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Information Technology (IT)/Business

Alignment as a Strategic Weapon: A Diagnostic Tool


Joseph W. Weiss, Bentley College
Alan Thorogood, University of New South Wales

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.

Refereed research manuscript. Accepted by Editor Doolen.

30 Engineering Management Journal Vol. 23 No. 2 June 2011


Toward this end we attempted to address some of the gaps can be used to plan the types of projects and programs that are
identified above in alignment frameworks by defining three strategic with regard to an organization’s use of IT in achieving
straightforward alignment profiles according to their intended business objectives.
end-purpose: 1) technical resource, 2) business enabler, and 3)
strategic weapon (Weiss and Thorogood, 2006). The first profile, Aligning IT as a “Strategic Weapon”
technical resource, does not require significant use of IT in business Generally, either a combined IT-business strategy or a business
processes or within the external market engagement. The second strategy integrating IT capabilities drives the strategic use of IT.
profile, business enabler, uses IT in selected business processes and IT and business officers in larger companies that we have studied
interfaces with critical customers and suppliers. The final profile, claim that re-aligning IT and business can take from two to
strategic weapon, uses IT to mobilize and extend the enterprise, five years and involve such enterprise programs as changing a
requires extensive internal and external IT engagement. multinational’s entire marketing cost structure, or implementing a
Somewhat related to the prospector type of strategy (Miles and global Enterprise Resource Planning system to present a single face
Snow, 1978), strategic weapon business/IT alignments provide to a customer. Collapsing several businesses into two or separating
organizational leaders a logic and approach for entering new one business into several across multiple countries and continents
markets through different products and services, and for extending is another example. Small and medium sized businesses also re-
the enterprise through spin-offs and other arrangements using IT align their IT to support IT-based business strategies. Moving a
capabilities. Organizations do not usually identify a profile that business to online selling or developing a new product line that
sets the stage for developing strategies at the outset of a major will generate half a firm’s profit are other examples.
alignment project.
Organizational and project leaders planning an IT initiative By definition strategic weapon alignments:
or project can use any one of these alignment profiles as a guide, 1. Directly link to both the external market and the firm’s
depending on the two dimensions offered in Exhibit 1 to specify performance objectives,
the initiatives’ goal. That is, 1) the degree of internal integration 2. Require transformative internal integration of resources,
of organizational resources, and 2) the degree of external market 3. Involve the entire enterprise and, therefore, require a
engagement an initiative requires. Technical resource alignment systems perspective for defining change,
requires the least resources and does not focus externally. Business 4. Require leaders who understand emerging and existing
enabler alignment can require sizable resources and indirectly technologies and stages of organizational and architecture
enable IT to meet external market objectives. Strategic weapon maturity from specific applications to modular networks,
alignment demands significant internal resources and mobilizes 5. Need leaders with strategic business and technology
the enterprise toward external market objectives. The purpose of knowledge and creativity to define a vision for the
this article is to explain how the third alignment, strategic weapon, alignment,

Exhibit 1. IT-Strategy Alignment Framework

Engineering Management Journal Vol. 23 No. 2 June 2011 31


6. Need behavioral and people skills in transformational team with strategic business initiatives. Executives use these criteria at
leaders who must drive the planning and implementation the beginning of a planning process before goals are set.
of new processes, and
7. Require managerial as well as leadership skills for those A Descriptive Framework with Questions
who direct these re-alignments. Exhibit 2 depicts the common characteristics associated with the
three alignment profiles, placing specific emphasis on the third
With these descriptions and definitions, IT-based initiatives profile—strategic weapon. As a diagnostic, Exhibit 1 serves as a
that fit the strategic weapon profile should be easy to differentiate basis for decision-makers to discern whether or not IT-business
from, e.g., planning and installing a single technical application, alignment is, can, and/or should be a support for strategic
or planning and implementing a new business process; however, business initiatives. Exhibit 2 is a practical diagnostic to assist
we have observed that several CEOs and technology leaders have project sponsors in answering the following questions:
trouble in identifying changes that enable IT to become a strategic • What is the target of this proposed IT investment? For
weapon. Such difficulties relate to a host of obstacles. A significant example, is it for product research and market development?
barrier is that of competent but rigid mindsets (i.e., mental models, Will the proposed project affect enterprise performance?
Senge 1992, 2000) of leaders and professionals who cannot and/or • Do the objectives of the project change the boundaries of the firm?
do not understand or envision how IT can contribute to a firm’s • From the perspective of this project, is the market opportunity
larger possibilities and opportunities for competitive advantage. realistic?
This presents a problem since many strategic, IT-based projects • Will the CEO be involved as a sponsor? Does the CEO
are mislabeled and treated as business process improvements or consider the IT in the first order of this initiative?
technical band-aids. • Is board sponsorship required? Would the board view the
While there are several factors that explain why technology proposed project as a necessary strategic use of IT resources
and business executives do not or simply cannot identify IT’s and investment contributing to the enterprise’s strategy?
strategic impact, we observe that one reason is lack of criteria • Will the CIO sign on as a member of the executive team on
by which to begin discussions and early planning activities. this project?
Executives can use the following set of illustrative criteria as a • Will the project include and involve IT specialists from the
front-end diagnostic for determining whether or not IT aligns business units and central IT?

