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STRATEGIC ALIGNMENT MATURITY. SIM FAIRFIELD-WESTCHESTER. DR. JERRY LUFTMAN STEVENS INSTITUTE OF TECHNOLOGY [email protected] 2/20/03. AGENDA. WHAT IS STRATEGIC ALIGNMENT? 2. WHY IS IT TAKING SO LONG TO ADDRESS? HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT?.

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STRATEGIC

ALIGNMENT

MATURITY

SIM FAIRFIELD-WESTCHESTER

DR. JERRY LUFTMAN

STEVENS INSTITUTE OF TECHNOLOGY

[email protected]

2/20/03


AGENDA

WHAT IS STRATEGIC ALIGNMENT?

2. WHY IS IT TAKING SO LONG TO ADDRESS?

HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT?


Which technology issues will be of greatest concern to you and your company in the next year
Which technology issues will be of greatest concern to you and your company in the next year?

168 Better links to customers and suppliers

163 Enhancing corporate-wide processes

151 Aligning IT and business goals

126 Lowering costs of technology

72 Increasing user competence

70 Enabling/enhancing e-business and e-commerce

61 Data security / privacy

56 Implementing new technologies (e.g., wireless)

* CEO Responses

TOP 3 ARE IT BUSINESS ALIGNMENT ISSUES

Ref : Conference Board


Organization Concerns Rankings and your company in the next year?

Ref: Robert Gray, Anil Gulati - Western New England College


Average weighted score (10 = max) and your company in the next year?

1

2

3

4

5

6

7

8

9

10

Top 10 IS Management Priorities, 2002

Key Findings

Improve synchronization

  • During tough times, strategizing and executive leadership are more important than ever, as is e-enabling 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

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


Csc survey rankings
CSC Survey Rankings and your company in the next year?


IT is an equal agenda item in your company’s strategy and planning sessions

STRONGLY AGREE

AGREE

7%

STRONGLY DISAGREE

18%

20%

27%

NEUTRAL

28%

DISAGREE

Ref : CIO and Boston-based consultancy ICEX


Product strategy planning sessions

51%

E-business strategy

49%

Sales/marketing

43%

43%

Customer service

Competitive position

38%

IT’s Role

35%

Manufacturing

8%

Corporate executives were asked:

Which subjects are included in your formal business strategy?

SOURCE: CUTTER CONSORTIUM, ARLINGTON, MASS.


What is the role of IT at your company ? planning sessions

Manager of key data, communications, hardware, and software

Vital utility, like electricity

Tool for improving business-process 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

50

60

70

% of respondents

Ref: Optimize Research



External planning sessions

Where is the Value From IT Investments?

IT

Investments

Strategic

Benefits

Business

Transformation

Internal

Every business is an information business.

Information is the glue that holds value chains & organizations together.


A New Perspective planning sessions

IT Investments

Investments in Business Change!!!


Business Outcome: planning sessions

IT Enabler:

Business Process:

Value Management Framework

  • Portfolio Management

  • Options

  • IT-Business Process


BUSINESS planning sessionsBusiness Strategy

ITIT Strategy

Business Scope

Technology Scope

Distinctive

competencies

Business Governance

Systemic competencies

IT Governance

Strategic Fit

Administrative Structure

IT Architecture

Processes

Skills

Processes

Skills

Organizational Infrastructure

IT Infrastructure

The Strategic Alignment Model

Functional Integration


Symptoms of strategic alignment problems
Symptoms of Strategic Alignment Problems planning sessions

LONG LIST ABOUT SYMPTOMS OF ALIGNMENT PROBLEMS



There is no “silver bullet”… planning sessions

It takes a combination of “things” to make it a success!!!


Customercentric, planning sessions

IT enabled/driven

differentiation

Incremental vs

Radical Innovation

Global Community

& Economy;

Enronitis

Knowledge

Economy

internal/external

E-NOUGH

Value

Demonstration

BUSINESS

TRANSFORMATION

IT can:

- Enable

- Drive

- Inhibit

Leverage Core CSFs

Secure,

Integrated

Infrastructure

Leadership Skills:

Agility, Experimentation

& Learning Hierarchy

of Imagination

Enterprise Application

Integration:

CRM, SCM, & K

Multiple careers.

Rightsizing, Skills

Shortage

Disintermediation,

Reintermediation,

Hypermediation,

Infomediation,

Aggregation

New Org.

Structures,

X-engineering, Business

Partnership Mgt

Wireless PDAs

via Semantic Web

Revenue vs

Earnings Growth


HOW MATURE IS YOUR planning sessions

IT-BUSINESS ALIGNMENT???


Climbing the Strategic Alignment Maturity Model planning sessions

LEVEL 5

Optimized

Process

LEVEL 4

Improved Process

LEVEL 3 Established process

Business

IT Strategy

Strategy

LEVEL 2 Committed Process

LEVEL 1 Initial Process

Alignment Gap


  • Prioritization Process

  • Innovation, Entrepreneurship

  • Cultural Locus of Power

  • Management Style

  • Change Readiness

  • Career crossover; training/education

  • Social, Political, Trusting

Interpersonal Environment

  • Hiring and retaining

GOVERNANCE

COMPETENCY/VALUE

COMMUNICATIONS

MEASUREMENTS

  • Understanding of Business

by IT

  • IT Metrics

  • Business Strategic Planning

  • Understanding of IT

  • Business Metrics

  • IT Strategic Planning

by Business

  • Balanced Metrics

  • Organization Structure

  • Inter/Intra

organizational

-

  • Service Level Agreements

  • Budgetary Control

Learning/Education

  • Benchmarking

  • Protocol Rigidity

  • Formal Assessments/Reviews

·

  • Steering Committee(s)

  • Knowledge Sharing

  • Continuous Improvement

  • Liaison(

s) effectiveness

IT BUSINESS ALIGNMENT MATURITY CRITERIA

SKILLS

PARTNERSHIP

SCOPE &

ARCHITECTURE

  • Business Perception of IT Value

  • Traditional, Enabler/Driver,

·

  • Role of IT in Strategic

c Business

External

·

Planning

  • Standards Articulation

  • Shared Goals, Risk,

  • Architectural Integration:

·

Rewards/Penalties

- Functional Organization

-

-

  • IT Program Management

-Enterprise

·

-

-Inter enterprise

  • Relationship/Trust Style

·

-

Inter

-

  • Business Sponsor/Champion

  • Architectural Transparency,

·

Agility, Flexibility

  • Manage Emerging Tech.


Strategic alignment maturity summary

Level 5 planning sessions

  • 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

Strategic AlignmentMaturitySummary

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

  • 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

Level 2

  • 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

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


Strategic alignment maturity summary1

Level 5

Strategic AlignmentMaturitySummary

  • 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 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 planning sessions

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


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