Recently I had the opportunity to read Ade McCormack’s book The IT Value Stack. In the book, Ade makes the case for stronger alignment of IT with their business customers. The book strongly resonated with me given my prior experience in corporate IT. Ade was gracious enough to grant me an interview so I could ask him some more questions about the book and gain some insights on the challenges of IT alignment with their business customers. I’m planning to post this interview in three parts and will provide a short review and final comments in the third post.

Holloway: For the people that haven’t yet had a chance to read your book, what is the single biggest problem facing traditional IT in 2008? And for a CIO facing that problem, what is the most important thing that they need to do in order to fix it?

McCormack: In my view the single biggest problem facing traditional IT is the opaqueness associated with value measurement. The inability to measure value frustrates users in general and CFOs in particular. This contributes to the tensions between users and the IT function. Many organisations see the IT function as solely existing for technology management purposes. Thus the IT function’s contribution to business strategy and business operations is non existent. Hence many IT functions under perform in respect of the value that they could potentially deliver to the organisation.

The key task for the CIO is to establish trust between the user and IT communities. The quickest way to do that is to work with the business to extract the full value from the IT investment.

Holloway: You identify “strategy entwinement” as the foundational element for driving value from IT to the business. In a business where the CIO doesn’t report to the CEO (or even to the COO or CFO), how does an IT department start to pursue strategy entwinement at the grass roots level?

McCormack: It is difficult for the CIO to influence strategy if he/she is not sitting with the other members of the executive management team. CIOs need to be on the board. Reporting into the CFO and even COO generally results in a focus on cost management rather than innovation. So again the value proposition is diminished. Ultimately the CIO cannot influence business strategy if she is not on the board. It is better for the CIO to leave and find an organisation that ‘gets IT’. Generally speaking this is what happens. The best CIOs go to the organisations that recognise the potential positive impact IT can have on their organisation.

Holloway: You talk about alignment versus entwinement. Can you explain the difference between alignment of strategy and execution and entwinement of the IT and business functions? Why is alignment not sufficient on its own?

McCormack: Business-IT alignment has been a big theme for some time. In my view alignment is not enough, as it suggests that the IT function becomes a well behaved supplier to the business. I believe that the relationship should be a partnership of equals, given how central IT is to most organisations. The IT function must be allowed to influence business strategy as much as the ‘business’.

Holloway: In your “IT Value Stack Assertions” that are derived from your book, you claim that “The IT department as a physical entity needs to end.” With that in mind, what would you say to a CIO that agrees with you about how they should begin to move towards this goal in their organization? How would you undertake the effort of dismantling the traditional IT group while improving the quality of IT services for the business?

McCormack: As technologies become simpler and the variety of technology options streamline (as a result of global standardisation) the issue of technology management will diminish. The re-emergence of software as a service now makes it easier for users to source their technology needs direct. The service element of IT will thus fall into the hands of people motivated to retain their customers. Smart CIOs will recognise this and gravitate their function away from technology management to process consultancy. In turn technologists need to morph into process consultants advising the business on how to be more effective. This would involve degeeking the IT function and migrating the DNA to one where all IT staff are effectively hybrid business-technologists. It won’t be enough to be business-oriented, we need specialists in specific areas of the business, whether that be front-office equities trading systems or air traffic control.

I’m pretty excited about the new console updates for Xbox, especially I need to get a spare console for my house pretty soon. More storage will be great since I’m already hooked on downloading HD content from the Xbox Live Marketplace. Having said that, we need to move much more quickly towards TB storage on our consoles. These 20/60/120 GB increments are just not that impressive.

The Microsoft Exchange Team Blog: “We’re glad to have Apple connecting their devices to Exchange Server and hope you have fun using these tools to stay informed about when iPhones connect to your Exchange Server.”

Gia Lyons: “Secret Agent, I salute you. I won’t blow your cover. But please, tell me your secrets.”

Microspotting is an interesting blog devoted to the people and personalities behind Microsoft software. As an employee, it is a great way to get a better sense for the diversity of talent, experience and background that we have in our company. For customers (and even skeptics and competitors), it is a great way to get a sense of our organization’s culture. We are “the empire”, but we also have families and hobbies and are regular folks.

