Articles, Metis Strategy

Hugging the business too closely can squeeze the lifeblood out of IT

by Peter High

Much has been written about the need for information technology departments to align with the business units within their companies. IT should understand the company's strategic direction, so the thinking goes, and develop solutions to meet those needs. This trend led many IT departments to develop a return on investment (ROI) analysis for each project.

Although the advantages of IT's intimacy with the business abound, the concept raises the question: Is it possible for IT to focus on the business at its own expense?

As IT achieves more value on behalf of the business, it tends to focus less on IT, reminding us that IT's alignment with business must be balanced with an alignment of business to IT. The former has been sacrosanct, whereas the latter is rarely considered. For a true partnership between business and IT, IT must manage its infrastructure and educate the business about technology. If IT ignores its own needs, the business suffers from increased downtime and IT's inability to scale appropriately.

In the late 1990s, the IT department at Hilton Hotels performed well, but was viewed as supportive to the business. Underscoring that role, the then-CIO reported into hotel operations.

After acquiring Promus Hotel in 1999, the organization began viewing IT differently.

Promus had developed a property management technology called System21. Under the stewardship of Tim Harvey, Hilton's executive vice president and chief information officer, the company leveraged System21, now called OnQ, into a tool that integrates reservation management, property management, CRM, revenue management, forecast and content management, Balanced Scorecard activities, and a host of other services for all the Hilton brands. Unlike competitors who have different solutions for these functions, now, as Hilton adds about 300 hotels annually, each one need only invest in OnQ, and a holistic technology solution is in place. Although Hilton remains a hospitality company, technology is one of the main sources of its competitive advantage.

As Hilton IT delivered increased value, Harvey realized the business needed to be educated about IT to ensure enough attention was spent managing systems infrastructure. He ensured IT staff spent time with business colleagues to understand their needs and to learn business language. This enabled Hilton IT to better communicate its plans, including metrics related to on-time, on-scope, and on-budget.

For many companies, infrastructure remains the domain of techies. At Hilton, IT communicates its plans to improve the infrastructure across the business.

Dean Permenter, vice president, shared infra-structure services, explains, "We are constantly improving infrastructure efficiency through virtualization, where several applications share the server, storage, or backup capacity. The result: A true enterprise solution instead of individual systems requiring additional management and resources such as power and cooling."

Hilton IT decreased baseline costs (those costs required to "keep the lights on") even as the hotel grew. By providing the business with value metrics to represent such infrastructure successes, the inner workings of IT become tangible.

Too often, business-IT alignment is taken in that order. To be truly consultative to the business, IT must educate the business on its own needs and constraints and how its capabilities can serve the business.

Aligning IT to the business is just the first step toward opening the lines of communication, which should flow in both directions if companies wish to fully leverage IT.

Peter High is president of Metis Strategy, a Washington, D.C.-based consulting firm specializing in the intersection of business strategy and IT.