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12 August 2004 Strategic Alignment By Maria Rojas
12 August 2004 Outline Business realities Aligning business and IT strategies Alignments Planning Funding Communication Operational vs. strategic planning Operational and strategic fit – Evident patterns of behaviour. Conclusion
12 August 2004 “ Strategies in any industry must be targeted to respond to the forces at work within their industries” (Cortada 1998).
12 August 2004 Business Realities Create response strategies and make them all work. Eg: Establish leadership Form relationships, alliances with partners. Comply with expensive social costs. Segmenting customers. Shifting value propositions to customers Thriving in the global market Today the best at handling these issues use a great deal of IT (Cortada 1998). Q. Is this statement true?
12 August 2004 Business Realities Cnt. Cortada (1998) summarises how firms have responded to pressures of marketplace. Figure 2.1 Business objectives are first. IT is there to support objectives. Q. Are there disagreements with the above statement? Many firms do not know how to make IT strategic enabler of business objectives.
12 August 2004 Aligning Business & IT Strategies Alignment – get information processing lined up with business objectives (Cortada 1998). Knowing how to use IT to align business strategies is a challenge.
12 August 2004 Alignments - Planning Well organised companies plan continuously. Done by doing monthly reviews – how they are doing against plans Planning process needs time to adjust plans before linking it to business strategy. IT plans emerge as a piece of business strategies.
12 August 2004 Alignments - Funding Generates three questions: Are we investing the right amount on computing? Are we making the right investment decisions? Are we investing adequately in infrastructure? Organisations get the answers from ongoing review of progress against plans. IT activities need to support what the organisation is trying to accomplish. Allocate money to strategic projects and infrastructure Ensure that day-to-day decisions support the strategy.
12 August 2004 Alignments - Communication Communicate/tell people what is being done and why. Focuses on two questions: Does IT communicate its strategic value to its constituency? Does IT coordinate appropriately with its customers/stakeholders. Technology managers and staff need to be present and participate in planning staff meeting to explain their activities. Communication is treated as a series of critical activities and assigning dedicated personnel.
12 August 2004 Operational Vs. Strategic Planning Operational fit focuses on executing business strategy by improving productivity Only works in companies that practice similar decision making and planning across the enterprise. Operational Model Strategic fit results when you align IT strategic plans to the business strategy.
12 August 2004 Operational Fit – Evident patterns of behaviour Planning IT plans are responsive to business unit requirements for technology. Priorities for IT activities and investments are made by business units. IT plans are kept flexible and are reviewed frequently. Approvals for major IT initiatives are made quickly.
12 August 2004 Operational Fit – Evident patterns of behaviour Funding Business units play an important role in obtaining funding for IT initiatives. Budgets are more fluid – changes during the course of the year. Investments in infrastructure are deliberately made with goals that are clearly understood.
12 August 2004 Operational Fit – Evident patterns of behaviour Communication End users keep IT organisations well informed about their plans. Learning, teaming of experts takes place in response to business problems or market opportunities.
12 August 2004 Strategic Fit – Evident patterns of behaviour Planning Involvement by all key stakeholders who are affected by these plans. Planning process creates a single well- integrated business plan. Plan is executed as a whole
12 August 2004 Strategic Fit – Evident patterns of behaviour Funding Funding is provided for key IT initiatives across more than one financial year. Senior business and IT executives remain actively engaged in the allocation of cross-firm resources. Forums are created to resolve cross-business unit disagreements/problems. Funding is done with the belief that they are crucial to the future competitiveness of the organisation.
12 August 2004 Strategic Fit – Evident patterns of behaviour Communication Collaboration exists between business units and IT organisations to ensure alignment IT executives end up in the inner circle or senior management making the key strategic decisions. IT executives add value and are critical to the implementation of a plan.
12 August 2004 Q. Are the methods of operational and strategic planning flexible enough for any organisation to follow? Q. Can an organisation use it as it is or do they have to adapt it ?
12 August 2004 Conclusion Well run IT organisations align technical activities with the (organizational) enterprise. Benefits of aligning IT with the organisation: Lead to continuous alignment of plans and actions. Generates a strong vision of IT roles, fostering collaboration which leads to increased value coming from IT. Places great emphasis on shared accountability for the governance of IT, encouraging improved allocation of IT resources from business perspective
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