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Lecture 6   Strategic Alignment Techniques
 

Lecture 6 Strategic Alignment Techniques

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    Lecture 6   Strategic Alignment Techniques Lecture 6 Strategic Alignment Techniques Document Transcript

    • BIS3000 Information Systems and Strategic Management
      • Dr Matthew Montebello
      • [email_address]
    • Lecture Schedule
      • Lecture
      • Strategic Alignment Techniques 2 nd June 09
      • eBusiness 9 th June 09
      • Knowledge Management 16 th June 09
      •  CW1 Deadline - Presentations
      • Change Management 23 rd June 09
      •  CW2 Deadline - Report
      • Protecting IT Assets (Wed)1 st July 09
      • Review 7 th July 09
    • Lecture 6 Strategic Alignment Techniques
      • What is Strategic Alignment
      • Important of Alignment
      • Strategic Alignment Maturity Levels (5)
      • Maturity Level Criteria
      • Strategic Alignment Model
      • Alignment Interaction Process (6)
      • Execution / Assessment
       Business Strategy Choices  Role of IT Managers in Strategy  Business Environment  Balanced Scorecard
    • 1. What is Strategic Alignment
      • The matching up of two or more organisational strategies in order to ensure the overall objectives of the organisation are met.
      • Example:
        • If a systems administrator is providing a given manager with the information they need in order that they can take the decisions they have to take then the two are aligned in terms of information delivery
      • What brought about the need for Strategic Alignment?
        • At strategic level the linkages can appear very complicated
        • Importance of IT and Business Environment
    • Two Meanings of ‘Alignment’
      • Making sure that :
      • 1. The IS is a good fit for the business strategy
        • (i.e. business strategy leads IS strategy)
      • 2. The different functional elements (i.e. separate departments) are each integrated with each other - including their individual IS - and jointly serving the overall business needs.
      • Note that some organisations may have developed separate IS strategies for each department
    • Information Strategy Alignment Information Strategy Business Strategy Organizational Strategy
    • Strategy Alignment Teaser …
    • Today’s Business Environment
      • Increased globalization
      • Increased competitive pressure
      • Frequent mergers
      • Rapidly changing technology
      • Evolving patterns of consumer demand
    • Competitive Advantage Today
      • Unsurpassed relationships with one’s customers and suppliers
      • Unique and adaptable business processes
      • Ability to harness information and knowledge of employees
      • Must become “Change Leaders”
    • IT Management Should:
      • Be knowledgeable about how new IT technologies can be integrated into business
      • Be privy to senior management's tactical and strategic plans
      • Be present when corporate strategies are discussed
      • Understand strengths and weaknesses of technologies and implications
      • So what is Alignment so important?
    • 2. Importance of Alignment
      • Effectiveness
      • Efficiency
      • Link Technology and Business
      • Optimise the Business model
      • Ensure success
      • There exist different levels of Strategic Alignment … different maturity levels …
    • IT as Architects of Alignment
      • Knowledgeable about new technologies
      • Privy to tactical and strategical plans
      • Be present in corporate strategy discussions
      • Understand technology strengths and weaknesses
    • Six Key Enablers to Alignment
      • Senior executive support for IT
      • IT involved in strategy development
      • IT understands the business
      • Business-IT partnership
      • Well-prioritized IT projects
      • IT demonstrated leadership
    • Six Inhibitors to Alignment
      • IT/business lack close relationships
      • IT does not prioritize well
      • IT fails to meet commitments
      • IT does not understand business
      • Senior executives do not support IT
      • IT management lacks leadership
    • Business Strategy Choices
      • Selection of business goals
      • Choice of products and services to offer
      • Design and configuration of policies
      • Appropriate level of scope and diversity
      • Design and organization structure and administrative systems
    • Three Business Strategy Elements
    • Business Strategy Elements : Vision
      • Where the company wants to go
      • What the company aspires to be
      • Clear, compelling, exciting
      • Big Hairy Audacious Goals (BHAG)
    • Business Strategy Elements : Strategy
      • How vision will be accomplished over specified time period
      • Use of checkpoints
      • Benchmarks to check strategy effectiveness
      • Aligned with company mission and core values
      • Provides architectural bridge between mission and vision
    • Business Strategy Elements : Mission
      • Reasons the IT function exists
      • Concise statement of what business the group is in
      • Purpose and function of IT
      • Review to identify for themes and ideas
      • Identify core values
    • 3. Strategic Alignment Maturity Levels
      • Initial/Ad Hoc Process
        • Business and IT not aligned
      • Committed Process
        • Organization commits to becoming aligned
      • Established Focused Process
        • Established and Focused on business objectives
      • Improved/Managed Process
        • Reinforcing concept of IT as “Value Center”
      • Optimized Process
        • Integrated/Co-adaptive business and IT strategic planning
    •  
    • Level 1 – Initial/Ad Hoc Process
      • Lowest level of strategic alignment
      • Understanding of IT by business is low
      • Investment in IT is underleveraged
    • Level 1
    • Level 1
    • Level 1
    • Level 2 – Committed Process
      • Committed to begin process for Strategic Alignment Maturity
      • View IT as an asset to the organization
      • Directed at local situations or functional organizations
      • Alignment at the level is difficult to achieve
      • Potential opportunities are recognized
    • Level 2
    • Level 2
    • Level 2
    • Level 3 – Established Focused Process
      • Concentrates on governance, processes, and communications toward specific business objectives
      • Needs better governance to invest in IT
      • Focus on business processes that generate long-lasting competitive advantage
      • Effectively communicate its vision and get “buy-in” from employees and management
    • Level 3
    • Level 3
    • Level 3
    • Level 4 – Improved/Managed Process
      • Leverage IT assets on an enterprise-wide basis
      • Focus on driving business process enhancements to gain competitive advantage
      • Views IT as an innovative and imaginative strategic contributor
      • Capitalize on information and knowledge
      • Utilize IT assets by deploying enterprise-wide architecture
    • Level 4
    • Level 4
    • Level 4
    • Level 5
    • Level 5
    • Level 5
    • Balanced Scorecard
      • A strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide.
