Tallon PPT
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Transcript of Tallon PPT
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COMPETING PERSPECTIVES ON THE LINK
BETWEEN STRATEGIC INFORMATION
TECHNOLOGY ALIGNMENT AND
ORGANIZATIONAL AGILITY:
INSIGHTS FROM A MEDIATION MODEL
Authors: Paul P. Tallon & Alain Pinsonneault
Prepared by:
Group 6
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INTRODUCTION
Strategic IT Alignment
Depicts the way in which a firm uses IT to achieve
improved performance and competitiveness
Alignment is the capacity to demonstrate a positive
relationship between IT and financial measures ofperformance
Organizational Agility
Ability of a firm to rapidly change or adaptin response to changes in the market
High degree of organizational agility can help a
company to react successfully to the emergence of
new competitors
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CASE FACTS
The case aims at explaining a positive and
significant link between alignment and agility and
between agility and firm performance
It also shows that:
The effect of alignment on performance is fully
mediated by agility
Environmental volatility positively moderates the
link between agility and firm performance
Agility has a greater impact on firm performance
in more volatile markets
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CONCEPTUAL MODEL
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WHATIS AGILITY?
Question 1
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AGILITY
The capability of a company to rapidly change or
adapt in response to changes in the market.
A high degree of organizational agility can help acompany to react successfully to the emergence of
new competitors, the development of new industry-
changing technologies, or sudden shifts in overall
market conditions.
Agility has emerged as a key business factor
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EXPLAINTHEPARADOX - "KEEPING IT RESOURCES
INCLOSEPROXIMITYTOACTIVITIESTHATNEEDTO
CHANGEALLOWSFORRAPIDRESPONSIVENESSTO
CHANGE"
Question 2
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The pursuit of alignment requires IT to be deeply
embedded in key business activities
Keeping IT resources in close proximity to activities
that need to change allows for rapid
responsiveness to change. So it essentially means
that alignment between IT and business strategy is
positively associated with agility.
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Through alignment the entire process gets
responsive to any changes and hence we can say
that agility is improved
On the other hand, embedding IT into business
activities can lead to extremely routine activities
that hurt agility by limiting a firms strategic choices
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So there is an attempt for a tradeoff between short-
term performance benefits from alignment and long
term benefits from agility.
It essentially means alignment is beneficial more for
short term while agility is useful more for long term.
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WHATARETHETWOMODERATINGFACTORS
DISCUSSEDINTHECONCEPTUALMODEL?
Question 3
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MODERATING FACTORS
IT flexibility positively moderates the link between
alignment and agility
Environmental volatility positively moderates the
relationship between agility and firm performance
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IT FLEXIBILITY
Firms with similar levels of alignment between their
IT and business strategy have different agility
depending on their respective IT infrastructure
flexibility.
IT flexibility can have two moderating effects
Further increase positive effect
Decrease some of the negative effect
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ENVIRONMENTALVOLATILITY
Defined as the frequency and extent of change in
critical market variables
Link between agility and firm performanceinfluenced by the rate of change in the environment.
In a stable setting , less to gain from agility or less
to lose from being slow to react.
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Firm
Performance
Environmental Turbulance AgilityEnvironmental Stability
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WHATARETHEPARALLELNOTIONSOFREACH
ANDRICHNESS?
Question 4
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EFFECTOF IT FLEXIBILITY
IT flexibility can have two moderating effects
Further increase positive effect
Decrease some of the negative effect
Two properties of flexible IT Infrastructure are
Scalability
Adaptability
These are the parallel notions of reach & richness
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SCALABILITY
Extent to which IT capacity can expand or contract
Can be achieved in two ways:
o Building or acquiring additional resources
o using more recent technologies - grid computing
Scalability enhances the response of IT to changing
competitive scenarios and helps achieve flexibility
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ADAPTABILITY
Interoperability of data structures and Portability of
applications to different OS
Can be achieved in following way
Middleware that integrates data and allow information
sharing
Adaptability makes system robust through sufficient
information sharing and helps increase its
applicability
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DOESTHERESULTSFROMTHEPAPERSUPPORT
THECLAIM "ALIGNMENTENABLES AGILITY"?
Question 5
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ALIGNMENT ENABLES AGILITY
Two Hypothesis: H2a: Alignment between IT and business strategy
is positively associated with agility H2b: Alignment between IT and business strategy
is negatively associated with agility
H2A is supported and H2B is negated
Significance levels (Beta = 0.36, p
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WHATARETHEMAINOBSERVATIONSFROM
EARLIERRESEARCHONSTRATEGIC IT
ALIGNMENT?
Question 6
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EARLIER RESEARCH
First, majority were of the view that Alignment is
positively associated with firm performance
This paper reveals that at the process level Alignment is
positively correlated with IT Business value
Also primary locus of alignment within the firm variesbased on differences in strategic foci and so alignment
is rarely the same in any two firms.
Second, significance ofmoderators has increased
in respect to study of alignment Research has found important differences in alignment
based on the type of strategy adopted by firms
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Do you see a connect between Slaughter and Tallon's
paper? Describe your view.
Common Question
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Slaughter Case
Proves that software processes should be aligned withthe company strategy
Tallon Case
Proves positive link between strategic IT alignment andorganizational agility
Yes there is a connect between both the cases
As agility is responsible for increased performanceof firm
Agility is positively correlated to IT alignmentAnd alignment itself is supported by software
processes
Thus it all forms a chain and it is as strong as theweakest link