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Paper Title:Strategic Alignment: Leveraging Information Technology

for Transforming Organisations.By: J. C. Henderson & N. Venkatraman, 2003

Question:Provide examples of each perspective and justify your

choice

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Role of IT has shifted beyond its traditional back office support model to provide an integral part of an organisational strategy.

Organisations fail to realise the value of IT investments due to the lack of alignment between the business and IT strategies of an organisation.

Strategic Alignment ensures that the operating elements of the company all work in harmony.

Proper alignment will allow an organisation to use information technology efficiently to achieve its business objectives.

Introduction

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The Strategic Alignment Model (SAM) is based on the concept of strategic fit between external and internal views and the functional integration between organisational and technology views.

One of the most popular models used in analysing and understanding strategic alignment.

Strategic Alignment Model (SAM)

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There are four domains involved in the strategic alignment model. There are two internal and two external domains.

External: Business Strategy and IT Strategy

Internal: Business Infrastructure and IT Infrastructure

Internal and External Domains

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Business Strategy

IT Strategy

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Business Infrastructure

IT Infrastructure

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Strategic Fit and Functional Integration.

These linkages are necessary because the all the quadrants and components have to work as a whole unit.

Strategic fit refers to the use of strategy to determine the infrastructure of the business.

Functional integration is most directly related to information technology and the alignment of the business.

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1) Strategy Execution

2) Technology Transformation

3) Competitive Potential

4) Service Level

Four Perspectives of SAM

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Anchored on the notion that a business strategy has been articulated and is the driver of both organisational design choices and the design of IS infrastructure.

Priority is to improve business processes which places focus on changing business infrastructure.

IT focus is on application development, driven by need to support business infrastructure.

Strategy Execution

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Strategy Execution Perspective

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The Wolf Organisation is a traditional manufacturing company located in Pennsylvania.

As competitors threatened, Wolf built an enterprise resource planning platform for growth, efficiency and productivity.

In ten years, Wolf doubled revenues and positioned itself for expansion.

Case Study:The Wolf Organisation Inc.

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Business Strategy Dedicated to expanding their markets.

Achieving Competitive Advantage.

Providing exceptional customer service to their customers.

Business Infrastructure Management team is an experienced group of professionals

dedicated to building better business through service to company and community.

Old billing system not meeting customer requirements or keeping up with competitors.

To enable business improvement initiatives Wolf implemented SAP within the company.

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IT Infrastructure

Relies on technological innovation. It became one of the first midsize companies to partner with SAP.

Recent implementation of SAP Biller Direct has helped to strengthen existing customer relationships and lay the groundwork for building new relationships in a tighter market.

Listening to its customers, Wolf integrated Web-based billing, empowering customers who want a digital relationship and stimulating real-time collaboration.

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Reduced customer and Wolf financial fees.

Built entry barriers to competitors.

Enhanced customer loyalty and collaboration.

Alignment enabled better relationships with customers by meeting customer demand and improving billing detail.

Improved communications with regional partners and employees.

Conclusions

Technology Transformation Model This perspective is anchored on the notion that a business

strategy through appropriate IT strategy and the articulation of the required IS infrastructure and processes.

Role of top management is that of the Technology Visionary.

Role of IS manager is that of the Technology Architect.

Technology Transformation Model Implement Chosen Business Strategy

Identify the value of Information Technology.

Identify the best possible IT competencies.

identify the corresponding internal IS architecture.

The technology transformation model is the ability to transform technology into business success.

Case Study No. 1

Case Study No.1 Business Strategy

Deliver Creative Technology Solution Deliver Value Competitive Advantage

IT Strategy Commitment to a Technology Alliance Expanding and Strengthening their Strategic Relationships

Case Study No.1 IS Infastructure

Samsung combined its hard disk drive operations into Seagate.

A NAND flash memory supply agreement under which Samsung will provide Seagate with its market-leading semiconductor product.

A disk supply agreement under which Seagate will supply disk drives to Samsung.

Case Study No.1 Conclusions

This Alignment enabled both Companies to better align their current and future product.

Accelerate time-to-market for new products.

Positioned the companies to better address rapidly evolving opportunities in the markets.

This alignment significantly expanded Seagate’s customer access in China and Southeast Asia.

Competitive Potential Perspective Leveraging of

existing/emerging IT capabilities.

Anchor- IT strategy Pivot- Business

Strategy Impacted- Business

Infrastructure Needs a dynamic

business model

Flextronics produce components, circutboards based in Hollyhill, Cork.

IT strategy initiative to improve data use. Business strategy- New Quality

Management approach. Infrastructure? New flow of information,

improved CRM More detailed overview of production.

Example 1

Employees: 38,100 Revenue: US$15.3 billion Plants on 5 continents

IT Driven- Opportunity to integrate software, improve quality management and quality management.

Business Strategy change in expectation and standards.

New performance measurement tools and share knowledge worldwide

Company overview

Service Level Perspective

Business StrategyScope

CompetenciesGovernance

Business InfrastructureStructureProcesses

Skills

IT StrategyScope

CompetenciesGovernance

IT InfrastructureInfrastructure

ProcessesSkills

• Service level alignment is anchored on the notion

that IT strategy is the driver of the perspective and

it focuses on how to build world class IT/IS

organisation within a business.

• The role of top management is that of prioritizer.

• The role of IS management is that of executive

leadership.

• Performance criteria is that of Customer

satisfaction.

IT Strategy

• Maintain business strategy of providing the best service

for the lowest price

• High levels of IT utilization.

• High level of IT innovation.

• Create customer loyalty through interactive customer

technology and experience.

Case Study: UPS

IS Infrastructure.

• Customer ability to track package/product via GPS.

• Error handling programmes.

• High use of logistics benefiting business process and

customer trust and satisfaction.

• Online return policy with customer, UPS and the vendor.

• Shipment updates via mobile apps.

• Reroute abilities through IT capabilities.

• Data delivery system of companies can be attached to the

UPS server.

Case Study

Business Infrastructure

• Enabling employees the skill set to operate all

technology and new technology innovations.

• Integrating the advanced IT into the basic

business process.

• The provision of high levels of information to

customers with the same low prices.

Case Study

Conclusion

◦ UPS is a world leader in the postal service business.

◦ It was the first postage service to provide the customer with

the technology experience.

◦ UPS’s IS infrastructure has led them to gain competitive

advantage over their rivals on the basis of the best service

for the best value.

◦ UPS are very progressive expansion wise and our becoming

leaders in the business in the European and Asian market.

Case Study

Example of how IT can bring harmony between strategies.

Exploitation through IT.

Conclusion