CHAPTER II
LITERATURE REVIEW
2.1 The Relationshi p Between Business,IS and IT Strategies
The definition of strategy is desc.ribed as ..a broad based fonnula for how
business is going to compete, what its goals should be. and w ha t PQiicics will be
nccdc;cJ to C;;tJTy out t hose goals"(Po11er, 1980 in Rohson, J C)tJ7, p.4).
Ae<:ordinK to Finnie (1994, p.5), the. definition of strdtct;y is described as ..long
lmn
direction that says what you arc tt)ing to accomplish nnd ho o. you ure ing to
do it".Thereron:.it "ill be: focused on developing long tcnn objectives, gener.nong a
coherent set or rlan.s for hir:ving than and the allocating resourcnteded to c-arry
out the plan.
Accordinto Ward and Griffiths (1997), the relationshi p herwten h wji ncsses, lS and
IT strategies ca n b4:X plaim:d as shown in figure 2.1. From figu re 2.1, it clearly stated
that the h u!i:iness st rategy deals with the high level co•·po•·ote st rategy.'11lerl, il
described that the business stralegy '"ill be. rocul:ied on some rclu tcd quc.stions, such
what is the bu.sincss going and why'? The IS sttategy dealwith the: issue in related
10 what are rmportant technology requirements needed in order to KCOmrnodfUc: the:
busines5 str.ltegy in rnnre ific: actions. \\'llilst the: IT strategy dc:als with the detail
issue; on how to deliver the IS strategy into the real Qpero: tiorut1 actions. Moreover,
14
rcfcrrinx to Robson (1997), the business strategy classifies into the corporntc level
slnttexy. lbc: IS stnotcgy classifies into lbc: business or unit divisiO!lllllcvclmd the IT
strategy classifies in10 lht filnc1iooaJ or operational level.
1Sn1
ln'C)I!Ct &
Pc.nmuul
Wb<"rt '¥ lhe
BusinessStratCitV
uni.J
tlusim-u l.>t-cmons
Objei:Jjvt's & Oinoctioru;
Change
bu tne.>
:uin¥
Wh}.'!
I
t
Supporb
l>no:..rur
business
busitla;s
I
TSStr.u v
Rldineu R.s;.ed
o,,.,..,..t o.-;cmro
Applitarioo F.......
t
IT S!t 31Ciitv
Activity Based Suppl
y Oriented
TcchnoiORY focu..o;cd
How it can be
delwered?
t-'igun 2.l·rhc rclarionhip !Mtwceo busiotllll. ISand fTtratqle._t (Wa rd & C.riffhh1997)
15
2.2 The Strategic Alignment Between IT and Business
2.2.1 The Importance of Being Aligned
A<WI\Iin¥ to Papp (2001). the con<:ept of stnUegic•liHJ1Ill<llt is used mon:!han 2
dc:eallo:s old. Vorious tcnns Md definitions used •ynonymously to deseribc the
concept or IT alld husiness st rategic aJjgn.rm:nl. such as: linkl'l es. htmnony and the
strategic alignment (Garg, et al., 2002). Papp (1996) in G•'M·ot ul.. (2002) dc.cribcd
that the tcmt of strategic alignme-1H used to explain t he appropriate usc of IT in the
intcgrntion and developmem of' hlL i11ess strategies un..S wrponatctis. Papp (2001)
described that the alig11ment analysis he[Ween IT and Rusincss suppose to be done in
order to determine "hcthcr they arc working in hannony or they are \\Orking in
opposition.
Accordong to Lunmon (2000), The alignment becomes an imporwn •uhject
10 be
pn)perly evaluatc:d since the increasing strategic role of I I' within the organt?.ation.
