the (20) IT people we've hired were all business-focused and we made sure of it. Many legacy-bound companies don't have that option," said Daphne Kwon, senior vice president and CFO at the New York-based network.

"I know some IT departments are insular and set themselves apart from the rest of the business," said Kwon. As a result, "that makes it harder for IT to work closely with business units and understand their needs."

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