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, Bel...
Outline
1. Background
2. Introduction
a.
b.

Business-IT alignment
Strategic Alignment

3. ProGoAlign
a.
b.
c.
d.

General...
1. Background
• Management Information Systems @ UGent

Economics

MIS

Computer
Science

Focus: conceptual modeling of en...
2. Introduction
a. Business-IT alignment
Gained importance in the ’90s as:
• Concern about gaining value from IT investmen...
2. Introduction
a. Business-IT alignment
Ensures effective communication between business and IT
professionals
– Business ...
2. Introduction
a. Business-IT alignment
Amsterdam framework for Information Management (AIM)

Maes R.: On the alliance of...
2. Introduction

• Information & Communication can bridge the gap between Business & IT
 should be managed separately fro...
2. Introduction
a. Business-IT alignment
IT strategy is traditionally focused on the internal domain only
• Seen as an int...
2. Introduction
b. Strategic Alignment: applied on IT?
WHY

• Strategy layer: strategy formulation
Conceptual model: goal ...
2. Introduction
b. Strategic Alignment: traditional
3. ProGoAlign
a. General
• Development of HEATMAPS between dependent elements of the different
layers

NB: Method is not d...
3. ProGoAlign
a. General: dependencies between layers
3. ProGoAlign
a. General
Definitions:
•

Goal: Long-term desired result that a company wants to achieve

•

Financial Stru...
3. ProGoAlign
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)
Example
3. ProGoAlign
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)

• Scale:

1: equal importance
3: moderate im...
3. ProGoAlign
b. Top-down: prioritization – Analytic Hierarchy Process (AHP)

Step 3: colour code (border of the elements)
3. ProGoAlign
c. Bottom-up: measures
Step 1: define appropriate measures & benchmarks for each element
avg. 1 year

avg. 5...
3. ProGoAlign
d. Result
4. Analysis options
a. Ex ante decisions:

•
•
•
•
•

Complete model
Pareto efficiency
Critical path
Outsourcing opportuni...
4. Analysis options
b. Ex post analysis:

• Strategic process improvement:
 Determine for critical goals (red importance)...
5. Discussion - Questions
ProGoAlign - Creating heat maps to realize strategic alignment - Ben Roelens - NESMA 2013
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ProGoAlign - Creating heat maps to realize strategic alignment - Ben Roelens - NESMA 2013

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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 - Ben Roelens - NESMA 2013

  1. 1. ProGoAlign: creating heat maps to realize strategic alignment NESMA najaarsconferentie: 21/11/2013 Ben Roelens
  2. 2. Contact information Ben Roelens Universiteit Gent Faculteit Economie en Bedrijfskunde Tweekerkenstraat 2, 9000 Gent, België Ben.Roelens@UGent.be www.mis.ugent.be
  3. 3. Outline 1. Background 2. Introduction a. b. Business-IT alignment Strategic Alignment 3. ProGoAlign a. b. c. d. General Top-down alignment Bottom-up alignment Result 4. Analysis options a. b. Ex ante Ex post 5. Discussion - Questions
  4. 4. 1. Background • Management Information Systems @ UGent Economics MIS Computer Science 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
  5. 5. 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
  6. 6. 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?”
  7. 7. 2. Introduction a. Business-IT alignment Amsterdam 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).
  8. 8. 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
  9. 9. 2. Introduction a. Business-IT alignment IT strategy is traditionally focused on the internal domain only • Seen as an internal response to the business strategy IT 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
  10. 10. 2. Introduction b. Strategic Alignment: applied on IT? WHY • Strategy layer: strategy formulation Conceptual model: goal model WHAT • Structural layer: strategy implementation Conceptual model: value model WHO • Operational layer: strategy operationalization Conceptual model: process model HOW
  11. 11. 2. Introduction b. Strategic Alignment: traditional
  12. 12. 3. ProGoAlign a. General • Development of HEATMAPS between dependent elements of the different layers NB: Method is not dependent on existing modelling languages
  13. 13. 3. ProGoAlign a. General: dependencies between layers
  14. 14. 3. ProGoAlign a. General 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.
  15. 15. 3. ProGoAlign b. Top-down: prioritization – Analytic Hierarchy Process (AHP) Example
  16. 16. 3. ProGoAlign b. Top-down: prioritization – Analytic Hierarchy Process (AHP) • Scale: 1: equal importance 3: moderate importance of one over another 5: essential or strong importance 7: very strong importance 9: extreme importance • Priorities: based on the Eigenvalues of the matrix
  17. 17. 3. ProGoAlign b. Top-down: prioritization – Analytic Hierarchy Process (AHP) Step 3: colour code (border of the elements)
  18. 18. 3. ProGoAlign c. Bottom-up: measures 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  red Performance ≥ benchmark  green
  19. 19. 3. ProGoAlign d. Result
  20. 20. 4. Analysis options a. Ex ante decisions: • • • • • Complete model Pareto efficiency Critical path Outsourcing opportunities …
  21. 21. 4. Analysis options b. Ex post analysis: • 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 • …
  22. 22. 5. Discussion - Questions

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