Value-based business-IT ALignment

http://www.vital-project.org

2

1

3

VITAL/services

VITAL/design

VITAL/maturity

Value-based business-IT ALignment

http://www.vital-project.org

2

1

3

VITAL/services

VITAL/design

VITAL/maturity

Business-IT alignment from a value-based perspective

Pascal van Eck

University of Twente

Oct. 12, 2006 SIREN 2006 2/33

V I TAL

Overview

What is business-IT alignment?

State of the art in research and

practice

The need for a more synthetic

approach

Value modeling as a tool for business-IT alignment

An overview of the VITAL project, and its relation to other NWO/STW funded research

Oct. 12, 2006 SIREN 2006 3/33

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Business-IT alignment: definition

Allocation of IT budgets such that business functions are supported in an optimal way outcome

“the continuous process, …, of consciously and coherently interrelating all components of the business – IT relationship in order to contribute to the organisation’s performance over time”

process

from Maes et al., 2000

Oct. 12, 2006 SIREN 2006 4/33

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Business-IT alignment

• Prod./market• Make-or-buy• HRM

• Adm. infra.• Processes• Skills

• Services• Make-or-buy• HRM

• Architecture• Processes• Skills

IT demand IT supply

inte

rnal

exte

rnal

Adapted from: Henderson, & Venkatraman, (1993). Strategic alignment: Leveraging information technology for transforming organisations. IBM Systems Journal, 32(1):472-484.

functional integration

strategicalignment

Oct. 12, 2006 SIREN 2006 5/33

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Alignment research in MIS

Researchers include: • N. Venkatraman• P. Weill• J. Luftman• Y. Chan

Journals include: • MIS Quarterly• IS Research• J. Strat. Inf. Sys.

Approach: observe and analyze strategic alignment by means of rigorous empirical methods

Qualitative validation:• Avison, D., Jones, J., Powell, P., Wilson, D. (2004). Using and validating the strategic alignment model. J. Strat. Inf. Sys.

13:223-246. http://dx.doi.org/10.1016/j.jsis.2004.08.002.• Eck, P. van, Blanken, H. and Wieringa, R. (2004). Project GRAAL. Towards Operational Architecture Alignment. Int. J. of

Coop. Inf. Sys. 13(3):235-255. http://www.cs.utwente.nl/~patveck/?page=IJCIS04

Oct. 12, 2006 SIREN 2006 6/33

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In practice: Manage IT!

Functionalmanagement

Applicationmanagement

Technicalmanagement

User organization

ASL

ITIL

BiSL

Users

Management

Suppliers

maintaining and managing of the technical infrastructure

resources to store, process and provide information

producing, maintaining and adapting application programs and the databases

software house

maintaining and leading information of the organization, supporting the organization by means of the management of the information.

IT Management Frameworks

ICT service organization

Demand Side Supply side

Fig

ure

by R

ober

to S

anta

na T

apia

, ad

apte

d fr

om V

an d

er P

ols,

R.,

Don

atz,

R.,

& V

an O

utvo

rst,

F.

(200

5).

BiS

L. E

en F

ram

ewor

k vo

or F

unct

ione

el B

ehee

r en

Inf

orm

atie

man

agen

t. V

an H

aren

Pub

lishi

ng.

Title stolen from Thiadens, Th. (2005). Manage IT! Springer Verlag.

Oct. 12, 2006 SIREN 2006 7/33

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Problem, and solution elementsProblem: guidance for engineering/planning/synthesizing the business-IT relationship is lacking

Solution direction: economic value-based approach to alignment in networked businesses

Oct. 12, 2006 SIREN 2006 8/33

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Contents

• Case study introduction

• Economic value viewpoint– Design guidelines

• Process viewpoint – Design guidelines

• Reflection on the case study

• Conclusion (of this part)Jump to relevant publications

Oct. 12, 2006 SIREN 2006 9/33

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Case study: “Amsterdam Times”

• Business idea: newspaper offers readers on-line access to its contents

• Subscribers have to use dialup-account provided by “Amsterdam Times”– “Amsterdam Times” causes many telephone

connections– Telecom consortium pays for this

Idea was never implementedBut that doesn’t matter

Oct. 12, 2006 SIREN 2006 10/33

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Case study modelling approach

