Creating a Roadmap to Alignment

By CIOinsight  |  Posted 07-14-2008 Print Email
Aligning IT with business strategy has been a top CIO priority for years. But the devil is in the details.

It's easy to talk about aligning information technology with business strategy; the devil is in the details. Getting down to the how-to is the point of The Execution Premium: Linking Strategy to Operations for Competitive Advantage by Robert S. Kaplan and David P. Norton. The authors, who previously penned The Balanced Scorecard and The Strategy-Focused Organization, won't win an points for literary style in the following excerpt, but they do provide some solid reporting on the work at hand.

Once a support unit understands how it can contribute to business and enterprise-level strategy, it creates a strategy map and Balanced Scorecard to align its internal organization for executing the strategy. All employees, whether in line or support units, understand the ultimate measure of enterprise success. In crafting the objectives on its strategy map and Balanced Scorecard, the support unit must identify how it contributes to the value-creating strategies of its business unit partners and any other constituencies it serves.

Lockheed Martin Corporation, with 140,000 employees, [is] the country's largest defense contractor. Sales in 2007 were $41.9 billion.

[The company's] Enterprise Services Internal IT Group has more than 5,000 employees working at sites in 47 states and overseas. [It] is responsible for about two-thirds of the spending on information technology across the enterprise; the rest is embedded in four decentralized business areas.

The Lockheed Martin Enterprise Services Internal IT Group adopted a "complete customer solutions" strategy, with the goal of becoming a credible innovator and supplier of cutting-edge, Net-based capabilities that would make it the preferred IT service supplier for Lockheed Martin business units. It also wanted to provide support to external Lockheed Martin customers by helping win large IT-related contracts from the government, such as those expected from the U.S. Department of Homeland Security and the Department of Defense.

Lockheed Martin's business and technology leaders [are] its key customers; for example, the human resource group provides services to employees, and the finance unit provides reports and disclosures to external stakeholders, including investors, the board of directors, analysts, regulators and tax authorities.

The process perspective of a support unit scorecard typically has three themes that enable it to achieve its financial and customer objectives. An operational excellence theme emphasizes lowering the cost of operating the unit and delivering its services. Another theme deals with how the function manages the relationship with its internal customers. A third theme might describe the unit's strategic support to the business, including providing business units with new capabilities that enhance their strategies. The learning and growth perspective reflects the specific needs of the functional staff for training, technology, and a supportive work climate.

The five customer objectives are stated in the voice of the customers. These objectives move from table stakes ("Guarantee secure, reliable, high-quality solutions," "Show me the value of my investments," "Deliver on commitments to enable my mission success") to objectives for delivering value by integrating IT into the business unit solutions for their customers.

The Internal IT Group must deliver results, build relationships, and shape the future. The objectives in the learning and growth perspective are to live by the company's values and develop a culture that will energize the team to model personal excellence, integrity and accountability.

Although the strategy map is a relatively recent development at the Internal IT Group, leadership estimates that benefits will generate significant cost avoidance and millions of dollars of productivity savings during the next five years. It also projects additional savings from improved customer focus and IT-to-business alignment.

Reprinted by permission of Harvard Business School Press. Excerpted from The Execution Premium: Linking Strategy to Operations for Competitive Advantage by Robert S. Kaplan and David P. Norton. Copyright 2008, Harvard Business School Publishing Corp. All rights reserved.

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