IT – Business Alignment
Last Lesson HighlightPurpose & Role Type of IT Strategies
IT Strategic Purpose/s
Analy
sing
Stra
tegie
s
Defending
Strategies
ProspectingStrategies
EFFICIENCY(PROFITABILITY)
COMPREHENSIVENESS(INFO CAPACITY BUILDING)
FLEXIBILITY(BUS AGILITY)
IT – Business Strategy Alignment
Corporate Level Objectives
Business Level Objectives
Function Level Objectives
Corporate LevelStrategies
Business LevelStrategies
Function LevelStrategies
IT Strategic Plan Contents
Enterprise Objectives
IT Objectives =
Cost-Benefit Measures
IT Systems
IT Service
levels
Process, contents and contexts of Linking IT objectives to Enterprise objectives & strategic capability requirements
Different Levels of Enterprise Objectives
Different Levels of Enterprise Strategies
(often grouped by org project groupings)
IT – Business Strategy Alignment
Degrees of alignment
Nil
Limited
Integrated
BUSI
NES
S VA
LUE
TOP
MGT
SU
PPO
RT
BUS
PERF
ORM
ANCE
low low low
High High High
Reasons for High Alignment
Alignment Gaps
1. Strategy Practice ignores IT value2. Tactics regards IT as an expense3. Communications - nerds language4. Education – lack of business understanding
(Rathnam et al, 2005)
5. Business strategists exclude IT strategies in planning
6. Business strategies change while IT strategy plan is in execution• Business strategists change minds• Competitive markets dynamics
Key Causes
Design solutions to address these causes
IT-Bus Alignment Models
IT Alignment as a Process:A means to a bus end
(Henderson & Vankatraman, 1993)
IT Alignment as a staged Capability Maturity
Management capacity
(Luftman, 2007; King & Teo, 1997))
Env Focus
Org Focus
Strategic Alignment
Strategic
Value Creation
IT created business value add
OperationsAlignment
Infrastructure &
Functionality Improvements
IT increases functional &
infra efficacies
Measurable IT
Capabilities
Comms
Value
Governance
(Enterprise)Architecture
Skills
Collaboration(Partnership)
Capability Maturity Levels
Initial (Ad hoc)
Committed(Repeatable)
Defined
Managed
Optimised
Basic management control
Process Definition
Process Management
Process Control
Low
High
IT-BUSINESS ALIGNMENT
What is Culture ?
Family, education, belief & expectation systems, experiences..... People attitudes in different situations
Shape behaviours at home/work/etc Situation Outcomes
COMMUNICATIONSTYLES
STRATEGY THINKING
STYLES
LEADERSHIP STYLES
MANAGEMENT STYLES
PROBLEM
SOLVING STYLES
IT Strategy & Work Culture
Country Cultural Dimensions
Organisational Cultural DimensionsGroup Cultural Dimensions
Personal Cultural Dimensions
Communication Abilities
Oth
er D
emo
Diffe
renc
es Values & Beliefs
Thinking & Decision Making
Many Theories/ModelsOne is Wallach (1983) org culture model:
1. Innovative culture2. Supportive culture3. Bureaucratic culture
• IT investment decisions• IT implement practices• Tech adoption practices• IT usage practices
influences
IT Strategy & Work Culture
Many Theories/Models:One is Kanungo model that extends the Wallace model:
1. Innovative culture2. Supportive culture3. Bureaucratic culture
IT strategy planning orientation
CentralisedIT
LeadingEdge(R&D)
Free Market(users decide) Monopolising
ScarceResource
(Tight Budgets)
Necessary Evil(Little IT support)
influences
IT Strategy & Work CultureAn organisation is structure along 3 views:
• Strategic• Managerial• Technical
IT strategies can be designed to align with one, a mix or all these levels’ purpose and hence functional support.
However, the work values and behaviours of people in these 3 levels may not be consistent and their behavioural influences will contribute to orienting the IT strategy to :• Be centralised or decentralised• Adopt leading edge ICT & accomodate
high learning risks• Controlled by users• Controlled by the IT dept• An administrative function and least
funding priority• Irrelevant & be prevented from use if
and where possible.
The Real Practice Alignment Issues
The new IT: Aligning Business & IT – Part 1 : Power Struggles 3.03 min
The new IT: Aligning Business & IT – Part 2: Mapping Analytics 2.26 min
The new IT: Aligning Business & IT – Part 3 : the small controlled projects 1.46 min
Additional Videos for home review
Aligning IT solutions with Business Needs 5.43 min
Cola Cola on Technology & Business Alignment 4.18 min
Class Study 1IT strategy misalignment problem at an Australian company
Part B – Mini Case1. What is the type of business strategu & It
strategy adopted by the Australian coy in both stages of growth. Use the taxonomy of IT strategy suggested by Sabherwal and Chan (2001).
2. Is there an alignment between IS/IT strategy and business strategy at both stages of growth of this company? Explain
Growth Phase
Business Strategy
IT strategy Business/IT Alignment Evaluation
Present both answers in a table
Look at roles & structure
Class Study 2the actions undertaken by a large chemicals company
to improve its IT alignment maturity
C2a) Identify the key IT management practices, IT systems, and IT decisions that the company made to improve its overall IT maturity level. Present your views in a tabular format taking into consideration of the 6 criteria or dimensions of IT alignment maturity included in the Luftman’s (2007) model.
C2b) Which dimension of IT alignment maturity experienced little improvement? What advice would you offer to the company to increase the maturity level of that particular dimension?
IT Alignment Maturing
Dimension
Key IT Mgt & Project
Activities
IT Decisions