Tampa Bay Technology Leadership Association
May 10, 2007
Strategic Alignment:
Analysis of Perspectives
Raymond Papp
Jeff Lackey
Associate Professor of MIS
MBA Graduate
[email protected]
[email protected]
John H. Sykes College of Business
The University of Tampa
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Overview
•
•
•
•
•
Reasons for undertaking this study
Literature Review
Methodology / Results
Discussion
Questions
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Strategic Alignment Overview
...is an ongoing process.
...has remained a major issue for over a decade.
…does not have a single answer or strategy for
everyone.
…is a constant flux of 12 components of
alignment
…focuses on improving the relationships between
the business and IT functional areas
...works toward mutual cooperation and
participation in strategy development
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
The Strategic Alignment Model
Business
I/T
Business Strategy
I/T Strategy
Business
Scope
Distinctive
Competencies
Technology
Scope
Business
Governance
Systemic
Competencies
I/T
Governance
Strategic
Fit
I/T
Architecture
Administrative
Structure
Processes
Organizational
Skills
Processes
I/T Infrastructure
Infrastructure
Functional Integration
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Skills
Strategic Alignment
• Extent & degree to which firm’s
business & information technology
strategies & infrastructures linked
• Interrelationships between the
domains reflect the linkages
between the four domains
– Strategic Fit (vertical)
The Strategic Alignment Model
Business
I/T
Business Strategy
I/T Strategy
Business
Scope
Technology
Scope
Distinctive
Competencies
Business
Governance
I/T
Governance
Strategic
Fit
– Functional Integration (horizontal)
• Assess both linkages simultaneously
– 12 alignment perspectives
I/T
Architecture
Administrative
Structure
Processes
Skills
Organizational
Infrastructure
Processes
Strategic Alignment: Analysis of Perspectives
TBTLA
Skills
I/T Infrastructure
Functional Integration
• Model provides “roadmap” for firm
© 2007 Raymond Papp, Jeff Lackey
Systemic
Competencies
Business
BUSINESS STRATEGY
Business Scope – Includes the markets, products, services, groups of customers/clients,
and locations where an enterprise competes as well as the buyers, competitors, suppliers and
potential competitors that affect the competitive business environment.
Distinctive Competencies – The critical success factors and core competencies that provide a
firm with a potential competitive edge. This includes brand, research, manufacturing and
product development, cost and pricing structure, and sales and distribution channels.
Business Governance – How companies set the relationship between management
stockholders and the board of directors. Also included are how the company is affected by
government regulations, and how the firm manages their relationships and alliances with
strategic partners.
ORGANIZATION INFRASTRUCTURE
Administrative Structure – The way the firm organizes its businesses. Examples include
central, decentral, matrix, horizontal, vertical, geographic, and functional.
Processes - How the firm’s business activities (the work performed by employees) operate or
flow. Major issues include value added activities and process improvement.
Skills – H/R considerations such as how to hire/fire, motivate, train/educate, and culture.
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Information Technology
IT STRATEGY
Technology Scope - The important information applications and technologies.
Systemic Competencies - Those capabilities (e.g., access to information that is important to
the creation/achievement of a company’s strategies) that distinguishes the IT services.
IT Governance - How the authority for resources, risk, and responsibility for IT is shared
between business partners, IT management and service providers. Project selection and
prioritization issues are included here. (See IT inhibitors discussion)
IT INFRASTRUCTURE
Architecture -The technology priorities, policies, and choices that allow applications,
software, networks, hardware, and data management to be integrated into a cohesive platform.
Processes - Those practices and activities carried out to develop and maintain applications and
manage IT infrastructure.
Skills - IT human resource considerations (e.g. hire/fire, motivate, train/educate, culture)
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Business
Strategy
I/T Strategy
Strategy Execution Perspective
Business Strategy - The domain anchor
Organization Infrastructure - The pivot domain
I/T Infrastructure - The impact domain

