1. Copyright 2004 Monash University IMS5042 Information Systems Strategic Planning Week 8: Elements of IS planning Theory: 5. Alignment Approaches

2. Copyright 2004 Monash University 2 Agenda Introduction to “Alignment” approaches Earl and “Alignment” approaches Further examples of alignment theory Implications for IS strategy and planning

3. Copyright 2004 Monash University 3 Alignment Approaches References Earl M (1993) ‘Experiences in Information Systems Strategic Planning’, MIS Quarterly, Vol 17, No 1, p1-20 Sabherwal R & King W (1995) ‘An empirical taxonomy of the decision-making processes concerning strategic applications of IS’, Jnl of MIS, Vol 11, No 4, p177-214 Segars A, Grover V & Teng J (1998) ‘Strategic IS Planning: Planning system dimensions, Internal Coalignment and implications for planning effectiveness’, Decision Sciences, Vol 29, No 2, p303-345

4. Copyright 2004 Monash University 4 1. Introduction to “Alignment” approaches Characteristics and deficiencies of previous approaches Philosophy and characteristics of alignment approaches Early pre-cursors to alignment approach Alignment and terminology

5. Copyright 2004 Monash University 5 Problems with previous planning methods Too much focus on a single method or technique to be followed Based on a simplistic picture of organisations Based on a simplistic picture of the planning process Do not take account of the organisational processes which support planning Too theoretical; insufficient linkages to empirical evidence about the actual effectiveness of planning (Too bad a track record in practice??)

6. Copyright 2004 Monash University 6 Philosophy of ‘alignment’ approaches Strategic planning is itself a system with many elements - some explicit and some emergent Multi-dimensional and multi-factorial Need to study the planning system in order to understand how to use it Planning methods need to be based on the specific blend of elements needed to “align” IT/IT strategy with other things Analyse factors which contribute to planning alignment (and therefore, effectiveness)

7. Copyright 2004 Monash University 7 Alignment and terminology Terminology is vague (as usual!), but all alignment approaches are based around identifying and achieving connections or correlations between things Some possible types of “alignment”: Process: level of correlation/integration between business and IS strategy planning processes Objectives: correlation of IT planning and business objectives/outcomes Approach: correlation between organisational style and IT planning approach Maturity: correlation between ‘stages’ of organisational and IT maturity Planning process: correlation with planning CSFs

8. Copyright 2004 Monash University 8 Early examples and pre-cursors to alignment approaches Remember: Nolan’s stages of growth (alignment of IT plans with organisational maturity)? McFarlan’s strategic grid (alignment of IT plans with strategic impact of IT)? Sullivan’s (1985) diffusion/infusion grid? (alignment of IT planning process with strategic impact of IT) Rockart’s CSFs (alignment of IT plans with management information needs) Note difference with SIS and BPR – organisation aligns with IT!

9. Copyright 2004 Monash University 9 Coping with the wide world of “alignments” Too many “alignment” approaches to consider them all in detail here; just outline a couple of examples Readings include references/examples of several different types Whenever you read the word “alignment”, ask: “What is being aligned with what?” AND “Why is this form of alignment considered important?”

10. Copyright 2004 Monash University 10 2. Aligning strategic decision–making with organisational style Organisations have different styles /cultures/ approaches to decision-making, etc These are determined by the industry, the people, the circumstances, etc Strategic planning processes need to be “aligned” with the organisational style (IT people have their own culture/style/etc which may or may not fit with that of the organisation – can create some significant problems) Various studies have tried to examine how IT planning may have to be aligned with aspects of organisational ‘style’

11. Copyright 2004 Monash University 11 2(a) Earl and planning approaches Earl set out to investigate organisational experiences in strategic IS planning and to identify effective planning techniques Found that: Organisations have multiple objectives for strategic planning (see Table 1, p3) Analysing the planning method was impossible, because method was just one element of planning activity Organisations listed many types of issues/problems in their planning activities

12. Copyright 2004 Monash University 12 Planning “approaches” Analysis of issues/problems identified three distinct categories: Method - technique(s) used to plan Implementation - linking planning to action Process - how was planning treated in the organisation Earl concluded that emphasis on identifying a single ‘correct’ method for planning was inappropriate; need a broader more sophisticated view of planning: “Successful SISP is more probable when organisations realise that method, process and implementation are all necessary issue sets to be managed” Defined “planning approach” as the key element, based on the interaction of method, implementation and process

13. Copyright 2004 Monash University 13 Five Planning “approaches” ‘Approaches’ have no single characteristic feature, but embody an “… underlying philosophy, emphasis and influences” Five distinct approaches emerged (see Tables 6-7, p7 and 12): Business-led: IS strategy flows from business plans Method-driven: formal method drives plan Administrative: resource allocation to projects drives plan Technological: business modelling/architecture drives plan Organisational: team-based learning drives plan

14. Copyright 2004 Monash University 14 Using the five planning “approaches” Earl found the use of these approaches to be spread fairly evenly between the 27 organisations he surveyed His analysis of outcomes suggested that the Organisational approach was the most successful He concluded that organisations should review their approach to planning against this framework and choose the method which worked best for their situation (Remember, Galliers added a ‘Stages of Growth’ twist to Earl’s work by suggesting that the approaches represented stages in IS planning maturity)

15. Copyright 2004 Monash University 15 2(b) Sabherwal & King: Aligning Strategic decision-making to organisational style Study focussed on how strategic IS decisions are made (therefore not specifically an IS planning study) Need for study based on evidence that strategic IS planning was not always the key influence behind strategic IS decisions; therefore, why does planning not work and what process was used instead? Rather than a single theory, we need a taxonomy of decision-making processes which use a range of theories

