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STRATEGIC ALIGNMENT MATURITY

STRATEGIC ALIGNMENT MATURITY. SIM FAIRFIELD-WESTCHESTER. DR. JERRY LUFTMAN STEVENS INSTITUTE OF TECHNOLOGY JLUFTMAN@STEVENS-TECH.EDU 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

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  1. STRATEGIC ALIGNMENT MATURITY SIM FAIRFIELD-WESTCHESTER DR. JERRY LUFTMAN STEVENS INSTITUTE OF TECHNOLOGY JLUFTMAN@STEVENS-TECH.EDU 2/20/03

  2. AGENDA WHAT IS STRATEGIC ALIGNMENT? 2. WHY IS IT TAKING SO LONG TO ADDRESS? HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT?

  3. 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

  4. Organization Concerns Rankings Ref: Robert Gray, Anil Gulati - Western New England College

  5. Average weighted score (10 = max) 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

  6. CSC Survey Rankings

  7. 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

  8. Product strategy 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.

  9. What is the role of IT at your company ? 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

  10. WHAT IS STRATEGIC ALIGNMENT???

  11. External 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.

  12. A New Perspective IT Investments Investments in Business Change!!!

  13. Business Outcome: IT Enabler: Business Process: Value Management Framework • Portfolio Management • Options • IT-Business Process

  14. BUSINESSBusiness 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

  15. Symptoms of Strategic Alignment Problems LONG LIST ABOUT SYMPTOMS OF ALIGNMENT PROBLEMS

  16. WHY IS IT TAKING SO LONG TO ADDRESS???

  17. There is no “silver bullet”… It takes a combination of “things” to make it a success!!!

  18. Customercentric, 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

  19. HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT???

  20. Climbing the Strategic Alignment Maturity Model 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

  21. IT Investment Management • 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.

  22. Level 5 • 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

  23. Optimized process 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

  24. IT IS NOT JUST THE LEVEL OF 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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