Picture this: A newly hired CIO of a large Fortune 500 company meets with all the C-level executives of the firm in the CEO’s office. During the meet and greet, after saying how he looks forward to setting up one-on-ones with all of them to discuss their thoughts on the IT department, he notices a bit of indifference among the people in the room.

Reflecting on this after the meeting, he sits down with the CEO and asks how she would evaluate IT’s performance to date. Without hesitation she says she was responsible for the change in IT leadership. The department was not in sync with the corporation, and all her VPs told her IT is not developing the systems needed for the success of the corporation.

She continues, “I don’t hear that sales isn’t selling the right products or that manufacturing isn’t making the correct products. Why is it always IT that is not aligned with the business?”

She along with every other C-level executive the CIO meets with over the next several weeks tell him that they hope he will be better able to determine the company’s IT needs and develop the systems the company needs to accomplish its goals.

What should the CIO do to solve this problem? What would you do?

Enter the IT steering committee

After decades leading IT, I have found only two solutions to the problem experienced by our hypothetical CIO: Dig in and learn every requirement of every department by interviewing all decision makers, or create an IT steering committee (ITSC) composed of all CEO direct reports in order to use their combined knowledge to reach consensus as to what IT priorities will accomplish the corporation’s goals.

For those CIOs looking to do IT alone, by all means, choose the first path. But my recommendation is to embrace the ITSC because the first method won’t ensure that you will correctly address the most important corporate issues.

There are many ways to implement an ITSC, but to start, you and your committee members must work together continuously on a strategic plan until the planning group can finalize an immediate one-year plan that is approved by all departments.

Then each department must take this one-year plan and decide what resources are needed to accomplish their objectives — a process that should include conversations with IT to help determine what is needed.

These requirements should then be examined by IT and senior department heads to determine initial time and cost estimates, along with expected ROI, which should be the responsibility of the requesting department.

With these plans now submitted to the ITSC, the committee, which remember is composed of all direct reports of the CEO or the COO to ensure all departments are included, then determines whether the systems requested do indeed represent what the company needs and at the speed they are needed. By doing so, the committee can determine whether staffing is sufficient or if additional resources are required to accomplish planned goals.

Note that the IT operating budget should not be finalized until the ITSC finishes this work.

If this process is followed, there is no way for the IT agenda to be misaligned with corporate goals. If it is not aligned, then it is the fault of the top leaders in the corporation, not IT.

How to handle the kicking and screaming

Inevitably, you may deal with objections to such a process, as some business leaders may feel opposed to taking on what they perceive to be IT’s work, or they may feel the process won’t result in the kind of spontaneous technology-needs requests they think they’d rather force on you.

Let me address the range of concerns you’re likely to encounter.

‘I don’t have time to do IT’s work’: It is every C-level executive’s job to ensure the right systems are in place to deliver on the company’s strategic plan. Companies that have lost business because their computer systems did not keep up-to-date with competitive forces in their industry are legion. The old software of an airline in the recent news may be a good example. And it isn’t just IT that is dealing with the fallout.

Additionally, it’s crazy to think today’s CIOs will be so smart that they alone can determine the best IT systems for the company. For that, business leaders must hold up their side of the conversation. The ITSC gives them the opportunity to help set the IT agenda for their own needs — and holds them to it.

‘IT is too rigid. Our plans change all the time’: This may be true for your business, and IT must be prepared to change priorities as quickly as needed. But the ITSC gives a framework for ensuring changes to the plan are strategic, fully vetted with line of business involvement, and prioritized.

‘I don’t understand technology. That’s IT’s job’: Yes,  senior executives do not need to understand how the sausage is made. But they must make sure the right sausage is made. The ITSC has nothing to do with the bits and bytes but rather the best use of the company’s resources, in this case IT, which is every executive’s job.

‘How should I know what new technologies are out there to exploit?’: Remember, the CIO must be a member of the ITSC and has a twofold role: (1) Participate and opine on what the company needs, and (2) be up-to-date on disruptive emerging technologies.