• Four viewpoints– Value viewpoint– Process viewpoint– Information systems viewpoint– Infrastructure viewpoint

• Based on work by Jaap Gordijn– Applied in consultancy projects in ISPs,

news, ads, energy, music, banking

In this presentation

Oct. 12, 2006 SIREN 2006 11/33

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Contents

• Case study introduction

• Economic value viewpoint– Design guidelines

• Process viewpoint – Design guidelines

• Reflection on the case study

• Conclusion (of this part)

1. Value object hierarchy

2. Value network

Oct. 12, 2006 SIREN 2006 12/33

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1. Value object hierarchy

Read news article

Article online (2) Telephone connection (3)

Article (7)IP-access (8)Hosting (9) Interconnection (5)

Termination (11)

Consumerneed

Valueobject

Consists-of

Legend

(1)

(6) (4)

(10)

AND

Oct. 12, 2006 SIREN 2006 13/33

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Design guidelines (example)Find fine-grained value object by deconstructing coarse-grained object

• Called ‘split-ups’ (horizontal/vertical)

• Consists-of and contributes-to relations

a

cb

a

c1b c2

a

cb

a

cb

c1 c2

Oct. 12, 2006 SIREN 2006 14/33

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Introduction to e3value 1/2

• e3 value modeling concepts– Actor: economically independent entity– Value object: thing of value to the actors– Value transfer: economical activity– Value exchange: pair of value transfers

e3value.com

Oct. 12, 2006 SIREN 2006 15/33

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Introduction to e3value 2/2

• Dependency paths indicate causal relations between value exchanges– A dependency path is not a business process!!

Oct. 12, 2006 SIREN 2006 16/33

V I TAL LegendActor

Valueexchange

Valueobject

Valueinterface

Consumerneed

Compositeactor

Value port

DataRunner

inetaccess fee

Read article (1)

Providearticleonline(6)

Reader r1

AmsterdamTimes

Publishing

articlefee

article(7)

articeonline (2)

termination

LastMile Provide

last mileconnection (5)

telephoneconnection

fee

telephoneconnection(3)

Hoster

Providehosting (10)

DataRunner

Provide IPaccess

accessfee

IPaccess (11)

Provide longdistance

connection(12)

Hoster

interconnectionfee

interconnection(4)

Telecommunicationconsortium

hosting (9)

hostingfee

IP access (8)

accessfee

Read news article online

Scenariopath

Valueactivity

terminationfee

termination(13)

Based on economic reciprocity

Costs are associated with each value activity

Economic validity can be assessed

Oct. 12, 2006 SIREN 2006 17/33

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Design guidelines (examples)

• Consist-of / contributes-to relations indicate value activities

• Bundle objects if it is likely that they generate more profit in combination than separately– May generate more revenue– Client only considers combination of value

Oct. 12, 2006 SIREN 2006 18/33

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Contents

• Case study introduction

• Economic value viewpoint– Design guidelines

• Process viewpoint – Design guidelines

• Reflection on the case study

• Conclusion (of this part)

Oct. 12, 2006 SIREN 2006 19/33

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Process viewpoint construction1. Interpret each transaction as service

provisioning from provider to customer

2. Develop service delivery process for each transaction

Oct. 12, 2006 SIREN 2006 20/33

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Design guidelines

• Determine steps needed to:– Establish service delivery relation (once)– Actual service delivery (many times)– Terminate service delivery relation (once)

• Determine process steps for service quality and transaction atomicity

• Service provider process steps may require consuming third-party services

Oct. 12, 2006 SIREN 2006 21/33

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Establish service delivery relation

Transaction “Article online”

Oct. 12, 2006 SIREN 2006 22/33

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Deliver serviceTransaction “Article online”

Oct. 12, 2006 SIREN 2006 23/33

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Establish service delivery relationTransaction “IP Access”

Oct. 12, 2006 SIREN 2006 24/33

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Contents

• Case study introduction

• Economic value viewpoint– Design guidelines

• Process viewpoint – Design guidelines

• Reflection on the case study

• Conclusion (of this part)

Oct. 12, 2006 SIREN 2006 25/33

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Back to the value model!

