Increasing the Success of Aligning IT and Business Strategy: A Framework for Alignment

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1 Increasing the Success of Aligning IT and Business Strategy: A Framework for Alignment Mohammed Alaa H. Altemimi Faculty of Information Science and Technology UniversitiKebangsaan Malaysia Bangi, Selangor MALAYSIA Mohd.altemimi@yahoo.com Tel: (60) Mohamad Shanudin Zakaria UKM Graduate School of Business UniversitiKebangsaan Malaysia Bangi, Selangor MALAYSIA msz@ukm.my Tel: (60) YazrinaYahya Faculty of Information Science and Technology UniversitiKebangsaan Malaysia Bangi, Selangor MALAYSIA yyazrina@gmail.com Tel: (60) Le Meridien Hotel, Mauritius, August

2 Increasing the Success of Aligning IT and Business Strategy: A Framework for Alignment Paper type: Conceptual; exploratory Abstract Organizations are becoming more aware as to the role of information technology (IT) as a key factor in their success and survivor if properly executed as tools for business enabler rather than leading business. Some substantial trends like rapid change of business strategic, technology complexity, mobility of business and information technology environments are changing the requirements of the alignment between IT and business environment. This shift demands new unified approaches and strong view to develop integrity conceptual framework in order to accomplish the service through alignment between business and IT environment. The cohesion between and within Business and IT is achieved by means of services. The rapid pace of technology and the influence of information technology on the change of competitive environment make organization to assess their management to information technology resource in order to meet the strategic objective of the organization. In this research, we show that the alignment strategy involved the transportation of IT strategic and consolidating with business strategy through the use success factors that impact on meeting the organizational strategy. The main issue of this study is to enhance the service through the development of a conceptual framework that integrates Business and IT strategies and its relation with the organizational structure. We hope, this research will help managers and executives to have a better corporate sustainability viewpoint to perform their alignment and determine degree of strength and weakness of service extracted through the interaction of business and IT strategies. Keywords: Business and IT strategy, competitive Advantage, Strategic IT plan, Conceptual Framework. Le Meridien Hotel, Mauritius, August

3 Introduction An increasing number of companies have begun to realize the importance played by their business partners in the success and prosperity of their own business. Information technology (IT) is the enabler that binds the two together one services the other. Through the interaction using services, IT made the company compete in their environment. IT has become an important factor for competitiveness and sustainable development belongs to the rapid change technology development (Boar, 2001) (Prasopchoke, 2002). Some notable trends like the rapid change of business strategic, technology complexity, and mobility of business and information technology environments (Sauve et al., 2006) demand a new unified approach in developing a coherent conceptual framework that can better deliver services through alignment between business and IT environment. Galliers et al. (1994) denote that the rapid pace of technology and the influence of information technology on the change of competitive environment render organization must assess their management to information technology resource in order to meet the strategic objective of the organization. Increasingly, a good technological framework should take into account having strategic and business dimensions (Marshall, 2004) and identify the components of this structure and the relationship between the components. It includes the current instance of business desired objective and implementation plan to achieve the objective and vision of organization. The Alignment strategy involves the transportation of IT strategic and consolidating with business strategy through the use success factors. Alignment of IT and business strategies concerned with gaining the value to the organization and thus increased competitive advantage and is being represented as the critical issue for managers around the world (Boar, 1993). The alignment of business and IT strategy has been a major affair in the last few years and has driven a lot of effort and investments in the development of integrated strategy for better communication of business and IT. The main issue of this study is to enhance the service according to the correlation between business and IT through developing conceptual framework, especially after the increasing reliance and general trust with information technology. Background to the study: Business and IT Strategies Luftman (2000) introduces the business-it alignment as putting IT in toning with business strategy in proper way to achieve goals and objective. It is difficult to dealing with the IT as separate part of business until it is viewed as part of business and merged with business strategy process to increase the efficient and effective alignment of IT with business strategy (Joanne, 2000). The researcher (Kearns, 2000) (Teo et al., 1997) denotes that we can grant the Le Meridien Hotel, Mauritius, August

