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IT – Business Alignment. Last Lesson Highlight Purpose & Role Type of IT Strategies. Efficiency (Profitability). Analysing Strategies. Defending Strategies. IT Strategic Purpose/s. Flexibility ( Bus Agility ). Comprehensiveness (Info Capacity building). Prospecting
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Last Lesson HighlightPurpose & Role Type of IT Strategies Efficiency(Profitability) Analysing Strategies Defending Strategies IT Strategic Purpose/s • Flexibility • (Bus Agility) • Comprehensiveness • (Info Capacity building) Prospecting Strategies
IT – Business Strategy Alignment Process, contents and contexts of Linking IT objectives to Enterprise objectives & strategic capability requirements IT Strategic Plan Contents Enterprise Objectives IT Objectives = Cost-Benefit Measures IT Systems IT Service levels Corporate Level Objectives Corporate Level Strategies Business Level Objectives Business Level Strategies Function Level Objectives Function Level Strategies Different Levels of Enterprise Objectives Different Levels of Enterprise Strategies (often grouped by org project groupings)
IT – Business Strategy Alignment Reasons for High Alignment High High High Degrees of alignment Integrated Business value Top Mgt Support Bus Performance Limited Nil low low low
Alignment Gaps Key Causes • Strategy Practice ignores IT value • Tactics regards IT as an expense • Communications - nerds language • Education – lack of business understanding • (Rathnam et al, 2005) • Business strategists exclude IT strategies in planning • Business strategies change while IT strategy plan is in execution • Business strategists change minds • Competitive markets dynamics Design solutions to address these causes
IT-Bus Alignment Models IT Alignment as a staged Capability Maturity Managementcapacity (Luftman, 2007; King & Teo, 1997)) IT Alignment as a Process:A means to a bus end (Henderson & Vankatraman, 1993) Org Focus Env Focus Comms Governance Measurable IT Capabilities Operations Alignment Infrastructure & Functionality Improvements IT increases functional & infra efficacies Strategic Alignment StrategicValue Creation IT created business value add Value Skills Collaboration (Partnership) (Enterprise)Architecture
Capability Maturity Levels High Optimised Process Control IT-Business Alignment Managed Process Management Defined Process Definition Committed (Repeatable) Low Initial (Ad hoc) Basic management control
What is Culture ? Strategy thinking Styles Communication Styles Problem Solving Styles Management Styles Leadership Styles Family, education, belief & expectation systems, experiences..... People attitudes in different situations Shape behaviours at home/work/etc Situation Outcomes
IT Strategy & Work Culture Country Cultural Dimensions Organisational Cultural Dimensions Many Theories/Models One is Wallach (1983) org culture model: Innovative culture Supportive culture Bureaucratic culture Group Cultural Dimensions Personal Cultural Dimensions Communication Abilities Values & Beliefs Other Demo Differences influences Thinking & Decision Making • IT investment decisions • IT implement practices • Tech adoption practices • IT usage practices
IT Strategy & Work Culture Many Theories/Models: One is Kanungo model that extends the Wallace model: Innovative culture Supportive culture Bureaucratic culture influences IT strategy planning orientation Centralised IT Necessary Evil (Little IT support) Scarce Resource (Tight Budgets) Leading Edge (R&D) Free Market (users decide) Monopolising
IT Strategy & Work Culture • An organisation is structure along 3 views: • Strategic • Managerial • Technical • IT strategies can be designed to align with one, a mix or all these levels’ purpose and hence functional support. • However, the work values and behaviours of people in these 3 levels may not be consistent and their behavioural influences will contribute to orienting the IT strategy to : • Be centralised or decentralised • Adopt leading edge ICT & accomodate high learning risks • Controlled by users • Controlled by the IT dept • An administrative function and least funding priority • Irrelevant & be prevented from use if and where possible.
The Real Practice Alignment Issues The new IT: Aligning Business & IT – Part 1 : Power Struggles 3.03 min The new IT: Aligning Business & IT – Part 2: Mapping Analytics 2.26 min The new IT: Aligning Business & IT – Part 3 : the small controlled projects 1.46 min Additional Videos for home review Aligning IT solutions with Business Needs 5.43 min Cola Cola on Technology & Business Alignment 4.18 min
Class Study 1IT strategy misalignment problem at an Australian company Part B – Mini Case What is the type of business strategu & It strategy adopted by the Australian coy in both stages of growth. Use the taxonomy of IT strategy suggested by Sabherwal and Chan (2001). Is there an alignment between IS/IT strategy and business strategy at both stages of growth of this company? Explain Present both answers in a table Look at roles & structure
Class Study 2the actions undertaken by a large chemicals company to improve its IT alignment maturity C2a) Identify the key IT management practices, IT systems, and IT decisions that the company made to improve its overall IT maturity level. Present your views in a tabular format taking into consideration of the 6 criteria or dimensions of IT alignment maturity included in the Luftman’s (2007) model. C2b) Which dimension of IT alignment maturity experienced little improvement? What advice would you offer to the company to increase the maturity level of that particular dimension?