The most rectnt survey report done by META Group reports that "two ou t of thl'ee
business deals nrc passed over' hy companies becau!>t: the IT d':purtn1cnts arc not
gea.n;d up lu httm.llc t he business" (Santana, 2003). Moreover, it hoppencd due to the
IT learn was not prep;trcd and obviously missed the signals when the company needs
to handle new busincs.s. Rcfcning to Papp (2001 ).in appropriate nlit91ment can cause
prohlern.ot only "ith the technology itself that can not be leverag
m1o i1s
maximum level but also e:an be identified as significant obstacle in the company
de:'dopmcnt.
16
Referring to Lufirnan. (2000). the aJignmcnt between IT and t:!usinmainly
addresses in 2 uspocts.includir'i:
•
Doing lh<: rig)lt things (c!Tccth•cness), and
•
Doing thi ng.< right (efficiency)
In summary. from the above the description, it can be described the importance
of the Slr.tlcgic alignment bc.twccn IT and business strategies.
2.2.2 The Concept of Strategic Al gnment Between IT and Business
Papp (2001) described t h•l the original ali!1J1111Cnt model. nomed as strate!Pe
Qlignmcnl model (SAM) initiall y developed by Henden;on and Venkntnunan at I W!l.
man it has bc<n modified
in 1992 and 1993. The model consists of 4 (four) major
domains that very important i n crea ing the com pany competiti ve ad vtmtagcs,
incl uding:Busints.f> SLra:cegy, Organi1.a1 ional infrastructure and proct,; es.IT strntegy,
IT infrastroctur<: and p.From the model.it identifies that all these 4 domains
have inier-relationship into each other domain.Tile model, as well xs shows that 1hc..'1'c
are 4 major arenas, including; .U usinleT, cx.tcrno.l and inl(..'TllaJ (set ligure 2.2).
In more del•il. in the analy>is. the SAM needs for aligning both sides, the IT and
Busi ness domains, as well as the extcmal and i nh:mtd domai ns in related to the IT
and B incss domains (Henderson & Venkatramo.n. 1993). The external domain ifi
the business arena in which the org;mi?.ation compc1es. It wiU be related tu KDY
strategies and decisions that h rJ\1t: to be taken hy urganization i n order to make it
17
different from its eom ritors. Whilst the internal domain is concc:mcd with any
action inside the orpniza:'lion functions. processes and skills m onlcr to make it
effective and cfficicnl.
IT
Business
Uu.siot·n·
t:J: tl'nMI
......................
strategy
Strtltelt
fnl ril llou
,
l_llltroal
Or;.1UI..i:l•tionlll
inJrasc ruclure &
pro<....
1'1' '"t nlt"t:Y
''
•' ' '
'''
''
.......................
!'I'
lnrr1ntru<ture &
prD<n>
'F\.n('Jfonal
Key:
iotq;ntion
....F..uiW:rioMI intrgrntioo
+-.. ('rndunc:nMm
.ai•)Sntm:nl
Flgurt. 2.2 Tltt.S1·.-a reg1c: Aflgnnloenl Mcxlel (flemteon .t: Vt.nll:a tHitn<ln, 1993).
Furthermore, h3.1on 1he type: or integratjQn bc:twccn lhc IT and Rusiness.. then:
an: 2 types of intcgnuion (Henderson & Venkattaman, 19':13), inclw!H:
18
•
Str:uegic integ_r.uion. h will oomprisc the link
be(Wr\
business ami
rr
stntcgics
rtflc:<:ting the external oompcmcnU. More specifically, it deals "ith the copabitity
of IT funerionality toshape and upJX)r1 the business strategy.
•
F\mctiorlal or operation!inlcgrution. It will deal with the COrre!$pOnding of
internal dOJnain. I t compri1o1es the link between organizational in li-nslrut;l un.: ttnd
prucess :md IS infrastructure arkl process. ll is aimed to ensure the internal
cuba'encc bctwttn the org.ani7.atron rcquin:mcnts and expectations and the.:
deli>ery capability within the IS fUnction.
I Iavi n!) all domains are aligned into each olher, it ensures that all 3SJ>CCU ore fully
integrated iruo one grand stra tegic of the fT oriented busi ness plan. Once it has
properly aligned. no one every single IT or busi ness ac.tivity catr tx: identified done
"'ithout inttr.r·tlationship each other. Surely, this condition will be very mcournging
and bencfici3J a lot in order10 achie'e lhc whole business objective.
