STRATEGIC ALIGNMENT:LEVERAGING INFORMATION TECHNOLOGY FOR TRANSFORMING ORGANIZATIONS

BYJ.C. HENDERSONN.

VENKATRAMAN

Presented By,

B. Sundaravadivelu

ESIGELEC, Rouen, France

Email: buvanesh.s@gmail.com

POINTS TO DISCUSS What is Strategic Alignment

Examples

Strategic Alignment Model

Differences between strategic alignment and traditional Linkage

Management Implications

Conclusion

STRATEGIC ALIGNMENT MODEL

“Strategic alignment between IT and the business occurs when IT is used to dynamically create and exploit business opportunities. It can be used then to transform business processes and also to create business dislocations in the market place.”

(Boar: 1994)

Four fundamental domains of strategic choice: Business Strategy Information Technology Strategy Organizational Infrastructure and processes Information Technology Infrastructure and processes

ABOUT

Inability to realize value from IT investments is, in part, due to lack of alignment between Business and IT strategies in an organization

Strategy involves Formulation – Decision making Implementation - Execution

Two fundamental assumptions Economic performance is directly related to

ability of management Strategic fit is inherently dynamic

EXAMPLES

Organizations leveraging IT capabilities to shape and support their business strategies Eastman Kodak and IBM Baxter Healthcare Corp. launched Value Link for

material management Electronic filling of taxes in United States Procter & Gamble Co. and Wal-Mart stores – To

manage the movement of products from different channels

These highlight the different facets of aligning IT strategy and Business strategy.

STRATEGIC ALIGNMENT : THE EMERGING CONCEPT

This is based on two building blocks Strategic fit – Need for addressing External and

Internal domains Functional Integration – How choices are made in

the IT domain those made impact in the business domain.

Positioning of an organization in an IT market place involves three choices: Information Technology scope System competencies IT governance

STRATEGIC ALIGNMENT MODEL

DEEP DIVE

This model identifies the need to specify two types of integration between Business and IT domains Strategic Integration – link between business and

IT strategy Operational Integration – link between

organizational infrastructure and processes.

ALIGNMENT PERSPECTIVE

Strategy execution

Technology transformation

Competitive Potential

Service Level

STRATEGIC EXECUTION This is anchored

on the notion that business strategy has been articulated and is driver of both organizational design and IS design

Classic and hierarchical view of strategic management

Top management should play the role of “Strategy formulator” and the IS manager should be “Strategy Implementer”

TECHNOLOGY TRANSFORMATION This involves

implementing business strategy through appropriate IT strategy and processes.

Examples: USAA American

Express

In contrast to strategic execution, this perspective is not constrained by current organization design, but seeks to identify best IT competencies and corresponding IS structure.

COMPETITIVE POTENTIAL This involves

implementing new IT strategies to impact new products and services.

Examples: Baxter Healthcare Federal Express Corp American Express

thru IDS financial corp.

In contrast to earlier perspectives, this perspective allows the adaptation of business strategy via emerging IT capablities.

SERVICE LEVEL This involves building

world class IS service organization.

This requires understanding of external dimensions of IT strategy with corresponding internal design of infrastructure and processes.

Specific role of top management is that of “Prioritizer” and the role of IS manager is one of “Executive Leadership”.

DIFFERENCES BETWEEN STRATEGIC ALIGNMENT AND TRADITIONAL LINKAGE

Predominant focus of information systems and technology

Management objectives

IS executive roles

Dominant criteria for performance assessment.

DIFFERENCES BETWEEN STRATEGIC ALIGNMENT AND TRADITIONAL LINKAGE

MANAGEMENT IMPLICATIONS Understanding of the enabling strategic

choices that binds a business strategy with IS infrastructures and IT strategy with organizational infrastructure.

Reconceptualise the scope and power of the IT strategy of the firm.

The criteria to assess the performance of the IT function should be reconceptualised.

Strategic alignment is a journey…not an event

CONCLUSION

Which alignment perspective is correct?

There is no universally superior mode to formulate and implement strategy.

Potential of IT impact is varied and complex that the executives should be prepared to continuously make adaptations.

THANK YOU