Strategic Use of IT

An instrument for assessing your alignment

Early in the use of the strategic alignment model, an executive organizational assessment survey was developed for use with it.  The first version of this instrument was authored by Professor (now Dean!)  James Thomas of the Smeal School of Business of Penn State university. This assessment asks respondents to rate the relative degree of definition, clarity, and understanding by their organization of the elements that make up the model. 

To refresh you --- or if you haven’t read the earlier post on this blog that described the elements and structure --- the four boxes in this model depict the four domains of strategic choice.  (See the graphic at left.  This and the other graphics shown on the blog are “thumbnails,” and you should click on the graphic to see a full-size graphic) 

Any strategy decision involves decisions in one or more domains.  At any point in time, one domain drives, enables, or otherwise impacts activities in one or more of the others.  When you take the assessment the results are analyzed by first looking at the strongest and weakest domains as self-rated by you, the respondent. The domain you view as the strongest is typically the one in which you have the most understanding of decisions made.  It is also probably the domain you see driving decisions in other domains.  Your weakest domain is typically the one in which you have the least understanding of decisions made. 

For example, a CEO may readily identify "business strategy" as the strongest domain and the same CEO may identify "IT structure" --- or perhaps "IT strategy" --- as his/her weakest.  An IT executive, particularly one with a technical background, is likely to have the exact opposite views of strength and weakness.  This knowledge is valuable when translated into an action plan by those two executives to improve communication with each other and increase understanding of each other's role and contribution.

Just as valuable as recognizing strength and weakness within a domain is recognizing them in the relationships among the domains --- particularly understanding the effects of decisions in one domain upon the others.  Let's say that an organization adopts a revolutionary change in structure, going from a traditional functional-hierarchical model to a flat, or matrix, or line-of-business model.  This organization's IT executive responds by architecting an IT structure appropriate to the new organization.  That IT executive's success --- indeed, survival --- hinges on understanding the effect of this organizational structure decision on I/T structure.

Getting real value from the alignment model lies in not only achieving but maintaining alignment between I/T and the business.  This calls for the executive team to continuously monitor the issues addressed in the model.  Doing so will open doors to marvelous opportunities for increased return on the IT investment.

If you want take this assessment I recommend you go the IBM Executive Business Institute web site, click on “Spotlight,” then follow the instructions that come up on the next web page.

You will be presented with 36 questions, 12 of which address the four domains of the Business-IT Alignment Model, and 24 of which address the relationships among the four domains.  The vertical relationships are called “strategic fit”.  The horizontal relationships are called “strategic alignment”.  The relationships are two-way between adjacent domains of the model.  There are three questions for each relationship. 

You answer the questions on a scale of 1 to 7 where 1 is “To a small Extent” and 7 represents “To a large Extent” with a midpoint, 4, neutral, which is neither a small or large extent. 

The result will represent your perspective at the point in time you answered the questions  (The most interesting results happen when two or more executives from the same organization each answer these questions individually.  Discussing the similarities and differences between the results could bring a major breakthrough in communications and strategy).

The results represent your opinion on the state of the twelve elements of the Business-IT Strategic Alignment Model in your organization.  It is important that we keep emphasizing that each set of results represents your point of view.

After you complete the instrument, the responses are compiled and presented in a graphic format as shown in this graphic.  This graphic is a typical result (one of many different possibilities) and is in fact from an executive who took our program Aligning IT & Business Strategies.

There are two images making up the result.  First look at the larger one, the one on the right.  The figures inside the domain squares are rounded to one decimal place, while those on the relationship arrow elements are rounded to integers.  The instrument calculates the best-fit "alignment perspective" and displays it on the left side.  The algorithm determines the perspective by using the strongest and weakest domain, using the relationship arrow scores as “tie-breakers.”

Every perspective contains one domain identified as strongest and one as weakest.  We name these as follows:

·         Anchor.  In every perspective the strongest domain is called the anchor.  In the above example the person  declared (in responses to the questions) the strongest domain in the organization to be “Business Strategy & Business Model.”  This domain is the one where decisions have the best ability to positively influence decisions in other domains. 