That said, C-level executives should at least try to be aware of technologies emerging in their area and bring them to the attention of IT.

Success is in sharing the burden

Given the importance of technology to business success today, if a company feels it is right to allow the CIO to make all prioritizing decisions for IT, then it is placing the future of the company in the CIO’s hands alone.

Certainly, the CIO should have a voice in these decisions, but the agenda must be driven by corporate consensus. Most IT systems take a long time to implement and a lot of corporate resources. And once it is up and running, any given IT system will be the method that the company uses to do its business for a long time.

There are very few initiatives that a company embarks on today that don’t involve IT systems. By establishing an ITSC, not only will your organization be better positioned to capitalize on its goals, but the CIO will also never be asked why IT is not working on a particular project, because everyone was involved in those decisions as part of the steering committee.

In my book The 9 1/2 Secrets of a Great IT Organization the subtitle reads “Don’t Do IT Yourself.” IT must be considered an integral part of the modern corporation and it must accept the judgment of all departments to ensure the company can reach its potential and achieve corporate goals.

Business IT Alignment, IT Leadership

When New York-Presbyterian CIO Daniel Barchi arrives at work in the morning, he doesn’t sit down at his desk. That’s because he doesn’t have a desk — or an office — of his own. “I guide a very, very large team of IT people, but I don’t have one office where I go every day,” he says.

Instead, Barchi may spend the day working in the building that houses the company’s back-office systems. Or he may spend the day in one of its hospitals, meeting with executives or doing a walkthrough. Every day is different, and that’s the point, he says. “You can’t understand the needs of the clinicians unless you are meeting with them.”

Not every CIO can or should give up their own office, he adds. But his choice to do so reflects an inescapable fact: “The technology can work, but unless it works well for users in their environment, it’s not meeting their needs.”

That’s a hard truth every CIO must face. And it’s not the only one. Here are some more hard truths that CIOs and other technology experts say all technology leaders must learn, if they want to be effective at their jobs.

1. The business is not your customer

Phil Pettinato, CTO, Versapay


When you use the word “customer,” do you mean an internal customer — someone who works for the same company that you do and who uses the technology IT provides? That’s a mistake, many experts believe. “The most significant thing CIOs get wrong about business-IT alignment is servicing other departments’ ‘internal customers,’ instead of the true business customer needs,” says Phil Pettinato, CTO of Versapay. “The CIO should push to transform processes so the internal stakeholders can create better customer experiences for the primary customer.”

Because, of course, external customers are your company’s customers, and that makes them your customers, too. Thinking of internal users as customers creates a division between business and IT that can undermine your efforts to create alignment. “I don’t believe there’s IT and the business,” says James Anderson, a vice president and analyst at Gartner. “The business includes IT. And your product is not IT, it’s the services enabled by IT that are used for business outcomes.”

Another reason it’s important for IT leaders to stop thinking of the business as a customer is so they can focus on actual customers — which is increasingly important in today’s tech-driven world, he says. “You should know and interact with and understand your company’s customers. That’s how you keep them customers.”

2. Like it or not, you are responsible for business outcomes

Uzi Dvir, global CIO, WalkMe


This hard truth is one most IT leaders miss, according to Uzi Dvir, global CIO at digital adoption platform WalkMe. In his experience, Dvir says, fewer than 5% of CIOs spend any time talking about business outcomes or measuring the business outcomes created by the technology they deploy.

“The CIOs I speak with often only look at cost,” Anderson says. “And then they’re challenged with, ‘What’s the ROI?’” That’s a question CIOs often can’t answer, he says. Back when he was in a different CIO role years ago, he was rolling out some automation systems. “The finance group would say, ‘What’s the ROI on that?’ We would say, ‘We’ve got this infrastructure, this application, the training, and the rollout. There is no ROI.’”

