strategic alignment: analysis of perspectivestbtla © 2007 raymond papp, jeff lackey strategic...

Strategic Alignment: Analysis of Perspectives

TBTLATBTLA© 2007 Raymond Papp, Jeff Lackey


Raymond Papp Jeff LackeyAssociate Professor of MIS MBA Graduate [email protected] [email protected]

John H. Sykes College of BusinessThe University of Tampa

Tampa Bay Technology Leadership AssociationTampa Bay Technology Leadership AssociationMay 10, 2007May 10, 2007



Overview

• Reasons for undertaking this study

• Literature Review

• Methodology / Results

• Discussion

• Questions



Strategic Alignment Overview...is an ongoing process....has remained a major issue for over a decade.…does not have a single answer or strategy for

everyone.…is a constant flux of 12 components of alignment…focuses on improving the relationships between

the business and IT functional areas...works toward mutual cooperation and

participation in strategy development



The Strategic Alignment ModelBusiness I/T

DistinctiveCompetencies

BusinessGovernance

BusinessScope

SystemicCompetencies

I/TGovernance

TechnologyScope

Business Strategy I/T Strategy

Processes Skills

Administrative

Processes Skills

I/T

StrategicFit

Organizational I/T Infrastructure Infrastructure

Functional Integration

Structure Architecture



Strategic Alignment• Extent & degree to which firm’s

business & information technology strategies & infrastructures linked

• Interrelationships between the domains reflect the linkages between the four domains

– Strategic Fit (vertical)

– Functional Integration (horizontal)

• Assess both linkages simultaneously

– 12 alignment perspectives

• Model provides “roadmap” for firm

The Strategic Alignment ModelBusiness I/T

DistinctiveCompetencies

BusinessGovernance

BusinessScope

SystemicCompetencies

I/TGovernance

TechnologyScope

Business Strategy I/T Strategy

Processes Skills

Administrative

Processes Skills

I/T

StrategicFit

Organizational I/T InfrastructureInfrastructure

Functional Integration

Structure Architecture



BUSINESS STRATEGY

Business Scope – Includes the markets, products, services, groups of customers/clients, and locations where an enterprise competes as well as the buyers, competitors, suppliers and potential competitors that affect the competitive business environment.

Distinctive Competencies – The critical success factors and core competencies that provide a firm with a potential competitive edge. This includes brand, research, manufacturing and product development, cost and pricing structure, and sales and distribution channels.

Business Governance – How companies set the relationship between management stockholders and the board of directors. Also included are how the company is affected by government regulations, and how the firm manages their relationships and alliances with strategic partners.

ORGANIZATION INFRASTRUCTURE

Administrative Structure – The way the firm organizes its businesses. Examples include central, decentral, matrix, horizontal, vertical, geographic, and functional.

Processes - How the firm’s business activities (the work performed by employees) operate or flow. Major issues include value added activities and process improvement.

Skills – H/R considerations such as how to hire/fire, motivate, train/educate, and culture.

Business



IT STRATEGY

Technology Scope - The important information applications and technologies.

Systemic Competencies - Those capabilities (e.g., access to information that is important to the creation/achievement of a company’s strategies) that distinguishes the IT services.

IT Governance - How the authority for resources, risk, and responsibility for IT is shared between business partners, IT management and service providers. Project selection and prioritization issues are included here. (See IT inhibitors discussion)

IT INFRASTRUCTURE

Architecture -The technology priorities, policies, and choices that allow applications, software, networks, hardware, and data management to be integrated into a cohesive platform.

Processes - Those practices and activities carried out to develop and maintain applications and manage IT infrastructure.

