Lecture 4 – The Strategic Alignment Model

References:

1.      Strategic alignment: Leveraging information technology for transforming organizations, by J. C. Henderson & N. Venkatraman

2.      IT-Enabled Business Transformation: From Automation to Business Scope Redefination, by N. Venkatraman

3.      http://businessitalignment.wordpress.com/2010/12/17/the-strategic-alignment-model-of-henderson-and-venkatraman/

4.      http://www.computerweekly.com/news/2240114794/Innovation-and-optimisation-top-UKs-2012-IT-agenda-survey-shows

5.      http://www.sciencedirect.com/science/article/pii/S0963868704000356

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Lecture 4 – The Strategic Alignment Model

Introduction - IS-Business Alignment

IS-Business Alignment refers to the integration of IS strategy and Business strategy. It also reveals the ability of a company to use powerful Information Technology to achieve multiple and difficult business objectives. Nowadays, IT becomes an irreplaceable component for a business to become successful. Good combination of IT strategies and Business strategies can facilitate organizational operations. 

How do IT professionals reckon about IS-Business Alignment?

Frank Buytendijk is the Vice President and Fellow of Oracle Corporation. He is also known as the Thought Leader of Oracle Corporation. He has written a lot of research papers, journals and book. You may find out more about him on his webpage. http://www.frankbuytendijk.com/index.html

Below is a video showing Frank Buytendijk's opinion on Business/IT Alignment. 

News about  IS-Business Alignment

News on www.computerweekly.com dated 3-2-2012 also mentioned a survey interviewing over 170 UK Businesses. Survey results reveals that businesses from all sectors would concentrate their budget on key business applications, alignment of IT and the business, and risk management. This survey result obviously shows the importance of IS-Business alignment.

Strategic Alignment Model (SAM)


Strategic Alignment Model is widely used by companies that have incapability in alignment between information technology and business.By using this model, companies can therefore understand the importance of investing in IT. Below is the figure of SAM.   

Review Question - Which alignment strategy in SAM model is the best? and why?

In last lecture, we have learnt 4 main alignment perspectives, namely, strategy execution, technology transformation, service level and competitive potential. 

For the first 2 alignment perspectives, they both consider business strategy as the driving force and have a constraint for organizational transformation. For competitive potential, it decides its business strategy by IT and its success is determined by business leadership, which sometimes cannot show the real effect of applying this prospective.

I personally believe that service level alignment perspective is the best alignment strategy in SAM model. 

Service level alignment prospective ensures Information Technologies are used effectively. This can make sure there are no underused or wasted IT resources. It also makes good use of IT resources to attract customers in this information age. This prospective mainly focus on satisfying customers.

Successful examples include Hong Kong’s 2 largest supermarkets(Wellcome and PARKnSHOP). These 2 supermarkets both make use of the RFID technologies, Wellcome uses Octopus Card while PARKnSHOP uses MoneyBack Card. Making use of this IT resources, supermarkets can therefore attract their customers to buy more goods in order to get more rewards such as cash dollar or special gifts. This can escalate customer’s satisfaction on the company.

Another successful example of service level alignment perspective is I.T . It has created a Facebook Fan Page. After you have “liked” the page, you can receive the news about the latest I.T products. Customers can also leave their comments of the webpage to ask for details of the products. This shows that I.T has up-to-date IT strategy to meet customers’ needs. Products of limited quantity in short periods will also be posted on the Facebook fan page. This often cause shopping rush to I.T stores.