Organization
Infrastructure
I/T Infrastructure
Business
Strategy
I/T Strategy
Technology Potential Perspective
Business Strategy - The domain anchor
I/T Strategy - The pivot domain
I/T Infrastructure - The impact domain

Organization
Infrastructure
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Infrastructure
Business
Strategy
I/T Strategy
Competitive Potential Perspective
I/T Strategy - The domain anchor
Business Strategy - The pivot domain
Organization Infrastructure - The impact domain

Organization
Infrastructure
I/T Infrastructure
Business
Strategy
I/T Strategy
Service Level Perspective
I/T Strategy - The domain anchor
I/T Infrastructure - The pivot domain
Org. Infrastructure - The impact domain

Organization
Infrastructure
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Infrastructure
Strategic
Execution
Technology
Potential
Competitive
Potential
Service
Level
Role of Top
Management
Leader
Technological
Visionary
Business
Visionary
Prioritizer
Role of I/T
Management
Functional
Manager
Technology
Architect
Business
Architect
Service
Manager
Reactive/
Responsive
Enable ValueAdd to
Business
Drive Value-Add
to Business
Business
within a
Business
Financial
I/T Value to
Product/Service
Product/Service
Value from I/T
Customer
Satisfaction
I/T
Strategy
I/T
Planning
I/T BPR
or Functional
Nature of
Domain
Relationships
I/T Focus
I/T
Performance
Criteria
Strategic
Planning
Method
Business
Transformation
or I/T Planning
I/T
Strategy
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Business
I/T Strategy
Strategy
I/T Organization Infrastructure
I/T Infrastructure - The anchor domain
Organization Infrastructure - The pivot domain
Business Strategy - The impact domain

Organization
Infrastructure
I/T Infrastructure
Business
Strategy
I/T Strategy
Organization Infrastructure Strategy
Organization Infrastructure - The anchor domain
Business Strategy - The pivot domain
I/T Strategy - The impact domain

Organization
Infrastructure
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Infrastructure
Business
Strategy
I/T Strategy
Organization I/T Infrastructure
Organization Infrastructure - The domain anchor
I/T Infrastructure - The pivot domain
I/T Strategy - The impact domain

Organization
Infrastructure
I/T Infrastructure
Business
I/T Strategy
Strategy
I/T Infrastructure Strategy
I/T Infrastructure - The domain anchor
I/T Strategy - The domain pivot
Business Strategy - The impact domain

Organization
Infrastructure
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Infrastructure
Organization
I/T
Infrastructure
I/T
Infrastructure
Strategy
I/T
Organization
Infrastructure
Organization
Infrastructure
Strategy
Role of Top
Management
Leader/Sponsor
Business Process
Visionary
Prioritizer
Sponsor
Role of I/T
Management
Business Process
Architect
Functional Manager
BPR Enabler
Project Manager
I/T Focus
Catalyze Value to
Business Process
Enable Value to
Business Process
Deploy Value to
Business Process
Nature of
Domain
Relationships
I/T
Performance
Criteria
Strategic
Planning Method
Process
Improvement
from I/T
BPR
System Support
Customer
Satisfaction
Business
Strategy
I/T Value to BPR
I/T Planning,
I/T BPR
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Value to
Product/Service
I/T Strategy
or Execute
Business
Strategy
Business
Infrastructure
Information
Technology
Strategy
Information
Technology
Infrastructure
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Organization Strategy Fusion
I/T Strategy
Business
Strategy
I/T Infrastructure
Organization
Infrastructure
Combination of:


I/T Infrastructure Strategy Perspective
I/T Organizational Infrastructure Perspective
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Organization Infrastructure Fusion
I/T Strategy
Business
Strategy
Organization
I/T Infrastructure
Infrastructure
Combination of:


Competitive Potential Perspective
Service Level Perspective
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Strategy Fusion
Business
Strategy
I/T Strategy
Organization
I/T Infrastructure
Infrastructure
Combination of:


Organizational Infrastructure Strategy Perspective
Organizational I/T Infrastructure Perspective
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
I/T Infrastructure Fusion
I/T Strategy
Business
Strategy
Organization
I/T Infrastructure
Infrastructure
Combination of:


Strategy Execution Perspective
Technology Potential Perspective
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Organization Strategy Fusion
IT Strategy Fusion
IT Strategy
Business
Business
Strategy
IT Strategy
Strategy
Organization
Infrastructure
IT Infrastructure
Organization
Infrastructure
IT Infrastructure
Combination of:
Combination of:
IT Infrastructure Strategy Perspective
Organizational Infrastructure Strategy Perspective
IT Organizational Infrastructure Perspective
Organizational IT Infrastructure Perspective
Organization Infrastructure Fusion
Business Strategy
Organization
Infrastructure
IT Infrastructure Fusion
Business Strategy
IT Strategy
Organization
Infrastructure
IT Infrastructure
IT Strategy
IT Infrastructure
Combination of:
Combination of:
Competitive Potential Perspective
Strategy Execution Perspective
Service Level Perspective
Technology Potential Perspective
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Organization
Strategy
Fusion
Organization
Infrastructure
Fusion
I/T
Strategy
Fusion
I/T
Infrastructure
Fusion
Nature of
Domain
Relationships
Role of Top
Management
Lead Change
Accept Change
Develop I/T
Focused on
the Future
Role of I/T
Management
Opportunity Seeker
Problem
Solver
Support
Change
Technology
Manager
Catalyze Value
to the Business
I/T as a
Solution
Process
Enabler
New I/T
Architecture
Product/Service
Value
Process
Improvement
Process
Improvement
Cost of
Success
Combination
Approach
Combination
Approach
Combination
Approach
Combination
Approach
I/T Focus
I/T
Performance
Criteria
Strategic
Planning
Method
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Web-Enabled Assessment Model
Three options:
• Background on the Model
• First-time assessment
• Repeat visit
Features of the website:
In order to enable data gathering &
return visits we also needed to have
 Ways to uniquely identify users
 E-mail addresses and a password
 Background information about the
users and their organizations
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Overview of the Model
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
ASP Routings
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Alignment Perspectives
Alignment Perspective
Percentage
Strategy Execution
20%
Technology Potential
16%
Competitive Potential
5%
Service Level
6%
Organization IT Infrastructure
7%
Organization Infrastructure Strategy
3%
IT Organization Infrastructure
8%
IT Infrastructure Strategy
6%
Organization Strategy Fusion
5%
Organization Infrastructure Fusion
6%
IT Strategy Fusion
5%
IT Infrastructure Fusion
14%
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Perspectives by Industry
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
St
ra
te
Te
gy
ch
Ex
no
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lo
Co
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gy
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m
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Po
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te
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ia
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In
fra Le
ve
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l
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ct
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fr a
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on
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.F
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si
fr a
o
.F n
us
io
n
0%
A gric ult ure
H e a lt hc a re
P ha rm a c e ut ic a ls
C o m m e rc e
Ins ura nc e
T ra ns po rt a t io n
C o ns ult ing
G o v e rnm e nt
Ut ilit ie s
E duc a t io n
M a nuf a c t uring
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
F ina nc e / B a nk ing
M is c . S e rv ic e s
Using the Website
 Practitioner version (www.strategic-alignment.com):
• Aid practitioners in assessing degree of alignment in their firm
• Data used to build anonymous information database by industry
• Enables firm to benchmark itself against its industry,
across all industries
• Enable managers to determine how their
firm compares to competition
• Use model to assess alignment perspective,
then determine steps needed to facilitate
alignment between business & IT strategies
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Comparison of
Enablers & Inhibitors
to Strategic Alignment
Business
I/T
All Executives
Senior executives support Senior executives support Senior executives support I/T
I/T
I/T
Enablers
Strategy developed in
conjunction with I/T
Leadership shown
by I/T
Poor prioritization
by I/T
Inhibitors
No close relationship
between business & I/T
No understanding of its
competitors/customers
&
Commitments not met
Strategy developed in
conjunction with I/T
Leadership shown
by I/T
Achievement of strategic
goals
Understanding of
competitors/customers
No close relationship No close working relationship
