RSM Resources

Despite nearly universal agreement that midsized companies should align their information technology (IT) initiatives with their business goals, most will admit that achieving such alignment is an easier-said-than-done proposition.

No longer relegated to a supporting role, IT has emerged as a core business function that can add value across organizations. While most CEOs of midsized companies can see firsthand how technology is changing the way they do business, many still struggle to create strategic synergy between the corporate planners and the technology implementers.

CIO magazine recently surveyed 539 IT department heads who called aligning IT with business goals — along with prioritizing the demands of various business units— their greatest challenge. In related research by CFO Marketing, 48 percent of CFOs surveyed described the alignment of business and IT as weak or nonexistent.

Experts say collaboration and communication are the critical tools for aligning IT and business. The biggest challenge, they say, is gauging which goals to align with and having a clear roadmap to track progress and assess results. The following example may help you determine what alignment should look like within your organization and which steps you must take to get there.

IT-business alignment — one company’s model
Executives at Minneapolis-based Regis have been actively pursuing IT-business alignment for nearly a decade, and Joel Wiens, vice president of information technology for the hair-care company, says they’ve mostly arrived.

Regis does not green-light any technology project unless it clearly advances one or more business goals within the corporation, Wiens says. Such goals include controlling salon payroll and costs, and keeping the business in regulatory compliance. Technology projects that advance the operational, revenue-generating side of the business receive the highest priority, while those tied to back-end or supporting functions receive a lower priority.

"We look at all the IT requests that come in,and we try to establish what the benefit is," Wiens says. "Are we going to save staff time? Can we quantify it? Are we going to drive revenue or save costs? We try to determine an ROI for each one of these projects, and then we try to work on the highest ones. So, if you ask the people who generate revenue about IT and business alignment, they will say we are lined up perfectly. If you ask the people in the supporting functions, they will say we have a ways to go. It’s more of an art than a science, and it’s a constant battle."

Regis operates 11,077 beauty salons, hair restoration centers and beauty schools around the world, including Cost Cutters, Jean Louis David, Hair Club for Men and Women, MasterCuts, RegisSalons, Vidal Sassoon, SmartStyle, Supercuts, and Trade Secret.

While hair care is not a predominantly technology-driven industry, the technology needs of the corporation run the gamut from point-of-sale (POS) systems, to reporting functions, to finance and accounting systems.

Wiens reports directly to the company’s CFO, and the two meet regularly with an executive committee consisting of themselves, two chief operating officers from separate business units, a merchandising and product sales representative, and a real estate representative. The committee reviews strategic goals, discusses current and upcoming projects, and must approve all technology projects that exceed $75,000.

Regis is upgrading POS systems at nearly 4,000 salons, a project Wiens says clearly illustrates IT and business alignment inaction:

Business goal. Because salaries represent the biggest expense within the company, which has about 55,000 employees, executives at Regis wanted to find away to mitigate any unnecessary costs.

IT solution. Wiens’ group worked with the company’s POS division to design a sales and forecasting algorithm that analyzes a 13-month history of a salon’s business. It factors in holidays, days of the week, time of day and other elements. And it presents a more accurate estimate than previously available of how many employees a salon should schedule throughout the week. So far, Wiens says, the new system has contributed to "a little bit of an increase in revenue and about a 2 percent decrease in salary expense."

Achieving alignment within your company
If there were one formula for aligning corporate strategies and IT initiatives, fewer companies would still be struggling to achieve such a balance. Experts advise the following three steps to help you determine where your company might be out of alignment and where you might best begin to correct it:

Assess your goals and strategies. Does your company have a clearly defined business strategy that you revisit regularly? Who sets the goals within your organization, and how do they communicate and track objectives? Having attainable, measurable goals is a key prerequisite to creating IT and business alignment.

Analyze your IT projects and processes. What systems and technologies does your company have in place? What business need(s) do they address? Who approves your IT projects? If you don’t have an individual or group to gauge each IT project’s relevance to your business goals, your company likely is not realizing its full alignment potential.

Open the lines of communication. Does your IT head know and understand your business goals and strategies? Do your CEO and CFO understand technology? While it’s unrealistic to think that every member of your leadership team can execute all other management tasks, it is important that each member of the team clearly understands the company’s strategic goals and can work collaboratively with others to communicate ideas, evaluate solutions and work to achieve those goals.

Clearly, a company has multiple obstacles to overcome before achieving IT-business alignment, but the potential rewards — including a more competitive business model, more efficient systems and processes, and a stronger bottom line — can make the struggle worthwhile.