Download Frameworks for

Frameworks for:
Integration of IS and
Business Strategies
(Planning frameworks)
Strategic Alignment
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Frameworks for Integration of IS and
Business Strategies-Planning f/works
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6.1 DEFINITION OF A FRAMEWORK AND ITS CONTENTS
 A framework
is a basic conceptual structure used to
solve a complex issue. Frameworks contain
Methodologies.
 Methodology is defined as
 "the analysis of the principles of methods, rules, and
postulates employed by a discipline" or
 "the development of methods, to be applied within a
discipline"
 "a particular procedure or set of procedures".
 A Methodology includes the following concepts as they
relate to a particular discipline or field of inquiry:
 a collection of theories, concepts or ideas;
 comparative study of different approaches; and
 critique of the individual methods
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Methodology continued
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Methodology refers to more than a simple set of methods;
rather it refers to the rationale and the philosophical
assumptions that underlie a particular study. This is why
scholarly literature often includes a section on the
methodology of the researchers.
A methodology must contain at least the following four
elements:
 A structure that gives guidance on what to do, and when
to do it.
 A definition of techniques to do what needs to be done
 Advice on how to manage the quality of the results
 Tools to automate the process.
Methodology will consist of tasks. Each task is completed by
using techniques. There must be a set of deliverables.
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6.2 PURPOSE OF FRAMEWORKS
The IS strategy is the outcome of the IS strategy planning
process and having a framework for that process helps the
organization avoid getting bogged down in inappropriate detail.
6.3 CLASIFICATION OF PLANNING FRAMEWORKS
Frameworks for planning may be classified by:
1. Intention of framework. This is further classified as:
 Business Impacting or
 Business Aligning
2.Nature of the planning environment. This is further classified as:
 Social- technical
 Developmental
3. Nature of the Planning process
Top-Down,
Bottom up
Eclectic,
Innovative
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Intention of framework
6.3.1.1 Business Impacting
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Bergeron, Buteau and Raymond (1991) suggested the
following impact planning techniques- covered earlier:
 Competitive forces (Porter, 1979 and McFarlan (1984)).
 Competitive strategies: (Porter, 1980)
 Value chain: (Porter, 1985 and Rackoff (1985)).
 Consumer resource life : Ives and Learmonth 1984
 Impact of IS/IT: Parsons 1983
 Strategic opportunities: Benjamin (1984)

These techniques aim to determine which IS strategy to
adopt in order to impact positively on the business.
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6.3.1.2 Business Aligning
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The three most widely used techniques include
Critical success factor analysisBusiness systems planning
Strategy set transformation -- Strategic set
transformation King (1978)
Earl’s
strategic alignment model (To be
covered here below)
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6.4 Alignment Problem
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Traditionally assumed purpose of strategic alignment is to
align IT with corporate or business strategies
Problems with this assumption:
Supposing corporate or business strategies don’t exist!
 What if IT drives the organization’s strategy e.g. in information
intensive firms like banks?
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We use Extended strategic alignment model by Earl
Info. needs drive the alignment process
 Central to alignment is corporate strategy and existing IS supporting
the organization (IS map)
 Info. needs are met via business domain (business strategy &
business organization) and IS domain (IS strategy & IS
infrastructure & resources) interacting to support the organization
THUS parallel development of IS and business strategy is driven by info.
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needs

6.5 Earl’s strategic alignment model
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Used in Strategic Alignment Process and is based on the 5
stages of IS planning proposed by Earl:
Stage 1 of IS planning
 Planning context: inexperience in IS planning,
unawareness of importance of IS
 Task: mapping of IS resources to assess the coverage
and quality of technology and applications (IS/IT
mapping)
 Objective: greater management understanding
 Methodology: survey of existing IS (bottom-up)
 Direction/involvement: led by DP/IT
 Once there is confidence in assessing IS, attention
moves to analyzing business needs as the driver for IS
(stage 2)
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Stage 2
Planning context: inadequate business plans for the purpose
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Task: business direction
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Objective: agreeing priorities
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Methodology: driven by business strategy (top-down)
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Direction/involvement: led by senior management
Stage 3
Brings together stages 1 & 2 into a coherent IS strategic planning
approach.
Planning context:
apparent complexity