Exhibit 2. Characteristics of IT-Business Alignment Profiles

Technical Resource Business Enabler Strategic Weapon


Target of IT Investment Administration Core Business Process Product Research and Market
Development
CEO No Involvement Awareness and supporting Exploiting IT as 1st order thinking
IT
Internal Integration Characteristics

Board of Directors No Involvement Probes CEO on Contributes IT knowledge and


competitors’ use of IT suggests strategic use
CIO No Involvement Partners with CEO Valuable member of the executive
team
IT-Business Relationship None or as needed Facilitates knowledge Building relationships as partners
Managers transfer
View of IT Automation Information Transformation
IT Strategy Technology life-cycle React to business needs by Subsumed into business strategy
management seeking alignment and
managing life-cycle
IT Structure Central function Federal Central and Federal
Investment decision-making Annual budget proposal, Multi-year project Multi-year initiatives, refreshing
championed by functional initiatives, championed by infrastructure, championed by CEO,
heads business heads with the CIO and the board
CIO’s support

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

32 Engineering Management Journal Vol. 23 No. 2 June 2011


• How will this project affect the firms’ industry Yin (1994) noted where research on specific organizations,
competitiveness? programs, or processes were considered “case studies”. Marshall
• Does the project require partnerships with suppliers and and Rossman (1994) stated that, “Case studies rely on historical
distribution channels? and document analysis, interviewing, and typically, some forms
• Does CIO and CEO compensation include performance of observation for data collection… Case studies take the reader
options and bonuses with regard to this project’s into the setting with a vividness and detail not typically present
deliverables? in more analytic reporting formats.” He continued by stating
• Will investment decision-making for the project require that, “Historically, qualitative methodologists have described
multi-year initiatives, refreshing infrastructure, and will three major purposes for research: to explore, explain, or describe
the CEO, CIO, and board champion the infrastructure a phenomenon… Many qualitative studies are descriptive
investment? and exploratory: They build rich descriptions of complex
circumstances that are unexplored in the literature.” Relative to
A range of executives and professionals across the organization our study, Marshall and Rossman (1994) also commented on in-
should be involved in deciding Exhibit 2’s fifteen probes. The next depth interview strategies, stating,
section presents suggested process guidelines. “A study focusing on individual lived experience
This initial planning diagnostic offers several advantages typically relies on an in-depth interview strategy.
over traditional planning formats. To start with, decision makers Although this may be supplemented with journal
begin a project planning process by viewing two dimensions writing by the participants or other forms of data,
of project requirements: internal integration and the extent the primary strategy is to capture the deep meaning
of external market engagement. External market engagement of experience in the participants’ own words.
and related questions are the dimensions that projects most Studies focusing on society and culture in a group,
frequently omit, based on our consulting and research with CIOs. a program, or an organization typically espouse
In addition this particular set of diagnostic criteria and probes some form of case study as a strategy. This entails
focus on the alignment transformation necessary to support immersion in the setting and rests on both the
strategic IT-based initiatives. Decision makers start the planning researcher’s and participants’ worldviews… In-depth
