Summary Report: Strategic Alignment: Leveraging Information Technology for transforming Organizations :: essays research papers

Strategic Alignment: Leveraging Information Technology for transforming Organizations Based on the paper of J.C. Henderson, N. Venkatraman (1993) by Philipp Maderthaner A. Summary Henderson and Venkatraman proposed a model for business – IT alignment; it was intended to support the integration of information technology (IT) into business strategy by advocating alignment between and within four domains (see figure 1). The inter-domain alignment is pursued along two dimensions: strategic fit (between the external and internal domain) and functional integration (between the business domain and the IT domain). The objective of this model was to provide a way to align information technology with business objectives in order to realise value from IT investments. The authors argued that the potential strategic impact of information technology requires both an understanding of the critical components of IT strategy and its role in supporting and shaping business strategy decisions and a process of continuous adaptation and change. Hence, they presented a model that defines the range of strategic choices facing managers. Figure 1 Strategic Alignment Model Two main imperatives for managers are pointed out by Venkatraman and Henderson: First, similar to business strategy, IT strategy has to consider both internal as well as external aspects. Second, both internal/external alignment as well as functional integration must be taken into account. Only one of them is not sufficient. Overview about the four dominant alignment perspectives: 1. Strategy execution This strategy assumes that an articulated business strategy is the driver of both organizational design choices and the design of IT infrastructure. The alignment is said to be the most common and widely understood perspective, as it corresponds to the classic, hierarchical view of strategic management. Driver:  Ã‚  Ã‚  Ã‚  Ã‚  Business Strategy Role of Top Management:  Ã‚  Ã‚  Ã‚  Ã‚  Strategy Formulator Role of IT Management: Strategy Implementer Performance Criteria: Cost/Service Center 2. Technology transformation This alignment involves the assessment of implementing the chosen business strategy through appropriate IT strategy and the articulation of the required IT infrastructure and processes. This strategy is not constrained by the current organization design, but instead seeks to identify the best possible IT competencies through appropriate positioning in IT marketplaces. Driver:  Ã‚  Ã‚  Ã‚  Ã‚  Business Strategy Role of Top Management:  Ã‚  Ã‚  Ã‚  Ã‚  Technology Visionary Role of IT Management: Technology Architect Performance Criteria: Technology Leadership 3. Competitive Potential This perspective is concerned with the exploitation of emerging IT capabilities to impact new products and services (business scope), influence the key attributes of strategy (distinctive competencies) and develop new forms of relationships (business governance). Driver:  Ã‚  Ã‚  Ã‚  Ã‚  IT Strategy Role of Top Management:  Ã‚  Ã‚  Ã‚  Ã‚  Business Visionary Role of IT Management: Catalyst Performance Criteria: Business Leadership 4. Service Level The service level alignment perspective focuses – as the name shows – on how to build a world-class IT service organization.