STRATEGIC
ALIGNMENT
MATURITY
SIM FAIRFIELD-WESTCHESTER
DR. JERRY LUFTMAN
STEVENS INSTITUTE OF TECHNOLOGY
[email protected]
2/20/03
AGENDA
1. WHAT IS STRATEGIC ALIGNMENT?
2. WHY IS IT TAKING SO LONG TO
ADDRESS?
3. HOW MATURE IS YOUR IT-BUSINESS
ALIGNMENT?
Which technology issues will be of greatest
concern to you and your company in the next
year?
168
163
151
126
72
70
61
56
Better links to customers and suppliers
Enhancing corporate-wide processes
Aligning IT and business goals
Lowering costs of technology
Increasing user competence
Enabling/enhancing e-business and e-commerce
Data security / privacy
Implementing new technologies (e.g., wireless)
* CEO Responses
TOP 3 ARE IT BUSINESS ALIGNMENT ISSUES
Ref : Conference Board
Organization Concerns Rankings
Rank
Issues
1
Aligning IS and Corporate Goals
2
Connecting to Customers, Suppliers and/or Partners Electronically
3
Using IT for Competitive Breakthroughs
4
Creating an Information Architecture
5
Improving the IS Human Resource
6
Integrating Systems
7
Developing an IS Strategic Plan
7
Implementing Business Reengineering
9
Cross-Functional Information Systems
9
Enabling Change and Nimbleness
11
Capitalizing on Advances in IT
11
Developing a Digital/E – Commerce Strategy
11
Organizing and Utilizing Data
14
Software Development Quality
15
Developing Executive Information Systems
16
Determining the value of IS
16
Restructuring the IS Function
18
Improving the Systems Development Process
18
Cutting IS Costs
Ref: Robert Gray, Anil Gulati - Western New England College
Top 10 IS Management Priorities, 2002
Key Findings
Improve synchronization
Average weighted score (10 = max)
1
Strategizing for IS/business linkage
Providing leadership and guidance for
the board/executive
Demonstrating business value of IS
Developing leadership and behavioral
competencies in the IS senior mgmt. team
Reducing total IT costs
Strengthening program/project prioritization
and management
Tightening security and privacy safeguards
Developing e-enabling IT architectures
Attracting, nurturing and sustaining
IS resources
Reducing IT complexity
Gartner
2
3
4
5
6
7
8
9
10
• During tough times,
strategizing and executive
leadership are more
important than ever, as is eenabling the enterprise
Delivering value, cut costs
• Now is the time to
demonstrate value for IS
investments and to focus on
better IS management
Fix security and business
continuity
• Privacy and security
concerns top the IS
management agenda
• The scope of security
includes business continuity
CSC Survey Rankings
’01
‘00
‘99
‘98
‘97
‘96
‘95
‘94
‘93
‘92
‘91
‘90
‘89
Aligning IS and Corporate Goals
2
5
3
1
1
1
1
2
2
1
2
4
2
Connecting to Customers, Suppliers
Electronically
6
1
1
4
5
7
7
16
16
20
15
19
NR
Organizing & utilizing data
4
5
2
3
2
2
3
3
4
4
5
7
6
Developing an E-Business Strategy
13
4
4
19
NR
NR
NR
NR
NR
NR
NR
NR
NR
Integrating systems
10
7
5
6
6
5
16
8
11
13
9
16
12
Optimizing Enterprise-Wide Systems
1
2
5
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
Instituting cross-functional IS
7
9
7
6
9
3
2
4
4
6
3
3
7
Capitalizing on Advances in IT
14
12
8
5
3
5
15
13
14
19
20
NR
17
Improving the IS Human Resource
20
15
9
2
7
11
5
9
12
5
13
11
8
Educating management on I/T
12
13
9
11
13
13
11
18
18
16
14
2
3
Using IT for Competitive
Breakthroughs
16
7
11
10
3
4
13
15
15
14
12
8
1
Creating an Information Architecture
18
16
12
8
8
9
8
5
7
3
8
9
5
Cutting IS Costs
15
14
13
12
12
15
17
12
6
11
11
10
14
Improving the Systems Development
Process
11
11
14
13
11
12
10
6
3
9
4
6
13
Updating Obsolete Systems
9
10
15
9
10
8
9
7
8
18
NR
13
NR
Changing technology platforms
NR
18
16
17
16
14
12
9
10
NR
NR
NR
NR
Restructuring the IS Function
19
17
17
13
17
17
NR
NR
NR
NR
NR
NR
NR
Managing Dispersed Computing
NR
20
18
20
15
16
NR
NR
NR
NR
NR
NR
NR
Determining IS value
NR
19
19
16
19
19
NR
NR
NR
NR
NR
NR
NR
Implementing Business
Reengineering (Transformation ’01)
8
18
20
13
14
10
4
1
1
2
1
1
‘89
Protecting and Securing IS
2
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
Optimizing Org. Effectiveness
5
3
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
NR
Top IS/IT Issues
IT is an equal agenda item in your
company’s strategy and planning sessions
STRONGLY
AGREE
AGREE
7%
STRONGLY
DISAGREE
18%
20%
NEUTRAL
27%
28%
DISAGREE
Ref : CIO and Boston-based consultancy ICEX
Corporate executives were asked:
Which subjects are included in your formal business strategy?