Today’s CIOs can’t afford to make that mistake. “It’s important to measure business outcomes, not just technology,” says Damon Venger, CIO at CompuCom, a managed services provider based in Boca Raton, Fla. “You implement a new piece of software. You completed the project, it’s live and has 10,000 users. You declare victory because it’s done. But if the business outcomes are not there, it’s not a success.” And that means business and IT are in disagreement, he says. “IT says success; business says failure.”

3. Alignment isn’t just about you — it’s about your team, too

Some CIOs treat IT-business alignment as their own responsibility. That’s a mistake, experts say. “The leadership team below the CIO also needs to be customer facing. It needs to be able to help solve problems. It shouldn’t just be going away and writing code,” Pettinato says. “To make it scalable, you need to take it beyond just one individual.”

Daniel Barchi, CIO, New York-Presbyterian

New York-Presbyterian

“I clearly can’t, myself, be involved in every organizational conversation,” Barchi says. “That is where trusting your team helps. There are many leaders on my team who are in these meetings day in and day out, solving problems in real time.”

In fact, he says, creating a team that’s capable of doing this is the most important part of his job. “As I’ve grown as a leader, I’ve recognized that my contribution is not my own technical skill and my ability to make decisions. It’s my ability to create a team that can do all of that,” Barchi says. “I think CIOs do well when we know that our job is not to be involved in every technology decision — it’s to create the environment where that can happen and create a team that can do that.”

4. If you say no, a vendor will say yes

Vendors, especially those selling cloud-based products, have made it a habit to call on business leaders in addition to — or instead of — IT leaders. And they’re making sales. “The business gets their door knocked on by vendors who say, ‘Hey, we can get you up and running on this solution tomorrow,’” Anderson says. “And when they go to IT with the same need, IT says, ‘It’s going to take us two weeks to evaluate your proposal.’”

James Anderson, vice president, Gartner


That’s why IT leaders need to get better at quickly putting technologies in place that create business outcomes. “The reason shadow IT exists is because necessity trumps efficiency every single time,” he says. The business has a need, and a vendor helps them get a solution up and running. When the business brings in the IT department, IT says, “‘We have our own process for this.’ Then the business is unhappy with IT because it seems like they can’t stand up solutions as quickly as the vendors can,” Anderson says.

Of course, there may be good reasons why IT needs that extra time. Your team is considering security and governance, and integration with existing and planned systems — things vendors may not worry about. How can IT departments compete with vendors on this unlevel playing field?

The answer, Anderson says, is to discuss every new technology’s pros and cons in three areas: cost, value, and risk. The business may not look at those issues the same way you do, he says. “But those are the building blocks for a discussion on whether we should go with this vendor or internally.”

5. The business may not want to move at the same speed that you do

“CIOs need to recognize where the business comfort level is,” Barchi says. “Do they want to be cutting edge, or are they comfortable being a late adopter of a technology or tool?”

Being a late adopter can be a safer approach, while being an early adopter can confer competitive advantage.  “The CIO’s role is not to advocate for either, but to read the organization and understand how best to achieve its goals,” he says

This can be frustrating for technology leaders who often are impatient to deploy new technology that will bring new capabilities, he acknowledges. “Advanced technology is exciting. But our role as CIOs is not to be excited about the technology. It’s to be excited about our organizations, our missions, and the people we serve.”

Besides, he says, every new technology comes at a cost, not only in dollars but also in effort on the part of both IT and the business. “We need to decide how much of our resources we’re willing to expend to make sure it’s going to work,” he says. “Even technology with a lot of benefit has a cost burden associated with implementation and refinement and making sure it meets the needs of the organization. Is the benefit of that advanced technology worth that cost and that lift? Or would it be better to optimize what the organization is doing with current technology and then adopt the advanced technology later when it’s better suited to move smoothly into the enterprise?”

Barchi says he weighs considerations like these all the time. “That’s a tradeoff. There’s no right answer.”

6. The business really does need to understand what you do

Damon Venger, CIO, CompuCom


Experts stress that CIOs — and their teams — need to understand how the business operates, and be able to speak its language, to be effective. But, Venger says, the reverse is also true. Effective technology leaders need to be good at helping business leaders grasp the complexities of modern technology so that they can work with IT to make good technology decisions.

