Creating Value through IT and Business Alignment: How does IS Research Inform Practice? - PowerPoint PPT Presentation

Creating value through it and business alignment how does is research inform practice l.jpg
Download
1 / 23

Creating Value through IT and Business Alignment: How does IS Research Inform Practice? Vallabh Sambamurthy Eli Broad Professor of Information Technology Michigan State University The Promise of Information Technologies Enabler of superior performance Productivity Consumer welfare

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

Download Presentation

Creating Value through IT and Business Alignment: How does IS Research Inform Practice?

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Creating value through it and business alignment how does is research inform practice l.jpg

Creating Value through IT and Business Alignment: How does IS Research Inform Practice?

Vallabh Sambamurthy

Eli Broad Professor of Information Technology

Michigan State University


The promise of information technologies l.jpg

The Promise of Information Technologies

  • Enabler of superior performance

    • Productivity

    • Consumer welfare

    • Profitability

  • Digital Options Platform

    • Transaction capital

    • Decision capital

    • Intellectual capital

    • Relational capital

© Vallabh Sambamurthy, 2008


Yet dispersion in success across firms l.jpg

Yet, Dispersion in Success Across Firms

  • Significant differences across firms and industries

  • Exemplars in different industries

    • Success with IT innovation

    • Repeat experiences of success

  • Frustration with IT investments

    • Failed projects

    • Poor alignment

© Vallabh Sambamurthy, 2008


Organizational leverage of it value l.jpg

Organizational Leverage of IT Value

  • Three significant challenges

    • Building the right alignment model

    • Implementing the appropriate governance model

    • Developing enterprise-wide IT savviness

© Vallabh Sambamurthy, 2008


What is alignment l.jpg

The ability of a firm to convert its IT spending into business value and competitive advantage

Results from the planned, ongoing use of a set of interlocking business practices that collectively derive superior value from IT investments

An outcome of alignment is portfolios of IT investments, projects, and installed information systems that reflects a firm’s strategic priorities of the firm

What is Alignment?

Competitive Strategies

IT Assets and Investments

Business Processes

© Vallabh Sambamurthy, 2008


Three modes of alignment support l.jpg

Three Modes of Alignment: Support

  • Business strategy drives IT strategy

  • Current business strategies and capabilities drive IT priorities, investments and capabilities

  • Tools for specific business processes

  • Measures

    • Extent to which IT capabilities have enhanced the efficiency of existing business processes (e.g., customer service, manufacturing)

    • Extent to which IT capabilities have enhanced the effectiveness of existing business processes (e.g., improving the visibility of the logistics process, improving the accuracy and accessibility of customer information)

Business

Strategy

Targeting of IT priorities

Driving

IT

Strategy

© Vallabh Sambamurthy, 2008


Three modes of alignment synchronization l.jpg

Three Modes of Alignment: Synchronization

  • IT strategy enables execution of current business strategy, but also anticipates and shapes future business models.

  • IT investments are platforms for business process integration

  • IT leadership, thinking and investments are active in seeding new business opportunities

  • As firms become aware of the capabilities of their IT investments, assets, and applications, they focus on discovering new business strategies

Business

Strategy

Targeting of IT priorities

Enablement of Businessby IT

Enabling

Driving

IT

Strategy

© Vallabh Sambamurthy, 2008


Three modes of alignment convergence l.jpg

Three Modes of Alignment: Convergence

  • Business strategy is shaped through digitized products, services, processes, and relationships

  • IT strategy is embedded in the business strategy

  • Processes are created through digital solutions (e.g., online auctions, keyword search)

  • A single leadership team operates across business and IT

  • Appropriate for media, banking, financial services, and entertainment industries

Business

Strategy

IT

Strategy

© Vallabh Sambamurthy, 2008


The three modes of alignment l.jpg

The Three Modes of Alignment

© Vallabh Sambamurthy, 2008


Facilitating alignment through it portfolios l.jpg

Facilitating Alignment through IT Portfolios

Adapted from Weill and Aral, 2006


Implications for practice l.jpg

Implications for Practice

  • Choose the appropriate mode of alignment for your firm

    • What view do the senior business executives have about the mode of alignment?

    • Is there consensus about the alignment mode?

  • Examine the portfolio of IT applications and investments

    • Does it reflect the alignment priorities?

  • What will be the alignment mode in the future?

    • How is the business likely to change?

    • How is the industry likely to change?

    • What will be the likely business strategy?

© Vallabh Sambamurthy, 2008


The differentiating role of it governance l.jpg

The Differentiating Role of IT Governance

  • Allocation of decision rights

  • Good governance enhances the leverage of IT value

  • Poor governance dissipates organizational resources and energy

© Vallabh Sambamurthy, 2008


Designing it governance l.jpg

  • What are the critical governance decisions?

    • Demand side

    • Supply side

  • How are the

  • decisions made?

  • Unilaterally

  • Shared

  • Who makes the decisions?

