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Strategic Alignment Model Source: Henderson and Venkataraman             V.T. Raja, Ph.D.,           College of Business  ...
Strategic Alignment Model• Framework for aligning IT with business strategy• Framework for conceptualizing and directing  ...
Strategic Alignment Model  External and Internal Domains• Four Domains• Two internal and two external domains• External do...
Strategic Alignment Model    Four Domains of Strategic Choice      Need to recognize how decisions in one domain affects t...
Strategy Domains• Business  – Scope: What business are you in?  – Distinctive Competencies: What do you do well to    dist...
Infrastructure Domains• Business  – Structure: Organizational structure  – Processes: What are key business processes?  – ...
How to use theStrategic Alignment Model             • Building Blocks:                – Strategic Fit                – Fun...
Strategy Execution                     IT is an Expense•    Business Strategy is the driver of both Business and IT Infras...
Technology Transformation   Business Strategy Drives Need to Develop IT Strategy• Assume: Business strategy and infrastruc...
Service Level                      Providing IT services• Information is a core product or service    – Business strategy ...
Competitive Potential    IT Enables Strategic Opportunities• Assume: IT strategy and infrastructure are aligned• IT strate...
Lessons from theStrategic Alignment Model             • Need for IT external and internal               domains           ...
Environment                  Competitive Forces Model  Business Strategy                           IT Strategy       Scope...
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Strategic alignment model

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Strategic alignment model

  1. 1. Strategic Alignment Model Source: Henderson and Venkataraman V.T. Raja, Ph.D., College of Business Oregon State University
  2. 2. Strategic Alignment Model• Framework for aligning IT with business strategy• Framework for conceptualizing and directing strategic role/management of IT• Framework for leveraging IT on a continuous basis to achieve sustainable competitive advantage
  3. 3. Strategic Alignment Model External and Internal Domains• Four Domains• Two internal and two external domains• External domains also referred to as Strategy Domains (Business Strategy Domain and IT Strategy Domain)• Internal domains also known as Infrastructure Domains (Business Infrastructure and IT Infrastructure Domains)
  4. 4. Strategic Alignment Model Four Domains of Strategic Choice Need to recognize how decisions in one domain affects the other domains Strategy Scope Scope (External) Competencies Competencies Governance Governance Strategic Fit Structure InfrastructureInfrastructure Processes Processes(Internal) Skills Skills Business Information Technology Functional Integration
  5. 5. Strategy Domains• Business – Scope: What business are you in? – Distinctive Competencies: What do you do well to distinguish yourself from your competitors? – Governance: What external business relationships do you depend on?• IT – Scope: What information technologies support or create strategic business opportunities? – IT Competencies: What characteristics of IT create business advantage? – IT Governance: What external relationships does IT depend on (outsourcing, vendors, etc.)
  6. 6. Infrastructure Domains• Business – Structure: Organizational structure – Processes: What are key business processes? – Skills: What HR needed to accomplish specific competencies?• IT – Infrastructure: Hardware, Software, Database, Networks – Processes: Development, Maintenance, Operations – Skills: What skills required to maintain architecture and execute the processes?
  7. 7. How to use theStrategic Alignment Model • Building Blocks: – Strategic Fit – Functional Integration and – Cross-Domain Relationship • Identify your strongest and weakest domain – Need to develop communication with and increase understanding of weaker domains • Understand relationship between domains when change in strategy occurs
  8. 8. Strategy Execution IT is an Expense• Business Strategy is the driver of both Business and IT Infrastructures – Priority is to improve business processes, which places focus on changing business infrastructure. IT focus is on application development, driven by need to support business infrastructure Business Strategy IT Strategy Scope Scope Top Mgmt’s Role? Competencies Competencies Governance Governance IT Mgmt’s Role? Performance Criteria for assessing ITBusiness Infrastructure IT Infrastructure based on ___? Structure Infrastructure Processes Processes Risk? Skills Skills
  9. 9. Technology Transformation Business Strategy Drives Need to Develop IT Strategy• Assume: Business strategy and infrastructure are aligned• IT strategy needs to define technologies integral to business strategy – Focus is aligning IT strategy and IT infrastructure Business Strategy IT Strategy Scope Scope Top Mgmt’s Role? Competencies Competencies Governance Governance IT Mgmt’s Role? Performance Criteria for assessing ITBusiness Infrastructure IT Infrastructure based on ___? Structure Infrastructure Processes ? Processes Risk? Skills Skills
  10. 10. Service Level Providing IT services• Information is a core product or service – Business strategy and IT strategy may be aligned• Focus is to enable business infrastructure by fitting IT infrastructure to IT strategy Business Strategy IT Strategy Top Mgmt’s Role? Scope ? Scope Competencies Competencies IT Mgmt’s Role? Governance Governance Performance Criteria for assessing IT based on ___?Business Infrastructure IT Infrastructure Structure Infrastructure Risk? Processes Processes Skills Skills
  11. 11. Competitive Potential IT Enables Strategic Opportunities• Assume: IT strategy and infrastructure are aligned• IT strategy necessary to build distinctive core competency – Business infrastructure needs to evolve to fit new business opportunities enabled by IT Business Strategy IT Strategy Top Mgmt’s Role? Scope Scope Competencies Competencies IT Mgmt’s Role? Governance Governance Performance Criteria for assessing IT based on ___?Business Infrastructure IT Infrastructure Structure Infrastructure Risk? Processes ? Processes Skills Skills
  12. 12. Lessons from theStrategic Alignment Model • Need for IT external and internal domains • Understand strong/weak domains and cross-domain relationships • Different roles of business and IT executives • Re-conceptualize assessment of the performance of IT • Which alignment perspective is best? – If there is one universally superior perspective – would the strategic benefit be sustainable?
  13. 13. Environment Competitive Forces Model Business Strategy IT Strategy Scope Scope Competencies Competencies Governance GovernanceBusiness Infrastructure IT Infrastructure Structure Infrastructure Processes Processes Skills Skills

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