“I think it’s about being more transparent,” he adds. “I like to say, it’s like The Wizard of Oz. The business doesn’t know what’s going on behind the curtain. But if we’re transparent and we explain, ‘This is how it’s working. This is what we’re delivering on,’ maybe, collectively, we can come up with a better way because maybe they want different results. You make adjustments together with the business so you can make sure your internal team is focused on what’s going to help drive the business.”

Knowing how to have these conversations is a powerful skill for any CIO, he says. “Being able to translate complex technology into terms that make sense for business results. It’s not about speaking in layman’s terms or dumbing anything down. The only way to do it is to understand the business, and as much as you can, get the business to understand IT.”

7. You’re probably talking about the wrong things

Most CIOs are, Anderson says. For example: uptime. That’s value-expected as opposed to  value-added, he says. CIOs need to tell the business about both value-added and value-expected, but most don’t distinguish between the two.

“If you’re looking at two different ice cream shops, you’re not thinking, ‘Which one has the cold ice cream?’ That’s value-expected,” he says. Seventy to 80 percent of the typical IT budget is spent on value-expected, keep-the-lights-on work such as creating the “five nines” of availability many CIOs take pride in, he adds. But if you want to talk about availability, you need to go the extra step to connect that metric to a specific business outcome, Anderson says. “How is this suite of applications used? It’s used to close loans. What impacts my paycheck is how many days it takes to close a loan. So if you talk about how availability helps with these metrics you care about, that’s a game-changer in a conversation on the business value of IT.”

In general, Barchi says, IT leaders are doing things right to foster business-IT alignment and help drive business results. “We’ve grown to be responsive to the needs of our customers in every industry I’ve seen.” But, he says, some business leaders have been slow to understand how IT can and must fit into every initiative.

“In some of the industries I’ve served, the first reaction I get from my peers is, ‘Oh, you want to be embedded with us? Join our staff meeting every other Tuesday for the last five minutes, and we’ll save any IT issues and discuss them then,’” he says. That’s not a great approach because there’s some element of tech in almost every financial, customer experience, service, or operational conversation. “So not just technology leaders, but also business leaders, need to recognize that technology underpins most of what we do now, and it needs to be part of every conversation.”

It’s up to IT leaders to deliver that message, he adds. “The hard truth is that, as CIOs, it’s on us to show the value of being part of every conversation — mostly listening, and then coming up with solutions or helping to solve problems.”

Business IT Alignment, IT Leadership

The greatest challenge for any CIO, undoubtedly, is aligning technology with an organization’s business goals.

Most CIOs know it is the No. 1 objective and far easier said than done. For a multitude of reasons — some political, some budgetary, some cultural — often the desired outcome of using technology to achieve business objectives seems out of reach.

Steve Taylor took the IT reins for mortgage subservicer Cenlar because he was confident his longtime experience as a consultant would help him bridge the gap between IT and the business — and deliver “material business impact” that is demonstrable and measurable, he says.

But getting results requires more than just sophisticated tech know-how and business acumen. It takes cooperation across the board, from the C-suite to the employee base, and that is the tough part, says Taylor, who was named senior vice president and CIO in March as part of a companywide reorganization that also brought in a new chairman of the board, two co-CEOs, and a talent director to the Ewing, N.J.-based company.

“A lot of times companies tends to outpace the technology and they don’t work together,” says Taylor, who prior to launching his own consulting business worked for large companies like Fidelity Investments. “From the standpoint of technology and business alignment, we need to make things dynamic.”

A cross-functional approach

As part of his alignment strategy, Taylor pairs his company’s business analysts and IT professionals in real-time — either in the same room or via videoconfernce — to collaborate on projects simultaneously.

This side-by-side approach enables colleagues from different sides of the aisle to catch all the business and technical nuances of a business process, identify the best workflow processes to achieve the specified business goal, and together ensure the accuracy of the data selected, the formulas used, and the code developed.

