I was recently working with a CIO that wanted to know what “operational alignment” truly meant, and how it could affect a sourcing decision.  This client was weighing the pros and cons of outsourcing versus a shared services solution.  The CIO felt that with either solution, the new retained organization had already been defined, and that meant the company had already had achieved operational alignment.  While having the retained organization defined and ready to implement is an important step in the sourcing journey, it is not a component of having operational alignment.

As we walked down the hall to the CEO’s office, I quickly explained the three critical elements to achieving operational alignment:

1.    Process Alignment - This particular client had been in business for over a century and had always done infrastructure and applications development and support in-house.  In order to align with a new potential outsourcing partner, or to align multiple disparate IT organizations, it is important to document current IT processes and align those processes.  I told the CIO that while it is important to use ITIL®V3 as a guideline, it was more important that the company document their current processes and align those with the future way of doing business.

2.    Governance Alignment – Focus on the future governance structure, account management process, and the team that will be in place.  Additional areas to focus on would include: performance monitoring and reporting, service level agreements, tracking, reporting and approach, and the use of tools for reporting to the business.

3.    Transition Alignment – Document the internal transition plan, timeline and milestones.  Create documentation on what capabilities, tools, methodologies, processes and technology are currently available to the company.  Some additional items to document would be transition approach, plan for knowledge transfer, and training milestones and deliverables.

I continued down the hall and left the CIO to introduce the CEO to the three cornerstones to operational alignment:

Operational Alignment = Process Alignment + Governance Alignment + Transition Alignment

Documented processes, governance structure, and transition plans should be vetted with the new provider, or with individual business units if going the shared service path.  Once these processes, structures, and plans have been reviewed and agreed upon, you can correctly say that you have operational alignment and are prepared for a successful sourcing relationship.