4 effectiveness, efficiency and excellent to the enterprise if the proper alignment happen between IT strategy and business strategy, then the right service will result. Most of the organizations realized that alignment plays a significant role in determining success of the organizations, The failure to carry out the plan cause loss of competitive and opportunities, incompatible strategy and wasted resources and this demonstrates that the strategic alignment is the main influence on organization performance, rather than either business strategic orientation or IS strategic orientation alone. This entails that technical and business managers as well as top management are well aware of the technology as a critical resource and need proper planning to manage IT. Increasingly, technology planning and management is a complex activity due to the rapid change of technology and difficulties of the turbulent and dynamic environment of business. Strategic IT planning (SITP) Strategy is a term refers to the plan or standard that produces in consolidation form, which is enhancing the policies and tasks of the organization (Quinn et al., 1991). Strategic plan intensify on what business must be done. The strategic IT plan identifies applications or solutions for specific business function as well as detail technological issues such software, communication system as infrastructure requirements and architecture (William, 2008). Lederer et al. (1996) identify the strategic information system planning as a portfolio of computer applications that support the organization to achieve the business plans and reach to fulfill the business goals. There is no doubt that IT strategic planning developed from business strategic planning and the significance of alignment between them and growth support of it. The main purpose of SITP analysis is to determine what business activities require an integrated IT and what are the requirements. The dealing with plan development need complex work from staff should come from both the business and IT divisions and require a hard working knowledge of the business activities and how they are supported by IT. IT planning needs to take into account the influence of the environment issues to business strategy and also to equipment pricing policies, education levels and available technical skills and experience, to arrive at strategy that provide the strongest support for business strategy. We proposed an approach that will lead to the development of IT strategic plan, enabling planning with business strategy and allowing technology to provide for competitive advantage. Le Meridien Hotel, Mauritius, August

5 Service through Integration IT governance Model identify a structure over IT activities so they can achieve the goals of the organization. Integrating IT activities with the organization s business strategy have resulted in proposals centralized, decentralized and federated (Steinke, 2006). In the centralized model, central authority of IT delivers services to the organizations. In the decentralized model, the authority of IT under different business departments delivers services to the organizations. For many, future success will depend on the ability to migrate expertise across functional and geographic management. In the federation model, the authority of IT has fade out under departmental IT managers reporting to head. Conceptual Framework In this study, we developed a framework that explains the structure of organization engaging with service delivery through Business and IT integration. This framework, shown in Figure 1, shows the main components. These components are viewed as set of processes that illustrates the interaction between Business and IT strategies to achieve the service delivery through accomplishment organizations strategy within the assessment measure to gauge if strategy integration can deliver the service in the right direction effectively and competitively. The framework could be applied for bring those domains together. It requires a clear and agreed corporate mission. The alignment has been increasing the awareness to successful implementation to objective and vision in the strength of the alignment between strategic of IT and business environment. The business strategy defines business goals which come together with relationships with the IT strategy. Among business goal there are defined goals for IT or IT initiatives to support pure business goals. Contributing goes up to the achievement of the higher business goals. Going from bottom-up, the KPIs lead to change in the integration Business and IT strategies and then enable changes in the organization to deliver the services. The same apply to objective which could not be controlled directly by the organization but impact the accomplishment of the strategy. The Improvement and control model Improvement and Monitor is considered by the organizations as a method to represents a new form of open innovation thus providing a fresh perspective in business. It can be used to redesign or enhance new products or to offer service to the clients. This model explains the structure of organization engaging with service delivery through business and IT integration. This framework in Figure 1 shows the main components, which are viewed as set of processes that illustrate the interaction between Le Meridien Hotel, Mauritius, August

