A: If you want to achieve alignment, you have to do something very tangible. It boils down to how you communicate among different disciplines, and how you create a structure to take your business strategy and figure out the best utilization of technology. Then, you need to be able to communicate that to diverse disciplines and groups of people in the organization, and then drive down a lot of that implementation. When a company becomes aligned from a business-technology perspective, you have the communication, the collaboration, and a very distinctive, direct, achievable game plan that shows the business strategy enabled with technology that's driving business value.

Q: What do you mean by "business value"? Again, it seems so abstract, as if it could mean anything you want, but at the same time, its a term no CIO would admit to ignoring. What is it and how do you know if you're getting it?

A: Many people say business strategy and business value happen separately, and then you define your technology and your technology value, and then somehow marry it together. But when I talk about business value, I'm talking about something else. For example, when you undertake an advertising campaign, what's your goal? Your goal is that your brand awareness will rise high, but ultimately, you drive sales. Similarly, when you talk about the business value of technology, it's the real business objective that is achieved by the technology. For example, when you say you want to undertake a CRM initiative, the business value of CRM is that you're going to have repeatable and satisfied customers. Somehow, the technology helped you do that. That's all I mean. It varies from initiative to initiative. At the end of the day, these are not separate things. The measure of business gain or business value is a collective result of the business-not necessarily of technology utilization. That's why I disagree when people ask, "What's the ROI of technology?"

Q: You seem to be putting yourself in opposition to "technology for technology's sake," but I wonder if anyone really thinks that way anymore. Isn't business value part of every IT plan nowadays?

A: We're getting closer to that, but I would argue that technology has never had a fair chance. Before, technology was on the back burner. Then it became "it's all about automation," and you had to use technology for everything you did. Then the Internet era came, and technology became the model. Now we're going back to the same thinking--that the technology model is part of your business model; it's not something different. Just like your financial structure or model is part of your business model, or your marketing model is part of your business model. So although we say we shouldnt do technology for technology's sake, I don't think we, as an industry, are mature enough that we consider technology as part of the business strategy. We agree to it, but we havent cracked the code to pull all this together from a business perspective.

Q: Let's discuss business-technology management, or BTM. What is it? How does it differ from other approaches to aligning IT with business goals? What about project-portfolio management, for example, which also has a goal of aligning of IT projects with business strategy?

A: I'm not preaching a new methodology. IT is fundamentally resource, dollar, process, application, business, and systems--all together. So what BTM incorporates is basically your strategy, design, and control. What is your strategy from a business perspective, and where does IT fit in? The second thing is design, or what we call the architecture. Third is governance: How do you govern not only that you're on budget, on schedule, and things are going well, but also the standards? You don't want to have redundancy of eight different databases, or 10 different Web servers, or 18 different ways to do the same project. Collectively, that's what I call BTM. It's very much a collaborative effort between the business side of the house and the technology side. Project management, or portfolio management, by contrast, is just a portion of it. That's the difference.

Q: Your book gives examples that seem to imply that the IT-alignment problem is basically one of specialized vocabularies that block communication between IT and nontechnical departments. Are you saying that the technology-business disconnect can be solved largely by improving communications between IT departments and the rest of the company?

A: That's one of the primary reasons, though there are other things as well. It's not just communication. You need to establish a structured way to communicate, too. As an example in another field, no architect would talk to a client without a blueprint. But do you know how many CIOs talk to their CEOs or counterparts with a blueprint that shows the end result or impacts? Very few, if any. So there may be a lot of communication, but it's not structured communication. Just sitting there face-to-face and talking is not going to solve the problem. You need a structured way to communicate with the businesspeople. It's a question of maturity. When people first started writing code, there was no structured way to do it. For many years, we talked about "spaghetti code." Then software-engineering methodologies emerged. Now that weve solved that problem, what's the structure for communication between the technology people and the businesspeople?

Q: What might this structured conversation look or sound like?

A: You have to show the connection between your business model and your business processes, and how that drives your application requirement or functionality, how that translates into a technology infrastructure. The structured communication revolves around connecting four separate areas: your business, process, application, and systems. Within each of those areas, you need to define what you mean by your business case or model. You can use any number of methodologies to do that. My primary argument is that you need to see the impact and interaction among these four areas, and see the ripple effect that a change in each area has on the other three areas. That's what we mean by structured communication. For example, you might say, "I want to retain a customer; I'm losing a segment of my customers." That has an impact on your business process because you need to change the process of taking care of your customer. That obviously has implications for how you want to interact with the customer. That may imply you must introduce a new technology vehicle that will be most cost-effective. Or you may have to put people in place who can interact with the customer. And it always has implications for the kind of system infrastructure you need to make that happen. So it's all interrelated, and your communication has to address this interconnection and the impacts of the changes.

Q: For CIOs wishing to get the "alignment effect," what is the first step? Are there tools available? Do you have to work with a consultant?

