Strategic Alignment: Analysis of Perspectives

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Strategic Alignment Analysis of Perspectives
Tampa Bay Technology Leadership Association May
10, 2007

• Raymond Papp Jeff Lackey
• Associate Professor of MIS MBA
  Graduate
• rpapp_at_ut.edu jlackey_at_ut.edu
• John H. Sykes College of Business
• The University of Tampa

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Overview

• Reasons for undertaking this study
• Literature Review
• Methodology / Results
• Discussion
• Questions

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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

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• The Strategic Alignment Model

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Strategic Alignment

• Extent degree to which firms 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

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Business
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 Administra
tive Structure The way the firm organizes its
businesses. Examples include central, decentral,
matrix, horizontal, vertical, geographic, and
functional. Processes - How the firms 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. 
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Information Technology
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 companys
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 Archite
cture -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)
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• Strategy Execution Perspective
• Business Strategy - The domain anchor
• Organization Infrastructure - The pivot domain
• I/T Infrastructure - The impact domain

• Technology Potential Perspective
• Business Strategy - The domain anchor
• I/T Strategy - The pivot domain
• I/T Infrastructure - The impact domain

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• Competitive Potential Perspective
• I/T Strategy - The domain anchor
• Business Strategy - The pivot domain
• Organization Infrastructure - The impact domain

• I/T Strategy

• Service Level Perspective
• I/T Strategy - The domain anchor
• I/T Infrastructure - The pivot domain
• Org. Infrastructure - The impact domain

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• Business

• I/T Organization Infrastructure
• I/T Infrastructure - The anchor domain
• Organization Infrastructure - The pivot domain
• Business Strategy - The impact domain

• Organization Infrastructure Strategy
• Organization Infrastructure - The anchor domain
• Business Strategy - The pivot domain
• I/T Strategy - The impact domain

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• Organization I/T Infrastructure
• Organization Infrastructure - The domain anchor
• I/T Infrastructure - The pivot domain
• I/T Strategy - The impact domain

• Business

• I/T Infrastructure Strategy
• I/T Infrastructure - The domain anchor
• I/T Strategy - The domain pivot
• Business Strategy - The impact domain

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• I/T Strategy

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• Combination of
• Competitive Potential Perspective
• Service Level Perspective

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• I/T Strategy

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• Combination of
• Strategy Execution Perspective
• Technology Potential Perspective

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I/T Strategy Fusion
I/T Infrastructure Fusion
Organization Strategy Fusion
Organization Infrastructure Fusion
Nature of Domain Relationships
Lead Change
Accept Change
Focused on the Future
Develop I/T
Role of Top Management
Opportunity Seeker
Problem Solver
Role of I/T Management
Technology Manager
Support Change
Catalyze Value to the Business
Process Enabler
I/T as a Solution
New I/T Architecture
I/T Focus
I/T Performance Criteria
Product/Service Value
Cost of Success
Process Improvement
Process Improvement
Strategic Planning Method
Combination Approach
Combination Approach
Combination Approach
Combination Approach
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Web-Enabled Assessment Model

• Three 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

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• Overview of the Model

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ASP Routings
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Alignment Perspectives
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

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Perspectives by Industry
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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

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• Comparison of
• Enablers Inhibitors
• to Strategic Alignment

Business
I/T
All Executives
Senior executives support I/T
Senior executives support I/T
Senior executives support I/T
Enablers
Strategy developed in conjunction with I/T
Strategy developed in conjunction with I/T
Achievement of strategic goals

Leadership shown by 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
No close relationship between business I/T
Poor prioritization by I/T
Poor prioritization by I/T
Inhibitors

No understanding of its competitors/customers Co
mmitments not met
No support for I/T from business executives
Commitments are not met
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Executives 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 todays changing markets.

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Executives 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.

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References

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  Information Systems Management, MIS Quarterly,
  11(1), 23-45.
• Chan, Y., Huff, S. (1993). Strategic
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  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
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• Ives, B., Jarvenpaa, S., Mason, R. (1993).
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• Liebs, S. (1992). Were All In This Together,
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• Luftman, J., Lewis, P., Oldach, S. (1993).
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• Papp, R. (2004). Assessing Strategic Alignment
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• Papp, R. (2001). Strategic Information
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• Papp, R., Luftman, J. (1995). Business and IT
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• Robson, W. (1994). Strategic Management and
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Questions/Comments?

• Raymond Papp Jeff Lackey
• Associate Professor of MIS MBA
  Graduate
• rpapp_at_ut.edu jlackey_at_ut.edu
• John H. Sykes College of Business
• The University of Tampa