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    California Management Review Rudy Hirschheim and Rajiv Sabherwal

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    nikhilsharma5
    This document discusses strategic IT alignment and presents three case studies. It defines strategic IT alignment as a process of continuous adaptation where business strategy drives IT strategy and vice versa. Alignment is important because it ensures IT is targeted at critical business areas. The document proposes a framework for alignment with lenses of business strategy (defender, prospector, analyzer) and IT strategy (role, sourcing, structure). It identifies three alignment profiles: utility (low-cost delivery), alliance (partnering), and infusion (business leadership). Case studies of companies Alpha, Beta, and Gamma analyze their alignment trajectories and decisions. Beta achieved the most success by recognizing threats and transforming IT strategy from prospector to analyzer through acquisitions and

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    California Management Review Rudy Hirschheim and Rajiv Sabherwal

    Uploaded by

    nikhilsharma5
    64 views14 pages
    This document discusses strategic IT alignment and presents three case studies. It defines strategic IT alignment as a process of continuous adaptation where business strategy drives IT strategy and vice versa. Alignment is important because it ensures IT is targeted at critical business areas. The document proposes a framework for alignment with lenses of business strategy (defender, prospector, analyzer) and IT strategy (role, sourcing, structure). It identifies three alignment profiles: utility (low-cost delivery), alliance (partnering), and infusion (business leadership). Case studies of companies Alpha, Beta, and Gamma analyze their alignment trajectories and decisions. Beta achieved the most success by recognizing threats and transforming IT strategy from prospector to analyzer through acquisitions and

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    1B IT Alignment

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    1B IT Alignment

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    This document discusses strategic IT alignment and presents three case studies. It defines strategic IT alignment as a process of continuous adaptation where business strategy drives IT strategy and vice versa. Alignment is important because it ensures IT is targeted at critical business areas. The document proposes a framework for alignment with lenses of business strategy (defender, prospector, analyzer) and IT strategy (role, sourcing, structure). It identifies three alignment profiles: utility (low-cost delivery), alliance (partnering), and infusion (business leadership). Case studies of companies Alpha, Beta, and Gamma analyze their alignment trajectories and decisions. Beta achieved the most success by recognizing threats and transforming IT strategy from prospector to analyzer through acquisitions and

    Copyright:

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    Download as pptx, pdf, or txt
    64 views14 pages

    California Management Review Rudy Hirschheim and Rajiv Sabherwal

    Uploaded by

    nikhilsharma5
    This document discusses strategic IT alignment and presents three case studies. It defines strategic IT alignment as a process of continuous adaptation where business strategy drives IT strategy and vice versa. Alignment is important because it ensures IT is targeted at critical business areas. The document proposes a framework for alignment with lenses of business strategy (defender, prospector, analyzer) and IT strategy (role, sourcing, structure). It identifies three alignment profiles: utility (low-cost delivery), alliance (partnering), and infusion (business leadership). Case studies of companies Alpha, Beta, and Gamma analyze their alignment trajectories and decisions. Beta achieved the most success by recognizing threats and transforming IT strategy from prospector to analyzer through acquisitions and

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    California Management Review Rudy Hirschheim and Rajiv Sabherwal

    Strategic Alignment
    Attaining the appropriate structure and capabilities to

    execute strategic decisions Organizational Performance IT-Business Alignment is a two-way street


    Business Strategy Drives IT Strategy IT Strategy Drives Business Strategy

    IT-Business Alignment is: NOT an event A process of continuous adaptation and change

    Why Is Strategic IS Alignment Important?


    Alignment Information systems are targeted on areas

    that are critical to successful business performance


    Alignment A firm can better use IS towards realizing its

    business objectives

    The Proposed Framework for Alignment


    Business Strategy Lens
    Defenders, Prospectors, and Analyzers

    IS Strategy Lens
    IS Role

    Efficient, Comprehensive, Opportunistic Outsourcing, In-sourcing, Selective Sourcing Centralized, Shared, Decentralized

    IS Sourcing

    IS Structure

    Strategic IS Alignment Profiles


    Utility Profile Alignment through Low-Cost Delivery
    Alliance Profile Alignment through Partnering Infusion Profile Alignment through Business Leadership

    The Three Strategic IS Alignment Profiles

    Trajectories of Strategic IS Alignment


    Paradoxical decisions Excessive transformations Uncertain turnarounds

    Alpha
    Started in 1976 as an equipment sales company
    Became independent equipment leaser in 1983 Net worth: $25 Million (1986) to $100 Million (1996) Low level of Alignment to start with Trajectories:
    Prospector Defender (Paradoxical Decision) Defender Prospector (Uncertain Turnaround)

    Consequence:
    Still groping (at the time of the case); senior managers seriously

    worried!

    Alpha - Analysis
    Operated in a decentralized fashion
    IS personnel isolated from the business functions Ignored the impact of the Tax Reform Act Failed to recognize the decline in mainframes

    Conclusions: Failed due to oscillating IS strategies Partial alignment achieved over years Still Struggling (at the time of the case)

    Beta
    Diversified Australian company

    Annual Revenue: $2 Billion, After-tax Profits: $250 Million


    Business: Financial services, property services, capital services

    and investments, group services Started as prospector


    Grew considerably from 1980 1993

    Reasonable alignment to start with Trajectories:


    Prospector Analyzer (Excessive Transformation)
    Realigned IS strategy to Analyzer

    Consequence: Net Earnings Per Share increased by 20% from 1996 to 1997

    Beta - Analysis
    Recognized the competitive threats and switched the business

    strategy Aimed at:


    Global competitiveness, a 35 to 40 percent reduction in business

    expenses and entry into the high-growth IS industry (comprehensive IS Role)

    Corrected the IS Strategy by:


    Acquiring 35% stake in an IS company (selective sourcing) Sharing IS decisions between CEO and CIO

    Business divisions starting to manage their own vendors and contracts

    (shared structure)

    Conclusion: Started winning major outsourcing deals in Australia!

    Gamma
    US subsidiary of a multinational corporation

    Business: Petroleum Products


    Revenue > $20 B, Net Income > $1 B, Employment > 15000 Started as Defender, Efficient, in-sourced, centralized IS 1980s 1990s: Industry became more competitive
    Financial performance dipped

    Trajectories:
    Defender Analyzer (Paradoxical Decision and Excessive Transform.) Realigned IS strategy to Analyzer

    Consequence:
    Uncertain turnaround in Period 3 towards the IS strategy of Period 1 caused

    perfect alignment with the Analyzer strategy!

    Gamma - Analysis
    Increased competition and dipping financials led to hiring a

    new CEO Shifting to analyzer in early part of 1990s :


    Greater attention paid to markets and growth opportunities Major corporate transformations in 1995

    Each subsidiary became independent and made their own decisions


    A CIO was appointed to each business unit Business units started following IS outsourcing

    Continuing onto the latter part of 1990s:


    IS became more important than just an opportunistic tool Business units gravitated towards a balanced in- and outsourcing Consequently, the IS structure became more shared

    Pragmatics of Alignment

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