Alignment Between Business And IT Strategies

In this paper, authors study alignment between Business and IT strategies by focusing on strategy modeling approach. The author argues that the difficulty to realize value from IT ventures is initially because of lack of alignment between the business and IT strategy of the organizations that are making investments, and secondly due to the lack of dynamic administrative process to ensure continuous alignment between the business and IT domains. The main aim of the authors is to contribute to a model-driven approach to establish and measure strategic Business/IT alignment within a given enterprise.

The evolution of IT resources and competencies is one of the fundamental levers for productivity and financial success of organizations defines four interaction perspectives between IT and Business activities at a strategic level.

Strategy Execution

This perspective corresponds to the traditional, hierarchical view of strategic management. It considers the business strategy as the driver of both organization design choices and the logic of the IT infrastructure. Top Management formulates the strategy; IT Management is only considered as strategy implementer.

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Technology Potential

This perspective also views the business strategy as the driver but it involves the formulation of an IT strategy to support the chosen business strategy and the corresponding specification of the required IT infrastructure and processes. The top management should provide the technology vision to articulate the choices and logic pertaining to IT strategy that would best support the chosen business strategy. The role of the IT manager should be that of the technology architect. He designs and implements efficiently and effectively the required IT infrastructure that is consistent with the external component of IT strategy.

Competitive Potential

This alignment perspective is concerned to address the emerging IT capabilities which create an opportunity in designing new products and services to influence the key attributes of strategy, as well as develop new forms of relationships.

Service Level

This alignment perspective focuses on how to build the world class IT organization within an organization. This perspective is often viewed as being necessary, however not being adequate, to ensure the effective utilization of IT resources and to be responsive to the rapid development and changing demands of the end users.

Strategic alignment uncertainty

According to above strategic alignment model, a business can be assessed from a different perspective. These perspectives occur when functional integration and strategic fit are assessed at the same time.

Strategy Execution

In this perspective, business strategy area drives the change for business needs to undergo. The pivot area is the organization infrastructure, which is the thing that should be changed. The subsequent area of effect is the information system infrastructure. This implies the information system architecture will experience changes that must happen as a result of changes in the business process. It centers around data innovation planning or transformation of the business. The objectives of this perspective involve reducing errors, expedite the service process, and spare time (e.g. process redefine or digitalizing the paper based work).

Service Level

The relationship that exists between the business and its clients is imperative. In this perspective, information technology strategy drives the change, the information system infrastructure is the pivot area, and the resulting region for impact is organizational infrastructure. Here the focus is on how IT can be leveraged to improve the deliverables of products and services. Lack of focus on these perspective leads to IT outsourcing due to its rapid change in demand.