In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it, according to the late economist Milton Friedman. We generally think of monopolies as a bad thing; monopolists gain pricing power that enables exploitation of consumers. But the provision of goods and services in a capitalist economy is actually accomplished by a blend of free-market players and monopolies, as it must be. Some monopolies are necessary, and even good.

This is most obvious when the provider must make a significant investment in some infrastructure for service provision. If the town in which I live enabled free-market competition for delivering water to my kitchen sink, I’d have multiple water mains running under my street (one for each competitor), and higher prices for all citizens (since the fixed cost of the infrastructure for each provider would be borne by fewer consumers, and the aggregate cost of the infrastructure would be multiples of the cost of a single system). The same can be said for roadways, sewers, police and fire departments, airports, and electrical power generation.

Several years ago, the electrical power industry lobbied successfully to switch power generation in California from a system of regulated monopolies to free-market competition. The result was higher prices, and poorer service, including some notable blackouts. Depending on the nature of the market being served, monopolies are far more efficient than free-market competition, resulting in lower costs. These cost savings are substantially passed on to the consumer when the monopoly provider is publicly owned (as in a police department), or regulated by a government (as in most electrical power generation). Of course, public ownership or regulation is not perfect, as opportunities for corruption become greater. But modern civilizations would simply not be possible without some regulated monopolies.

Less visibly, regulated monopolies are also found inside organizations. In your organization, there is likely to be only one human resources department, one corporation counsel, one corporate finance function. When there are multiples of these providers (usually in multi-national corporations), their boundaries are strictly defined with no overlaps – it is easy to see that groups within an enterprise competing with one another to provide internal services would be absurd and dysfunctional.

But it is exactly that kind of dysfunction that is found in some organizations; in the information technology function. The “official” centralized IT organization may have to compete with decentralized IT; each division or business unit may have established sanctioned or covert alternate sources of IT services. This condition has been fed by two major technology shifts; from large centralized mainframe computers to banks of servers small enough to fit into a closet, and the advent of cheap, high-speed networks that enable the distance between data, processing, and users to grow to a global scale. Software vendors and offshore outsourcers bypass the central IT organization and sell directly to leaders of business units. The result is a crazy quilt of enterprise information technology.

Does this sound like your organization? The organizations I’ve worked with that have arrived at the crazy quilt model struggle with the inevitable result; decentralized IT costs more in the aggregate than a centralized model. But the defense of the decentralized model is always the same: big centralized IT is too bureaucratic, unresponsive, and unaligned with strategy. Yet it is precisely these organizations whose senior leaders have engaged me to help empower a more effective, stronger, and more cost-efficient centralized IT model.

Is your enterprise IT centralized, decentralized, or some hybrid of both models? How is that working out? What are the benefits of the existing model, and how much pressure is there to change? Please offer your experience and opinions below.

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A series of posts have approached the topic of strategy for the Information Technology organization. IT is almost always either an enabler or an inhibitor of strategy execution in an enterprise, and aligning IT and organization strategy is among the most pervasive challenges for strategy facilitators today.

The featured post:

Framework for IT Organization Strategy

builds upon several earlier posts that may also be of interest:

• Blockbuster vs. Netflix: A Case of Technology-Driven Strategy
• Strategy Execution Impossible Without IT
• Insatiable Demand for IT
• Impaired IT Means Impaired Strategy Execution
• The IT Change Agenda – Part I: Cost and Quality
• The IT Change Agenda – Part II: Agility and Innovation
• The Mature Information Technology Organization?

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Instead of one overall IT budget, imagine putting all IT expenditures into two buckets, mandated and discretionary. Mandated spending “keeps the lights on” to operate the business into the foreseeable future “as is,” without making strategic changes. Discretionary spending is simply how the enterprise chooses to invest to change its technology capabilities.

The level of mandated spending can’t really be planned; it’s the result of two factors outside the control of the IT organization: the unit cost of hardware, which generally decreases over time, and the demand for existing technology resources, which increases as the enterprise grows, and with the intensity of technology use in the enterprise. It is no more practical to limit mandatory spending than to tell an executive to stop making long-distance phone calls after the budget for those calls has been exhausted. Because mandated spending is the product of unit cost and demand, which are independent of each other, it is difficult to predict the amount and direction of change from one year to the next.

