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Business Framework: Strategic Alignment

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PROJECT DESCRIPTION

What is Strategic Alignment?

Strategic Alignment may be described as an organizations ability to determine an IT Strategy that optimally and flexibly supports the business strategy whilst maximizing the value of the investment in IT.

 

The Strategic Alignment model of Venkatraman, Henderson and Oldach seeks to enable a clear view of the organizational drivers which affect organizational decision making with regards to the alignment between the Business and IT Strategy of an enterprise.

Venkatraman and his colleagues argue in 1993 that the difficulty experienced by firms in realizing value from IT investments is primarily caused by the difficulties inherent in achieving an optimal alignment between the business strategy and the IT strategy of the organization. Secondly it is caused by the lack of a dynamic, self corrective administrative process that ensures continuous alignment and re-alignment between the business and IT domains whilst making efficient use of finite resources.

They describe four dominant alignment perspectives relating to the organizational and political strategic drivers for IT development. These views are intended to aid the analysis of the dominant forces within the organization that potentially impact the effective alignment of Business and IT Strategy.

Four Alignment Perspectives
  1. impact new products and services (i.e. the business scope),
  2. influence the key attributes of strategy (i.e. distinctive competences), as well as
  3. develop new forms of relationships (i.e. business governance).
  4. Unlike the two previous perspectives, which considered business strategy as pre-defined and fixed and a constraint for organizational transformation, this perspective allows feedback into the modification of the business strategy via emerging IT capabilities. The specific role of the top management to help this perspective succeed is that of the hybrid IT/ business visionary, who advocates how the emerging IT competences and functionality as well as changing governance patterns in the IT marketplace would impact positively the business strategy. The role of the IT manager is to act as a catalyst and advisor. He identifies and interprets the trends in the IT environment. In doing so he assists the business managers to understand the potential opportunities and threats from an IT perspective. [Arrow 3]

  5. Service Level. This alignment perspective focuses on how to build world class IT organization within an organization. In this perspective, the role of business strategy is indirect. This perspective is often viewed as being necessary in early stages of IT maturity, but not being sufficient, to ensure the effective use of IT resources and to be responsive to the growing and fast-changing demands of the end-user population. The specific role of the top management to make this perspective succeed is that of the prioritizer. They decide how the scarce resources should be allocated, both within the organization as well as in the IT marketplace (in terms of joint ventures, licensing, minority equity investments, etc.). The role of the IT manager is one of business leadership, with the specific tasks of ensuring that the internal business succeeds within the operating guidelines issued from top management. [Arrow 4]



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