process with a broad range of criteria at the outset. Using these interview strategies are elegant in design, relying on
general criteria from the outset helps inform strategic goals and a single primary method for gathering data… Case
objectives, and discourages realignment plans from slipping into study, the most complex strategy, may entail multiple
business process enablers or technical resources. methods—interviews, observations, document
The internal integration criteria of Exhibit 2 are necessary analysis, even surveys.”
to take a high-level overview beginning with the “target of IT
investments”. While product research and market development Finally, Marshall and Rossman’s (1994) emphasis on context
are not the only primary characteristics of IT investments, was a primary consideration in our case study methods: “…human
these examples offer a starting point for identifying the various actions are significantly influenced by the setting in which they
types of IT-based project descriptors. The other dimensions occur and that one should therefore study that behavior in those
under internal integration include board, CIO, and business/IT real-life situations…for qualitative studies, context matters…the
managers’ roles and responsibilities. Additionally, this profile study should be conducted in the setting where all this complexity
supports the importance of the role of IT strategy integrated operates over time and where data on multiple versions of reality
with investment decision-making. Again, a strategic weapon can be collected.”
alignment focuses internal integration at the upper level officers We next describe the use of these specific data collection
and managers. methods in each of the two case studies.
The external market engagement dimension includes market
objectives, sourcing, partnerships, standards, and industry Case #1: SellWell Data Collection. The SellWell case originated
analysis. We have found that identifying and including market from the interest of understanding the business value of
objectives and industry analysis are two dimensions that IT information technology. The Australian Graduate School of
alignment planning often omits. Management was a sponsor of this study. The objective was to
describe how e-businesses initiatives can be effectively developed
Methods and executed, and to explore influencing factors on why some
In developing the diagnostic and frameworks, we drew on survive and prosper while others do not. SellWell.com is one of
engagements with several organizations in our consulting over the largest retail sites in the world and the lead researcher worked
the last decade. This study uses examples and information from there during its establishment, adding personal experience to the
two completed programs with different projects. We selected two case study.
companies from several others because these firms were involved Data collection followed two approaches. One focused on
in multiple projects and programs that represented a wide range SellWell.com, developing a narrative time line and detailing
of both business and IT objectives. In addition, both companies the operating structures. The other focused on events in the
provided in-depth information that more fully illustrated our wider industry and competitor performance. The research team
diagnostic and frameworks. In these engagements, we primarily collected multiple types of data, drawing on the considerable
used the case study and interview methods with business and publicly available information.
IT executives and senior managers. To guide our interviews and Within SellWell.com, respondents were selected based
interpretations, we used qualitative research methods found in on a purposive sampling to develop an understanding of the
Yin (1993, 1994), Creswell (1994), Marshall and Rossman (1994), company from the executives to the engineering and support
Moustakas (1994), and Gummesson (1991). functions. Respondents were involved in the decision-making,