      • Employed to align business activities to the:
      • vision and strategy of the organization,
      • improve internal and external communications,
      • and monitor organization performance against strategic goals
    • Visual of Balanced Scorecard Adapted from The Balanced Scorecard by Kaplan & Norton
    • Why a Balanced Scorecard ?
      • Increase focus on strategy and results
      • Improve organizational performance by measuring what matters
      • Align organization strategy with the work people do on a day-to-day basis
      • Focus on the drivers of future performance
      • Improve communication of the organization’s Vision and Strategy
      • Prioritize Projects / Initiatives
    • The Balanced Scorecard by K2 Performance Group
    • 4. Strategic Alignment Maturity Criteria
      • Communications
      • Competency/value measurements
      • Governance
      • Partnerships
      • Scope and Architecture
      • Skills
    •  
    • a) Communications
      • Ensure ongoing knowledge sharing
      • Use people in formal inter-unit liaison roles
      • Cooperation among business-IT partners
      • Trust and openness between units and IT
    • b) Competency/Value Measurements
      • Service levels that assess commitment of IT
      • Tie service levels to criteria
      • Take action based on measurements of performance factors
      • Understand factors that lead to missing criteria
      • Understand what can be learned to improve the environment continuously
    • c) Governance
      • Clearly defined decision-making authority
      • Integrated enterprise-wide strategic business plan
    • d) Partnership
      • Relationship between business and IT organizations
      • Give IT function equal role in defining business strategy
      • Perception of contributions
      • Partnership should enable and drive change
    • e) Scope and Architecture
      • Go beyond back office and into front office
      • Assume role supporting flexible infrastructure
      • Evaluate and apply emerging technologies effectively
      • Enable or drive business processes and strategies
      • Provide solutions customizable to customer needs
    • f) Skills
      • Include all human resource considerations for organization
      • Consider cultural and social environment
    • Role of IT Managers
      • Set of decisions made by IT and senior management
      • Deployment of technology infrastructures
      • Relationship of technology choices to business choices
      • These involve:
        • Strategic (Develoment Policy)
        • Tactical (Control Policy)
        • Operational (Implementation Policy)
    • Aligned IT Strategy
      • Intimate understanding of customers and evolving needs
      • Managing knowledge- and information-based asset management
      • Continuously innovate strategically relevant new processes
      • Coordination of activities involving people, procedures, and technology
    • IT Roles in Strategy
      • Transformation driver
        • Create and exploit new markets
        • Link customers to firm
        • Define new standards of excellence
      • Enabler of transformation
        • Interconnect people and processes
        • Span organization boundaries
        • Bridge geographical distances
    • IT as Inhibitor
      • IT strategy not aligned with business strategy
      • Over-emphasis on technology
      • Failure to recognize effective use of IT requires business process change
    • Three Management Subcultures
      • Executive
        • Focused on maintaining financial health
      • Engineering
        • Focus is outside organization
        • Views humans as source of potential error
      • Operator
        • Based on human interaction
        • Frequently operate at cross-purposes
    • 5. Strategic Alignment Model
    • Internal Business Domain
      • Administrative Structure
        • Functional, matrix, decentralized, process-based, geographic, or hybrid
      • Critical Business Processes
        • Identification of salient processes
      • Human Resource Skills
        • Acquisition and development of people skills
    • Strategic Fit
      • Scope of Firm’s Business
        • Customers, products, markets, and competitors
      • Distinctive Competencies
        • Core competencies
        • Critical success factors that provide competitive advantage
      • Governance of the Firm
        • Impact of regulatory agencies
    • Strategic Alignment Variables
      • Scope of Firm’s Technology
        • Impact and support business strategy decisions and initiatives
      • Systemic Competencies
        • Technology capabilities
      • IT Governance
        • Pursue relationships and alliances to obtain IT competencies
    • Internal IT Strategy Domain
      • IT Architecture
        • Selection of technology and infrastructure
        • Models used to define data, information, networks, applications, and systems
      • IT Organizational Processes
        • Critical to operation of IT organization
        • Systems development, IT operations
      • IT Skills
        • Acquisition and development of people
    • Components of Strategic Alignment Model (Henderson & Venkatraman)
      • Business Strategy
        • Business Scope
        • Distinctive Competencies
        • Business Governance
      • Organization Infrastructure and Processes
        • Administrative Structure
        • Processes
        • Skills
      • Strategy
        • Technology Scope
        • Systemic Competencies
        • IT Governance
      • IT Infrastructure and Processes
