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Strategic Alignment:Leveraging Information Technology For Transforming OrganizationsJ.C. Henderson N. Venkatraman
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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
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