STRATEGIC

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STRATEGIC ALIGNMENT MATURITY
SIM FAIRFIELD-WESTCHESTER
DR. JERRY LUFTMAN STEVENS INSTITUTE OF
TECHNOLOGY JLUFTMAN_at_STEVENS-TECH.EDU 2/20/03
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AGENDA

• WHAT IS STRATEGIC ALIGNMENT?
• 2. WHY IS IT TAKING SO LONG TO ADDRESS?
• HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT?

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Which technology issues will be of greatest
concern to you and your company in the next year?
168 Better links to customers and suppliers
163 Enhancing corporate-wide processes 151
Aligning 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 ISSUES
Ref Conference Board
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Organization Concerns Rankings
Ref Robert Gray, Anil Gulati - Western New
England College
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Top 10 IS Management Priorities, 2002

• Key Findings
• Improve 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

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
Gartner
6
CSC Survey Rankings
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IT is an equal agenda item in your companys
strategy and planning sessions
STRONGLY AGREE
AGREE
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STRONGLY DISAGREE
18
20
27
NEUTRAL
28
DISAGREE
Ref CIO and Boston-based consultancy ICEX
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Corporate executives were asked
Which subjects are included in your formal
business strategy?
SOURCE CUTTER CONSORTIUM, ARLINGTON, MASS.
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(No Transcript)
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WHAT IS STRATEGIC ALIGNMENT???
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• Where is the Value From IT Investments?

External
IT Investments
Strategic Benefits
Business Transformation
Internal
Every business is an information business.
Information is the glue that holds value chains
organizations together.
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A New Perspective
IT Investments
Investments in Business Change!!!
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Value Management Framework

• Portfolio Management
• Options
• IT-Business Process

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The Strategic Alignment Model
Functional Integration
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Symptoms of Strategic Alignment Problems
LONG LIST ABOUT SYMPTOMS OF ALIGNMENT PROBLEMS
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WHY IS IT TAKING SO LONG TO ADDRESS???
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There is no silver bullet
It takes a combination of things to make it a
success!!!
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Customercentric, IT enabled/driven
differentiation
Incremental vs Radical Innovation
Global Community Economy Enronitis
Knowledge Economy internal/external
E-NOUGH
Value Demonstration
BUSINESS TRANSFORMATION IT can
- Enable - Drive -
Inhibit
Leverage Core CSFs
Secure, Integrated Infrastructure
Leadership Skills Agility, Experimentation
Learning Hierarchy of Imagination
Enterprise Application Integration CRM,
SCM, K
Multiple careers. Rightsizing, Skills Shortage
Disintermediation, Reintermediation, Hypermediati
on, Infomediation, Aggregation
New Org. Structures, X-engineering, Business
Partnership Mgt
Wireless PDAs via Semantic Web
Revenue vs Earnings Growth
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HOW MATURE IS YOUR IT-BUSINESS ALIGNMENT???
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Climbing the Strategic Alignment Maturity Model
LEVEL 5
Optimized
Process
LEVEL 4
Improved Process
LEVEL 3 Established process
Business
IT Strategy
Strategy
LEVEL 2 Committed Process
LEVEL 1 Initial Process
Alignment Gap
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GOVERNANCE

COMPETENCY/VALUE
COMMUNICATIONS




MEASUREMENTS

• Understanding of Business

by IT

• IT Metrics

• Business Strategic Planning

• Understanding of IT

• Business Metrics

• IT Strategic Planning

by Business

• Balanced Metrics

• Organization Structure

• Inter/Intra

organizational

-

• Service Level Agreements

• Budgetary Control

Learning/Education

• Benchmarking

• Protocol Rigidity

• Formal Assessments/Reviews

• Steering Committee(s)

• Knowledge Sharing

• Continuous Improvement

• Liaison(

s) effectiveness
















IT BUSINESS ALIGNMENT MATURITY CRITERIA





SKILLS
PARTNERSHIP
SCOPE



ARCHITECTURE

• Business Perception of IT Value

• Traditional, Enabler/Driver,

• Role of IT in Strategic

c Business
External








Planning

• Standards Articulation

• Shared Goals, Risk,

• Architectural Integration

Rewards/Penalties
- Functional Organization

-



-

• IT Program Management

-Enterprise



-




-Inter enterprise

• Relationship/Trust Style

-
Inter
-

• Business Sponsor/Champion

• Architectural Transparency,

Agility, Flexibility

• Manage Emerging Tech.

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Strategic AlignmentMaturitySummary
Level 5

• Optimized process

• COMMUNICATIONS Informal, pervasive
• COMPETENCY/VALUE Extended to external partners
• GOVERNANCE Integrated across the org partners
• PARTNERSHIP IT-business co-adaptive/improvisatio
  nal
• SCOPE ARCHITECTURE Evolve with partners
• SKILLS Education/careers/rewards across the
  organization

Level 4

• Improved/ managed process

• COMMUNICATIONS Bonding, unified
• COMPETENCY/VALUE Cost effectiveSome partner
  valueDashboard managed
• GOVERNANCE Managed across the organization
• PARTNERSHIP IT enables/drives business strategy
• SCOPE ARCHITECTURE Integrated with partners
• SKILLS Shared risk rewards

Level 3

• Established focused process

• 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
  driverConflict seen as creative
• SCOPE ARCHITECTURE Integrated across the
  organization
• SKILLS Emerging value service providerBalanced
  tech business hiring

Level 2

• Committed process

• 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

Level 1

• Initial/Ad-Hoc process

• 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

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Strategic AlignmentMaturitySummary

• Optimized process

Level 5

• COMMUNICATIONS Informal, pervasive
• COMPETENCY/VALUE Extended to external partners
• GOVERNANCE Integrated across the org partners
• PARTNERSHIP IT-business co-adaptive/improvisatio
  nal
• SCOPE ARCHITECTURE Evolve with partners
• SKILLS Education/careers/rewards across the
  organization

Level 1

• Initial/Ad-Hoc process

• 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

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IT IS NOT JUST THE LEVEL OF MATURITY

• 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