A: You have to have a tool. You have to have a structure, an enabler for that structure, and domain experts. These are three different areas. First you have to decide how you want to do these. You must choose some sort of methodology. You can use Six Sigma, balanced scorecard--whatever makes you most comfortable. But do not introduce yet another methodology! Companies already have a lot of methodologies. Second, you need a tool that acts almost like ERP for CIOs. You need the ability to do strategy, governance, design, and a central place for all this information. There are very few vendors offering a tool that does all this in one box. Selfishly, Enamics is one of them. But there are also portfolio-management vendors like Pacific Edge and others. I haven't seen any company yet that combines portfolio management, knowledge management, and enterprise business, process, application, and systems modeling all in one place. Third, domain expertise is where the consultant comes in. The biggest problem with consultants is that they come in as a domain expert. They say, "I'm a CRM expert and I'm going to help you with CRM." But they do it in a very unstructured way, and they leave with that knowledge. So they really haven't been able to transfer the knowledge to the clients. There's a place for consultants, but theyre not a replacement for tools and methodology.

Q: Your book discusses the changing role of the CIO. Where, in your view, is the CIO role headed in the next five years?

A: In a sense, we've come full circle. Initially, CIOs were like the data-processing manager who sat in the background. Then, in the last five to six years, at many companies the CIO or CTO got involved with the business model. Now, a lot of people are looking at the CIO as more of an operational manager, just like a head of sales or marketing or finance. They have a seat at the table and are focused on how technology moves the business forward. So we're seeing technology managers who are operationally focused. That's the changing role. They are part and parcel of the senior-management team whose concern is overall business goals. They bring technology as an enabler, as opposed to a driver or an operational support infrastructure.

Q: So the IT group has to be strategic as it looks outside itself, but tactical as it looks internally?

A: That's right. That's the role of any senior manager. For example, the head of the sales organization is operationally managing the field for revenue generation and so forth. But strategically, he or she is thinking of what the right sales model is. Similarly, the CIO has to say, "In the context of business, where can I use the tech," and then operationally, "How can I make it happen?"

Q: In your book, you discuss the three activities of BTM, namely, business-model definition, process optimization, and technology automation. What do CIOs need to know about these?

A: What's important is figuring out how these things are interrelated, and what the impact is when you change one element of the overall model. For example, what's the connection between business process and technology? If you change your business strategy, how does that impact your business processes? Then, where does IT play a role in that overall change? You have to analyze that, just as you analyze your financial model by saying, "If we want to increase some resource pool to bring something to the market, what will the impact be on cost of sales?" Similarly, you have to go through that analytical process for technology. If you want to make business changes, what is the impact on the technology? That's what I mean by predictive modeling. Collaborative decision-making is creating new, reusable assets. If you want that level of analytical work, because these are cross-discipline answers you need to figure out, you have to be collaborative. Without that, you can't make any decision. You need the businesspeople, the domain experts, and the technology people. You need reusable knowledge that you can immediately tap to make the decision. For example, you don't want to recreate your customer-interaction process again and again. I'm talking about the knowledge that usually resides in people's heads; it has to be identified, captured, and kept in a way that you can use it to make decisions.

Q: But isn't that simply knowledge management? And isn't KM something everyone agrees would be nice to have, but on which very little progress has been made?

A: I would actually say the same thing about collaboration. Knowledge management and collaboration are even more abstract than alignment. In many ways, they are a result of how you work, in the sense that you can't stand up on the desk and say, "You need to collaborate." You cant enforce that. Collaboration needs to happen in the context of doing something. For example, when you define business, process, technology, that is a collaborative process. It involves different sets of people, and they have to work together to figure things out. Collaboration happens because you're going through those activities. Similarly, knowledge management-you have to capture this information, communicate and identify it in a centralized way that is sharable and reusable. So I'm not saying you need to have knowledge management; I'm saying you need to have knowledge management in the context of doing the work you do. That's why neither of these areas is that popular--because they cant stand by themselves. For example, you say you need management rigor, but what does that mean? It means whatever you do. Same with collaboration and knowledge management-they're what happen when you work effectively.

Q: Are you aware of any companies that have pulled all this together?

A: Sure. They're our customers, like J.P. Morgan, PACCAR, and Marriott. They are organizationally, culturally, and structurally in tune with these processes. They manage technology from a business perspective, yet it's not the same as managing sales or finance or marketing. Just as each of those areas has a distinctive management process, IT management also has a distinctive process. So these companies are very much aware of that fact, because IT is not just about dollars and people.

Q: For companies that achieve the alignment effect, what kinds of benefits can they gain?

A: First, in financial terms, most companies spend 8% to 10% of their budget revenue on technology, so not doing it right has a significant financial impact. But the overall impact of not doing it right is enormous, too. For example, when Nike and i2 got into a huge battle over a $400 million project, that wasn't just about whether the implementation reached the desired business goals, but also the impact it had on Nike's overall inventory. You cant afford not to do this right. Second, if you do it right, then IT will become a strategic partner in the business, just like sales, marketing, and finance. Today, for the most part, IT is not a strategic partner; it's an operational cost center that all too often doesnt bring enough value. So that's the other benefit. CIOs should have huge incentive to make IT a strategic partner, and they should show CEOs a way that is manageable and tangible, in terms of communicating with the business.