Skills - IT human resource considerations (e.g. hire/fire, motivate, train/educate, culture)

Information Technology



BusinessStrategy

OrganizationInfrastructure I/T Infrastructure

I/T Strategy

BusinessStrategy


I/T Strategy

Strategy Execution PerspectiveBusiness Strategy - The domain anchorOrganization Infrastructure - The pivot domainI/T Infrastructure - The impact domain

Technology Potential PerspectiveBusiness Strategy - The domain anchorI/T Strategy - The pivot domainI/T Infrastructure - The impact domain



I/T Strategy

I/T Infrastructure

BusinessStrategy

OrganizationInfrastructure

BusinessStrategy


I/T StrategyCompetitive Potential PerspectiveI/T Strategy - The domain anchorBusiness Strategy - The pivot domainOrganization Infrastructure - The impact domain

Service Level PerspectiveI/T Strategy - The domain anchorI/T Infrastructure - The pivot domainOrg. Infrastructure - The impact domain



TechnologicalVisionary

Enable Value-Add to

Business

I/T Value to Product/Service

I/TStrategy

TechnologyArchitect

Nature ofDomainRelationships

Role of TopManagement

Role of I/TManagement

I/T Focus

I/TPerformanceCriteria

Strategic Planning Method

BusinessVisionary

BusinessArchitect

Drive Value-Addto Business

I/TStrategy

Prioritizer

Businesswithin a

Business

CustomerSatisfaction

I/TPlanningI/T BPR

or Functional

Service Manager

Leader

Reactive/Responsive

Financial

BusinessTransformationor I/T Planning

FunctionalManager

Product/ServiceValue from I/T

CompetitivePotential

ServiceLevel

Strategic Execution

TechnologyPotential



BusinessStrategy


I/T StrategyI/T Organization InfrastructureI/T Infrastructure - The anchor domainOrganization Infrastructure - The pivot domainBusiness Strategy - The impact domain

BusinessStrategy


I/T Strategy

Organization Infrastructure StrategyOrganization Infrastructure - The anchor domainBusiness Strategy - The pivot domainI/T Strategy - The impact domain



BusinessStrategy


I/T Strategy

I/T Infrastructure StrategyI/T Infrastructure - The domain anchorI/T Strategy - The domain pivotBusiness Strategy - The impact domain

BusinessStrategy


I/T StrategyOrganization I/T InfrastructureOrganization Infrastructure - The domain anchorI/T Infrastructure - The pivot domainI/T Strategy - The impact domain



System Support

CustomerSatisfaction

Functional Manager




I/T Focus



BPR Enabler

Enable Value toBusiness Process

Deploy Value toBusiness Process

Project Manager

Catalyze Value toBusiness Process

ProcessImprovement

from I/T

BPR

Business ProcessArchitect

I/T Organization Infrastructure

Organization Infrastructure

Strategy

OrganizationI/T

Infrastructure

I/T Infrastructure

Strategy

Leader/Sponsor PrioritizerBusiness Process

VisionarySponsor

BusinessStrategy

I/T Strategyor Execute

I/T Planning,I/T BPR

I/T Value toProduct/ServiceI/T Value to BPR



BusinessStrategy

Business

Infrastructure


Infrastructure


Strategy



I/T Strategy

I/T Infrastructure

Business

Strategy


Combination of: I/T Infrastructure Strategy Perspective I/T Organizational Infrastructure Perspective

Organization Strategy Fusion



Combination of: Competitive Potential Perspective Service Level Perspective

Organization Infrastructure Fusion

I/T Strategy

I/T Infrastructure

Business

Strategy

Infrastructure

Organization



I/T Strategy

I/T Infrastructure

BusinessStrategy

Organization

Infrastructure

Combination of: Organizational Infrastructure Strategy Perspective Organizational I/T Infrastructure Perspective

I/T Strategy Fusion



Combination of: Strategy Execution Perspective Technology Potential Perspective

I/T Infrastructure Fusion

I/T Strategy

I/T Infrastructure

BusinessStrategy

Organization

Infrastructure



IT Strategy

IT Infrastructure

Business

Strategy


Combination of:

IT Infrastructure Strategy Perspective

IT Organizational Infrastructure Perspective


Combination of:

Organizational Infrastructure Strategy Perspective

Organizational IT Infrastructure Perspective

IT Strategy Fusion

Competitive Potential Perspective

Service Level Perspective

Organization Infrastructure Fusion

Strategy Execution Perspective

Technology Potential Perspective

IT Infrastructure Fusion

IT StrategyBusinessStrategy

IT InfrastructureOrganizationInfrastructure

Combination of: Combination of:

IT InfrastructureIT Infrastructure



IT StrategyIT Strategy

Business StrategyBusiness Strategy






I/T Focus



I/TStrategy Fusion

I/T Infrastructure

Fusion


Organization Infrastructure

Fusion

Lead Change Accept Change Focused on the Future

Opportunity Seeker

Problem Solver

I/T as a Solution

Catalyze Valueto the Business

ProcessEnabler

New I/TArchitecture

Product/ServiceValue

Cost of Success

Technology Manager

Support Change

Develop I/T

ProcessImprovement

ProcessImprovement

CombinationApproach

CombinationApproach

CombinationApproach

CombinationApproach



Web-Enabled Assessment ModelThree options:

• Background on the Model

• First-time assessment

• Repeat visit

Features of the website:

In order to enable data gathering & return visits we also needed to have

Ways to uniquely identify users

E-mail addresses and a password

Background information about the users and their organizations



Overview of the Model



ASP Routings



Alignment Perspective Percentage

Strategy Execution 20%

Technology Potential 16%

Competitive Potential 5%

Service Level 6%

Organization IT Infrastructure 7%

Organization Infrastructure Strategy 3%

IT Organization Infrastructure 8%

IT Infrastructure Strategy 6%

Organization Strategy Fusion 5%

Organization Infrastructure Fusion 6%

IT Strategy Fusion 5%

IT Infrastructure Fusion 14%

Alignment Perspectives



Perspectives by Industry

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agriculture Commerce Consulting Education Finance/BankingHealthcare Insurance Government Manufacturing Misc. ServicesPharmaceuticals Transportation Utilities



Using the Website Practitioner version (www.strategic-alignment.com):

• Aid practitioners in assessing degree of alignment in their firm

• Data used to build anonymous information database by industry

• Enables firm to benchmark itself against its industry, across all industries

• Enable managers to determine how their firm compares to competition

• Use model to assess alignment perspective, then determine steps needed to facilitate alignment between business & IT strategies



Comparison of Enablers & Inhibitors to Strategic Alignment

Business I/T All ExecutivesSenior executives support

I/TSenior executives support

I/TSenior executives support

I/T

Enablers Strategy developed in conjunction with I/T

Strategy developed in conjunction with I/T

Achievement of strategic goals

Leadership shownby I/T

Leadership shown by I/T

Understanding of competitors/customers

Poor prioritization by I/T

No close relationship between business & I/T

No close working relationship between

I/T & business

Inhibitors No close relationship between business & I/T

Poor prioritization by I/T

Poor prioritizationby I/T

No understanding of its competitors/customers

&Commitments not met

No support for I/T from business executives

Commitments are not met



Enablers to AlignmentBusiness vs. IT

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Pe

rce

nta

ge

Business Execs.

I T Execs.



Inhibitors to AlignmentBusiness vs. IT

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Pe

rcen

tag

e

Business Execs.

I T Execs.



Executive’s Role• Executives should work toward minimizing those activities

that inhibit alignment and maximize those activities that bolster it.

• IT executives can be successful business leaders & keep their organizations in constant harmony by continuous focus on the enablers & inhibitors.

• Patience is also important. Alignment is a dynamic, complex process that takes time to develop and even more effort to maintain.

• Companies that have achieved alignment can facilitate building a strategic competitive advantage that will provide them with increased visibility, efficiency, and profitability to compete in today’s changing markets.



Executive’s Role

• Ensure cooperation between business & IT to maximize investment in tech.

• IT plays an increasing role in defining corporate strategies, its correct application will facilitate a more competitive and profitable organization.

