Last week, Bob Evans published an article entitled, "Suicide Strategy For CIOs: Aligning IT With The Business." In it he asserts that the CIO must abandon efforts to align IT to the business and instead align with customers. This does not make business sense. Information technology enables business capabilities to deliver value to the customer, but the CIO should support the business by ensuring that the business capabilities make effective use of information technology. The enterprise and its business activities are the customers of the CIO.
The role of the CIO should be to optimize the enterprise information systems and their use of information technology to enable the enterprise to achieve competitive advantage in each of its lines-of-business. That does not mean the CIO is a technology geek, but rather that the CIO must know about the design of the business to determine how technology can empower the business.
Alignment of IT to the business should be put in the context of delivering value to the enterprise customers. Value chain analysis as introduced by Michael Porter in his 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance, promotes business alignment with the customer value. A value chain identifies those capabilities that contribute directly to the value of a line-of-business product or service delivered to the customer. The IT organization represents a supporting capability that is necessary for the effective performance of the enterprise value chains.
The CIO should focus not on the implementation of computer and communication systems, but on management of the technical capability, much of which may be outsourced. This capability includes not only the development of applications and operation of computers and networks, but it includes support for the design of the enterprise.
The enterprise itself in a complex information system. SOA is a design paradigm for enterprise optimization. In SOA:A Matrix Architecture I described how SOA leads to a matrix organization where value chains are managed by line-of-business managers, and services are managed by shared capability managers. The CIO provides the cross-enterprise perspective to develop value chain models, design shared services and provide the applications that support the implementation and integration of the capabilities. Where shared capabilities are provided as services, Value Chain Modeling Is Essential for SOA Management. The value chain models, as well as other information services managed by the CIO, support management planning, decision-making and governance. By focusing on value chains, the CIO should help determine priorities for investment in technology and business systems design that will improve customer value. This is alignment of IT with the business.
In The Next Generation CIO I describe this key business role of the CIO. The CIO is responsible for a critical aspect of the business, just as the CFO is responsible for the financial aspect and the HR executive is responsible for the personnel aspect. There is no discussion about how the CFO and HR executive align to customer values. Their jobs are to serve the shared financial and personnel needs of the enterprise.
The CIO should focus on optimizing the enterprise as an information system through managing the information technology capability. That includes modeling, designing and transforming the business systems. In that context, the CIO will play in indispensable role in the future of the enterprise, and alignment of IT to the business is a measure of CIO success.
