Evaluating the strategic alignment maturity in a large company
STRATEGIC STRATEGIC ALIGNMENT ALIGNMENT MATURITY MATURITY DR. JERRY LUFTMAN STEVENS INSTITUTE OF...
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Transcript of STRATEGIC STRATEGIC ALIGNMENT ALIGNMENT MATURITY MATURITY DR. JERRY LUFTMAN STEVENS INSTITUTE OF...
STRATEGICSTRATEGIC
ALIGNMENT ALIGNMENT
MATURITYMATURITY
DR. JERRY LUFTMANDR. JERRY LUFTMANSTEVENS INSTITUTE OF [email protected]/20/03
SIM FAIRFIELD-WESTCHESTERSIM FAIRFIELD-WESTCHESTER
1.1. WHAT IS STRATEGIC ALIGNMENT?WHAT IS STRATEGIC ALIGNMENT?
2. WHY IS IT TAKING SO LONG TO 2. WHY IS IT TAKING SO LONG TO ADDRESS?ADDRESS?
3.3. HOW MATURE IS YOUR IT-BUSINESS HOW MATURE IS YOUR IT-BUSINESS
ALIGNMENT?ALIGNMENT?
AGENDAAGENDA
Which technology issues will be of greatest Which technology issues will be of greatest concern to you and your company in the next concern to you and your company in the next
year?year?
Ref : Conference Board
168 Better links to customers and suppliersBetter links to customers and suppliers 163 Enhancing corporate-wide processesEnhancing corporate-wide processes151 Aligning IT and business goalsAligning IT and business goals 126 Lowering costs of technology 72 Increasing user competence 70 Enabling/enhancing e-business and e-commerce 61 Data security / privacy 56 Implementing new technologies (e.g., wireless)
* CEO Responses
TOP 3 ARE IT BUSINESS ALIGNMENT ISSUESTOP 3 ARE IT BUSINESS ALIGNMENT ISSUES
Organization Concerns RankingsRank Issues
11 Aligning IS and Corporate GoalsAligning IS and Corporate Goals
2 Connecting to Customers, Suppliers and/or Partners Electronically
3 Using IT for Competitive Breakthroughs
4 Creating an Information Architecture
5 Improving the IS Human Resource
6 Integrating Systems
7 Developing an IS Strategic Plan
7 Implementing Business Reengineering
9 Cross-Functional Information Systems
9 Enabling Change and Nimbleness
11 Capitalizing on Advances in IT
11 Developing a Digital/E – Commerce Strategy
11 Organizing and Utilizing Data
14 Software Development Quality
15 Developing Executive Information Systems
16 Determining the value of IS
16 Restructuring the IS Function
18 Improving the Systems Development Process
18 Cutting IS Costs
Ref: Robert Gray, Anil Gulati - Western New England College
Top 10 IS Management Priorities, 2002
Strategizing for IS/business linkage
Providing leadership and guidance for the board/executive
Demonstrating business value of IS
Developing leadership and behavioral competencies in the IS senior mgmt. team
Reducing total IT costs
Strengthening program/project prioritization and management
Tightening security and privacy safeguards
Developing e-enabling IT architectures
Attracting, nurturing and sustaining IS resources
Reducing IT complexity
1 2 3 4 5 6 7 8 9 10Average weighted score (10 = max)
Key Findings
Improve synchronizationImprove synchronization
• During tough times, strategizing and executive leadership are more important than ever, as is e-enabling the enterprise
Delivering value, cut costs
• Now is the time to demonstrate value for IS investments and to focus on better IS management
Fix security and business continuity
• Privacy and security concerns top the IS management agenda