Product strategy
51%
E-business strategy
49%
Sales/marketing
43%
Customer service
43%
Competitive position
38%
IT’s Role
Manufacturing
35%
8%
SOURCE: CUTTER CONSORTIUM, ARLINGTON, MASS.
What is the Manager of key data, communications,
hardware, and software
role of IT at
your
Vital utility, like electricity
company ?
Tool for improving businessprocess efficiency
Resource for creating new
business processes
Instrument for cutting costs
within the company
Core part of decision-making
team that sets overall strategy
Responsible primarily for
technology maintenance
Cost Center and drain on
corporate resources
Note: Multiple
responses
allowed
Profit Center
10
20
30
40
% of respondents
Ref: Optimize Research
50
60
70
WHAT IS STRATEGIC
ALIGNMENT???
Where is the Value From IT Investments?
External
IT
Investments
Business
Transformation
Strategic
Benefits
Internal
Every business is an information business.
Information is the glue that holds value chains &
organizations together.
A New Perspective
IT Investments
Investments in Business Change!!!
Value Management Framework
IT
Enabler:
Business
Process:
Portfolio Management
Options
IT-Business Process
Business
Outcome:
The Strategic Alignment Model
BUSINESS
IT
Business Strategy
IT Strategy
Technolog
y Scope
Business
Scope
Distinctive
competencie
s
Business
Governance
Systemic
competencie
s
IT
Governance
Strategic
Fit
Administrativ
e Structure
Processes
IT
Architecture
Skills
Organizational
Infrastructure
Processes
Skills
IT Infrastructure
Functional Integration
Symptoms of Strategic Alignment Problems
WHY IS IT TAKING SO
LONG TO ADDRESS???
There is no “silver bullet”…
It takes a combination of
“things” to make it a
success!!!
Incremental vs
Radical Innovation
Knowledge
Economy
internal/external
Customercentric,
IT enabled/driven
differentiation
Value
Demonstration
E-NOUGH
Secure,
Integrated
Infrastructure
Leadership Skills:
Agility, Experimentation
& Learning Hierarchy
of Imagination
BUSINESS
TRANSFORMATION
IT can:
- Enable
- Drive
- Inhibit
Multiple careers.
Rightsizing, Skills
Shortage
Revenue vs
Earnings Growth
Global Community
& Economy;
Enronitis
New Org.
Structures,
X-engineering, Business
Partnership Mgt
Leverage Core CSFs
Enterprise Application
Integration:
CRM, SCM, & K
Disintermediation,
Reintermediation,
Hypermediation,
Infomediation,
Aggregation
Wireless PDAs
via Semantic Web
HOW MATURE IS YOUR
IT-BUSINESS
ALIGNMENT???
