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As Information Technology cannot longer be considered as an isolated business function within the enterprise, Business-IT alignment is crucial for both identifying the appropriate requirements for IT systems and discovering new business opportunities that can be realized by IT. Nowadays, this alignment is realized by developing software applications in relation to the corresponding processes within organizations. As not all processes evenly contribute to the realisation of business goals, alignment should be realized between these layers of the business architecture to ensure that IT investments yield sufficient value. To tackle this problem, we propose a method that aligns goals via business models with the processes within the organization. The alignment is based on the creation of a heat map, which combines the use of prioritization for top-down alignment, with KPI’s to close the loop bottom-up. This method is based on academic principles but is kept lightweight and flexible, which can help organizations to make a range of decisions: identifying which process steps support important business goals and whether they should be improved, determining which processes are possible candidates for outsourcing as they are not crucial within the organization, comparing the cost-effectiveness of processes in realizing business goals, and supporting performance-based evaluations.
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ProGoAlign: creating heat maps to realize strategic alignment
NESMA najaarsconferentie: 21/11/2013 Ben Roelens
Contact information
Ben Roelens
Universiteit Gent Faculteit Economie en Bedrijfskunde
Tweekerkenstraat 2, 9000 Gent, België [email protected]
www.mis.ugent.be
Outline
1. Background2. Introduction
a. Business-IT alignmentb. Strategic Alignment
3. ProGoAligna. Generalb. Top-down alignmentc. Bottom-up alignmentd. Result
4. Analysis optionsa. Ex anteb. Ex post
5. Discussion - Questions
Computer Science
1. Background
• Management Information Systems @ UGent
Focus: conceptual modeling of enterprises and other kinds of organizations and actors that engage in economic interactions
Increase understanding & facilitate communication To facilitate problem analysis & solution design To better engineer (IT) systems that support these phenomena
Economics MIS
2. Introduction
a. Business-IT alignment
Gained importance in the ’90s as:
• Concern about gaining value from IT investments Alignment is important to realize this
2. Introduction
a. Business-IT alignment
Ensures effective communication between business and IT professionals
– Business to IT: “What are the business needs?”– IT to Business: “What information, communication, processing
services, etc. IT can offer?”
2. Introduction
a. Business-IT alignmentAmsterdam framework for Information Management (AIM)
Maes R.: On the alliance of executive education and research in information management at the University of Amsterdam. INTERNATIONAL JOURNAL OF INFORMATION MANAGEMENT 23: 249-257 (2003).
2. Introduction
• Information & Communication can bridge the gap between Business & IT should be managed separately from the technology used to produce it
• Structure should be managed separately from operations as it is an important driver for the flexibility of an organization
2. Introductiona. Business-IT alignment
IT strategy is traditionally focused on the internal domain only
• Seen as an internal response to the business strategyIT too much seen as purely a support function (i.e. automation support)
• Strategy in management literature focuses on output markets rather than input markets
The IT marketplace is an input market where organizations acquire critical technological functionality to support and shape business strategies
2. Introduction
WHY
•Strategy
layer:
strategy
formulation
Conceptu
al model:
goal mod
el
WHAT
•Structural
layer:
strategy implementation
Conceptu
al model:
value
model
WHO
HOW
•Operational
layer:
strategy
operationalizatio
nConceptu
al model:
process
model
b. Strategic Alignment: applied on IT?
2. Introduction
b. Strategic Alignment: traditional
3. ProGoAlign
• Development of HEATMAPS between dependent elements of the different layers
NB: Method is not dependent on existing modelling languages
a. General
3. ProGoAlign
a. General: dependencies between layers
3. ProGoAlign
Definitions:
• Goal: Long-term desired result that a company wants to achieve
• Financial Structure: Representation of the costs resulting from acquiring resources, and the revenues in return for the offered value proposition.
• Value Proposition: Offered set of products and/or services that provide value to the customers and other partners, and competes in the overall value network.
• Core Competence: Ability to coordinate flows of resources through the value chain to realize the intended value proposition.
• Value Chain: Overall business process architecture that describes the structured set of activities that combine resources to created the necessary competences.
• Process Activities: Work to be done by participants within a collaboration.
a. General
3. ProGoAlign
Example
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)
3. ProGoAlign
• Scale: 1: equal importance3: moderate importance of one over another5: essential or strong importance7: very strong importance9: extreme importance
• Priorities: based on the Eigenvalues of the matrix
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)
3. ProGoAlign
Step 3: colour code (border of the elements)
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)
3. ProGoAlign
Step 1: define appropriate measures & benchmarks for each element
avg. 1 year
avg. 5€/purchase
Step 2: measure performance in your organization
Step 3: colour code (surface of the elements)
Performance < benchmark redPerformance ≥ benchmark green
c. Bottom-up: measures
d. Result
3. ProGoAlign
4. Analysis options
• Complete model• Pareto efficiency• Critical path• Outsourcing opportunities• …
a. Ex ante decisions:
4. Analysis options
• Strategic process improvement: Determine for critical goals (red importance) which process
steps can be improved (red importance & execution)• Outsourcing decisions:
Determine for unimportant goals (green importance), which process step are candidate for outsourcing (green importance, red execution)
• Performance-based evaluation• …
b. Ex post analysis:
5. Discussion - Questions