“What I am trying to do is make IT part of the business,” Taylor says, noting that automation is a business tool — not an IT product. “Our goal is to implement it and teach the business how to build their own workflows versus putting in a request. We want to push that back.”

To enable this, Taylor has reassigned business analysts to work for the company’s IT staff and reassigned IT employees to business roles. What Taylor is trying to do is align the business and technology practitioners and processes seamlessly to achieve maximum business impact, he says.

Cenlar, for instance, has also created new roles within IT called business information officers (BIOs) and solutions architects “whom we place side by side with the business, even in operations,” Taylor says. “They see exactly what the workflow is, what are their business needs and what their clients are asking for. Then the goal for this team is to come back to me, the CIO, and I work with IT leadership and the business.”

The power of the cloud

None of would be possible without the cloud, says Taylor, who inherited a core cloud platform on Microsoft Azure, which is rounded out by MuleSoft middleware, commercial analytics, and automation tools such as UiPath, as well as a data warehouse and essential SaaS offerings such as Teams.

The mortgage subservicing company migrated to Microsoft Azure in 2019 and spent the next three years (18 months if one accounts for the downtime during the pandemic) moving numerous assets such as Citrix databases and test systems in seven “waves” to Azure.

When Taylor came on board, he was responsible for moving most of Cenlar’s corporate data, including its client-facing data and interfaces, in the last three “waves” to the Azure cloud. “Wave 10 was really the meat of getting to the cloud because now all of our data was there,” Taylor says.

With that transition complete, Cenlar could then start delivering real-time data to its BIOs rather than stagnant weekly reports. Currently, there remain only 200 servers left in Cenlar’s data center. All the data contained on those servers will also be migrated to the cloud.

Taylor is also committed to implementing a hybrid, multicloud approach to avoid lock-in and expand Cenlar’s capabilities. For example, the company will implement more SaaS solutions on Amazon Web Services. “We want to make sure we’re not so stuck in one cloud [if we need] to pivot at a later date,” he says.

Overhauling the IT strategy

Cenlar’s chief clients are the banks and credit unions that provide loans for homeowners. In that sense, the company has two constituencies — one which works directly for the company’s corporate clients and another for their customers, the homeowners. For the latter, for instance, Cenlar employs Avaya call center technology to aid customers with mortgage information.

“We have two faces of technology — one very focused on our homeowners, which is very digital and very transformative, and then for banks and mortgage clients, for which we do a lot of data analytics and management of customer portfolios,” Taylor notes.

Cenlar’s automation and workflow processes, many of which precede Taylor, are highly effective at eliminating costly human errors. Taylor points out that if one of Cenlar’s 3,000 employees makes a single mistake on a single transaction, such as a misplacing one digit in a financial transaction, it has a ripple effect on the homeowner, the bank and, of course, Cenlar’s efficiency.

To address this, Cenlar’s technologists and analysts started developing automated workflows using industry-standard products, such as the Decisions analytics tool and AI chatbots, to deliver on core business objectives for consumers and corporate clients — for example, to provide fast, accurate answers to consumer questions and business analysts’ requests for data.

When he signed on six months ago, Taylor began unifying the IT and business teams, while also expanding Cenlar’s automation efforts and use of AI. He currently counts 200 in his IT staff and a handful of data scientists, and hopefully more soon.

To make Cenlar more agile, Taylor will have his work cut out for him re-engineering business processes across the board. Consulting companies allude to these macro changes — such as instituting agility and flexibility across multiple lines of business — as waterfall transformations.

One Gartner analyst says Cenlar’s CIO is addressing one of the most advanced challenges facing enterprise IT today: fusing IT with business analysts in an effort to design more collaborative business processes based on objectives and key results (OKR).

“CIOs have tried to solve this by using forms of business relationship management to get closer to the business. This provides advantages for sure and is useful. However, if the business is unclear in what they need to achieve, getting closer and being a better listener will not solve the problem,” says Irving Tyler, a vice president and analyst at Gartner. “The solution is for IT to provide leadership, to help business leaders increase their knowledge of technology and how it can solve business challenges.”