Engineering Management Journal Vol. 23 No. 2 June 2011 33


execution, and benefits capture. The wide range of respondents The first step in the analysis of the findings was to synchronize
provided maximum diversity to enable the research team to the two timelines, which surfaced and validated external factors
compare and contrast data (Carson et al., 2001). The collection affecting the organization. A joint narrative timeline of the
procedures involved reflection on experience, telephone calls, industry events was then constructed. Rich local events were
public and private database searches, emails, questionnaires, attached to the consolidated timeline. All respondents then
and both individual and group on-line chat sessions, to assist in received the resulting narrative for review. Several chat sessions
triangulation of findings. discussed and validated the case and further resolved the data.
The lead researcher initially communicated with people in The CIO and the Director of Systems Operations, the most senior
SellWell.com by email. The response was enthusiastic, reinforced participants in the study, approved the final case transcript.
by the purpose of the research and the confidentiality agreement, The research took place over a three-year period with data
but perhaps also buoyed by a sense of pride. Participants included collection concentrated on the six months from January to June,
the CIO; the Director of Systems Operations; managers from 2003, and analysis was undertaken over an extended period from
marketing, merchandizing, and fulfillment; and key members of July to December 2003. The decision to spin off an online store and
the Creative Development and Technical Operations groups. operation were taken with serious deliberation and commitment
All respondents received an email containing a two-page to follow-through by the parent firm. Further refinement and
questionnaire to establish the timeline of major events. The input from a number of academic sources and the 2005 Americas
researchers compared the results and consolidated a narrative Conference on Information Systems contributed to the case.
timeline that was then sent back to the participants for
confirmation and/or revision. This process was repeated until a Case #2: Crown Limited Data Collection. Crown was a
timeline was agreed on. retrospective case study of managing IT at Crown between
The researchers needed a more interactive mechanism 1998 and 2008. This study is part of a larger project that seeks to
than asynchronous email to enable richer exchanges, but visits understand how IT functions should be structured and managed
to the physically distant SellWell.com were not a viable option, in the second decade of the 21st century (2010-2019). This research
and demands on the respondents’ time made it difficult to used the case study method because it was able to provide a rich
secure appointments for telephone calls. Further complicating source of data in the context of a real-life setting and permits
communication was the large time zone difference between the analysis from a fresh perspective (Benbasat et al., 1987; Bonoma,
subjects and the researchers. Internet chat was the solution. 1985; Eisenhardt, 1989; Yin, 1993, 1994).
Participants received an invitation to join an Internet chat The study is based on eight interviews conducted between
group. Nine accepted, which may reflect the technical background February and July 2008. The key informants were the CIO and
of the participants. Those who did not join remained accessible general manager of the gaming business (a major business of
via email and telephone. Chat sessions lasted for up to four hours Crown), along with supporting interviews from four of the CIO’s
and were active at various times of the day and night (approaching direct reports. The researchers maintained field notes in order
24/7), to conform to the respondents’ availability. Sessions had to record the data. As Marshall (1994) stated, “Observation
up to five participants who sent documents, diagrams, and other entails the systematic noting and recording of events, behaviors,
information back and forth as discussions took place, providing and artifacts (objects) in the social setting chosen for study. The
timely responses to questions and confirmation on specific observational record is frequently referred to as field notes—
information. The researcher recorded all chat sessions with detailed, nonjudgmental, concrete descriptions of what have been
the applicants’ tracking function and kept a journal reflecting observed.”
on conversations and information. The journal’s unformatted The interviews were supplemented with publicly available
conversation data is 2 MB and the journal contains 10 MB of file information such as annual reports, news releases, presentations
transfers. to annual general meetings and stock-market analysts, newspaper
In parallel to the focus on SellWell.com, a separate enquiry reports, and some internal reports. Together the multiple data
established the operating structure of both SellWell and SellWell. sources enabled triangulation of evidence, facilitating construct
com. Questionnaires were used that focused on identifying validity and reliability (Yin, 1994). NVivo™ was used to index, and
the structure of SellWell.com and its fit with the larger parent in some cases, contain the material within a case database.
company. In addition, company reports, past and current The interviewers and research team were aware of biases that
organizational charts, financial and sales performance figures, could influence the interpretations of the findings. Based on this
sales growth estimates, profits, transaction volumes, and other awareness, the following criteria from Carson et al. (2001) were
relevant figures were collected and reviewed. used: 
The industry-focused approach was simultaneously building • Researching in the respondent’s own surroundings—
an understanding of the state of the industry, and the dynamics interviews were conducted in respondents’ offices,
of the e-business market in which SellWell.com competed. • Purposive sampling rather than statistical sampling was
Here, the objective was to establish a separate timeline to used,
represent the external events influencing alignment of the case • Comparing results across context—business and IT
organization. To accomplish this, relevant published materials interviewees results were compared,
on consumer electronics retailing, online retailing (e-tailing), • Depth and intimacy of interviewing—interview guidelines
Internet consumerism and trends in Information Technology were used,
were extensively scanned and collected. Although academic • Prolonged and persistent observation—interviews occurred
and proprietary databases were referenced, the most relevant over 6 months,
information was publicly available on the Internet. More than • Negative case analysis—the analyses were partially validated
32 articles provided reference data for the industry time-line and with external data,
analysis of direct competitors’ performance. • Debriefing by peers was observed,