16. Copyright 2004 Monash University 16 Sabherwal & King: Taxonomy of strategic decision-making Used a model of decision-making processes and survey data from 85 organisations to identify five main strategic decision-making processes: Planned: formal/top-down process/long-term/using methodologies Provincial: less formal /led by IS dep’t/low use of formal methodologies Incremental: little planning/adaptive/slow Fluid: little planning/quick/external focus Political: negotiated/power-based/some planning (see Table 6, p195)

17. Copyright 2004 Monash University 17 Sabherwal & King: Conclusions There is no single correct method for making strategic IS decisions Organisational circumstances will dictate which of the 5 approaches described is most appropriate Some of these approaches require formal planning methodologies; others do not

18. Copyright 2004 Monash University 18 2(c) Segars Grover and Teng: ‘Internal co-alignment’ Identified (from literature) six key dimensions for the process of planning Comprehensiveness (scope/thoroughness) Formalisation (structure) Focus (creativity/innovation vs integration/control) Flow (authority/direction: top-down vs bottom-up) Participation (breadth of involvement) Consistency (planning cycle: intermittent/cyclic/on- going Used the term internal co-alignment to describe the blend of these dimensions (see Table 1, p311)

19. Copyright 2004 Monash University 19 Segars Grover and Teng: Rational adaptation Successful planning requires a rational basis - structured, formal, method-based … but planning process must also be able to adapt to suit organisational and environmental changes Hence should have a “rational adaptive” planning system (see Fig 1, p313) Then tried to develop measures for each dimension (Table 2-7, p318-323)… … and link to measures of planning effectiveness (Table 8, p324)

20. Copyright 2004 Monash University 20 Segars Grover and Teng; Conclusions Statistical analysis of surveys of organisation ‘proved’ their theory correct (be as sceptical as you like about this!) Planning is a process which has many dimensions; these must be understood Effective planning requires appropriate blending of these dimensions (rational adaptation) Organisations must plan about planning to ensure its on-going effectiveness (see Fig 3, p332)

21. Copyright 2004 Monash University 21 3. Aligning IS and Business A different view of alignment Focuses on the way in which IS planning processes are linked with business planning Often lead to definitions of planning ‘maturity’ and normative statements about how mature organisations ‘should’ be in their linking of IS and IT (Be careful about what measures are used to show maturity!)

22. Copyright 2004 Monash University 22 BSP: An early version of IS/Business integration Business Systems Planning (BSP) was one of the earliest planning methodologies developed by IBM Based around a view that IS was so integral to any business that the strategic planning of the two should be tightly integrated IBM described a single process in which both were done together Became the basis for many consultant approaches Subsequent studies asked why this desired integration was so hard to achieve

23. Copyright 2004 Monash University 23 Teo and King: CSFs for achieving alignment Reviewed literature relating to desirability of business-IS integration Identified possible CSFs for successful alignment Surveyed companies to find out which were appropriate Finished with 18 factors with varying levels of correlation (see Table 2, p178)

24. Copyright 2004 Monash University 24 Luftman: Business-IT alignment maturity Degree of integration of IT and business planning processes is a measure of organisational maturity Identifies various factors which are the essential components of maturity (see Table) Identifies criteria for measuring maturity Describes process for assessing maturity Once you know how and why you are immature, do something about it! (Is this really sensible?!)

25. Copyright 2004 Monash University 25 4. Other ‘alignment’ studies Many other empirical studies tried to identify the key factors which were associated with IS planning success. For example: Premkumar & King (1994) examined the impact of organisational factors on the quality and effectiveness of planning processes (see Fig 1, p81) Segars & Grover (1998) proposed a composite measure of planning success which includes alignment, analysis, co-operation and planning capabilities (see Table 1, p146) These studies all implied (or explicitly stated) that successful IS planning methods need to be based on consideration of a variety of issues

26. Copyright 2004 Monash University 26 A warning about alignment theory All these studies use a wide range of literature to identify their key elements to defining alignment, measuring it and achieving alignment success All used empirical studies of planning process and effectiveness Do not be intimidated by large surveys, lots of statistics and correlation co-efficients

27. Copyright 2004 Monash University 27 5. Planning philosophy behind the Alignment approaches?? Formalised Unified Comprehensive Utopian Rational Deterministic Directed Dictatorial Democratic Emergent Political Contingent Pluralist Pragmatic Ad hoc Incrementalist

28. Copyright 2004 Monash University 28 Implications for IS strategy and planning Less pure normative theory (“this is what organisations should do” ); more focus on deriving theory from planning practice (“this is what actually happens”) New emphasis on empirical studies and statistical analysis of organisational experience (how meaningful?!) How valid and verifiable are the criteria and their measures? (how understandable is the statistical analysis?) Is there a ‘right’ or ‘favoured’ planning approach (eg Earl’s bias to the Organisational approach)?

29. Copyright 2004 Monash University 29 Some implications for IS strategy Role of IS in organisations? Links between IS and business strategy? “Ownership” of IS strategy decision-making? IS planning is now about choosing which planning approach is best aligned with your organisation’s circumstances; much more than just information, systems or technology

30. Copyright 2004 Monash University 30 Some implications for planning Planning methods and techniques are no longer the main focus; now just a part of the overall planning activity Planning is multi-dimensional, and each dimension has many factors Various different versions of what the dimensions are and how to choose between them In order to plan effectively organisations must adopt the planning approach which suits them and their business environment The ‘right’ approach may change over time