• The scope of security includes business continuity
Gartner
CSC Survey RankingsTop IS/IT Issues ’01 ‘00 ‘99 ‘98 ‘97 ‘96 ‘95 ‘94 ‘93 ‘92 ‘91 ‘90 ‘89
Aligning IS and Corporate GoalsAligning IS and Corporate Goals 2 5 3 1 1 1 1 2 2 1 2 4 2
Connecting to Customers, Suppliers Electronically
6 1 1 4 5 7 7 16 16 20 15 19 NR
Organizing & utilizing data 4 5 2 3 2 2 3 3 4 4 5 7 6
Developing an E-Business Strategy 13 4 4 19 NR NR NR NR NR NR NR NR NR
Integrating systems 10 7 5 6 6 5 16 8 11 13 9 16 12
Optimizing Enterprise-Wide Systems 1 2 5 NR NR NR NR NR NR NR NR NR NR
Instituting cross-functional IS 7 9 7 6 9 3 2 4 4 6 3 3 7
Capitalizing on Advances in IT 14 12 8 5 3 5 15 13 14 19 20 NR 17
Improving the IS Human Resource 20 15 9 2 7 11 5 9 12 5 13 11 8
Educating management on I/T 12 13 9 11 13 13 11 18 18 16 14 2 3
Using IT for Competitive Breakthroughs
16 7 11 10 3 4 13 15 15 14 12 8 1
Creating an Information Architecture 18 16 12 8 8 9 8 5 7 3 8 9 5
Cutting IS Costs 15 14 13 12 12 15 17 12 6 11 11 10 14
Improving the Systems Development Process
11 11 14 13 11 12 10 6 3 9 4 6 13
Updating Obsolete Systems 9 10 15 9 10 8 9 7 8 18 NR 13 NR
Changing technology platforms NR 18 16 17 16 14 12 9 10 NR NR NR NR
Restructuring the IS Function 19 17 17 13 17 17 NR NR NR NR NR NR NR
Managing Dispersed Computing NR 20 18 20 15 16 NR NR NR NR NR NR NR
Determining IS value NR 19 19 16 19 19 NR NR NR NR NR NR NR
Implementing Business Reengineering (Transformation ’01)
8 18 20 13 14 10 4 1 1 2 1 1 ‘89
Protecting and Securing IS 2 NR NR NR NR NR NR NR NR NR NR NR NR
Optimizing Org. Effectiveness 5 3 NR NR NR NR NR NR NR NR NR NR NR
7%
20%
28%27%
18%
IT is an equal agenda item in your company’s strategy and planning sessions
STRONGLY STRONGLY AGREEAGREE
STRONGLY DISAGREE
DISAGREE
AGREEAGREE
NEUTRAL
Ref : CIO and Boston-based consultancy ICEX
SOURCE: CUTTER CONSORTIUM, ARLINGTON, MASS.
Product strategy
E-business strategy
Sales/marketing
Customer service
Competitive position
IT’s RoleIT’s Role
Manufacturing
35%35%
8%
38%
43%
43%
49%
51%
Corporate executives were asked:
Which subjects are included in your formal business strategy?Which subjects are included in your formal business strategy?
10 20 30 40 50 60
Profit Center
Responsible primarily for technology maintenance
Core part of decision-making Core part of decision-making team that sets overall strategyteam that sets overall strategy
Instrument for cutting costs within the company
Resource for creating new business processes
Ref: Optimize Research
What is the role of IT at
your company ?
% of respondents
Cost Center and drain on corporate resources
70
Tool for improving business-process efficiency
Vital utility, like electricity
Manager of key data, communications, hardware, and software
Note: Multiple responses allowed
WHAT IS STRATEGIC WHAT IS STRATEGIC
ALIGNMENT???ALIGNMENT???
Where is the Value From IT Investments?
ITInvestments
StrategicBenefits
BusinessTransformation
External
Internal
Every business is an information business.
Information is the glue that holds value chains & organizations together.
A New PerspectiveA New Perspective
Investments in Business Change!!!Investments in Business Change!!!