        • Architecture
        • Processes
        • Skills
    • Components of Strategic Alignment Model (Henderson & Venkatraman)
    • Components of Strategic Alignment Model (Henderson & Venkatraman)
    • Functional Integration
      • Linkage between the IT strategy domain and business strategy domain
      • Support requirements and expectations of business’ organizational structure and processes
    • Planning IT Strategy
      • Sequence of activities that transforms current alignment state to future alignment state
      • Actively involve IT staff in development of vision and strategies
      • Strengthen degree of strategic alignment
    •  
    • Forming the Team
      • Senior decision makers from corporate IT, business IT, and senior business management
      • Include systems architect and CIO
      • Establish join understanding
      • Commitment to goals and objectives
    • “ As-Is” State Description
      • Specify both business strategy and organizational infrastructure
      • Baseline for senior management and IT
      • Understand firm’s strategic positioning in IT marketplace
      • IT governance
      • Facilitated interactive workshop sessions
      • 10-12 participants
    • SWOT Analysis
      • Strengths
      • Weaknesses
      • Opportunities
      • Threats
      • Recommend strategies that ensure best alignment between external and internal environments
    • Strengths
      • Distinctive Competencies
        • Critical success factors
        • Core competencies
        • Brand, research, manufacturing, product development, cost and pricing structure, sales and distribution channels
      • Systemic Competencies
        • Capabilities and success factors important to strategies
    • Weaknesses
      • Observation of existing business and IT problems
      • Weaknesses will emerge from observation
      • Effect on firm’s strategic positioning
    • Opportunities – Ansoff Matrix
    • Ansoff Matrix Positioning Strategies
    • Delta Model
    • Threats
      • Rivalry Between Existing Firms
      • Risk of New Entrants
      • Power of Buyers
      • Power of Suppliers
      • Threat of Substitutes
    • Environmental Factors
      • Political and Legal Environment
      • Macroeconomic Environment
      • Social Environment
      • Technical Environment
      • Demographic Environment
    • Strategy Alternatives Analysis
    • Scenario Planning Grid
    • 6. Strategic Alignment Process
      • This ‘good fit’ does not happen automatically. Alignment is hard work and requires systematic evaluation. In this lecture we look at two different approaches that can help:
      • Customer Orientation
      • Contingency Approach
      • Such a process requires initial assessment
    • Customer Orientation
      • Lockamy and Smith (1997) advise managers to ensure that:
      • Strategy is driven by customer needs and expectations;
      • Processes selected for redesign by IS create value for the customer;
      • IS supports those processes in a way that supports the strategy.
    • Contingency Approach
        • This is based on the idea that information systems should reflect the organisation characteristics and business type in which they are used. The variables are :
      • primary tasks of the organisation
        • routine or non-routine
      • degree of interdependency between those doing the tasks
        • high or low
      • environment of the organisation
        • stable or unstable
    • Primary Objective of Assessment:
      • Agree that criterion needs to be improved
      • Agree that a criterion is good, but can be better
      • Disagree with how good/bad a criterion is
    • Six Step Process
      • Set the Goals and Establish a Team
      • Understand the Business-IT Logic
      • Analyze and Prioritize Gaps
      • Specify the Actions (Project Management)
      • Choose and Evaluate Success Criteria
      • Sustain Alignment
    •  
    • 7. Execution / Assessment
      • Execute the strategy
      • Commitment and engagement of senior business management
        • Must occur prior to implementation planning
      • Strategic Alignment Maturity
        • Ability to adapt in harmonious fashion
      • Adoption of Measurement Criteria
        • Measure effects in several different dimensions
    • Periodic Review
      • Ensure initial assumptions are correct
      • Ensure implementation of plans are on schedule
      • Measurements are captured and reported
    • Identifying Industry Key Success Factors
      • Answers to three questions pinpoint KSF’s
        • On what basis do customers choose between competing brands of sellers?
        • What resources and competitive capabilities does a seller need to have to be competitively successful?
        • What does it take for sellers to achieve a sustainable competitive advantage?
      • KSF’s consist of the 3 - 5 really major determinants of financial and competitive success in an industry
    • Examples of Key Success Factors
      • Design talent
      • Fast concept-to-production cycle
      • Low-cost manufacturing efficiency
    • Assessing Strategic Alignment Maturity
      • This does not fit the organization, or the organization is not very effective
      • Low level of fit for the organization
      • Moderate fit for the organization, or the organization is moderately effective
      • Fits most of the organization
      • Strong level of fit throughout the organization, or the organization is effective
    • Next Lecture eBusiness impact on strategy In preparation you should all read…… Chaffey & Wood pages 93-103