Read news article

Article online (2) Telephone connection (3)

Article (7)IP-access (8)Hosting (9) Interconnection (5)

Termination (11)

Consumerneed

Valueobject

Consists-of

Legend

(1)

(6) (4)

(10)

AND

(Solvedincident) (12)

Read news article

Article online (2) Telephone connection (3)

Article (7)IP-access (8)Hosting (9) Interconnection (5)

Termination (11)

Consumerneed

Valueobject

Consists-of

Legend

(1)

(6) (4)

(10)

AND

Horizontal split-up

Oct. 12, 2006 SIREN 2006 26/33

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Read article (1)

Reader r1

AmsterdamTimes

Publishing

articlefee

article(7)

articeonline (2)

termination

Read news article online

N

1

The Helper

Incidentmanagement

indicentfee

solvedincident

Legend

OR-dependency

Oct. 12, 2006 SIREN 2006 27/33

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Contents

• Case study introduction

• Economic value viewpoint– Design guidelines

• Process viewpoint – Design guidelines

• Reflection on the case study

• Conclusion (of this part)

Oct. 12, 2006 SIREN 2006 28/33

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http://www.vital-project.org/coop

Coordination Process Correctness and Trust Assumptions

This is only the beginning …

Vrije Universiteit• Jaap Gordijn• Vincent Pijpers

University of Twente• Roel Wieringa• Lianne Bodenstaff

Oct. 12, 2006 SIREN 2006 29/33

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VITAL: Value-Based IT ALignment

• Three parts:– VITAL/services: focus on service specification– VITAL/design: focus on architecture– VITAL/maturity: focus on implementation

Economic value-based approach to alignment in networked businesses

“IT investment decisions just like any other investment decision”

Oct. 12, 2006 SIREN 2006 30/33

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IT alignment & service provisioning

Oct. 12, 2006 SIREN 2006 31/33

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VITAL team

• Pictured: Jaap Gordijn, Hans Akkermans, Roel Wieringa, Pascal van Eck

• Here today: Roberto Santana Tapia, Novica Zarvic• And: Zsofia Derzsi, Sybren de Kinderen, Maya Daneva

Oct. 12, 2006 SIREN 2006 32/33

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Participating companies• ABN AMRO• Atos Origin• Belastingdienst C/ICT• BiZZdesign• Cap Gemini• CIBIT/SERC• Cisco Systems• Deloitte• Gartner• GetronicsPinkRoccade

• HP• ICTU• KLM• KPN• Labyrint• OrangeWing Consulting• Ordina• Sogeti• Twynstra Work Innovation• Unisys

Oct. 12, 2006 SIREN 2006 33/33

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My research landscape

2

1

3

VITAL/services

VITAL/design

VITAL

a

project

Jacquard (NWO, STW) NWO open competition

Sentinels (STW, NWO) Bsik (MinEZ)

Value-based business-IT ALignment

http://www.vital-project.org

2

1

3

VITAL/services

VITAL/design

VITAL/maturity

Value-based business-IT ALignment

http://www.vital-project.org

2

1

3

VITAL/services

VITAL/design

VITAL/maturity

Thanks!

Pascal van Eck – p.vaneck@utwente.nlDept. of Computer ScienceUniversity of TwenteP.O. Box 2177500 AE Enschede, The Netherlandshttp://www.cs.utwente.nl/~patveck

Oct. 12, 2006 SIREN 2006 35/33

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Relevant publications & links• Eck, P. van, Gordijn, J., Wieringa, R. (2004).

Value-based Design of Collaboration Processes for e-Commerce. In: Soe-Tsyr Yuan and Jiming Liu (editors), Proceedings 2004 IEEE International Conference on e-Technology, e-Commerce and e-Service, EEE'04. pp. 349-358. IEEE Press. ISBN 0-7695-2073-1.

• Eck, P. van, Gordijn, J., Wieringa, R. (2004). Risk-Driven Conceptual Modeling of Outsourcing Decisions. In: Paolo Atzeni et al., Conceptual Modeling - ER 2004. Proceedings of the 23rd International Conference on Conceptual Modeling, Shanghai, China. LNCS 3288, Springer-Verlag, pp. 709-723.

• Wieringa, R., Eck, P. van, Blanken, H. (2004). Architecture Alignment in a Large Government Organization. A Case Study. In: Proceedings of the CAiSE Forum, CAiSE, June 7 - 11, 2004, Riga, Latvia.