2.2.3 The Benefit of The Strategic Alignment Model
Accordi ng to Henderson and Ven katranuln (1993), there arc 4 (four) rnajM
management impacts of using the SAM oomrared to other traditiomtl li nkage, lhey
an:;
• Allcmpt l'O compare the internal condition with the external IT market pbcc
ct,nu.Ji tion in tcnn of the tech noh'lgicS. ll is important to have better Utldel'bland of
the cuiTtn
:t
IT capabi lity and its potential fu ture to shape the husi ncss
competencit:S in the market.
19
• Provides scvcntl selections of approprhue alignment perspective that c:an he u.
dq>end on tbc taf¥clcd business obj«:lives.
• Highliglns lhe dh·mi1y of roles in both. lop Business and IS mana£,'<Til<niS.AS
described earlier. bt$1de iLtraditional leadership functionthe 10p Business and
IS managemtnts h3ve various roles range dcpcndod on the scloctctl strategic
al ignment perspectives.
• Articulatand emphnsi:to:e how the perfonnance measurement critcl'ia shift across
the different alignment perspectives.There will be various methodologies can be
chosen depend on the appropriate alignment pcrspccli..·cs.
In summary.!he dolferern charac<eristic between lhe SAM ond tbc tradi<ion•llinkagc
is shown in table 2.1.
Tabk Z.l 1>il1«c-nli•lln£ Tb" Stntt-;jc Ali:;nmenl rrom Tndition11l Unt..a&fl (lltnd«-rwn &
Vtokalnnum.1993}.
Charoctertsdcs
TraditionalLinkage
Stra!Oglc Alignment
Predominnm focus ofIS
Internal IS function and
organitaLion
lntcma.IJS fi.mction and
orgnni?.ation a nd external
IT markclplacc
Ensuring that IS activities
arc linked to business
Selecting OJ>rmrriJUe
ttli)pllllcnt pcnrpcctivcs for
achieving bminess
objectives
and IT
Manag :mc:n
requjremems
IS cxccuti\'C roles
line IC3dcrsbip and IS
runctional support
Multiple cxccuti,e roles
for line and IS managerS
Dominant criteria for
Cosl and service
considerations
Multiple crilcria
pesfonnance assH$ml!nt
20
Referring to llenderson and Venkatraman (1 993), thewil l be some expected
implicationscould he derived when using the SAM.they are:
• It described th<: SAM can be used lO do eross-func:tional alignm<11t that has no
straightforward logic. t'or example to align !Tom business stral<gy into the IS
infrastructure or from the IT strate-gy into the organiz.ationo..l and pr'<>«:ss.
• SAM provides lhc: need to view l.he s·uatc:gy choict:$ in the:: rT domains. bolh
imemally and extel'nally in order to opt mi:;r.e the power
or IT
in Lul - husine
o:; acti\•itics.
• Since the busines.eondition is d)namic, the SAM provides some comprthen,;ive
alignment perspectives that can be chosen depend on its current business str.negy
requirement
• Following the chosen :.1ppropriatc alignment perspectives, the SAM also suggestS
vari<.HI$ nmgcs of recommended performance measuremen t criteria can be used
for CtiCh diiTcrcnt tligruncnt perspectives.
2.3.The IT-Business Alignment Maturity
Accord ng to LuHman (2000), there are sever.tl rr.amewurk.s in the field of
strategic :al1gnm nt between IT and Business, hov.' ever most of them an: not provided
v.ith a. c:lear roadmap on bow to assess and enhance the alignment condition.
Morwvcr, Lofim11n (2000), describes tblll knowing tho maturity of its strategic
21
choices and alignment practices between the IT and BusinefOs sn1negics make possible
for an orpniz.arion or company to sec where it stands at
industry and bow it can be impru,·cd.llprovides
J.