Task:
detailed planning
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Objective:
firming up the IS strategic plan
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Methodology:
matching top-down and bottom-up outputs
plus investigations and prototypes
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Direction/involvement: users and IS staff involved
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Stage 4
The competitive advantage stage. Most organizations aspire to get to
this stage but few make it! Even when achieved, few sustain it!
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Planning context: impatience, especially with detailed and formal
planning processes
Task: competitive advantage
Objective: finding business opportunities occasioned by
developments in IT or seeking opportunities afforded by IT which
may yield competitive advantage or create new strategic options
Methodology: inside-out processes (IS strategy linked to what
the business could do) – requires “bright sparks” & powerful
“champions” & an environment that encourages innovation and
working around normal rules
Direction/involvement: executive management and users. Note
the absence of IS – Often IS has moved to executive management
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Stage 5
For the most successful organizations. IS and corporate
strategy are integrated within a participative
environment encompassing users and managers within
the organization.
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Planning context: maturity in IS strategic planning
Task: IT strategy connection
Objective: integrating IS and business strategies
Methodology: multiple methods accepted (combination
of stages 1-4 methods)
Direction/involvement: partnership of users, general
management and IS
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Notes on IS mapping:
 Useful only as an aid to thinking about the strategy
process
 The IS map in any organization will be a complex
mixture of all the stages: the purpose of mapping is to
attempt to map this complexity

However, the understanding implicit in earlier stages is
important to being able to successfully undertake later
stages
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6.6 The Business & IS Domain
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Business domain consists of business strategy and the
business organization or infrastructure
IS domain consists of IS strategy and IS infrastructure &
processes
All elements of business & IS domains are continuously
aligned (all elements dynamic) around corporate
strategy and IS map; and in satisfaction of the overall
information need
Strategic alignment process consists of 2 stages:
 determining an alignment perspective
 undertaking the alignment process
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6.7 The Alignment Perspectives
Perspective builds from the position determined by IS mapping
(i.e. IS mapping used to determine alignment perspective) &
looks at how strategic alignment can be pursued given the
organizational context
1. Strategy execution:

Driver: business strategy – organizational design and IS are
adapted to the changing business strategic needs
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Role of top management: strategy formulator
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Role of IS management: strategy implementer
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Performance criteria: cost/service centre
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Problem: supposing the current organizational design &
available choices of IS infrastructure to support business needs
are so constrained that the strategic vision is unattainable?
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Strategy execution perspective
Business
strategy
Business
Organization
Driver
Role of top management
Role of IS management
Performance criteria
Business strategy
Strategy formulator
Strategy implementer
Cost/service center
IS
Infrastructure
and process
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2. Technology potential:

Similar to strategy execution but without the same
constraints
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Focuses on available technologies and infrastructure
necessary to their success, with business organization &
strategy following the technological lead

Aim: to identify the best IS and organizational
configurations needed to implement the chosen
strategies – assumes the organization has the necessary
flexibility to achieve these (e.g. change business org.)

Driver: business strategy
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Role of top management: technology visionary
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Role of IS management: technology architect
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Performance criteria: technology leadership
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Technology Potential
IS strategy
Business
strategy
IS infrastructure and
process
Driver
Role of top management
Role of IS management
Performance criteria
Business strategy Technology
visionary
Technology architect
Technology leadership
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3. Competitive potential:

Aim: to exploit emerging IT capabilities to generate
competitive advantage, either by enhancing products or
by improving processes, with business strategy being
modified to take advantage of new opportunities
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Driver: IS strategy
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Role of top management: business visionary
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Role of IS management: catalyst
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Performance criteria: business leadership
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Problem: may often fail to deliver anticipated benefits,
esp. if the focus is on IT rather than IS resources in
general
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Competitive Potential
Business
strategy
IS strategy
Driver
Role of top management
Role of IS management
Performance criteria
IS strategy
Business visionary
Catalyst
Business leadership
Business Organization
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4. Service level:
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Aim: improved organization through IS strategy and IS
infrastructure and resources
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Driver: IS strategy
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Role of top management: prioritizer
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Role of IS management: executive leadership
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Performance criteria: customer satisfaction
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Problem: may become detached from business strategy
and loose focus
Summary
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Info needs is driver of IS strategy
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IS strategic alignment is a continuous process of
aligning business domain with IS domain in accordance
with corporate strategy and organization’s IS map
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Service level perspective
Driver
Role of top management
Role of IS management
Performance criteria
Business
Organization
IS strategy
Prioritiser
Executive leadership
Customer satisfaction
IS strategy
IS
infrastructure
and process
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6.7 Undertaking the Strategic
Alignment Process

Iterative process of info. needs analysis and aligning business &
IS domains in satisfaction of those needs
1. Information needs analysis:

Aim: to assess info. needs in relation to both internal & external
organizational environments
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EE: use PEST (Politics, Economic, Sociology and Technical
Developments) and SWOT (see earlier module)
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IE: aim is to determine the balance of culture and structure (see
earlier module on analysis of values and objectives) – see also
case of structure/culture conflict
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EE & IE analysis should be participatory – in order to gain and
improve understanding within the organization
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The Process of Strategic Alignment
Information
needs analysis
Information
systems domain
Business Domain
Business strategy
IS infrastructure
and processes
Business organization
IS and IT strategy
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The structure for corporate
information
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2. The business domain:

Use Porter’s value chain analysis (see earlier module)
with the following perspective:
 IS provide the links between the primary activities
and the means of ensuring that secondary activities
are used to their full advantage
 e.g. firms using JIT manufacturing systems,
procurement, inbound logistics & operations are
linked by technology-based systems, which
ultimately control the whole manufacturing process

Corporate strategy is also taken into consideration here
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Care must be taken to ensure that business domain
analysis fits the structural and cultural issues raised by
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the information needs analysis
Using Porter’s Value Chain in
Business Domain Analysis

The primary tool for analysing a company's internal
business domain is Porter's value chain.
Administration & Infrastructure
Human resource management
Product/ Technology/ Development
Procurement
Inbound
logistics

Operations
Value Added
Cost
=
MARGIN
Outbound Sales &
Services
marketing
logistics
Porter casts the value chain as an integrated model,
rather than as a collection of functional areas.
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3. The IS domain:

Analysis of IS infrastructure and resources starts with
strategic grid – compares current & potential IS
applications according to their current and future value
(see figure) – similar to BCG matrix on product

Strategic grid used to map IS applications & hence to
gain an understanding of role of IS applications. It also
implies changes required for applications that are not
having an impact
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Applications move round the quadrants e.g. entering in
Turnaround or Strategic and moving until Support
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Applications in Support selectively divested & replaced
with those from emerging & pacing quadrants (see fig.)
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Using the Strategic Grid for IS
Domain Analysis
Strategic
Critical to the business
and of the greatest
potential value
Essential for primary
processes
High Potential
Potential value high but
not confirmed
Needed to support the
business but of little
strategic value
Factory
Support
The strategic grid
Source: McFarlan (1989)
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Problem: Organizations hanging onto dying systems,
e.g. because of resistance to change.
IT has a life cycle close to that of IS applications:
 Phase 1 - start with untried technology
(development – turnaround)
 Phase 2 – major competitors sample it
(development/growth – strategic)
 Phase 3 – all organizations are using it – none can
survive without it (growth/maturity – factory)
 Phase 4 – keeping the technology is a liability –
become uncompetitive (decline – support) (see fig.)
Plot a life cycle for PC operating systems or a popular
RDBMS
NB – if promised potential is not realizable, org. must
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get rid of particular IT (can be very expensive!)
The Technology Life Cycle
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Uses of the strategic grid:

Helps identify IS resource allocations on the basis of
business importance
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Gives a snapshot of the status & role of IS now and in
the future and makes this role explicit – a vital part of
IS strategic planning
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Helps match existing technologies against applications
and to plan for future technologies (tech. impl. grid)
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Emerging technologies being used for systems which have
high potential (Turnaround) but which are not critical to
business, and must be monitored carefully until a decision to
utilize them can be made
Pacing technologies (Strategic/Turnaround) should be
invested selectively for applications in which competitors are
investing. Aim is to decide those likely to become Key and
use them to build Strategic/Factory systems and selectively
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divest from Base technologies
Technology Implementation Grid
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Weaknesses of the strategic grid:

Originally used to determine the required level of
senior mgnt attention in managing IS – but has been
used for many IS strategic issues. For strategic IS
planning, it has the following weaknesses:

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Leaves the strategic value of IS as something to be assessed
after the fact
Cannot model the situation when an organization is aware of
the strategic importance of IS but has no current or planned
IS applications
 This (latter) may however be solved by using CSFs
(another top-down IS planning tool) – determines priority
IS requirements whether the IS exists or is planned for
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Summary of objectives of IS domain analysis:

To conduct internal and external audits to determine the
current position regarding IS applications and the
technology to support them (valuable tools include the
strategic grid and technology implementation grid)
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To classify the business value of IS applications using
the strategic grid
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To determine the available technologies, categorized as
emerging, pacing, key or base
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To match current IS applications and technologies to
those available
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4. Summary of strategic alignment action:

Strategic IS alignment is an integral part of the process
of aligning corporate, business and IS domains all
driven by information requirements
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Alignment process is iterative and participative
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A combination of tools should be used
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