·         Pivot.  Every perspective also has a weakest domain, called the pivot simply because it’s where the perspective path “turns the corner,” i.e., pivots.  In the above example the person declared (in responses to the questions) it to be “Business Organization.”  The reason why the path moves direct from anchor to pivot is probably perfectly clear: you want to leverage (or lead from) strength to build up weakness. 

In addition there’s an important third domain:

·         Impacted.  As the perspective path turns it naturally moves into a third domain, called the impacted domain.  This is so-called because we see the management process of leading from strength to build up weakness will next influence the decisions to be made there. 

Comments on the "Strategy Execution Perspective," shown here: This perspective often results when the business has a strong business strategy and model, but a weak fit with the business organization (structure/responsibilities, processes, and skills). The organization should leverage the business strategy and model to build up the business organization and improve alignment with the IT organization & structure for automating business processes. 

Areas of focus are: 

1.      Building and improving strategic fit on the business side,

2.      Building and enhancing the business organization,

3.      Assessing the impact on the IT infrastructure as a result of changes to the business organization.

For focus area  1 - building and improving strategic fit on the business side:

·         What new products, services, and/or markets can be added or leveraged to improve the business organization?

·         What strategic competencies (i.e., pricing, distribution, value-add services, sales, marketing, etc.), can be added or leveraged to improve the business organization?

·         How can strategic alliances with external organizations be leveraged to improve the business organization?

For focus area 2 - building and enhancing the business organization: 

·        What are the issues with the business processes supporting business strategy?

·        Is the ownership of business processes clear; and are the outcomes clear, accountable and linked to the strategy?

·        Are the processes appropriate, or missing, low-functioning, etc in support of the business strategy?

·        What additional skills do you need to execute the key business processes?

·        How well does the business organization understand the business strategy?

For focus area 3 - assessing the impact on the IT infrastructure as a result of changes to the business organization:

·        How will the changes that come from building and enhancing the business organization impact your IT organization & structure (architecture, IT services/processes, IT skills)?

·        Will your architecture accommodate these changes; and if not, what architectural changes will be required?

·        What IT services/processes will be required to support any changes made to the business organization?

·        What IT skills will be required to support any changes made to the business organization?

Any result can be due to any of a variety of causes.  We have suggested plausible or likely reasons for thus result based on our experience, but of course in every case you are the best judge of why you answered the questions as you did.

Alignment (or lack of it!) confronts us in daily life

With the massive pervasiveness of information technology in society and business today, it should not be surprising that we routinely run into examples of good and bad "strategic alignment" --- or perhaps I should say "Examples of alignment and non-alignment."  The following tale will be recognized by New Yorkers.

The great and venerable cultural institution Metropolitan Opera has, after appointing a new general manager prior to last season, been undergoing some significant transformation aimed at expanding their following and audience base.  The opera announced a free, public open house to be held the week prior to opening night in September, to include attendance at a full dress rehearsal of the opening night production.  There one was one hook: you needed tickets --- an obvious requirement for crowd control!  It is easily predictable that when a "free" event of this quality is announced, the volume of response will beggar description.  However, this does not appear to have been so predictable to the Met Opera management.  Tickets would be available (free, remember!) via phone or web only, beginning at 10:00 AM the third day prior to the event.  And of course, by about 20 seconds after 10:00 both the reservation phone number and the Met web site were totally brought to their knees and had become non-functional.  I understand they had 4000 people in the queue although I have no idea how they were able to count them (Incidentally. the opera house seats about 3900).

The point of this tale is it shows a monstrous lack of "Strategic fit," i.e., a complete imbalance between strategy and structure.  The Met's management is admirably focused on growing the scope of the business (specifically, broadening the customer set) but has a telecommunications and IT infrastructure totally unable to respond to the initiative they designed in this case.  Of course, "what to do about that" is an interesting problem.  Can --- or should -- any organization invest in enough infrastructure capacity to handle a once-a-year huge peak?  Such an investment is clearly impossible for most businesses to justify  (Notice, I said "most" because exceptions do exist).  The alternative is to maintain strategic fit by keeping your strategic initiatives in line with either your existing infrastructure capabilities, or your capacity to invest.