CUJTCnt
condition in the
c:ompn=hensi\<c mclhod lo
c·'aJualc
aJI the eurrem inter.relationship of
an strategic aJigllmenr domains iocluding strategic
choices for hener mlprO\'ement.Be1lce, having bener understl.\nding on the alignment
maturity level will be very beneficiaJ, because it makes possible for o.n organization
or a company to s.ee where il stands and what aclinn f\bt'
11\\l i\
be tuk.on fa,.. hetter
imJH"Ovement in the future in order to achieve !he goals,
Accordins 10 Lu llrnan (2000. 2002), lbCTc arc 6 (>ix) ali!IMlcnl componcms or
criteria that must be prope ly eva]uated in order to evaluate the strategic aligruncnt
nururil)' h<lwe;,n
•
IT and Busin<SS,iliey are:
Communication. The c:u,;hange of ideas. kno"ledge and information among the
IT and business organizations, enabling bolh to have o eleor understanding oftht:
comp;;my strutcgics. business and IT environments.priorities and must be done to
achieve l hcm.
•
Competency or Vttl uc Mcttsurcmcnts. The usc ofmci.\surcs thnt demonstrate the
contribution
ur
TT amJ the IT organization to the business, in tcm1s that the
business un(.(cnitands and accc::pls.
•
Govcmancc. The degree to which the authority for ma.lcing IT dec-ision isdefined
and sha""l among
mm< gcmall,
and lhc proccsses mma¥CTJ in both IT and
22
businc:$$ or¥:mizations apply in setting IT priorities md the ltlloeation of IT
•
Partnershap. 'J'he relah hip among the business and IT organitations. including
IT involvement in defining the business strategies. the degree of tru.
hetweetl
these two org.ani.1.:uio1\§ and how each perceives the contribution of t he ot her.
•
Scope and Archi h:Cllir¢.. TI1e extent 10 whic.::b IT is able 10 provide a flexible
i nfrnstnacture. evaluate
illld appl y e1nerging teclull)logies, cntahl..:. nr tlrivc
business processes and provide customized sol utions to meet cutomer a.ld
internal needs.
•
Skills. This includes practices such as training, perfonnane< fe<dhxk,
cncourag.tn¥ innovation and providing carocr opponunitics. a.s well as the TT
org:;l.llb.ation readiness for change, capability for lec&minH. and Mbility to leverage
new ide:l..\,
Figure 2.3 shows the 6 strategic alignment criteria needed in the strategic alignment
maturity anal ysis dovolopcd by Lu fiman (2000).
Based on the evaluation on the 6 alignment criteria,. Luftm:m (2000) idtntifie,:; that
the strategic alig.nrnem marurity level e.an be \Jivi\100 inlo 5 C< h ¥Urit.:s a.s (ollow:
•
Initial or Ad I Joe: Proces..;;.
•
Committed l'nl<<SS.
•
Esbblishcd Process
23
•
Improved or Monagcd Process
coo·£T£"C\' 1
t:.OMo\J UICA'IlON
GOV"f.R'IAN("F.
VALU.tr
STRATEGIC ALIGNMENT
MATIJRITV CRITERIA
/
OP...e:
/
s•m.l.
PARTh'l:RSHlP
ARC.:ill I t:(,,U K>:
•leurl.J n4 Sfn.ltfi<' Alip.ment )laturitr CritC"N (Lu.nmaa..lOOO)
Level 1. the I nitial or Ad Hoc Process is the lowest sut'l tcgic alignmen t
maturity level. An organization or company that meet this n'laturity level can be
chn•ch;rizt.:d
U.!)
