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Abstract: This article presents a diagnostic for identifying a scope, competencies, and governance. The internal dimension
strategic profile for Business/IT alignments. Based on consulting includes infrastructure, skills, and process. The two fundamental
and research over the past decade, we have observed executives characteristics of the model are strategic fit (relating external and
who are dissatisfied with their IT program and project alignment internal domains) and functional integration (integrating business
strategies. Technical and process engineering projects rather than and technology). Strategy, infrastructure, and processes are also
strategic IT-business alignments were favored. Not all IT initiatives linked to process, structure, and people. A fundamental premise
can or should be dedicated to projects and programs that affect is that change cannot occur in one domain without influencing
enterprise-wide change; however, prominent IT experts argue at least two of the other three domains. Luftman et al. (1996),
that CIOs are receiving pressure to align IT for strategic purposes Maes et al. (2000), and Avison et al. (2004) have since expanded
due to competitive market forces. Two case studies illustrate the on the SAM model. The underlying assumption of these models
processes and benefits of aligning IT-based business outcomes is that alignment, especially with regard to projects that deal with
at the project and program levels using the strategic diagnostic strategic organizational interests, benefits a firm in three ways: first,
proposed here. by maximizing return on IT investment; second, by enhancing a
firm’s competitive advantage through IT; and third, alignment
provides direction and flexibility to react to new opportunities.
Keywords: IT Project Management, Strategic Project Effective organizational and project alignment remains
Management, Alignment, Leadership problematic. An annual CIO poll ranked “IT and business
alignment” as the number one priority and concern (Duvall,
EMJ Focus Areas: Program and Project Management, Strategic 2009). Similarly, in a recent Society for Information Management
Management, Technology Management survey (Luftman, 2008), IT and business alignment was ranked
as the top management concern by CIOs and other executives.
IT strategic planning ranked third and managing change ranked
sixth. Luftman noted from the survey that, “…businesses with good
IT alignment, referred to as ‘mature alignment,’ share common
T
traits that included effective communications, governance,
he increasing importance of projects in organizations has understanding of the value of IT, collaboration with IT as a full
been acknowledged (Gray, Clifford, and Larson, 2003); partner, systems that extend to customers and partners, and HR
however, aligning leaders and resources to enterprise recruiting strategies to attract/retain top IT talent.” Luftman
business strategy and objectives at the project level is a recent and McLean (2004) stated that IT executives needed to, “1)
development in alignment literature and practice. Hacker and understand the businesses of which they are a part and, 2) work
Doolen’s study (2007) is an example of this recent trend. Their toward planning for, and achieving, an alignment between the IT
results showed the impact of top management on project success activities they head and the businesses they serve.”
in managing large, multi-year technical projects. Many studies Additional reasons why alignment frameworks are
in the project management literature (Gobeli and Larson, problematic (Weiss and Thorogood, 2005) include the following
1986; Pinto and Slevin, 1988; Youker, 1999; Brown, 1999) hint observations: (1) frameworks continue to be too internally
at strategic alignment and top-level leader involvement as focused—the resulting “how-to” lists for alignments omit
important to project success; however, these studies do not external dimensions (stakeholders, environments, markets);
offer an integrative approach that combines both the internal (2) organizational alignment processes ignore initial steps that
and external organizational dimensions with business and identify the purpose and type of alignment required—the intended
technology objectives. result of the project or initiative is not clearly stated; (3) there are
Two seminal studies on alignment offer examples for also no specific means offered to measure the degrees of internal
integrating strategic business and IT with external/internal efficiency and external market engagement resulting from an
organizational dimensions: MIT 90s model (Morton, 1991) and the organization’s IT-business alignment; and (4) authors describing
Strategic Alignment Model (SAM) (Henderson and Venkatraman, alignment processes assume and then prescribe alignment
1989). These frameworks are important for projects focusing on guidelines as a top-down, lower, or even mid-level process only.
wider strategic initiatives, which is the interest in this research. In reality individuals and teams often plan and perform alignment
The latter model, in particular, identified four domains—business on an ad-hoc basis (Broadbent and Kitzis, 2005; Ross, 2003). In
strategy, IT strategy, organization infrastructure and processes, this article, we build on previous literature to present a diagnostic
and IT infrastructure and processes—requiring integration that enables IT and business project leaders to identify strategic
when deciding on a strategy. Each domain has an external initiatives and projects that targets new markets, partnerships
and internal component. The external dimension consists of with external groups, and innovative products and services.
