Business-IT Alignment in a
Network-Era:
Opportunities & Challenges
PROFESSOR N. VENKATRAMAN
David J. McGrath Jr. Professor in
Management
Boston University School of Management
EIS Conference @ Tilburg
May 23,2008
Overview
2
 Past: Origins (A brief recap)
 Present: State-of-the-Art in Research and Practice
 Future: Opportunities and Challenges
(c) Venkatraman, 2008
Origins: A Brief Recap
3
 Exploring the Concept of ‘Fit’ in Strategy Research,
Academy of Management Review, 1984
 Contingency Perspectives of Organizational Strategy,
Academy of Management Review, 1985
 The Concept of Fit in Strategy Research: Toward
Verbal and Statistical Correspondence, Academy of
Management Review, 1989.
(Focused on Strategy Research)
(c) Venkatraman, 2008
Origins: A Brief Recap (II)
4
 MIT Management in the 1990s Research Program
 My research focused on how IT impacts business
strategy

Electronic Integration and Strategic Advantage: A QuasiExperimental Research in the Insurance Industry, ISR, 1990

“IT-Enabled Business Transformation….” Sloan Management
Review, 1994

“Configurations of Interorganizational Relationships…”
Management Science, 1995
(c) Venkatraman, 2008
Collaboration with Professor J.C. Henderson
5
 MIT Management in the 1990s Research Program
 IBM Sponsorship at MIT-CISR
 Our initial conversations focused on

The Concept of Fit (Alignment) in IT/IS research

Concept and dimensions of IT Strategy (STROBE, Management
Science, 1989)

Parallels between Business and IT Strategies

Descriptive versus Prescriptive Research
(c) Venkatraman, 2008
The Strategic Alignment Model
6
IBM Systems Journal,
1983;
“Turning Points”
1999.
(c) Venkatraman, 2008
Three Key Contributions
7
1. Elevate IT Strategy in parallel with Business
Strategy with an external and an internal
dimension
2.Conceptualize and dimensionalize business and IT
strategies with similar theoretical logics
3.Recognize the different insights based on the
directionality of impact (IT strategy--> business
strategy versus business strategy --> IT strategy)
(c) Venkatraman, 2008
Over the Last Fifteen Years…
8
1. About 94o citations (Google Scholar)
2.Many extensions, refinements and applications
3.Invoked by many doctoral students and scholars at
different levels of theoretical abstractions and
empirical research
4.Applied within IBM Consulting and adapted
(borrowed) by several consulting companies
(c) Venkatraman, 2008
Alignment and My Current Work
9
Strategy: Network-centric views
IT Strategy in a Network Era
Research: Opportunities and Challenges
(c) Venkatraman, 2008
We are in an era of global networks…
10
Live
Work
Connect
Create
Play
(c) Venkatraman, 2008
Consume
Internet as the Global Business
Infrastructure
11
Global
Virtual
Internet
Modular
(c) Venkatraman, 2008
Three Technology Laws….
12
Moore’s
Law
Bandwidth
Law
Metcalfe’s
Law
How do these laws
impact business?
(c) Venkatraman, 2008
Alignment: Descriptive & Prescriptive
13
“IT Domain”
Valuecreation &
capture
Bandwidth
Law
Metcalfe’s
Law
Moore’s
Law
Product
Process Service
“Business Domain”
(c) Venkatraman, 2008
Where do management ideas come from?
14
‘early 20th century’
“Massproduced
automobiles”
‘early 21st century’
“Networked
business
models”
(c) Venkatraman, 2008
14
Computer Industry [circa 1980]
15
(c) Venkatraman, 2008
Source: Bill Gates Testimony
Computer industry circa 2002…
16
(c) Venkatraman, 2008
Source: Bill Gates Testimony
What insights can we glean?
17
 Applicability of ‘layers’ or ‘stacks’ as we think about




business networks?
Dominate one layer but ensure connections across
other layers?
What does it mean to dominate when competition is
ecosystem-based?
What role for IT for competitive advantage in a
network era?
Example: ISR Special Issue on Digital System and
Competition…
(c) Venkatraman, 2008
Alignment: Some Issues to Think About..
18
 Descriptive versus Prescriptive
 Static versus Dynamic
 Conceptual versus Analytical
 Controllable versus Uncontrollable
 Narrow (contingency) versus Broad
(configuration)
 Optimization versus Adaptation
 Equilibrium versus chaos
 Tension versus Harmony
(c) Venkatraman, 2008
Alignment & Adaptation
19
“Exploration”
Growth
Center
Investment
Center
“Business”
“I/T”
Profit
Center
Cost
Center
“Exploitation”
(c) Venkatraman, 2008
Building on James March, 1991
Opportunities & Challenges
20
 Business-IT Alignment is more important than ever
before as we shift to a global, network-era
 We need to expand our ideas of alignment and
develop new frames and operationalization schemes
 IS researchers have the opportunity to bring insights
from IT architecture to frame business potential in
the network era.
 Rigor and relevance are not tradeoffs and we must
continue to be at the frontier of rigor and relevance..
(c) Venkatraman, 2008
Conversation continues…. Venkat@bu.edu