rollvw:
Conunw1ica.tion:
I
Characteristics
Attribute
•
Undcntondin¥ of Business by IT
• Undcn<tllnding of IT by
•
Rusin"""
lnttr/lntra.()rsanizarionalleaming
• Protocol rigidity
• Minimum
•
Mini mum
•
Casual, ad· hoc
• Command and oontrol
25
PIUIDC111hip:
Characteristics
Anribute
• Business Pc:rccptioo of IT ••aluc
• rr perceived as a tosl of business
•
• No seal at lbc busins Wlle
Role of IT in St,...4ltc:gic Business
Planning
• Sh•nxl Go•ls. Risk.Rewards
• IT
takes
rewards
risk
with
•
• Ad·hoc
• Rclotionshipf l'ru<t Style
• Confli<.:C/Minimum
• Business Sponsor/Champion
• None.:
Scupc & urchitcctun::
Cl:taracteristics
Anribute
•
Traditional. Enablc:r/Drh·cr,
External
•
Standauds Articulation
•
Architectuntllntcgration:
•
Traditional
•
None or ad-hoc
•
No fonnaJ integration
•
None
• Archilectural Transpllrcncy.
f.loxibilit y
-- -- - ----'--
Skills:
Attribute
Charo eteristics
• Innovation. Enarepreneurship
•
Oi11COUnt!l"<i
• l.ocus0 rpoy, er
•
In the business
• Managcmenl >lyle
•
Command and conuol
--------L---------
the
liule
26
• Chonge or re:ldiness
•
• C:ltccr crosso r
• None
• Education.cross·tnrining
•
• Social.Political, Trusting
•
Resistant to ch:mgc
1\one
urn
environment
Level 2 of the stra tegic maturit y lc:vd named as t he CommiHed Process.
Organi:t:•liun ur compan y that meet this maturity h;.vcl cur• be it.lcnti l'h.:d h
utwing
COTtlruitment lO begin the ('ln)CeSS for Slrate-gic align ment (l.ultm nn, 2()00). ll
CAll
he
characterized :u follow:
Communicarion:
Attribute
Cba.racteristics
• Undcrst3Jlding of Business by IT
•
Limited IT 3.W3J'tness
• Undcrstandin11 or IT by Business
•
Limited Business awareness
• lnterllnLrao{)rgani?.ational leaming
•
Informal
• Protocol rigidi t y
•
lirnih:d n:laAt:d
•
Knowledge shari ng
• Semi st ruct ulr
•
l.iaison(s) hreadLh/ell"ective-ness
• I ,imited tactical tech nology bas¢e;l
'-
CompctcocyNaluc: measurements:
Attribute
•
IT Metrics
• Business Mcrries
•
Cost efficiency
• At the functional Ol'gitnization
27
• Balanced Mttries
•
Business & l' f mttrics unlinked
•
•
Technical at the functional level
ice Level Agreements
• llenehmarking
• lnfonnol
•
• Some, typicolly for problems
tormal Assessments/Reviews
• Continuous Improvement
•
Minimum
Govemanc.::
Attribute
Characteristics
• BusinC$$ Strategic Planning
• Basic planning at functional level
•
•
Funclionalt ctical phmning
•
CentraVOccentral;some ccr
location, CIO rcporu to CFO
IT Sir.llc)lic Pllllllling
• Rcporting/Organiation Strucwre
• Bu<lj etory Control
•
IT Investment Monagcmcnt
• Cost center by fun<:rional
organiauion
• Steering <.:ommine<(s)
• Operatiom;& maintenance fQCUS
•
• Periodic organized
l'riol'illza.tion P(oeess
communication
• Occ-asional responsive
l'a.nnership:
AUribute
Characteristics
• Business Perc:cpaion or IT value
•
IT emerging as an asset
•
•
Business proc...enahler
•
IT takes mos1 of the ris.k with the
Role of IT '" Strategic Ru.!.Oiness
Plllllnin¥
• Shanxi Goals. Risk, Rcw•rds
little rcwW'd:i
1
28