Typical market objectives None Improve service and/or Extend the enterprise
External Market Characteristics
reduce cost
Sourcing In-house and bureaus: Packaging and out-sourcing Multi-sourcing
departments, functions and
bureaus
Partnerships None IT vendors, other With suppliers and distribution
stakeholders channels
Standards None Open Systems or dominant W3C (consensus building standards
vendor for web technologies) esp. XML
Perception of Markets Non-existent/Threat Balance Opportunity
Industry Most, including farming, Retailing, manufacturing, Finance, e-business, automotive,
mining, health care, education services, government utilities
Strategic Weapon
SellWell.com Crown Limited
Comparisons
Internal Integration
Characteristics
Target of IT Investment New distribution channel for Build new products Similar
existing products otherwise buy IT for
commodity processes
CEO Parent’s CEO had direct CEO less involved Dissimilar
involvement to the point of
selecting software
configurations
Board of Directors Board actively endorses Board less involved Dissimilar
strategic use of IT
CIO CIO becomes CEO of the CIO/Executive General Similar
startup .com Manager
IT-Business Relationship IT has become the business IT facilitates relation- ships Similar
Managers business functions
View of IT Industry-wide transformation More limited to product Dissimilar
embedded
IT Strategy IT is the business strategy IT enables new products Dissimilar
IT Structure Highly centralized Centralized with strong Similar, with a variation
projects
Investment decision-making Strategic initiative with board Multi-year projects Similar
approval
External Market
Engagement
Typical market objectives IT used to encourage IT drives new products Similar
customers into stores; defend such as Rapid-Roulette and
market share from online leverages Casino
attackers Management System
Sourcing In-house and strategic Packaging for commodity Similar
partnerships business processes and in-
house for embedded
products
Partnerships Extensive and evolving Extends to other casinos Similar
for using new products
Standards Extensive through W3C Open systems Similar
(consensus building standards
for web technologies)
Perception of Markets Opportunity and emerging Opportunity for new Similar
threats products
Industry Electronics and e-businesses Gaming (also seen as Similar
Financial Services)
SellWell saw IT as transformational. Crown viewed IT as “IT structure” in strategic weapon profiles is both centralized
an embedded characteristic of the products. IT was the driver of and decentralized. At SellWell, IT structure remained highly
business strategy in both firms. “IT strategy” in strategic weapon centralized, and effectively so. The centralization of IT at SellWell
profiles is “subsumed into the business strategy.” At SellWell, was also accelerated in part because of the “Black Friday” technical
this was the case. At Crown, IT enabled new products that were website crisis. The fix to this problem required a “re-architected”
profitable for the company. Crown’s overall business strategy of infrastructure that consolidated functions and integrated business
“growing revenue” by using the IT department within Crown and technical personnel at the business unit level. At Crown, IT
and through external IT companies to “help drive shareholder structure was centralized, resulting in stronger and value-added
value” set the strategic platform for the projects summarized in products. IT is also embedded in the business. As the case stated,
the case. Compared to SellWell, the alignment in Crown’s case “Crown treats IT as another business function rather than a
is less complete due to Crown’s narrow focusing of IT on new service provider. People sit within the revenue generating part of
product lines. Although this approach is strategic, it does not the business…”
have as transformative an impact across the firm’s value-chain Four notable comparisons of the two firms are made
as was evidenced with SellWell. Nevertheless, it is interesting to based first on four internal characteristics using Exhibits 2
note how the alignment in Crown’s case is contingent upon the and 3. First, CIOs at both firms used strategic weapon alignment
strategic use of IT. For commodity business processes, Crown profiles to identify business goals driven by technology projects
utilizes packages as a way of “sourcing-in” technology; for new and capabilities. SellWell used IT as a strategic weapon for two
business products, it in-sources the technology and maintains purposes: to retain its market share as well as to establish a new
control. For SellWell.com, IT was a mission critical capability. distribution channel. In essence, IT became the business itself,
38 Engineering Management Journal Vol. 23 No. 2 June 2011
causing it to be centralized. Additionally, the IT strategy merged company culture was balanced, somewhat conservative, and
and became one with the overall business strategy—another willing-to-take calculated risks. The leadership perceived markets
outcome we had not anticipated in our original diagnostic. The as opportunities and threats, was willing to risk initiating a start-
CIO of SellWell’s parent company became the CEO of the startup. up with the goal of protecting its Internet initiative. SellWell
Finally, SellWell.com is broadening the boundaries of the firm on executives later discovered that its parent corporate culture was
the supply-side by maintaining far-reaching partnerships within incompatible with the start-up. This cultural context was reflected
the IT industry. in the decisions the CIO took, the execution of the different teams
Second, the “target of the IT investment” (Exhibit 2) for to balance technical and business objectives, and the strategic
SellWell.com was a “new distribution channel for existing outcomes. One such outcome was the decision to protect
products”; for Crown it was “building new products otherwise buy SellWell’s core competencies by outsourcing the IS function that
IT for commodity processes.” Both targets were clearly strategic led to increased profits.