between business & I/T
between
I/T & business
Poor prioritization
Poor prioritization
by I/T
by I/T
No support for I/T
Commitments
from business executives
are not met
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
© 2007 Raymond Papp, Jeff Lackey
TBTLA
oo
d
s
IT
Strategic Alignment: Analysis of Perspectives
er
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25.0%
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Se
Enablers to Alignment
Business vs. IT
20.0%
Business Execs.
I T Execs.
10.0%
5.0%
0.0%
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nd
ec
ts
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em
ss
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pp
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ks
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T
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ra
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bl
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an
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st
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tu
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ot
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ar
es
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co
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va
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ta
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ic
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on
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- IT
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el
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re
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xe
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.
no
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ke
d
IT
IT
,n
on
- IT
IT
Percentage
Inhibitors to Alignment
Business vs. IT
25.0%
20.0%
15.0%
© 2007 Raymond Papp, Jeff Lackey
Business Execs.
I T Execs.
10.0%
5.0%
0.0%
Strategic Alignment: Analysis of Perspectives
TBTLA
Executive’s Role
• Executives should work toward minimizing those activities
that inhibit alignment and maximize those activities that
bolster it.
• IT executives can be successful business leaders & keep
their organizations in constant harmony by continuous
focus on the enablers & inhibitors.
• Patience is also important. Alignment is a dynamic,
complex process that takes time to develop and even more
effort to maintain.
• Companies that have achieved alignment can facilitate
building a strategic competitive advantage that will provide
them with increased visibility, efficiency, and profitability
to compete in today’s changing markets.
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Executive’s Role
• Ensure cooperation between business & IT to maximize
investment in tech.
• IT plays an increasing role in defining corporate strategies,
its correct application will facilitate a more competitive and
profitable organization.
• Careful assessment of a firm's alignment is important to
ensure IT is being used to appropriately enable or drive the
business strategy.
• Executives should concentrate on those things that keep
their companies aligned and reset the height of the
performance standard to a new level.
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
References
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Henderson, J., & Venkatraman, N. (1990). “Strategic Alignment: A model For Organizational Transformation Via Information
Technology,” Working Paper 3223-90, Sloan School of Management, Massachusetts Institute of Technology.
Henderson, J., & Venkatraman, N. (1996). “Aligning Business and IT Strategies,” Competing in the Information Age, Luftman, New York,
Oxford University Press.
IBM (1981). Business Systems Planning, Planning Guide, GE20-0527, IBM Corporation, 1133 Westchester Ave, White Plains, New York.
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475-95.
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Papp, R. (1995). Determinants of Strategically Aligned Organizations: A Multi-industry, Multi-perspective Analysis, (Dissertation), Stevens
Institute of Technology, Hoboken, New Jersey.
Papp, R., & Luftman, J. (1995). “Business and IT Strategic Alignment: New Perspectives and Assessments,” In Proceedings of the
Association for Information Systems, Inaugural Americas Conference on Information Systems, Pittsburgh, PA, August 25-27, 1995.
Parker, M., & Benson, R., (1988). Information Economics, Englewood Cliffs, New Jersey, Prentice-Hall.
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Rogers, L. (1997). Alignment Revisited. CIO Magazine, May 15, 1997.
Watson, R., & Brancheau, J. (1991). “Key Issues In Information Systems Management: An International Perspective,” Information &
Management, 20, 213-23.
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey
Questions/Comments?
Raymond Papp
Associate Professor of MIS
[email protected]
Jeff Lackey
MBA Graduate
[email protected]
John H. Sykes College of Business
The University of Tampa
Strategic Alignment: Analysis of Perspectives
TBTLA
© 2007 Raymond Papp, Jeff Lackey