Strategic alignment

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

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  • First two Business strategy as Driver Last two IT strategy as Enabler
  • USAA – United Services Automobile Association – Low cost insurance
  • Value added services to hospital customers and redesigning internal organizational processes. Overnight delivery services Income tax filling
  • Value added services to hospital customers and redesigning internal organizational processes. Overnight delivery services Income tax filling
  • Strategic alignment

    1. 1. STRATEGIC ALIGNMENT: LEVERAGING INFORMATION TECHNOLOGY FOR TRANSFORMING ORGANIZATIONS BY J.C. HENDERSON N. VENKATRAMAN Presented By, B. Sundaravadivelu ESIGELEC, Rouen, France Email: buvanesh.s@gmail.com
    2. 2. POINTS TO DISCUSS <ul><li>What is Strategic Alignment </li></ul><ul><li>Examples </li></ul><ul><li>Strategic Alignment Model </li></ul><ul><li>Differences between strategic alignment and traditional Linkage </li></ul><ul><li>Management Implications </li></ul><ul><li>Conclusion </li></ul>
    3. 3. STRATEGIC ALIGNMENT MODEL <ul><li>“ 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.” </li></ul><ul><li>(Boar: 1994) </li></ul><ul><li>Four fundamental domains of strategic choice: </li></ul><ul><ul><li>Business Strategy </li></ul></ul><ul><ul><li>Information Technology Strategy </li></ul></ul><ul><ul><li>Organizational Infrastructure and processes </li></ul></ul><ul><ul><li>Information Technology Infrastructure and processes </li></ul></ul>
    4. 4. ABOUT <ul><li>Inability to realize value from IT investments is, in part, due to lack of alignment between Business and IT strategies in an organization </li></ul><ul><li>Strategy involves </li></ul><ul><ul><li>Formulation – Decision making </li></ul></ul><ul><ul><li>Implementation - Execution </li></ul></ul><ul><li>Two fundamental assumptions </li></ul><ul><ul><li>Economic performance is directly related to ability of management </li></ul></ul><ul><ul><li>Strategic fit is inherently dynamic </li></ul></ul>
    5. 5. EXAMPLES <ul><li>Organizations leveraging IT capabilities to shape and support their business strategies </li></ul><ul><ul><li>Eastman Kodak and IBM </li></ul></ul><ul><ul><li>Baxter Healthcare Corp. launched Value Link for material management </li></ul></ul><ul><ul><li>Electronic filling of taxes in United States </li></ul></ul><ul><ul><li>Procter & Gamble Co. and Wal-Mart stores – To manage the movement of products from different channels </li></ul></ul><ul><li>These highlight the different facets of aligning IT strategy and Business strategy. </li></ul>
    6. 6. STRATEGIC ALIGNMENT : THE EMERGING CONCEPT <ul><li>This is based on two building blocks </li></ul><ul><ul><li>Strategic fit – Need for addressing External and Internal domains </li></ul></ul><ul><ul><li>Functional Integration – How choices are made in the IT domain those made impact in the business domain. </li></ul></ul><ul><li>Positioning of an organization in an IT market place involves three choices: </li></ul><ul><ul><li>Information Technology scope </li></ul></ul><ul><ul><li>System competencies </li></ul></ul><ul><ul><li>IT governance </li></ul></ul>
    7. 7. STRATEGIC ALIGNMENT MODEL
    8. 8. DEEP DIVE <ul><li>This model identifies the need to specify two types of integration between Business and IT domains </li></ul><ul><ul><li>Strategic Integration – link between business and IT strategy </li></ul></ul><ul><ul><li>Operational Integration – link between organizational infrastructure and processes. </li></ul></ul>
    9. 9. ALIGNMENT PERSPECTIVE <ul><li>Strategy execution </li></ul><ul><li>Technology transformation </li></ul><ul><li>Competitive Potential </li></ul><ul><li>Service Level </li></ul>
    10. 10. STRATEGIC EXECUTION <ul><li>This is anchored on the notion that business strategy has been articulated and is driver of both organizational design and IS design </li></ul><ul><li>Classic and hierarchical view of strategic management </li></ul><ul><li>Top management should play the role of “Strategy formulator” and the IS manager should be “Strategy Implementer” </li></ul>
    11. 11. TECHNOLOGY TRANSFORMATION <ul><li>This involves implementing business strategy through appropriate IT strategy and processes. </li></ul><ul><li>Examples: </li></ul><ul><ul><li>USAA </li></ul></ul><ul><ul><li>American Express </li></ul></ul><ul><li>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. </li></ul>
    12. 12. COMPETITIVE POTENTIAL <ul><li>This involves implementing new IT strategies to impact new products and services. </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Baxter Healthcare </li></ul></ul><ul><ul><li>Federal Express Corp </li></ul></ul><ul><ul><li>American Express thru IDS financial corp. </li></ul></ul><ul><li>In contrast to earlier perspectives, this perspective allows the adaptation of business strategy via emerging IT capablities. </li></ul>
    13. 13. SERVICE LEVEL <ul><li>This involves building world class IS service organization. </li></ul><ul><li>This requires understanding of external dimensions of IT strategy with corresponding internal design of infrastructure and processes. </li></ul><ul><li>Specific role of top management is that of “Prioritizer” and the role of IS manager is one of “Executive Leadership”. </li></ul>
    14. 14. DIFFERENCES BETWEEN STRATEGIC ALIGNMENT AND TRADITIONAL LINKAGE <ul><li>Predominant focus of information systems and technology </li></ul><ul><li>Management objectives </li></ul><ul><li>IS executive roles </li></ul><ul><li>Dominant criteria for performance assessment. </li></ul>
    15. 15. DIFFERENCES BETWEEN STRATEGIC ALIGNMENT AND TRADITIONAL LINKAGE
    16. 16. MANAGEMENT IMPLICATIONS <ul><li>Understanding of the enabling strategic choices that binds a business strategy with IS infrastructures and IT strategy with organizational infrastructure. </li></ul><ul><li>Reconceptualise the scope and power of the IT strategy of the firm. </li></ul><ul><li>The criteria to assess the performance of the IT function should be reconceptualised. </li></ul><ul><li>Strategic alignment is a journey…not an event </li></ul>
    17. 17. CONCLUSION <ul><li>Which alignment perspective is correct? </li></ul><ul><li>There is no universally superior mode to formulate and implement strategy. </li></ul><ul><li>Potential of IT impact is varied and complex that the executives should be prepared to continuously make adaptations. </li></ul>
    18. 18. THANK YOU

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