As a field guy, I’d love to see more coverage of the interesting folks in the field who make Microsoft “real” for our customers. I know several of them that are real oddballs and would make great interviews.

I saw Wilco in St. Louis on Thursday night with Donna. It was the first of three straight nights of shows at the Pageant theater in University City. If you’re in St. Louis and didn’t get to go, they’ve recorded two of the shows and will be posting them shortly. Highly recommended.

Robert Scoble: “I like the noise. Why? Because I can see patterns before anyone else. I saw the Chinese earthquake happening 45 minutes before Google News reported it. Why? Because I was watching the noise, not the news.”

This is one of Scoble’s best posts since he left Microsoft. Robert is a student of journalism and trends in the media. What he is describing is the process by which news will be reported in the future. As the “blogosphere” has talked about the death of establishment/traditional media with the rise of the Internet, blogs and podcasts, many have overlooked a very important point. The establishment media will be able to keep up and stay relevant if they are able to put the right tools and people in place to sift through all of the “noise” and find new stories, spot trends, and explain to the masses.

The masses may never be on Twitter. Even if they were many important news stories will pop up in new and interesting places. The people that can find those new places, sift through the noise and find the things that are interesting to the masses will always have an important role to play in delivering the news.

Steve Gillmor ties together a bunch of disconnected thoughts, ideas and trends in a post that snidely refers to Bill Gates getting a gold watch and retiring. Steve is a savant of sorts. He spots patterns and trends that others can’t see but struggles to articulate why they’re there and what they’ll lead to.

But there is a redeeming quote in the piece: “But don’t think that just because Google will prosper that Microsoft won’t. Live Mesh can fit into this like a glove, feeding downstream vertical versions of affinity groups to skinned Silverlight containers. We’re within weeks of offerings already from Twhirl, FriendFeed, Summize, and others we just haven’t been told about yet. All Microsoft needs to do is get Bill his gold watch and get back to work.”

What Steve is missing is that the work hasn’t ever stopped and that the “ship cycles” are very long. We are at a major inflection point but we don’t leave all of our past investments behind. Just as Facebook started nearly 5 years ago as a slick app for college kids to connect with their friends and now represents a “social graph”, the infrastructure that Microsoft has built out for internet presence (Live Messenger, Spaces), collaborative business applications (SharePoint, CRM) and end-user enablement on the desktop (Excel, Word)  are now rapidly converging into something new. To Steve’s point, Mesh could be an innovative way to rapidly innovate and distribute more of these scenarios while leveraging the people and tools we’re already tied into. SilverLight could be a big part of how the experience is delivered. Either way, something new and significant is coming together here.

I’m not sure that Steve sees it, but I’d say the future looks very bright here for Microsoft.

UPDATE- Steve sees it.

While posting some links today between Twitter, del.icio.us and creating a few short entries on my blog today, it occurred to me that I’ve been using FriendFeed the wrong way. The short snippets, comments and links aggregated from various services that I use or posted directly to FriendFeed could directly replace my blog. In fact, when I look at my blog, 90% of what I post is really for my personal reference. Things that I found interesting and want to get back to. Others may find it interesting too, but that’s not really what I’m going for. So the only compelling feature that FriendFeed lacks that my blog has is the ability to post long articles and to organize those in the context of my web site so that they are navigable outside of the “blog stream”. But, if I were to use another online document editor, Wiki or simple CMS that provided feeds I could add that to FriendFeed too. Hrmmm.

Channel 9: “Ray Ozzie, Microsoft’s Chief Software Architect sits down with Jon Udell to talk about Live Mesh, a new technology and platform that enables synchronization and storage “to the cloud.” You’ll hear about the history of Live Mesh, how it has been influenced by Ray’s previous work on products like Groove and Lotus Notes. Ray also discusses the core technology that forms the basis for Live Mesh including REST APIs, XML, and synchronization APIs that enable you sync your Mesh across multiple devices.”