In this era of technology and digital transformation, alignment of IT initiatives with business strategy is

pivotal. Not only it defines the future state of an organization in terms of its key business processes and
conducting business as usual, but it also impacts financials in terms of current and future cashflows. In
my view, it is important to gather ample information about the organization, what it does for its
business, who are its people, what are the current processes in place, what are the existing flaws and
where the optimization can be done, before thinking about making a potential investment in a new IT
venture.

As explained broadly in the Strategic alignment paper, an IT strategy needs to focus on both the internal
and external domains of a Business, as well as make sure that they integrate to deliver the cutting edge
that business seek. To enable this integration, the paper talks about 4 models of IT alignment. However,
before talking about the models, in my view, there is need to change the way of thinking most of the
board level executives thinks about IT strategy.

Paper also talks about the difficulties that happen in achieving such integration. In my view, a change in
thinking is required at board level. Before opting an IT strategy (just because it is a trend), board should
focus on cost-benefit analysis:

a) Business objectives – Can this IT strategy benefit business in terms of process or capability
b) Realized gains – How the gains or benefits from a given IT strategy will be measured and translated
into business profit (mostly EBITDA is the financial measure which is used)
c) Alternate strategy – In case if a given strategy is costly or risky, is there any other alternative which
can achieve same cutting-edge while being low on cost or risk
d) Future implications – How this new IT strategy will shape future business and IT requirements

Board need adapt a wholistic approach, that is to focus on the external domain (Business arena),
internal domain (Intra-business arena) and how these two can integrate. In order to adapt, board
members must be qualified to understand that IT in modern world is not just a support function for the
business, rather it has the potential to shape future business requirements, capabilities and processes.
Not only that, with prerequisite thoughtfulness, IT strategy can deliver a competitive advantage that can
magnify profits in terms of future cashflows.

Lastly, Arla Foods case was an interesting one. With respect to the literature provided for the case,
outsourcing of IT services was done as a trend. An organization of such magnitude, both in terms of
organizational staff and the IS infrastructure, shouldn’t opt for such outsourcing. Managed service
providers (MSP) can elevate and outsource some IT workload and allow business to focus on expanding
its customer base. However, it takes away chance of harnessing inhouse capabilities, which in my view
Arla should have focused from the very start (from 2001). Moreover, bigger MSPs with good service
level deliveries tend to have multiple customers. Each being served by a dedicated team, and the team
members shift from one customer to another. Arla Food’s IT service levels started to diminish as the
team changed on the service provider side. Fast forward, when Arla opted to reduce number of service
providers, they didn’t divide workload appropriately. For example, they outsourced SAP Basis (or SAP
engine) and SAP applications to two different vendors. SAP is modular in nature and in my view, if such
software is outsourced, it should be done to a single vendor. Lastly, in terms IT alignment, Torebin was
not focusing on his deliverables. He was focused on the providing BI and Global supply chain capabilities
to the business than optimizing service levels. In my view his IT strategy, after that incident in Sweden,
must focus on creating a knowledge base (using Sharepoint) and educate internal customers on how to
contact vendors whenever there is an incident.