38 THE STRATEGIC ALIGNMENT MODEL

vironment to identify those existing and potential IT-related capabilities

that could support and shape business strategy. It is important to recognize
that the focus is not simply to identify a set of technologies but rather to
define the totality of the capabilities offered by the chosen set of technol-
ogies. For example, in the case of a financial services organization, an im-
portant technological capability is global, seamless information access and
analysis across different data sources and distinct media. The specific set
of technologies selected to achieve this capability may involve trade-offs
along several criteria, which ultimately must be consistent with specific
standards set by the firm.
Developing technological capacity deals with the principles, policies,
and rules that will govern the development and implementation of these
capabilities. For instance, what should the relationships be between the
required technological capability for the future and the current standards?
What if they are inconsistent? Similar to the analysis of the impact of a
new product on the profitability of existing products, this mechanism must
assess the trade-off between current standards and new functionality.
Adapting technological capacity focuses on migration issues. The im-
portance of this can easily be appreciated, given the dynamic evolution in
the price—performance ratio of new IT products and the proliferation of
multiple, competing standards. This issue is most commonly linked with
the problems of "legacy systems," which have been in existence for some
time and cannot be easily changed without incurring a significant commit-
ment of financial resources and time. Thus, while such systems may be
efficient (low-cost, given that the initial capital may be amortized), they
restrict the development of new technological capabilities for the organi-
zation. Addressing technological capacity ensures that this issue cannot be
swept under the carpet.

Organizational Capability
This alignment mechanism deals with the administrative processes for cre-
ating the required human skills and the capability for supporting and shap-
ing the business strategy.
Defining human skills is more than the specification of traditional job
descriptions for hiring or promotion; it also involves the articulation of how
human skills support and complement the available or potential IT capa-
bilities. Neither technology nor human skills alone would be effective as
they fail to leverage important complementary sources of capabilities. For
instance, the definition of the skills of a customer service manager will vary
greatly, depending on how the customer support process is defined.