As many as a third of all companies impose an annual cap on IT spending, according to the survey on which I collaborated with CIO Insight Magazine back in 2003. At such companies, discretionary spending is limited to what’s left over after the mandatory spending. Typically, the distinction between mandatory and discretionary spending isn’t clear because IT accounting doesn’t explicitly segregate them. The result is to artificially limit the level of discretionary spending.

Why a spending cap? When CEOs and CFOs see IT spending growing faster than revenue, they panic. Since most CEOs and CFOs can’t tell the difference between legitimate investments and waste, they fear that something really bad is going on in the IT organization, and that it’s becoming a black hole for money. Their natural reaction is to cap overall spending. But it’s irrational to cap overall spending when the majority of it is demand-driven and not the result of explicit decisions. Mandated and discretionary spending are fundamentally different, and need to be segregated and managed differently.

Capping IT spending across the corporation is a dangerous move, because each business unit requires its own technology investment to compete effectively. A cap puts either IT or top management in the position of making far-reaching decisions about which businesses are going to get the IT and which aren’t. Thus, the IT funding decision becomes a proxy for deciding which strategic initiatives will and won’t be executed.

The demand for IT resources in any organization exceeds the capacity to deliver them. To improve alignment, discretionary IT spending decisions must be made in the context of business strategy, not IT budgets. It’s as simple as that. But since most companies aren’t very good at describing or executing business strategy, there’s little or no strategic context in which to make the decisions. But the nature of IT investment decisions has far less to do with IT than in does with enterprise strategy, and should not be by IT. These crucial decisions should be made by enterprise leadership as part of the strategic management process.

The IT organization does have an important role to play in influencing certain types of decisions. Under a business initiative to improve customer information, for example, IT can and should weigh in on which of three CRM systems is the best fit with the current and planned infrastructures. But IT should not be in the position of deciding whether the business unit should use a CRM system in the first place.

Too many corporate leaders abdicate their responsibility to make the tough decisions. They should be saying to business unit executives,” You haven’t made a compelling business case for your strategy, so we’re not funding it.” Instead, they avoid the problem by capping overall IT spending at a level lower than needed to deliver on all proposed strategies, and letting IT pick the winning strategies by proxy through its funding decisions.

How does your organization allocate scarce resources for IT? Does IT make the decisions? Please share your experience below.

(This post was adapted from my article that appeared in CIO Insight Magazine in 2003.)

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While the ITO strategy framework takes the form of a balanced scorecard (BSC) strategy map, it can be legitimately applied to any discussion of ITO strategy, even if there is no intent to fully develop the ITO strategy map, objectives, targets, and initiatives that constitute a proper BSC. Given the propensity of most ITOs to excessively focus their change agendas on the domains of cost and quality, with insufficient focus on the equally important dolmans of agility and innovation, the framework provides the basis for a balanced change agenda. When used as the basis for a BSC strategy map, the framework contains and organizes the recommended inventory of 20 to 30 strategic objectives for the ITO.

Value Creation Dimension

The four perspectives that constitute the value creation dimension follow the generalized model that can be applied in both for- and non-profit organizations, which applies to business units and support groups inside the enterprise. The names of the four perspectives: Capabilities and Assets, Internal Process, Partner, and Enterprise Results – describe how the ITO creates value. The IT organization develops and sustains its capabilities and assets, which it employs to execute its internal processes, in order to deliver valued services to its partners within the enterprise, enabling those partners to achieve and deliver desired results to the enterprise and its external stakeholders.

Of course, the most important focus in the Capabilities and Assets perspective is the people that make up the ITO, but their skills and knowledge perform in the context of both ITO and enterprise strategy; nearly every ITO’s leadership is explicit about their desire to change the culture.

Every sustainable ITO has well-established processes for service delivery, and this is where the bulk of management energy is applied. But the model invites equal consideration of processes for establishing and enhancing alliances with internal partners, and engaging with those partners to develop innovative applications of technology to create new value for the enterprise.

Nearly all of the dozens of ITOs with whom I’ve worked recognize the importance of satisfying their internal business unit and support group ‘customers’ and understand that calling them customers sends the wrong message. By naming this perspective Partner, the framework reflects the shared desire on the part of the ITO and the groups it serves to achieve a true partnership in their relationship. And the ITO and its partners share, and are fundamentally guided by, their desire to achieve exceptional Enterprise Results.