6 Business. The corporate strategy define the alignment business strategy with IT strategy called planning stage. The planning process involves processes of integration between business and objective, set development goals, establish resource needed to meet objectives and goals and identify support to achieve goal. The evaluate performance supported by KPI then Improvement & monitor in order to support the weakness points and improve productivity quality and creativity. Figure 1: Service through alignment business and IT Conceptual Framework Vision Mission Goal Objective Assessment Strategy Strength Weakness Opportunity Threat Business Goal Business Strategy Business Process Business Architect Business Service Policies Procedures Tactical Methodology IT Goal IT Strategy IT Portfolio IT Service KPI Success Factor Basic KPI Aggregate KPI Le Meridien Hotel, Mauritius, August

7 Figure 2: Improvement and Monitor the Service Model Corporate Strategy Planning Data collection & analysis Evaluation performance Action Plan Improvement & monitoring Report Result KPI Review and Feedback The leadership of an organization plays in a major role of in determining the future and the success of company, the role of senior management come in play the prioritizing existing assets of the company to monitor the current achievements in order to success. In addition, the feedback between manager and employees will give light to addressing problems from different angles. Conclusion The alignment has become part and parcel of 21st century life. The key to the success of IT in business environment is the alignment between them. As discussed, the key determination success of alignment is understand and employing IT as an added factor of a competitive advantage and supporting the capability of IT to accomplishment the objective of organization. The role of IT has significantly increased in the organizations especially that have employed the IT to improve the competitive advantage, efficiency and effectiveness of corporate vision. The result of this study will assist the organizations by giving them a perception on how the service deliver through alignment of IT and business domains together to support business strategy as well as how can we improve and monitor the service delivery through planning instrument. This research helps managers and executives to better have a corporate sustainability viewpoint to perform their alignment also to determine degree of strength and weakness of service extracted thru interaction business and IT strategies. Le Meridien Hotel, Mauritius, August

8 References Boar, B. 2001, The art of strategic planning for information technology, New York: John Wiley & Sons, Inc. Boar, B.H., 1993, The art of strategic planning for information technology, England- Chichester: John Wiley & Sons. Galliers D. R., Merali Y., Spearing L., 1994, Coping with information technology? How British executives perceive the information system management issues in the mid- 1990, Journal of Information Technology 9, Joanne Curry, & Jeff Ferguson, 2000, Increasing the success of the Global Information Technology Strategic Planning Process, IEEE, pp Kearns, G. and Lederer, A., The Effect of Strategic Alignment on the Use of IS-based Resources for Competitive Advantage, Journal of Strategic Information Systems, Vol. 9, No.4, pp Lederer A.L., H. Salmela, 1996, Towards a Theory of Strategic Information System Planning, Journal of Strategic Information Systems, pp Luftman, J., 2000, Assessing business-it alignment maturity. Communications of the Association for Information Systems, Vol.4, No.14, pp Marshall P. and J. McKay, 2004, Strategic IT planning, evaluation and benefits management: The basis for effective IT governance, Australasian Journal of Information Systems, 11(2). Prasopchoke P. &Teay Sh., 2002, Strategic IT Framework for Modern Enterprise by using Information Technology Capabilities, IEEE, pp Quinn, J. B. Strategies for Change, 1991, In: The strategy process: concepts, contexts and cases. 2 ed. p Englewood Cliffs, N.J.: Prentice-Hall. Sauve, J., Moura, A., Sampaio, M., Jornada, J., Radziuk, E, 2006, An Introductory Overview and Survey of Business- Driven IT Management, In Proceeding of the 1st IEEE/IFIP International Workshop on Business- Driven IT Management (BDIM 06, Vancouver Canada). Steinke G., 2006, Strategic administration of information technology in government: Technology for government services delivery. In INFOTEC. Teo, T. S. H. and King, W. R., 1997, Integration between Business Planning and Information Systems Planning: an evolutionary contingency Perspective, Journal of Management Information Systems, Vol. 14, No.1, pp William S. Shu, 2008, Strategic IT Planning as Change Specification, ACM, pp Le Meridien Hotel, Mauritius, August