IT InvestmentsIT Investments
Business Business Outcome:Outcome:
Business Business Process:Process:
IT IT Enabler:Enabler:
Value Management Framework
Portfolio ManagementOptionsIT-Business Process
Functional Integration
Business Scope
Distinctivecompetencie
s
Business Governance
Administrative Structure
Processes Skills
Technology Scope
Systemic competencie
s
IT Governance
IT Architecture
Processes Skills
BUSINESS Business Strategy
IT IT Strategy
IT Infrastructure
Strategic Fit
Organizational Infrastructure
The Strategic Alignment Model
Symptoms of Strategic Alignment Problems
LONG LIST ABOUT SYMPTOMS OF ALIGNMENT PROBLEMSLONG LIST ABOUT SYMPTOMS OF ALIGNMENT PROBLEMS
WHY IS IT TAKING SO WHY IS IT TAKING SO
LONG TO ADDRESS???LONG TO ADDRESS???
There is no “silver bullet”…
It takes a combination of “things” to make it a success!!!
New Org.Structures,
X-engineering, Business Partnership Mgt
New Org.Structures,
X-engineering, Business Partnership Mgt
Wireless PDAsvia Semantic Web
Wireless PDAsvia Semantic Web
Customercentric, IT enabled/driven
differentiation
Customercentric, IT enabled/driven
differentiation
ValueDemonstration
ValueDemonstration
Leverage Core CSFsLeverage Core CSFs
Enterprise Application
Integration: CRM, SCM, & K
Enterprise Application
Integration: CRM, SCM, & K
Disintermediation,Reintermediation,Hypermediation,Infomediation,Aggregation
Disintermediation,Reintermediation,Hypermediation,Infomediation,Aggregation
Incremental vs Radical Innovation
Incremental vs Radical Innovation
Revenue vs Earnings Growth
Revenue vs Earnings Growth
Multiple careers.Rightsizing, Skills
Shortage
Multiple careers.Rightsizing, Skills
Shortage
Leadership Skills:Agility, Experimentation
& Learning Hierarchy of Imagination
Leadership Skills:Agility, Experimentation
& Learning Hierarchy of Imagination
Secure, Integrated
Infrastructure
Secure, Integrated
Infrastructure
E-NOUGH E-NOUGH
KnowledgeEconomy
internal/external
KnowledgeEconomy
internal/external
BUSINESSBUSINESSTRANSFORMATIONTRANSFORMATION IT can:IT can: - Enable - Enable - Drive- Drive - Inhibit- Inhibit
BUSINESSBUSINESSTRANSFORMATIONTRANSFORMATION IT can:IT can: - Enable - Enable - Drive- Drive - Inhibit- Inhibit
Global Community& Economy;
Enronitis
Global Community& Economy;
Enronitis
HOW MATURE IS YOUR HOW MATURE IS YOUR
IT-BUSINESS IT-BUSINESS
ALIGNMENT???ALIGNMENT???
Climbing the Strategic Alignment Maturity Model
BusinessStrategy
IT Strategy
LEVEL 1 Initial Process
LEVEL 2 Committed Process
LEVEL 3 Established process
LEVEL 4 Improved Process
LEVEL 5OptimizedProcess
Alignment Gap
· ·
·
· · ·
-
·
- - - Inter -
-
IT BUSINESS ALIGNMENT MATURITY CRITERIA
PARTNERSHIP
•Business Perception of IT Value•Role of IT in Strategicc Business
Planning•Shared Goals, Risk,
Rewards/Penalties•IT Program Management•Relationship/Trust Style•Business Sponsor/Champion
SCOPE & ARCHITECTURE•Traditional, Enabler/Driver,
External•Standards Articulation•Architectural Integration: - Functional Organization -Enterprise-Inter enterprise
•Architectural Transparency, Agility, Flexibility
•Manage Emerging Tech.