Organizational Evolution Dimension

The domains of Competency and Contribution overlay and bisect the Partner and Process perspectives to ensure that the ITO doesn’t aspire to mere competence, which is necessary but not sufficient to realize the ITO’s full potential. As the IT organization demonstrates its competency in managing costs and delivering quality services, it establishes the credibility to collaborate with its partners to contribute to enterprise value creation. At the highest level, a journey from competency to contribution represents the aspiration of nearly every ITO.

Process Themes

The three themes in the Process perspective elaborate this evolution from competency to contribution focus. On a foundation of its processes for Operational Excellence, the IT organization expands its focus to build and manage Partner Alliances and lead delivery of innovative Solutions. By allocating equal space to each of these themes in the framework, ITO leadership is invited to move beyond the status quo focus on operations and aspire to higher goals.

It’s Only a Framework

This structure can enable the kind of leadership team discussions necessary at the onset of the change program. One powerful way to begin is to place a (virtual) Post-it note on the appropriate spot in the framework for every change initiative currently underway in the ITO – there is a pretty good chance that they won’t be evenly distributed. The implicit question, “Is this where we need to be focusing our efforts?”

Of course, the perspectives, domains, and themes presented here have generic that I’ve chosen to convey the concepts on which they are based. They can be renamed to fit your ITO’s culture and existing vocabulary. It is vital to use the language is meaningful to the intended audience; this can entail preserving existing vocabulary, or even deliberately creating new language to convey the urgency of the change program.

Needless to say, in future posts, I will have far more to say about each of the areas in the framework, as well as a set of generic strategic objectives to populate the framework.

Does the framework make sense in your ITO? If you already have a strategy map, how does it compare? Please offer your comments and insights below.

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Before IT can begin contributing to the execution of business strategy, it must first demonstrate its competency in cost control and quality. Defensive ITOs focus their time and energy on defending the IT budget and keeping systems running properly. There aren’t too many Defensive ITOs; either they’ve improved marginally to the Responsive stage, or the problem has been addressed by outsourcing the entire IT function.

Reactive ITOs sustain their focus on cost and quality, but expand their focus to better handle the stream of requests for IT services. Reactive ITOs must navigate internal enterprise politics to successfully allocate scarce IT resources among competing requestors. The majority of ITOs that I’ve observed are at the Reactive stage of maturity.

When cost and quality are no longer a central focus for the ITO (although these domains can never be ignored), the focus shifts to the domains of contribution: agility and innovation. Responsive ITOs are those where the greatest energy is spent on defining, managing, and building a partnership between the ITO and its enterprise customers. The ITO – business partnership is most evident when the ITOs representatives are included in each business unit’s strategic planning process. In the Responsive stage, the ITO is credibly able to undertake technology research on behalf of the enterprise. But building and sustaining trusted partnerships is challenging, and can easily be set back if issues of cost and quality return.

A true Strategy-Focused ITO (SFITO) is seen by all as competent in managing cost and quality, responsive to business unit strategy, and able to anticipate, identify, and propose new technology applications that enable strategic evolution in the firm’s value proposition. At the center of technology solutions leadership, the Strategy-Focused ITO is recognized as a full partner in formulating and executing enterprise strategy.

What stage of maturity do you think your IT organization has achieved? What behaviors demonstrate this maturity? How did the ITO reach this stage, and what efforts are underway to further mature? I hope you’ll share your reactions to this model and your own experience in the comments below. Much has already been posted, and much more will be written about the SFITO concept in future posts.

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Agility

Of the four domains, this one was the most difficult to name. I named it ‘Agility,’ not because of its precision as a word in describing the domain concept, but because it does a pretty good job of describing a bundle of fuzzy expectations for the performance of the IT organization.

While Agility certainly has to do with timeliness, timeliness means more than responsiveness. Simply satisfying requests more quickly than in the past is insufficient for the expectation of agility. Agility also pertains to the ability of the IT organization to change direction quickly, to reprioritize its work, to react to and even anticipate changes in the enterprise, industry, and or technology domains in such a way that opportunity can be seized and defenses mounted against threats. It is here under this concept of agility that business unit managers (BUMs) express their frustration that “IT just doesn’t understand our business.” After all, each BUM operates in a fast moving competitive environment, so from his or her standpoint, shouldn’t the IT organization be able to react and anticipate as quickly as the environment is changing?

IT leaders genuinely want to be more agile. But the nature of the external cost controls and internal disciplines that must be imposed by a centralized IT organization naturally tend to impair the IT organization’s agility. So while IT leaders understand the need to apply and adhere to policies for system design and development, information management and security, and reliability of processing infrastructure, the bureaucracy that these controls entail inevitably makes IT seen as plodding and unresponsive.