in nature, leading to projects in both firms that required internal Crown’s culture also reflected a move from a somewhat
and external resources and alignment capabilities in the firms conservative culture to one that balances risk and innovations
(Exhibit 1). These targets also promised returns on investments with cost reduction strategies. The CIO took risks more with
that would enhance the respective enterprises. products than with core business resources. From the cultures in
Third, the role of “IT-business relationship managers” is to both cases, the company CEOs empowered and assigned the CIOs
“build relationships as partners.” As noted earlier, at SellWell the authority and responsibility to move forward with strategic
IT became the business. IT-business relationship managers weapon profiles to extend the enterprise, whether through new
(“business liaisons”) worked effectively, creating cross-functional products or a spin-off business, into new markets.
teams in order to meet project objectives. At Crown, these
managers were effective in eliminating bureaucratic barriers inside Concluding Comments
and outside the organization to achieve their projects’ strategic This study expands the understanding of the characteristics of
business objectives. firms that have effectively implemented strategic IT/business
Finally, “Investment decision-making” is “multi-year, projects. Four limitations of the study are as follows: First, cases
refreshing infrastructures, championed by CEO, CIO, and the and examples of firms that tried and failed to plan and implement
board.” At SellWell the strategic initiatives had board approval. At such strategic alignments were not identified. A follow-up study
Crown, investment decisions resulted in multi-year projects. of unsuccessful implementations would be a good follow-up
When compared based on external integration, the following contribution. Second, the findings are based only on two cases.
six important similarities between the two firms are noted. First, We opted for more detail over a larger number of firms. This is not
“Typical market objectives” in strategic weapon profiles are a survey or sample. Third, while these two cases do not optimally
generally aimed at “Extending the enterprise.” At SellWell, IT was match for comparison purposes, they are suitable for illustrating
used to encourage customers into stores and to defend market “strategic weapon” types of IT/business alignments in their
share from online attackers. At Crown, IT was used to create new separate domains. The two cases also show how such alignments
products and leverage a management system. Second, “Sourcing” are deliberately chosen. Other studies comparing more closely
in the strategic weapon profile is used for “Multi-sourcing” matched companies within the same industry with similar size
(Exhibit 2). At SellWell, sourcing was used in-house and to build and types of products, for example, would also be helpful. Finally,
strategic partnerships. At Crown, sourcing was used for packaging our diagnostic is macro-level and does not provide detailed
commodity business processes and in-house for embedded metrics for planning complex strategic projects. Additional case
products. Third, “Partnerships” in strategic weapon profiles are studies could inform and extend our findings by reporting on how
characterized in Exhibit 2 as “suppliers and distribution channels.” business and IT leaders prepare business initiatives and projects
SellWell formed partnerships with a number of external groups. across different industries, organizations, and environments.
The firm outsourced its entire IS operation to Accenture. Crown At this stage of research, the case study approach is
developed a joint venture with StarGames, a gaming supplier. appropriate. There is a potential external validity threat and the
These findings suggest that “joint ventures” and “consultants” be question remains: “Are the findings specific to these two cases
included in this dimension in Exhibit 2. Fourth, “Standards” are or can they be generalized to other situations?” The absence of
characterized by “W3C, exp. XML” in Exhibit 2. SellWell used substantive empirical testing across a range of other settings in
W3C. Crown used open systems. Fifth, “Perception of Markets” this study reflects the research focus on theory building, which, in
is characterized as “Opportunity” in Exhibit 2. At SellWell, the itself, is a contribution to IS research (Weber, 2003; Zmud, 1998).
perception was both opportunity and threat. Both firms acted as Future empirical testing is required in other contexts to establish
prospectors and analyzers in their strategic choices to innovate external validity.
in the market. And finally, “Industries” that use strategic weapon This study has argued that moving to a strategic weapon
profiles are not limited to those listed in Exhibit 2, “Finance, alignment requires behavioral, technical, and strategic
e-business, automotive, and utilities”. Since SellWell was in the competencies of both business and technology leaders and
electronics business and Crown in gaming, other industries can project managers. Such alignments in projects and programs
and are being added to this dimension. are not necessarily dependent on the availability of resources an
This analysis indicated more general similarities than organization has or that an environment may provide. Leaders at
differences as shown in Exhibits 2 and 3, although the differences different levels in the organization may need to plan on a strategic
are significant and can be attributed to a number of factors breakthrough in order to survive. The two cases presented from
(industry opportunities and pressures, leadership styles and this research illustrate how the IT-Strategy alignment framework
capabilities, types of markets selected to enter, and visions). can help provide a comprehensive view with different project
Organizational culture also played a significant role in explaining profiles necessary to build a momentum for change. Use of these
some of the two firms’ strategic differences. SellWell’s parent profiles can also surface the strategic versus tactical orientations