Many CIOs, like Taylor, are addressing this by forming cross-functional teams comprising business subject matter experts, business technologists such as data scientists, and IT experts, Tyler says.

While Taylor eyes Cenlar’s waterfall transformation globally, he is currently focused on building teams tailored to deliver immediate micro changes that matter, he says — an approach HVAC manufacturer Carrier is also taking.

Cenlar’s BIOs, who are assigned to ensure constant information exchange and precisely developed workflows, ensure there is fusion, the CIO says.

“This is very different than what I have seen in other companies where they don’t have technology embedded in the business side-by-side with them,” says Taylor, who participated in global changes that affect multiple business lines at Fidelity. “Just putting people together next to each other does not always make for success. But when IT is a business capability and leaders in IT and the business share objectives, the disconnects are removed.”

Business IT Alignment

Only a minority of companies who are either current SAP customers, or plan to become SAP ERP users, have completed their migration to the company’s S/4HANA system, even though support for its ECC on-premises suite will end in 2030, according to a report from digital transformation services provider LeanIX.

Just 12% of current and intended SAP ERP users responding to a LeanIX survey have completed the transition to S/4HANA, SAP’s cloud-based ERP suite that runs on the HANA in-memory database. The survey polled 100 enterprise architects, IT managers and other IT practitioners across US and Europe.

Another 12% of those surveyed said they intend to migrate, but have postponed the start of their S/4HANA transformation, and 74% of enterprises that were polled are just at the  evaluation and planning phase of their ERP transformation journey, LeanIX reports.

SAP introduced S/4HANA in 2015, expecting its existing base of 35,000 customers (as estimated by Gartner) to convert to the new ERP system.

However, SAP’s earnings disclosure show that S/4HANA has been attracting more new users rather than existing SAP ERP customers. In the last quarter of 2021, about half of all S/4HANA were new users, and for the last two quarters, 60% of S/4HANA users were new SAP customers.

Alignment among teams the biggest challenge

Almost 66% of respondents said that alignment, especially among IT teams, is the biggest challenge when it comes to S/4HANA mirgation.

“This may be due to the size of internal SAP teams: In 63% of the companies, these teams are often made up by more than 50 people,” the report reads.

Further, it states that only very few SAP teams work closely with enterprise architects, who can provide clarity about complex ERP landscapes and their dependencies within the whole software environment in an enterprise.

Only 33% of respondents termed the collaboration between the SAP and enterprise architecture teams in their enterprise as close, and 22% of respondents said that there is no collaboration between the teams at all.

Out of all of the enterprise architects surveyed, only 38% feel sufficiently involved with a transformation project, the report shows.

ERP, software dependencies pose challenges

And due to the lack of collaboration with enterprise architecture teams, almost 50% of respondents say that they see both the definition of the target architecture or roadmap and the identification of dependencies between ERP systems and the surrounding software landscape as challenging for SAP S/4HANA migration.

When asked about the level of transparency into these landscapes, only 20% of respondents said they always have a comprehensive overview or can achieve it in under one month, with 47% of respondents saying that they would need more than three months to provide an overview of all applications and systems, including all ERP solutions and dependencies, used by an enterprise.

Uncertainty over HANA transition period

Despite time for support for SAP ECC coming to an end, there is still uncertainty over the time needed for an enterprise to move to S/4HANA, according to the report.

While Gartner estimates or prescribes a three-to-five-year period as ideal for S/4HANA transition, almost 36% of respondents said that it could take more than three years, followed by 33% respondents estimating that it would take less than two years to upgrade.

However, when asked if the time currently planned for S/4HANA transition would be enough, 37% of respondents say that they would not be able to give an estimate, with 29% saying that they have not adhered to the time planned and overshot it.

Only 33% of respondents estimate that they will be able to complete the ERP transformation according to their planned schedule, the report shows.

Business IT Alignment, Digital Transformation, ERP Systems, IT Management