Innovation

Closely related to the domain of agility is Innovation. BUMs and IT  leaders often disagree on where innovation in the enterprise should take place. BUMs contend that only they know their business well enough to imagine ways in which technology can be applied to create new value. Software vendors align with this belief, and market their wares directly to the BUMs, circumventing IT leadership.

Meanwhile, the IT leaders believe that the IT organization exists to concentrate specialized knowledge about technology in the enterprise, and contend the their specialists are best equipped and best informed to anticipate and propose new applications of technology.

Of course, both are right and wrong at the same time. Each group brings unique knowledge to the challenge of innovation, but it is only through a trusted partnership between IT and business units that innovation can effectively take place. Given the challenges and mismatched expectations of cost, quality, and agility, it is unsurprising that this partnership in innovation occurs so rarely.

Agility and Innovation are the Domains of Contribution

Satisfactory performance in the domains of agility and innovation are necessary for the IT organization to be seen as a true contributor to the task of realizing enterprise strategy. But an excessive focus on these two domains is risky if the enterprise satisfaction with the hygienic domains of cost and quality has yet to be achieved; the IT organization simply has no credibility to innovate if costs are seen as high and quality is lacking.

To be effective, IT organizations must manage a balanced focus on each of the four domains of Cost, Quality, Agility, and Innovation.

 Next: The stage-maturity model of strategic alignment in the IT organization.

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Cost

When asked about the information technology organization, senior executives are genuinely puzzled at cost increases over time. They certainly understand that some costs for information technology, especially hardware, goes down over time. Yet IT spending in the enterprise goes up continuously, and while they intuitively understand the benefits of information technology they lack a quantified understanding of those benefits. They’re frustrated with the IT leadership who construct complex, and at times incomprehensible, models of IT ROI (return on investment).

As a result, IT executives feel continuous pressure from senior executives to reduce overall spending. They’re painfully aware that any dollar not spent on information technology drops to the bottom line profitability for the firm. IT executives aggressively pursue cost savings where they are available, but they have little control over the increased demand for technology services from business unit managers (BUMs). So the IT executives are caught in the middle of a squeeze: pressure from senior executives to reduce spending, in almost direct opposition to pressure from BUMs to increase the provision of technology services, without regard to the impact on the firm’s aggregate spending on IT.

Quality

The domain of quality in information technology performance is a moving target. BUMs are painfully aware of the implications of low quality and service delivery. Often the failure of a single component such as a network, a server, a database for, or another piece of critical hardware results in periods of reduced or no productivity for large numbers of end-users and customers. In organizations where fundamental availability is an issue, the predominant topic of discussion between ITO leadership and BUMs is system availability.

When systems become more reliable, expectations for IT quality diverge; while nearly everyone is concerned about system security and data integrity, some BUMs mingle the domains of cost and quality, describing a belief that a high quality system is the one that costs them less. Others are focused on the idea of responsiveness. This can be as simple as how quickly is the phone answered when IT receives a phone call for support, the time it takes to actually resolve an end-user’s problem (such as a failure of a desktop computer), or a richer set of expectations about functionality of applications, ability to move information between disparate systems, and usability of end-user interfaces such as web sites. Unfortunately for IT leadership, the satisfaction of one quality issue does little to satisfy the overall expectations of quality; the BUM or the end-user simply shifts attention to their next most important issue.

Cost and Quality are the Domains of Competency

Satisfactory performance in the domains of Cost and Quality is merely hygienic; it is expected of every competent IT organization. But achieving objectives for Cost and Quality are absolutely necessary, but not sufficient, to realize the full strategic potential of IT in the enterprise.

Next: Agility and Innovation

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Principle I: Strategy execution cannot be accomplished without information technology

and

Principle II: The demand for technology in the enterprise always exceeds the capacity of the enterprise to deliver

Today, we build on these ideas to form Principle III.

How the enterprise allocates its scarce resources for information technology affects both its technology costs, and its effectiveness in using the technology. Certainly not all technology investment opportunities are equally meritorious. But enterprises employ a wide variety of processes and disciplines to choose the technologies that are worthy of investment. From the standpoint of each individual requester, the proposed investment is certainly meritorious. But in the aggregate, these meritorious requests would break the bank (this is Principle II). So by necessity not all requests will be satisfied. The dissatisfaction experienced by the requestor who is denied if he easily transferred from the circumstances of the request to the entire information technology organization. “They just don’t understand what I need to do my job.” 