34 Engineering Management Journal Vol. 23 No. 2 June 2011


• Maintaining journals or memos—field notes were kept, to product information and easy price comparisons. (The article,
• Triangulation of data from several sources—external sources “A Perfect Market” in the Economist, May 13, 2005, explains how
were used, trends are reshaping industries such as this one).
• Asking respondents to comment on drafts and their Specialty retailers such as Circuit City, Silo, and the parent
interpretations—debriefs and circulation of case were company, SellWell, were all growing. Consider Circuit City—one
systematically followed, of SellWell’s competitors. Customers came to Circuit City stores
• Independent audits were not used because of expense, intending to purchase an advertised item. Commissioned sales
• Multiple interviewers—three interviewers were used, people waited in those stores. The SellWell strategy was to create a
• Presenting findings to respondents—the case study was sense of excitement in the store. Supported by a large advertising
reviewed by Crown for reasons of commercial confidentiality campaign, SellWell attracted tens of thousands of customers to
and individual reputation; no material changes were made. its stores. SellWell also had to deal with customers informed by
information sites of companies such as Sony and IBM.
The interview design and execution was based on Yin (1994).
Interviews were semi-structured, open-ended conversations, Business Strategy. SellWell created a separate e-commerce
with the objective of encouraging informants to describe Crown company to operate the Internet retailing that would offer
IT developments from their own perspective. This involved customers cross-channel services such as store pick-up and
open-probe questions around the MIT90’s constructs (strategy, return, online catalogue services for customers’ research before
structure, process, roles and skills, and technology) and focused- going to a store, discounts through electronic coupons, and in-
probing questions to explore topics relevant to the specific roles store “kiosk ordering” in case the store ran out of stock.
and interests of the informants. SellWell announced the Internet initiative in a January news
Follow-up interviews with the CIO were more structured. release. Six months later, the Internet retail site was launched.
The follow-up interviews focused on changes and specific issues SellWell.com was a separate company from the large bricks and
raised during earlier interviews. In addition, these interviews mortar operation of the parent for two reasons. One, if kept in-
sought to clarify and verify data collected from other sources. house, the internet strategic initiative could easily disrupt the
All interviews were with a single informant. The duration of existing IT function’s core business of running the tills, managing
interviews was from 1-1 1/2 hours. The interviews were recorded stock flow, and placing orders. The other reason for spinning off
and transcribed. Between interviews, the interviewers reviewed SellWell.com was to protect the initiative itself. The culture for
their approach and refined the protocols. the new business was incompatible with that of the established
Follow-up interviews with the CIO were more structured, SellWell operation. SellWell.com would have a younger workforce;
with a focus on reflecting on changes and specific issues a highly creative culture; and a fluid, high-pressure environment.
raised during earlier interviews, or clarifying and/or verifying SellWell.com planned and implemented multiple projects
data collected from other sources. All interviews were with a simultaneously, with one-half focused on the technical and
single informant. The duration of interviews was from 1-1 1/2 business adjustments needed to operationalize the site, and the
hours. The interviews were recorded and transcribed. Between other half developing new functionality. Each project also used
interviews, the interviewers reviewed their approach and refined business liaisons from the SellWell.com Systems Operations
the protocols.   Group to guide business operatives on the capabilities and
limitations of systems and technologies.
Case Summaries SellWell.com’s implementation plan drew on the parent’s
Case #1: Consumer Electronics—IT Becomes the Business. A proven marketing and sales approach developed over the years
large consumer electronics retailer created an online store that for launching new stores in the traditional retailing channel. As
we factiously named, SellWell.com (Custodio et al, 2006). The the holiday season approached, testing and quality assurance
strategy was to leverage the parent’s business model, which relied cut corners to get the site to market. Keeping the pressure
on attracting customers to stores using low-priced specials, and on, both online and traditional competitors were launching
to cross-sell products in an exciting retail environment. SellWell. campaigns, requiring SellWell.com to react and change the site’s
com (the online start up) was to offer free shipping and low-priced specifications. Halfway through the development, the parent
items to attract customers. As an executive with the company company intervened and “tweaked” the business model. SellWell.
noted, “It’s only a web site. What could be so difficult about that?” com had to react to competitors’ online campaigns and the
Black Friday, however, brought SellWell.com a business crisis. At campaigns of an aggressive physical parent, while it dealt with the
that time, SellWell.com was in transition from being a dynamic already complex work of stabilizing the web site for the holiday
development shop to becoming an industrial-strength, large- season.
scale e-tailer, with customers forcing the pace.
Execution. In an address to SellWell.com’s Operations Group
Industry Trends. The most popular forms of e-business are upon his appointment, the CIO acknowledged the lingering
business-to-business (B2B)—where companies use electronic technical and operational issues and the diminishing time to
means to sell to one another, and business-to-consumer (B2C)— fix them, as the holiday shopping season loomed closer. One
where business sells directly to consumers via web sites (Trombly, August initiative of the Development Operations Team was to
2000). Responding to these customers, some companies were clean up code and data. A September initiative by the Systems
offering combined channels, or a “bricks and clicks” business Operations Team aimed to improve infrastructure performance.
model (Weill and Vitale, 2001). For home video equipment, more (For example, the web, application, and data servers received
than 12% of customers reviewed specifications online and then operating system and database upgrades). This would form a
went to a store to review and purchase, compared with only 2% Software Architecture Team to establish software development
buying online. The Internet empowered consumers with access standards, create a Release Management Team and release

