Is your firm's tech portfolio aligned with its business strategy?

Here's a tool that allows you to find out. OVERVIEW: Considerable work has been done by the Industrial Research Institute and other organizations to improve the efficiency ofthe technology function within a company. Protocols have been developed to evaluate projects, transform them from ideas to products or processes, and generate a balanced project portfolio. However, very little has been done to determine whether or not the portfolio developed is aligned with the company's business strategy, to achieve the company objectives. Consequently, an IRI committee developed a tool for testing this alignment. Ten "Alignment Dimensions," covering many necessary areas of alignment, have been formulated for use as a communication tool between the different functions within a company. It is believed that more and better discussion will lead to integrated planning and, in turn, better results. Many studies have been undertaken to improve the efficiency of the technology function within a company, with respect to project selection (1-6) and development of balanced project portfolios (7-10). However, not much has been published on aligning the portfolio with the business strategy of the company, at least not on using a procedure that utilizes a language understood by both the technical and business personnel, is relatively quantitative, and is designed to promote discussion and be iterative until alignment is achieved. The "misalignment" of the technology portfolio with the business strategy seems to be a common occurrence in industry today, leading to missed company objectives and disenchantment of senior management with the technology function. One of the problems appears to be the lack of a tool that promotes discussion on a fairly quantitative basis, in terminology understandable to all participants. The tool described in this article is designed to determine the alignment of the portfolio with the business strategy. (See "How the Tool Was Developed," next page). One can draw a comparison with the alignment of a person's investment portfolio with their retirement strategy. The major value from using this tool is to ensure that the alignment of the portfolio with the business strategy is considered and a dialogue is started and continued until alignment is achieved. It can be used as many times as necessary to ensure that alignment is maintained, particularly under changing business and technology conditions. The ten "Alignment Dimensions" are: 1. Size and nature of future business goals (by markets). 2. Meeting time requirements. 3. Return on existing assets: * People. * Core competencies. * Technology. * R&D. * Manufacturing equipment. * Working capital. * Intellectual property. * Brand name. * Information technology. 4. Investment in new assets. 5. Alignment of portfolio with balance of business objectives-line extensions vs. new products vs. exploratory products vs. process vs. service/system solutions. 6. New Sales Ratio goal. 7. Need for new business or market areas vs. existing business areas. 8. New and improved products/processes vs. cost reduction. 9. Alignment with business risk tolerance. 10. Organizational commitment. These are detailed below with their corresponding anchoring statements. Dimension 1: Size and Nature of Future Business Goals Broken Down by Markets.-Are the Business and Technology expectations of future market opportunities (trends, size, growth, new technologies, new applications) reflected in the Technology Portfolio? Anchoring Statements 5. Business and Technology jointly plan the portfolio using ongoing, validated, documented forecasting of markets. 4. Technology portfolio is usually planned using market information. 3. Technology portfolio and market information are sometimes linked. …