IT leadership, of course, would prefer to satisfy as many requests as possible, especially those from ranking executives and others with power within the enterprise. So the information technology organization aggregates these requests, and presents them to enterprise financial management for resource allocation. Most often, this is done within the context of the annual IT budget. 

Perhaps one of the most closely examined aspects of IT management is change in the annual enterprise spending. Industry periodicals teem with surveys, interviews, and other prognostications of spending trends. What seems to be consistent in the enterprises I’ve worked with, as well as reports and industry periodicals, is that over the long run IT spending has increased faster than the other reasonable measures of the size of the enterprise. The effect of this increase within most enterprises is a concern among senior executives, especially financial executives. They are acutely aware of IT spending, which along with personnel costs are the two largest spending categories in most service-related businesses, and find the increase worrisome. After all, they reason, isn’t the role of technology to reduce costs? Thus begins a tension between financial management and IT about the fundamental question of what’s the right amount of spending. The results of the worry is top line constraint of overall IT spending. In the absence of a satisfactory understanding of the merits of increased IT spending, financial management seek to limit the increase according to broad criteria, such as simply keeping pace with revenue, or such ratios as IT spending as a share of revenue, IT spending as a share of expense, or industry average IT spending. 

These are not intrinsically unreasonable approaches, but they have been carried to extremes. One multinational firm I worked with a few years ago had publically stated its intent to grow revenue by an aggressive 10% year-over-year while at the same time insisting on a 10% annual cut in net IT spending. The arbitrary target for cutting IT appeared to be arrived at in haste and without consideration for its implications. Over time, IT spending in this organization actually increased, but at a rate slower than the growth of the business. But the pressure on spending caused considerable anxiety, misdirected efforts, and broad adverse implications in the enterprise. Key objectives in the business strategy were delayed or otherwise compromised because of the constraint on IT spending. Unfortunately, this is not an isolated case. Most organizations’ senior financial executives exert downward pressure on IT spending. This leads to our third principle.

Principle III: Impairing technology spending ultimately impairs the ability of the enterprise to execute strategy and create value

Well, duh. It seems so obvious, but time and time again I have seen organizations where good ideas and strategic intent are thwarted because of constraints on overall technology spending. Somewhere between the blank check and the starvation diet lies an optimal level of IT spending that balances the need for prudent investment with the long-term value creation that technology spending can enable. But the ways in which organizations arrive at their actual level of IT spending is remarkably unsophisticated, and rarely even close to optimal. 

The consequences for getting this wrong are significant. As seen with our example of the video rental business, and similarly in nearly any service industry, technology-driven change in value creation processes and value propositions themselves leaves little time for firms in competitive industries to dither with technology decisions. 

Take a moment to consider your enterprise. A few simple questions, answered honestly and candidly, will highlight the need for change in the relationship between IT and the rest of the enterprise.

1. Is spending on information technology viewed by most decision makers as an unrecoverable expense, or as an investment in the future of the enterprise? 
2. How would you describe the nature of the relationship between IT and business unit leadership? Does the relationship resemble that between a customer and a supplier? A consumer and a utility? Or a durable partnership, in which honest and painful insights are routinely shared in both directions? 
3. When the enterprise undertakes strategic change, is the IT organization and its capabilities seen as an enabler of strategic change, or as an inhibitor; something whose limitations must be overcome in order to be successful? 
4. When the CIO communicates with members of the IT organization, is the topic typically about saving money and improving quality, or more effectively aligning the actions of the IT organization with business strategy? 

Please share your thoughts in the comments section below.

There is a better way. In future posts, we’ll elaborate the idea of the Strategy-Focused IT Organization, in which IT spending decisions are viewed in a more progessive way, and investment decsions are made in the context of business strategy, not constrained by an IT budget.

(note: This is part of a series of posts on the topic of the Strategy-Focused IT Organization. Its subject is the third of three principles of aligning IT with business strategy that were outlined in an article in CIO Insight Magazine in 2003, and later elaborated in an article in Harvard Business School Press’ Balanced Scorecard Report in 2004.)

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Mr. Chopra says that his top goal is economic development using government policy to create jobs and business around technology. “My job is to serve as the innovation platform champion in addressing private market opportunities in support of public priorities.”

