It’s the perennial issue for many CIOs and often the No. 1 challenge for new CIOs: “How do I align IT with the business?” And while this is perhaps the most important challenge for IT groups struggling with a bad reputation across the business, it’s certainly not the most important challenge for IT groups with a solid track record of success. For these teams, the challenge is how to move beyond alignment.

In the report Beyond Alignment: BT Strategic Planning, I highlight how critical it is for IT to help formulate business strategy. The research suggests that how a firm develops and manages business strategy is pivotal to the question of how IT can move beyond alignment. Unfortunately, there are a number of challenges with this:

At Forrester’s recent Business Process And Application Delivery Forum, there was a very interactive session on “Using The Next-Generation PMO To Promote Innovation,” led by Margo Visitacion. The premise of the session was that leading-edge PMOs (project management offices) are evolving to a more strategic role, focused on portfolio management of business investment rather than just IT projects or programs.

Many clients have suggested their PMO mission is already elevated to this level. They now focus their efforts on everything from guiding business leaders through building a business case for the investments they want to make, to guiding decision-makers through selection from the portfolio of investment proposals, to tracking benefits realization and ROI after the fact. PMOs with this kind of business-focused, strategic mission have greater business impact and are often close partners with executives leading their firm.

Yesterday, I participated in one of the regular content planning sessions for us analysts on Forrester’s IT Infrastructure & Operation’s Research team. Similar to investment managers and their portfolio of stocks or bonds, we spent time making buy/hold/sell decisions on what we will research more, continue to research, or stop researching. Among the many criteria we use to make these decisions, like client readership, inquiries, or consulting, the strategic relevancy to IT is an important factor to consider. And there was some heated debate around research themes we may phase out down the road…

Enter the discussion on IT asset disposition – or the process of reselling, donating, or recycling end-of-life IT equipment. While every organization eventually has to dispose of its end-of-life IT equipment, it’s long been an afterthought. And the data backs this up. Forrester finds that 80% of organizations globally use their OEM, third parties or a combination of the two for IT asset disposition. But when asked how important IT asset disposition is relative to other IT asset management processes, it’s far and away the least important. As an indicator of this, I recently surveyed over 300 European IT professionals where 77% of respondents ranked IT asset disposition “less important” or “least important.”

This begs the question, is disposing of end-of-life IT equipment really strategic?

As CEOs put IT budgets under pressure year after year, CIOs and their teams focus on balancing money spent on running the business (RTB) versus money spent on growing the business (GTB). By decreasing the percentage of their budget spent on maintenance and ongoing operations (RTB), they aim to have a greater share of their budget to spend on projects that grow the business. In the best IT organizations, the ratio can sometimes approach 50:50 — however, a more typical ratio is 70% RTB and 30% GTB.

Unfortunately, such practices suggest an incremental budget cycle — one that looks at the prior year’s spend to determine the next year’s budget. While this may be appropriate for the RTB portion of the IT budget, it is far from ideal for the GTB portion. Incremental budgeting for GTB results in enormous tradeoffs being made as part of the IT governance process, with steering committees making decisions on which projects can be funded based upon the IT and business strategy. Anyone from outside of IT who has worked through IT governance committees understands just how challenging that process can be. And the ultimate result of such tradeoffs is that sometimes valuable projects go unfunded or shadow-IT projects spring up to avoid the process altogether.

How CEOs Can Get More Value From IT