Symptom: Priorities are not aligned with clients' strategy.
In fee-for-service settings, priorities are not a problem. If the organization is able to deliver any product for which clients are willing to pay, no priority-setting is required. This is the case for a company that lives in an open market economy, and within a company where client executives budget for their own support resources. In either case, so long as clients can supply the money, the organization can expand its resources and fulfill the demand (within some practical limits to growth rates).
This expansion does not represent a lack of control. In a fee-for-service economy, the market will ensure that each investment has an acceptable rate of return. If the organization's current resources do not permit this, the overall level of resources should be expanded to satisfy legitimate demand for high-payoff projects. Otherwise, clients will simply spend their money elsewhere.
However, when a staff department directly receives a budget to provide its products and services,, priorities may be a problem. On one hand, supply is fixed by the central budget. On the other hand, to clients everything appears free, so demand is unbridled. When demand exceeds supply, priorities become an issue.
In such a situation, there is the risk that clients may be disenfranchised. There may be a temptation to set priorities centrally, either by the organization itself (a conflict of interests, as if your vendor were telling you what to buy) or by a central committee.
In either case, the people closest to the business need are not making the decisions, and strategic alignment is likely to suffer.