When asked about his goals for the job, Mr. Chopra’s cited four objectives that were presented recently to the White House: 

• Economic growth through innovation
• Addressing presidential priorities through innovation platforms
• Building the next-generation digital infrastructure
• Fostering a culture of open and innovative government 

What strikes me about these goals is how similar they sound to those expressed by corporate CIOs, at least before the economic downturn. All one needs to do to echo typical corporate IT strategy is change the wording a bit, e.g. “Addressing enterprise strategic priorities….” and “Fostering a culture of openness and innovation.” 

Chopra’s top idea for economic growth is to change how the government looks at the money it spends on research and development. Rather than purely thinking about basic research, the government should focus on investing in technologies that can be developed. A first step is to find ways to actually measure how much research is being commercialized. “There is an implicit assumption that R.&D. investment will lead to job growth and economic success,” he says. “The measurement question will lead us to think about how do we begin to assess the outcomes.”

Chopra’s talk of platforms echoes the Silicon Valley concept that companies become most valuable when they offer services that other companies integrate with. Mr. Chopra wants the government itself to use the latest tools and technologies, just as the Obama campaign was quick to use social networking and other trendy techniques.

Intrigued? There is much to learn about Mr. Chopra, including this admiring review of his qualifications, and a worthwhile 50-minute video (below) of a recent speech talking about technology and government while with the State of Virginia.

According to the NYT article, Chopra proposed two measures for his own performance. First: “Can we achieve the president’s goals better, faster, cheaper through technology?” And second: “How many new billion-dollar businesses can we create by unlocking government data or government policy?”

I admire his ambition, and his ideas. Having worked closely with CIOs in state and federal government, I appreciate the magnitude of his challenge of driving change within government IT organizations. Godspeed, Mr. Chopra.

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Business unit (BU) managers(*) understand that their success depends on information technology, both in terms of day-to-day operations (keeping the business running) and long-term success (changing the business to achieve strategy, as described in Principle I). They know that if IT fails, the business fails. Thanks to the steady drumbeat of technology innovation, members of the IT vendor community are delighted to describe how an investment in new this technology will undoubtedly improve performance in a variety of ways: operational reliability and efficiency, improved customer service, access to new customers and markets, etc. Hardware improvements quickly obsolete past investments; try to imagine convincing an executive in your firm to use a five year old laptop. The promise of new technology, as small as a new PDA or as big as a new enterprise-wide software solution is always high on their lists of needs.

Of course in every enterprise, technology is a finite resource. Senior-level executives generally understand the crucial role played by IT, but they also have to consider overall spending. And what they see is IT spending increasing faster than other key indicators of growth (such as revenue). But the role of IT has evolved over the decades, from simply increasing productivity to connecting people with information inside the firm, to connecting the firm with its customers, to leveraging the value of information itself; many IT expenditures are no longer an option. Organizations simply must have e-mail to communicate, they must have Web sites to reach their customers, they must play by the rules of their partners in order to survive. It is inevitable that IT increases as a share of expense as businesses use IT more intensively. But these pragmatic executives feel they must establish limits on overall technology spending in the enterprise. The tension between those who want technology and those who manage the investment is at the core of our second principle:

Principle II: The demand for technology in the enterprise always exceeds the capacity of the enterprise to deliver.

The constraint sets off a downward spiral for the organization:

• Fierce competition among BUs for scarce IT resources, which leads to
• dissatisfaction with the IT organization when constrained resources result in project delays, which leads to
• blame placed on the IT organization for lackluster BU performance, which ostensibly justifies
• deliberate or unauthorized IT spending and the decentralization of IT
• which results in higher technology costs from lost economies of scale and uncoordinated efforts.

Managing this tension is a challenge for every enterprise. How this is accomplished has far-reaching implications for strategic management of the enterprise, and will be the subject of the next post in this series.

(read the previous and next articles in the SFITO series)

(note: This is part of a series of posts on the topic of the Strategy-Focused IT Organization. Its subject is the second of three principles of aligning IT with business strategy that were outlined in an article in CIO Insight Magazine in 2003, and later elaborated in an article in Harvard Business School Press’ Balanced Scorecard Report in 2004.)

(*) Despite my use of the word “business,” these ideas apply across all types of organizations; for-profit, non-profit, government. I beg your indulgence when using such terms as ‘business’ and ‘business unit’ and generically, even though the terms may not be strictly appropriate or preferred usage in your organization.

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