  • Senior management

  • Business management

  • IT management

  • External partners

Designing IT Governance


Building the right governance model l.jpg

Building the Right Governance Model

Innovation leadership

Operational Excellence

Customer Intimacy

Source: Gartner, 2006

© Vallabh Sambamurthy, 2008


Emerging is roles l.jpg

Emerging IS Roles

  • Infrastructure architect

  • Vendor relationship manager

  • Portfolio manager

  • Innovation catalyst

Innovation leadership

Operational Excellence

  • Technology advisor

  • Project lead

Customer Intimacy

  • Services liaison

Source: Gartner, 2006

© Vallabh Sambamurthy, 2008


Changing face of the is organization l.jpg

Changing Face of the IS Organization

1

IT leadership

Architecture development

Business enhancement

Technology enhancement

Vendor management

2

Increasingly driven by IT savvy Business leaders

Enabled by Business savvy IS leaders

3

1

4

Driving innovation

5

2

3

Delivering change

4

Supporting infrastructure

5

Business aligned

Outsourced to external services providers

Source: Broadbent and Kitzis, 2005

© Vallabh Sambamurthy, 2008


An emerging organizational model for it governance l.jpg

An Emerging Organizational Model for IT Governance

IT Investment Board

Business TechnologyCouncil

Divisional Project Approval Committee

Corporate Project Approval Committee

  • Head of IT Finance(e.g. CFO of IT)

  • CIO

  • CFO

  • Selected Business SVPs

  • Head of IT Strategy

  • CIO

  • Selected Business SVPs

  • Head of IT Applications

  • Functional Area Leads

  • Client Relationship Managers

  • Divisional Functional Heads

  • Divisional CFO

  • Divisional PMO and Finance rep.

  • Divisional CIO, Divisional CTO

  • Enterprise Functional Leads

  • IT Directors

  • Head of Portfolio &Program Mgt.

  • Head of EnterpriseArchitecture

  • Head of IT Strategy

  • Business Strategy Analyst

  • Finance Representative

Office of Architecture& Standards

Office of the CIO

  • Head of Enterprise Architecture

  • Business Architects

  • Technical Architects

  • CIO

  • CTO

  • Chief Information Officer (CIO)

  • Chief Technology Officer (CTO)

  • Head of IT Security

  • Head of IT Risk

  • Head of IT Finance

  • Head of IT Strategy

  • Head of IT HR

  • Head of Vendor Management

  • Head of IT Application Areas

  • Head of Portfolio & Program Mgt.

  • Head of Enterprise Architecture

  • Head of IT Communications

Functional Groups

Project Teams

  • Project Managers

  • Business Analysts

  • Technical Analysts

  • Developers

  • Trainers

  • IT Director

  • IT Strategists

  • Business Analysts

© Vallabh Sambamurthy, 2008


Implications for practice18 l.jpg

Implications for Practice

  • Organizational governance is less likely to be centralized or decentralized

    • Hybrid, federal, or dispersed allocation of decision rights

    • Focus on demand side and supply side governance

    • Management of risk, finance, and outsourcing will become significant

  • Emerging models for governance

    • Emergence/proliferation of new organizational roles

  • CIOs will have to balance their roles between

    • Managing the “IT business of the business”

    • Seeding, stimulating, influencing, and driving IT-enabled business innovation

© Vallabh Sambamurthy, 2008


Building enterprise wide it savviness l.jpg

Building Enterprise-wide IT Savviness

  • Digitizing internal and external communication

  • Extensive internet use

  • Digitized routine transactions

  • Enterprise-wide IT skills

  • Senior management commitment to IT Investment and use

  • Enable IT Potential & Options

  • Relationship Building

  • Change mindsets

  • Human Assets

  • Senior Management Leadership

Source, Weill and Aral, 2006

© Vallabh Sambamurthy, 2008


Savviness in business executives l.jpg

Savviness in Business Executives

  • T-shaped business managers

    • Grounded in processes

    • Thinking of services

    • Conceptualizing as systems thinkers

    • Driven by metrics and analytics

    • Fearless about change

    • Quest for globalization

    • Diligent about governance

    • Savvy about the role and value of information technologies

© Vallabh Sambamurthy, 2008


Savviness in is executives l.jpg

Savviness in IS Executives

  • IS managers

    • Technically knowledgeable

    • Business savvy (process, strategy)

    • Articulate, persuasive, influence builders

    • Innovation catalysts

    • Change agents

    • Relationship managers (business partners, external vendors)

    • Financially astute

    • Diligent about governance

© Vallabh Sambamurthy, 2008


Conclusion l.jpg

Conclusion

  • Consistent success in leveraging IT value is achievable!

  • Requires attention to effective approaches to IT management

    • Alignment

    • Governance

    • Building of enterprise-wide savviness

  • IT management practice is in a state of transformation

    • Building applications to managing services delivery

    • Buying technologies to multi-capability integration

    • One-off outsourcing to multivendor strategic partnerships

    • Cost-benefit justification to astute financial and risk management

  • IS research and educational programs have an important role to play in assisting this transformation

© Vallabh Sambamurthy, 2008


Further interest l.jpg

Further Interest?

www.btminstitute.org

© Vallabh Sambamurthy, 2006


  • Login