• IT Program Mlll1agemem
• St:mdards defined
•
• Primarily tr.ms:l<:tional
Rel>tionshipfl'rust Style
•
• Business Sponso</Cbaropioo
Limited
at
organization
the
functional
Scope & architecture:
Attribute
Characteristics
• Tradi tional
• Tnu.lil ionlil, Onublt'r/Orivc;r,
External
•
Standards defined
•
Shmdnn.Js Articulation
•
Early attempt at integration
•
Arthitcctur.tl Integration:
•
Limited
•
Architectural Transparet1cy,
Flexibility
Skills:
Attribute
•
I nnovation. E1nrep1·eneu1'Ship
•
Locus of power
Characteristics
• Dependen t on functional
organizalion
•
• Man•gcn>cnt style
• Consensus based
• Chan¥t: or rcm.linc.'8S
•
• C"rccr CI"'SSQver
L
Functional orgnni?..o.tiOil
Dependent on functional
org_an•'l.ation
• &lucaaion, cross-uaining
• Minimum
• Social.Politic31, Trusting
cnvironmenl
•
Minimwn
•
Primarily trans tional
_L
29
Level 3 of the str.ltegic alignment maturity named as the Established focused
Proccs.. It c:hat11Ch:ri=l by on oiJ!lllli.<atioo or compony that
c:oncc:nlnllcs
governance. process and communications towant.specific business ohjectives. IT is
becoming embedded in the bu1.0iness as an asset on tJ1e en1errrise wide ha.;:;i>
(Lufbnan, 2000).'l'he detoi l characterization can be identi lied
:1
follow:
Cornrnunica.ti011:
Attribu te
Characteristics
• Undc:rst:mding of Business by IT
• Senior and mid management
• Understanding of IT by Business
• Emerging business ttwarcncss
• lni<Tflntnt-o<pnizational learning
• Regular.clear
•
Protocol ri .jdity
• Eo1aKinll relaxed
•
Knowledse sharing
• Structured around key procc:sses
•
Liaison(s) bread th/effectiverless
• Fonnali1.ed, regular rnectings
Com pctcncyNaluc 1ncasurcmcnts:
AUrihute
Char..u;;tcrislics
• rr Metrics
• Traditional financial
•
Uusiness Metries
•
Traditional financial
•
U:tl311ced Metrics
•
Emerging llusmtAA & IT mclria;
linked
• Scn.;cc Level Agreements
•
Renchmari<ing
•
Emerging lk."I'OSS the enterprise
•
Emergi ng
30
•
Form11l Asscssmc:nlSIReviews
•
Emcrfonnally
•
(·ontinuous lmpm...ernent
•
Gmergin!S
L--------- ------_L_
Go'ema.ncc::::
Attribute
• nusine:.s S1rul.egic Planning
• IT SLrategic Planning
• Rcporti ng/Organizntion Strucrure
• Budgctory Com.rol
Char..«; eristics
•
Some inlcr•orpnizHiiomtl
planning
• Focused planning, some interorgani7alional
•
CentraUL>ecentro.l;some
fedenttiun.CJO n:purts to COO
• IT lnvcsrmcnt M:m:1gemem
• StocrinJI Commiucc(s)
•
Cusl cc.'tllcr. wmc investments
•
•
Traditional;proc:cgs enabler
Prioriliution Process
• Regular clear communication
• Mostly rcsponsi\'e
PIUtnt:hr ip:
Attribute
Characteri
ic.s
• Business Perception of IT value
•
IT seen a.an asel
• Role of IT in Str.ltcgic Business
•
Busines.process enahler
•
Risk tolerara; IT snme reward
Planning
• hortd <.;oals.Risk. Rewards
• I I' Prog.rum Management
• Rclationship!Trust Style
• llus•ness SponsorfOampion
• Stand.:uds odhertd
• Emcrxinll volucd service pro'1dcr
•
AI the functic.mal CJ1'gMiution
I
31
Scope & an:hitceturc:
Attribute
•
Tr.iditional. Erutblcr/Drivcr.