Engineering Management Journal Vol. 23 No. 2 June 2011 35


procedures to coordinate the entire software delivery and data “The Crown IT organization was half way out the
synchronization process, improve the version control process, door… They had set-up a separate company and
and use a robust configuration management system. It would also moved all the IT people into it. They were looking
simplify the management of the site through the implementation to sell services back to Crown and to other casinos
of a comprehensive Site Management System. around the world. In fact, they were already doing
On November 13, SellWell.com implemented a code freeze some work for a casino in Connecticut.”
to stabilize the site for the holiday season. Everybody worked
hard to ensure an excellent customer experience for those At Crown, Lamb could see there was limited support from
visiting the site, and few customers experienced problems—until the parent company executive, and the team was achieving results
November 23, Thanksgiving Day. On Black Friday, SellWell.com’s through sweat, hard labor, and by working weekends. Company
site availability was at less than 50%. support and resources were scarce for the team. Lamb noted, “The
In response, the Director of Systems Operations approved the first thing I did was transfer these people back to Crown.”
Software Delivery System (SDS) initiative. This “re-architected”
the entire infrastructure, consolidating functions into industry- Building Internal IT Capabilities. Lamb immediately set about
proven integrated systems. The Site Management System (SMS), establishing the necessary professional IT management skills,
which began implementation in Q1, was another technology developing project-management capabilities, and ensuring he had
project proposed by SDS to address the problematic builds. the necessary technical capabilities that encompassed approximately
The Release Management Team, Data Management, Systems 65 people who held key functions and specialist skills.
Operation, and Architecture Groups clarified and re-aligned their Lamb also hired a new Head of Applications Development,
functional and service boundaries. Business operatives received who was previously with a local software development company. He
comprehensive rules of engagement to obtain services from the also introduced formal requirements and cost estimation with the
Technical Operations Group. business. On the business-systems side, Lamb inherited one of the
By supporting standards, policies, and procedures, along with early IT employees, Peter Herring, who he appointed as the person
changes to the Release Management Team, Developers’ Portal, in charge of business relationship management. This manager has
Configuration Management System, and the Release and Deployment since taken a position in the gaming part of the business as general
Process, SMS began to establish stability for SellWell.com. manager for product strategy for gaming machines.
Key business and technical personnel integrated into Lamb explains the differences between other types of
the SellWell IT and business units to assimilate the learning, projects and IT projects: “It’s like us building a third hotel—we
while the rest remained in the new Web Operations Group to completely design the thing and then we go to tender. But, for
operate the web site and develop the next generation of business IT, it is sometimes a bit hard to draw the blueprints upfront,
requirements. and that’s where people get into trouble. Crown operates its
development processes to CMM Level 2. We have repeatable
Strategic Outcomes. In comparison with its competitors, SellWell process: requirements, project management, testing, contract
had better capabilities in satisfying multi-channel consumers. It management...” He sees this as optimal for Crown.
had the virtual marketing reach and online service delivery of its
website along with support from the bricks and mortar operation Business Alignment. Lamb describes Crown as a “taker” of off-
to integrate in-store fulfillment. For SellWell.com, the “brick- the-shelf packages for most solutions, except in gaming where
based” fulfillment channel worked. Home deliveries were largely IT in Crown also does its own development and partners with
on time, stores handled customer collections efficiently, returns suppliers. “Crown has a reputation in the gaming industry as an
and exchanges operated flawlessly. In an effort to concentrate its innovator and good user of IT.”
efforts on its core competencies, SellWell outsourced its entire IS Crown’s IT scope includes “front of house”—table and slot
operations to Accenture, including the SellWell.com technical machine management control and bank systems; and “back-
support function. SellWell.com succeeded by creating a dynamic of-house”—food, beverage, hotel management, security, and
development environment and sourcing capabilities through a car parking systems. These are integrated into the loyalty
prime contractor. By complementing the existing business model of tracking, patron management, and VIP management system.
the parent company, SellWell.com experienced a surge in demand A spectacularly successful example of an innovation at Crown
just as it began the transition from development to production. was the development of a semi-automated table-game—Rapid-
SellWell.com worked 24 hours a day to overcome this obstacle and Roulette. The idea was born between the IT function and the
deliver what is now one of the world’s busiest web sites. gaming business, and was developed in a joint venture with
gaming supplier StarGames.
Case #2: Crown Limited—Going for Growth. Crown Limited Describing the business problem, Lamb explained that
started with a temporary casino in 1994, developing the Crown one of the critical issues of the business with table games is the
casino and entertainment complex in Melbourne in 1996 labour costs. Herring noted how Crown has been able to capture
(Reynolds 2008). Crown is now building a position as a global ideas from people coming from other casinos both in Australia
provider of gaming services (DFAT, 2007) and is leveraging the and internationally. As he stated, “Crown owns its own casino
Crown brand where appropriate to add value to VIP gaming management system—CMS. The system was for a U.S. casino,
operations. but Crown tailored it for a global market and local regulations,
Ric Lamb joined Crown Limited in May, 1999, as Executive while the gaming industry-packaged solutions are dominated by
General Manager—Management Information Systems and CIO. a small number of suppliers who focused on the needs of larger
Lamb came to Crown Limited from the IT subsidiary of a large casinos in Las Vegas.”
Australian mining company, that did about 30% of its work Crown has continued to benchmark themselves against
outside its parent organization. Lamb stated, leading packaged casino management systems each year, meeting

