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Strategic Alignment Model Source: Henderson and Venkataraman. V.T. Raja, Ph.D., College of Business Oregon State University. Strategic Alignment Model. Framework for aligning IT with business strategy Framework for conceptualizing and directing strategic role/management of IT

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strategic alignment model source henderson and venkataraman

Strategic Alignment ModelSource: Henderson and Venkataraman

V.T. Raja, Ph.D.,

College of BusinessOregon State University

strategic alignment model
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
strategic alignment model external and internal domains
Strategic Alignment ModelExternal 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)
strategic alignment model four domains of strategic choice
Strategic Alignment ModelFour Domains of Strategic Choice

Need to recognize how decisions in one domain affects the other domains

ScopeCompetenciesGovernance

ScopeCompetenciesGovernance

Strategy(External)

StrategicFit

StructureProcessesSkills

InfrastructureProcessesSkills

Infrastructure(Internal)

Business

Information Technology

Functional Integration

strategy domains
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.)
infrastructure domains
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?
how to use the strategic alignment model
How to use the Strategic 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
strategy execution it is an expense
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 StrategyScopeCompetenciesGovernance

IT StrategyScopeCompetenciesGovernance

Top Mgmt’s Role?

IT Mgmt’s Role?

Performance Criteria

for assessing IT

based on ___?

Risk?

Business InfrastructureStructureProcessesSkills

IT InfrastructureInfrastructureProcessesSkills

technology transformation business strategy drives need to develop it strategy
Technology TransformationBusiness 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 StrategyScopeCompetenciesGovernance

IT StrategyScopeCompetenciesGovernance

Top Mgmt’s Role?

IT Mgmt’s Role?

Performance Criteria

for assessing IT

based on ___?

Risk?

Business InfrastructureStructureProcessesSkills

IT InfrastructureInfrastructureProcessesSkills

?

service level providing it services
Service LevelProviding 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 StrategyScopeCompetenciesGovernance

IT StrategyScopeCompetenciesGovernance

Top Mgmt’s Role?

IT Mgmt’s Role?

Performance Criteria

for assessing IT

based on ___?

Risk?

?

Business InfrastructureStructureProcessesSkills

IT InfrastructureInfrastructureProcessesSkills

competitive potential it enables strategic opportunities
Competitive PotentialIT 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 StrategyScopeCompetenciesGovernance

IT StrategyScopeCompetenciesGovernance

Top Mgmt’s Role?

IT Mgmt’s Role?

Performance Criteria

for assessing IT

based on ___?

Risk?

Business InfrastructureStructureProcessesSkills

IT InfrastructureInfrastructureProcessesSkills

?

lessons from the strategic alignment model
Lessons from the Strategic 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?
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EnvironmentCompetitive Forces Model

Business StrategyScopeCompetenciesGovernance

IT StrategyScopeCompetenciesGovernance

Business InfrastructureStructureProcessesSkills

IT InfrastructureInfrastructureProcessesSkills