External
•
Stand3J'dS Articulation
•
• Emerging erue.,-,rise $0tandards
•
Integration o.cross the
organi?ation
•
Focused on communications
• Archittclurtll lntc:gratkm:
•
Architectural Transparency.
expanded scope
Flc.<ibilily
Skills:
Attribute
Characteristics
• Innovation, Entrepreneurship
• Risk tolcr.mt
• Locus of power
• Emcrgaicnrtoss the organization
•
Managcmcnl style
• Result b<tscd
•
Change of'readiness
•
Recognized need lOr cha nge
• Career crossover
•
Oependcnt on functional
organizl:•liun
•
• Dc:pem.lc:n t vn functionttl
organization
Social, Political, Trusting
c:nvironmcnl
•
Emerging valued service provider
Level 4 of lilt strategic maturity level named as Improved/Managed l'rocess.
The organization or comp:my that meet lhis maturity level eharmctcrized by effective
32
governance and services that enforce the concept of IT as
t-t
value center.IT assets arc
le\ eraged onn enterprise wide and the focus of application sys:1ems are
Of\
driving
business process mhanecmcnts to obtain sustainable competitive adv3lltage as well as
sccn an
rr
as an innovative strategic contributor to su=s (Luft.man, 2000). The
detail cbaractcristics ean be described as follow:
Communication:
Characlerisli
AHributc
• Unc.Jcrstandinw: of Business by IT
• Push down through org_aniauion
• Understanding or IT by Business
• R usinc::ss aware of potential
•
•
lntcr/lntrn-orgonil'ationaJ learning
Unified. bonded
• l'rotocol rigidity
• Relaxed, infom»l
• Knowled!l"sharing
• Institutionalized
• liaison(s) breodthlcffoctivcncss
• Bonded. cffccth·c at all internal
levels
CompclcncyNaluc n1casu rcmcnts:
Characteristics
Atltibu te
• IT Mc:trics
•
Cost t:Ut:ctivc
• Bu>inc:ss Metrics
•
Custonlet basl
•
•
Busincu &
• Service Level Agreements
•
Enterprise widt
• B<nchmortin¥
• Routinely pcrfonned
•
llalanc:ed Metrics
Fonnal AliboCSSrnentsiRcvic:ws
- -'-
rT metrics linked
• Fonn lly pc:rfonncd
33
•
• Continuous Improvement
Attribute
frequently
Clulrnctcristics
• Business Slratcgic Planning
•
Managed across the enterprise
•
•
Managed ac1'0SS the emel')u·ise
•
Federated; CIO r<:pons ro COO or
IT StNltegic l,laru1ing
• Repo11ingiOrg.atli ?.ation Strucrure
CEO
• Budgetary Control
• IT investment M3ll.3gcmcut
• St<-erin¥ Committc.'(s}
•
•
lnveslrncnl <;enter
•
Cost effectivene.\.\, process driver
• Fonnal. effective eomrninccs
Prioritmnion Proc:a10
• Value: add.responsive
Partnership:
Auribute
Characte.ristics
•
U usi ness Pcrce,)tion of IT value
•
•
Role of IT in Strategic Business
Planni ng
• Husines.s strategy cnabtm·/driver
•
• Shared Guuls., Risk, Rewards
Relationship(Trust Style
• Business Sponsor/Champion
Scope & architec.rure:
Risk acceptance & reward shared
• Standards evolve
• IT Program Mo.na.,gement
•
IT seen ns an driver/enabler
l
•
Valuod savice provider
•
Atthe IIQ level
34
Attribute
•
T...JitioDlll, Enablc:r/Drivo:r,
•
procas driver)
t::xtem31
•
Stanc:brds Anicul3rion
Redelined scope (business
• Enterprise standards
• •.tuthitcctuntl Integration:
• lntegrdlcd with Jmr1ners
• Archi1cctura1 TranSparency.