• Careful assessment of a firm's alignment is important to ensure IT is being used to appropriately enable or drive the business strategy.

• Executives should concentrate on those things that keep their companies aligned and reset the height of the performance standard to a new level.



ReferencesBrancheau, J., & Wetherbe, J. (1987). “Issues In Information Systems Management,” MIS Quarterly, 11(1), 23-45.Chan, Y., & Huff, S. (1993). “Strategic Information Systems Alignment,” Business Quarterly, 58(1), 51-56.Dixon, P., & John, D. (1989). “Technology Issues Facing Corporate Management in the 1990s,” MIS Quarterly, 13(3), 247-55.Henderson, J., & Venkatraman, N. (1990). “Strategic Alignment: A model For Organizational Transformation Via Information

Technology,” Working Paper 3223-90, Sloan School of Management, Massachusetts Institute of Technology.Henderson, J., & Venkatraman, N. (1996). “Aligning Business and IT Strategies,” Competing in the Information Age, Luftman, New

York, Oxford University Press. IBM (1981). Business Systems Planning, Planning Guide, GE20-0527, IBM Corporation, 1133 Westchester Ave, White Plains, New

York.Ives, B., Jarvenpaa, S., & Mason, R. (1993). “Global Business Drivers: Aligning Information Technology to Global Business Strategy,”

IBM Systems Journal, 32(1), 143-161.Liebs, S. (1992). “We’re All In This Together,” Information Week, (October 26), 8.Luftman, J., Lewis, P., & Oldach, S. (1993). “Transforming the Enterprise: The Alignment of Business and Information Technology

Strategies,” IBM Systems Journal, 32(1), 198-221.Luftman, J., Papp, R., & Brier. T. (1995). “ The Strategic Alignment Model: Assessment and Validation,” In Proceedings of the

Information Technology Management Group of the Association of Management (AoM) 13th Annual International Conference, Vancouver, British Columbia, Canada, August 2-5, 1995, 57-66.

McLean, E., & Soden, J., (1977). Strategic Planning for MIS, New York, John Wiley & Sons.Mills, P., (1986), Managing Service Industries, New York Ballinger.Niederman, F., Brancheau, J., & Wetherbe, J. (1991). “Information Systems Management Issues For the 1990s,” MIS Quarterly, 15(4),

475-95.Papp, R. (2004). “Assessing Strategic Alignment in Real Time” Journal of Informatics Education Research, (6, 1).Papp, R. (2001). Strategic Information Technology: Opportunities for Competitive Advantage, Hershey, PA: Idea Group Publishing.Papp, R. (1995). Determinants of Strategically Aligned Organizations: A Multi-industry, Multi-perspective Analysis , (Dissertation),

Stevens Institute of Technology, Hoboken, New Jersey.Papp, R., & Luftman, J. (1995). “Business and IT Strategic Alignment: New Perspectives and Assessments,” In Proceedings of the

Association for Information Systems, Inaugural Americas Conference on Information Systems, Pittsburgh, PA, August 25-27, 1995.Parker, M., & Benson, R., (1988). Information Economics, Englewood Cliffs, New Jersey, Prentice-Hall.Robson, W. (1994). Strategic Management and Information Systems: An Integrated Approach, London: Pitman Publishing.Rogers, L. (1997). Alignment Revisited. CIO Magazine, May 15, 1997.Watson, R., & Brancheau, J. (1991). “Key Issues In Information Systems Management: An International Perspective,” Information &

Management, 20, 213-23.



Questions/Comments?

Raymond Papp Jeff LackeyAssociate Professor of MIS MBA Graduate [email protected] [email protected]

John H. Sykes College of BusinessThe University of Tampa

strategic alignment: analysis of perspectivestbtla © 2007 raymond papp, jeff lackey strategic...

Documents

business slide

analysis of perspectivestbtla

components of alignment

strategic partners

alignment perspectives

firm slide

business governance

jeff lackey overview