36 Engineering Management Journal Vol. 23 No. 2 June 2011


with key suppliers and evaluating their offerings. Herring said, Lamb’s team takes accountability for project delivery and
“Now we’re de-coupling our systems so that our table automation only uses external resources where appropriate.
system is now separated from our casino management system.” • Harness the diversity of people—Recruit and develop people
In addition, before deciding whether to buy or build, the Head of from the business: Crown recruits staff from the gaming floor
Applications focuses on the business solution by instituting the and other parts of the business where there is a strong pool of
following questions that teams had to address: What are your people undertaking further study. It develops their IT skills
business processes? What are the business rules? while capturing their close business links and company loyalty.
When commenting on the culture within IT at Crown, Lamb
says, “Crown also has quite a good customer service recognition IT Strengths at Crown. Crown IT has two key strengths. The
program, which IT people get to participate in.” One of Lamb’s key first is its proximity to the business. In house IT presents few
sources of staff is recruiting from within Crown, which exploits a barriers to building relationships with the business, whereas
number of its organizational strengths. The brand power of Crown outsourcing requires significant processes and ongoing efforts to
Casino helps with external recruitment. Lamb noted, “People will align stakeholder interests. Crown’s in-house strategy has made it
come in the door for a job because they’ve heard about Crown, easy to position IT as part of the business and deliver innovation.
and there’s something about Crown they like the sound of.” Within Crown’s growth environment, where requirements are
In terms of business strategy, Lamb says, “We are part of the often unclear, this has facilitated strong alignment of technology
process of growing revenue.” Herring seeks to institutionalize and strategy. The second strength of in-sourcing at Crown is their
the business system’s thinking. Lamb continues, “Identify the ability to match IT risk and business risk. Crown has consciously
need within the business, identify the big drivers from a margin embraced other IT and business links, such as recruiting graduates
perspective or top line revenue, and then use the IT department from the gaming floor and leveraging the brand to recruit and
within Crown or external IT companies to help drive shareholder retain people. Organizations that choose in-house IT exploit
value.” In addition, Herring forecasts ongoing changes. the strengths it offers, which include close alignment with the
For example, Lamb was considering the strategic questions of business and the ability to match IT and business risk.
whether or not to operate the Crown IT function as a service
provider to multiple entities, or replicate its in-house model Analysis
within each Casino. These were the types of questions that each SellWell.com started as an online spin-off from its successful
Casino’s IT and business counterparts discussed. parent—a large consumer electronics retailer. The spin-off
Working in IT in Crown is “being part of the business,” transitioned, with support from its parent, to a large-scale,
rather than “working in IT as part of Crown.” Crown’s in-sourcing successful e-tailer. Crown Limited started as a temporary casino
practices tailor processes and skills to ensure cost-effective yet before developing into an entertainment complex and global
successful delivery of IT services. The IT staff has co-developed provider of gaming services. Both companies required IT
innovative new products, maintained and further developed an capabilities in order to survive and grow. Both companies had
excellent casino management system, and integrated many other to build, develop, and integrate IT capabilities with business
packaged solutions. objectives in order to drive their growth. While the companies
Although Crown’s primary strategic focus is on growth, represent different industries, leadership, visions, cultures, and
Lamb must still deliver cost reduction, maintain access to new products, both had to decide how and to what extent to view and
technology and skills, and focus on Crown’s core business. use IT within their business strategies. We argue that “strategic
Taking “cost reduction” as an example, Lamb has contained costs weapon” dimensions and characteristics were essential for the IT-
by having multi-skilled staff; selectively bringing in specialty business alignment in the companies in their marketplace success.
resources only when needed; working with the business on the A discussion of strategic alignment similarities and differences
highest value-adding IT development functions; adopting a level are presented next.
of CMM that is optimal for Crown; and recruiting, developing, Exhibit 3 summarizes the IT alignment results from the two
and retaining staff from the business. Other best-in-class practices case studies of SellWell.com and Crown Limited. The two firms
Crown follows include: are more similar than dissimilar on 10 of the 15 dimensions of
• Focus on business solutions: IT at Crown seeks to free the “strategic weapon” characteristics. The dissimilarities were found
business from the constraints of established products and in 1) the involvement of the CEO and board of directors in IT-
existing practices to deliver innovative solutions. business strategic alignment activities and initiatives, 2) the firms’
• Embed IT in the business: Structurally, Crown treats IT as view of IT and IT strategy, and partly in 3) the companies’ IT
another business function rather than a service provider. structures. At SellWell.com the board of directors and CEO were
People sit within the revenue generating part of the business more instrumental and actively involved in exploiting IT as a
and work to understand issues and develop ideas. IT only strategic business resource. At SellWell, the parent company CEO
charges discretionary work back to the business, where it is participated directly in the projects and even selected software
subject to normal business decision processes. configurations. While the CEO was involved at Crown Limited,
• Understand internal systems capabilities relative to the Ric Lamb (the CIO and Executive General Manager) executed the
market: While primarily a “taker” of packaged solution, IT/business strategies. Since SellWell.com was a calculated spin-
Crown seeks, where appropriate competitive advantage from off that depended on technology from its inception, the parent
ongoing development of its own systems. firm’s CEO had a lot at stake in its survival. At Crown, on the
• Select the appropriate level of process and risk: For example, other hand, IT capabilities were not as valued before a General
Crown sees CMM level 2 as optimal for its business needs Manager/CIO was hired. This person became the champion
and risk appetite. for IT and enlisted the support of business leaders. Without
• Build a project-management competence: Crown’s IT is this champion who had both business and IT vision, skills, and
highly regarded by the business for getting the job done. execution ability, Crown’s story would have been different.