Climbing the Strategic Alignment Maturity Model
LEVEL 5
Optimized
Process
LEVEL 4
Improved Process
Business
Strategy
LEVEL 3 Established process
LEVEL 2 Committed Process
LEVEL 1 Initial Process
Alignment Gap
IT Strategy
COMPETENCY/VALUE
MEASUREMENTS
COMMUNICATIONS
•Understanding of Business
by IT
•Understanding of IT
by Business
•Inter/Intra
- organizational
Learning/Education
•Protocol Rigidity
•Knowledge Sharing
•Liaison(s) effectiveness
·
•IT Metrics
•Business Metrics
•Balanced Metrics
•Service Level Agreements
•Benchmarking
•Formal Assessments/Reviews
•Continuous Improvement
GOVERNANCE
•Business Strategic Planning
•IT Strategic Planning
•Organization Structure
•Budgetary Control
•IT Investment Management
•Steering Committee(s)
•Prioritization Process
IT BUSINESS ALIGNMENT MATURITY CRITERIA
PARTNERSHIP
·
·
·
·
·
·
•Business Perception of IT Value
•Role of IT in Strategic
c Business
Planning
•Shared Goals, Risk,
Rewards/Penalties
•IT Program Management
•Relationship/Trust Style
•Business Sponsor/Champion
SCOPE &
ARCHITECTURE
•Traditional, Enabler/Driver,
External
•Standards Articulation
•Architectural Integration:
- - Functional Organization
-Enterprise
-Inter
- Inter - enterprise
•Architectural Transparency,
Agility, Flexibility
•Manage Emerging Tech.
SKILLS
•Innovation, Entrepreneurship
•Cultural Locus of Power
•Management Style
•Change Readiness
•Career crossover; training/education
•Social, Political, Trusting
Interpersonal Environment
•Hiring and retaining
Level 5
Strategic
Alignment
Maturity
Summary
•Optimized process
•COMMUNICATIONS: Informal, pervasive
•COMPETENCY/VALUE: Extended to external partners
•GOVERNANCE: Integrated across the org & partners
•PARTNERSHIP: IT-business co-adaptive/improvisational
•SCOPE & ARCHITECTURE: Evolve with partners
•SKILLS: Education/careers/rewards across the organization
Level 4 •Improved/ managed process
•COMMUNICATIONS: Bonding, unified
•COMPETENCY/VALUE: Cost effective;Some partner value;Dashboard managed
•GOVERNANCE: Managed across the organization
•PARTNERSHIP: IT enables/drives business strategy
•SCOPE & ARCHITECTURE: Integrated with partners
•SKILLS: Shared risk & rewards
Level 3 •Established focused process
Level 2
Level 1
•COMMUNICATIONS: Good understanding; Emerging relaxed
•COMPETENCY/VALUE: Some cost effectiveness; Dashboard established
•GOVERNANCE: Relevant process across the organization
•PARTNERSHIP: IT seen as an asset; Process driver;Conflict seen as creative
•SCOPE & ARCHITECTURE: Integrated across the organization
•SKILLS: Emerging value service provider;Balanced tech & business hiring
•Committed process
•COMMUNICATIONS: Limited business/IT understanding
•COMPETENCY/VALUE: Functional cost efficiency
•GOVERNANCE: Tactical at Functional level,occasional responsive
•PARTNERSHIP: IT emerging as an asset; Process enabler
•SCOPE & ARCHITECTURE: Transaction (e.g., ESS, DSS)
•SKILLS: Differs across functional organizations
•Initial/Ad-Hoc process
•COMMUNICATIONS: Business/IT lack understanding
•COMPETENCY/VALUE: Some technical measurements
•GOVERNANCE: No formal process,cost center, reactive priorities
•PARTNERSHIP: Conflict; IT a cost of doing business
•SCOPE & ARCHITECTURE: Traditional (e.g., acctng, email)
•SKILLS: IT takes risk, little reward; Technical training
Strategic Level 5 •Optimized process
Alignment •COMMUNICATIONS: Informal, pervasive
•COMPETENCY/VALUE: Extended to external partners
Maturity
•GOVERNANCE: Integrated across the org & partners
Summary •PARTNERSHIP: IT-business co-adaptive/improvisational
•SCOPE & ARCHITECTURE: Evolve with partners
•SKILLS: Education/careers/rewards across the organization
Level 1
•Initial/Ad-Hoc process
•COMMUNICATIONS: Business/IT lack understanding
•COMPETENCY/VALUE: Some technical measurements
•GOVERNANCE: No formal process,cost center, reactive priorities
•PARTNERSHIP: Conflict; IT a cost of doing business
•SCOPE & ARCHITECTURE: Traditional (e.g., acctng, email)
•SKILLS: IT takes risk, little reward; Technical training
IT IS NOT JUST THE LEVEL OF
MATURITY
WHERE IS THE ORGANIZATION
STRONG/WEAK?
WHERE IS THERE DISAGREEMENT?
WHAT ARE THE IMPLICATIONS?
WHAT CAN BE DONE TO IMPROVE
THE MATURITY LEVEL?
IT OPENS THE DOOR TO DISCUSSING
ALIGNMENT