Flexibility
• Emerging QCros;s the
organil.a tiuns
Skills:
Aurihute
• Innovation, Entrepreneurship
• Locus of power
•
M3110J!CDlCOt style
• Change of.>dincss
• Ctu'CX% crossover
•
Educ uio•l, cross..training
• Social, l'olitieol, Trusti ng
environment
Characte-ristics
•
Enterprise, pilttntrs Qtld IT
managers
•
Across the org.ani7ation
•
Profit/value h....t
•
Hig)1 focused
• Acros.s the functional
organi7..Ation
• At functional organi ution
• Valued service provider
Level S of the strategic maturity level oamed as Optimized Process. An
urganil'-lllion or eompu:ny mt:clS this aJignment maturity is chanach:rital having a
sustamed S0''em30Ce process int _J"ates the IT with the Uusiness struttg.ies. The IT
assets is e:xtcndtd on the enterprise '"ide basis as well as for the cxtcnul process into
35
!he suppl y chai ns of customers and suppliers (Luftman. 2000). The detail
characteristic can be described as follow:
Communicalion:
Cbar.tetcristics
Attribute
• Undcrst<mding of Business by
IT
• Pervasive
• Undcrst<mdin¥ of IT by Business
•
• Intcrllntra..or ani:atliontl lt:aming
• Strong & Rtrucrured
•
ProLocol rigidity
•
•
Knowledge shori ng
• Extr::t ntcrprisc
• Liaison(s) brcadthlcffcctivcncss
•
Pl:'l'vasivc
l nfonnal
E.xlm-c.:ntc:rpri"
Com.pc;:tcncyNaluc measurements;
' Attribute
Characteristics
• IT Mell'ics
• Extended to external p311tlcrs
• Uu. iness Metrics
•
• llalancod Metrics
• Business & IT mctrics
• Service Level Agreements
•
Exlcmfcd IO c:xtemal purlncn;
• Benehmarkin
•
Rou tinely performed with partner
•
•
Routinely performed
•
Routinely performed
Formal AssessrncotRIRc\/iew,;
• <·onunuous lmprov1!mem
Extended to external panncrs
36
Characteristics
Attribute
• Business Strategic Jllanning
•
IT Str•tcgie Planning
•
Rcponinllf()rpniution Stro<:tom:
• Integrated across & ouL'iiide the
eotc:rpritfC
• Integrated across & outside: the
entc:rpri5e
• Uudgetary Control
•
Feder•tod; CIO n:p<>r1s to CEO
•
•
Investment (,;emer;Prorit ceruer
IT Investment Managemetn
• Steering C'.n nuninee(s)
•
llusiness
val ue
Extendt(l
to
buiness p r1ncrs
• Prioritizntion P1·occss
•
Partr1ership
•
Value added1 anners
IT eo adapts with the business
Pattnership:
Attribute
•
Uusmeu Perception of IT value
•
•
Role of IT in Suategtc Business
Planning
• Co a&Japth c with the business
• Shored Gc>al•. R isl, Rewards
• IT J•rogram Management
• Rel:uionshipfl rust Style
• Risk & reward shartd
• Continuous improvancnt
• Valued panncrshi p
1
• Al tho CEO level
• Business Sponsor/Champion
Scope & architecture:
Attrihute
•
Tmd.Jtlonal.En::ahler/Dri\ er,
External
• Stand.atds Aniculation
Char. eteristief
• External scope: business stmc;g:y
drivod=blcr
• lnler-f..nlerprisc standards
37
•
Architectural lntegnnion:
•
Evol ve with partners
•
Alchitocturol Tr:msp3rency,
Flexibility
•
Across the inrrastruerure
Skills:
Attribute
Characteristics
• Innovttlion.Entrepreneurship
•
The noml
•
l.ocus or power
•
•
Management style
All executives. including CIO &
partners
• Ch•ngc of readines.<
• Cnrccr c:rossovtr
• Education.cross· tr.rining
• Suciol.Political. Trusting
c:ovironmcn1
• Rclatio11$hip bast<!
•
High.focus<XI
• Aero$$ l.be c:ntcrprisc
•
Across the enterprise
• Valued Partnership
Figure 2.4 shows the summary of the strategic alignment marurity level n1odel
developed by !..unman (2000).
38
I.tvEL 5 • OPTIMIZ£1> PROCESS
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