SKILLS
by Business
•Liaison(
COMMUNICATIONS
•Understanding of Business by IT
•Understanding of IT
•Inter/Intra organizational Learning/Education
•Protocol Rigidity•Knowledge Sharing
s) effectiveness
COMPETENCY/VALUEMEASUREMENTS
•IT Metrics•Business Metrics•Balanced Metrics•Service Level Agreements•Benchmarking
•Formal Assessments/Reviews•Continuous Improvement
GOVERNANCE
•Organization Structure
•IT Investment Management
•Prioritization Process
•Business Strategic Planning•IT Strategic Planning
•Budgetary Control
•Steering Committee(s)
•Cultural Locus of Power
•Change Readiness
•Innovation, Entrepreneurship
•Management Style
•Career crossover; training/education
•Hiring and retaining
Interpersonal Environment•Social, Political, Trusting
•Improved/ managed process
•COMMUNICATIONS: Bonding, unified•COMPETENCY/VALUE: Cost effective;Some partner value;Dashboard managed•GOVERNANCE: Managed across the organization•PARTNERSHIP: IT enables/drives business strategy•SCOPE & ARCHITECTURE: Integrated with partners•SKILLS: Shared risk & rewards
•Established focused process
Strategic AlignmentMaturitySummary
•Initial/Ad-Hoc process
•Committed process
•Optimized process
Level 2
Level 1
Level 3
Level 4
Level 5
•COMMUNICATIONS: Good understanding; Emerging relaxed•COMPETENCY/VALUE: Some cost effectiveness; Dashboard established•GOVERNANCE: Relevant process across the organization•PARTNERSHIP: IT seen as an asset; Process driver;Conflict seen as creative•SCOPE & ARCHITECTURE: Integrated across the organization •SKILLS: Emerging value service provider;Balanced tech & business hiring
•COMMUNICATIONS: Business/IT lack understanding•COMPETENCY/VALUE: Some technical measurements•GOVERNANCE: No formal process,cost center, reactive priorities •PARTNERSHIP: Conflict; IT a cost of doing business•SCOPE & ARCHITECTURE: Traditional (e.g., acctng, email)•SKILLS: IT takes risk, little reward; Technical training
•COMMUNICATIONS: Limited business/IT understanding •COMPETENCY/VALUE: Functional cost efficiency•GOVERNANCE: Tactical at Functional level,occasional responsive•PARTNERSHIP: IT emerging as an asset; Process enabler•SCOPE & ARCHITECTURE: Transaction (e.g., ESS, DSS)•SKILLS: Differs across functional organizations
•COMMUNICATIONS: Informal, pervasive•COMPETENCY/VALUE: Extended to external partners•GOVERNANCE: Integrated across the org & partners•PARTNERSHIP: IT-business co-adaptive/improvisational•SCOPE & ARCHITECTURE: Evolve with partners•SKILLS: Education/careers/rewards across the organization
Strategic AlignmentMaturitySummary
•Initial/Ad-Hoc process
Level 1
•COMMUNICATIONSCOMMUNICATIONS: Business/IT lack understanding
•COMPETENCY/VALUECOMPETENCY/VALUE: Some technical measurements
•GOVERNANCEGOVERNANCE: No formal process,cost center, reactive priorities
•PARTNERSHIPPARTNERSHIP: Conflict; IT a cost of doing business
•SCOPE & ARCHITECTURESCOPE & ARCHITECTURE: Traditional (e.g., acctng, email)
•SKILLSSKILLS: IT takes risk, little reward; Technical training
•Optimized processLevel 5
•COMMUNICATIONSCOMMUNICATIONS: Informal, pervasive
•COMPETENCY/VALUECOMPETENCY/VALUE: Extended to external partners
•GOVERNANCEGOVERNANCE: Integrated across the org & partners
•PARTNERSHIPPARTNERSHIP: IT-business co-adaptive/improvisational
•SCOPE & ARCHITECTURESCOPE & ARCHITECTURE: Evolve with partners
•SKILLSSKILLS: Education/careers/rewards across the organization
WHERE IS THE ORGANIZATION STRONG/WEAK?
WHERE IS THERE DISAGREEMENT?
WHAT ARE THE IMPLICATIONS?
WHAT CAN BE DONE TO IMPROVE THE MATURITY LEVEL?
IT OPENS THE DOOR TO DISCUSSING ALIGNMENT
IT IS NOT JUST THE LEVEL OF IT IS NOT JUST THE LEVEL OF MATURITYMATURITY