Engineering Management Journal Vol. 23 No. 2 June 2011 37


Exhibit 3. Strategic Weapon Characteristics of IT-Business Alignment Profiles

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

Engineering Management Journal Vol. 23 No. 2 June 2011 39


of leaders and can be used to help plan projects and programs resources, and environment is not new (Benjamin and Levinson,
that meet the needs of the organization in its environment. 1993). What is different is defining IT/ business projects as larger
Broadbent and Kitzis (2005) argued that the next wave strategic weapon profiles and initiatives that are grounded in
of CIOs must compete in a more global economy. According enterprise strategies that seek to innovate organizations as well as
to these authors, “new CIO leaders” must perform tasks and products and services.
satisfy priorities such as create a vision for how IT will build the
organization, share and inform expectations for an IT-enabled Note: This article is based in part on an earlier paper delivered
enterprise, weave business and IT strategies together, manage at the 39th Hawaii International Conference on System Sciences,
new enterprise and IT risks, and communicate IS performance Kauai, Hawaii, January, 2006. We thank Renita Patel, Bentley
in business-relevant language. There is a growing emphasis to University MBA graduate, for her assistance in helping update
align IT to support business strategy at the project level. A 2008 and extend our content in this article.
McKinsey survey of 548 executives (McKinsey, 2008) supports
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http://primavera.fee.uva.nl/html/working papers.cfm. Chair of the National Academy of Management’s Consulting
(1999). Division. He was a Fulbright Senior Program Specialist and
McKinsey Quarterly, “IT’s Unmet Potential: McKinsey Global is a management consultant. His current research analyzes
Survey Results,” (2008), http://www.mckinseyquarterly. ethical issues, the broadband digital divide, and aligning
c o m / B u s i n e s s _ Te c h n o l o g y / B T _ O r g a n i z a t i o n / technology leaders and teams. He has consulted with Fortune
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Result_2277?pagenum=4 (accessed March 12, 2009). leadership development.
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Process, McGraw-Hill (1978). specializes in developing improvements to IT investment
Morton, Scott, The Corporation of the 1990s, Oxford University decisions. He is also a visiting senior fellow at UNSW. He
Press (1991). received his Ph.D. in strategy at UNSW in 2006. The Australian
Moustakas, Clark, Phenomenological Research Methods, Sage Graduate School of Management awarded him an MBA in
Publications (1994). 2003 with the Australian Business Limited Prize for the top
Pinto, Jeffery, and Dennis Slevin, “Critical Success Factors Across academic performance and the BCG Prize in Strategy.
the Project Life Cycle,” Project Management Journal, 19:3 Contact: Joseph William Weiss, PhD, Bentley University,
(1988), p. 72. 175 Forest St., Waltham, MA 02452; phone: 617-484-8510;
PriceWaterhouseCoopers, (2004), CIO / IT Director Market fax: 617-484-4713; jweiss@bentley.edu
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Information Technology Objectives,” MIS Quarterly, 24:1
(2000), pp. 81-113.

Engineering Management Journal Vol. 23 No. 2 June 2011 41


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