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