Aligning Information Systems and Business Strategies

---

1. Strategic Alignment

A simple view of strategic alignment suggests a relationship between business strategy, organisational strategy and information strategy, where organisational strategy and information strategy being driven by the overall business strategy.

This view is supported by many scholars such as Pearlson & Saunders (2003), who describes this relationship as the 'Information Systems Strategy Triangle', which emphasises the following criteria for success:

• Successful firms' business strategy drives both their organisational and IS strategies
• Firms must seek to balance business, organisational and IS strategies
• IS strategy has (sometimes unintentional) consequences on business and organisational strategies and thus should not be treated in isolation

The importance of aligning IS strategies with business and organisational strategies to minimise risks of project failure. Strategic alignment is a process by which organisations ensure that an IS is a good fit for the business strategy.

Figure 17 illustrates the information systems strategy triangle:

Making sure that the IS is a good 'fit' for the business strategy (for example: it is well matched to and supports the strategy)

or

Making sure that the various functional divisions of the organisation are each integrated with each other, thus jointly serving the overall business needs

The 'strategy triangle' depicts that business strategy drives organisational strategy and information strategy and that they should be mutually supportive.

2. Customer Orientation Approach

The customer orientation approach for strategic alignment offers the potential of creating an assessment of organisational IS demands directly from business needs rather than indirectly from the separate IS demands of different users within the organisation.

In 'customer orientation' approach it is important for managers to ensure that:

• strategy is driven by customer needs and expectations
• processes selected for redesign by IS create value for the customer
• IS supports those processes in a way that supports the strategy

Three organisation / environment variables are used in the contingency approach to structural alignment:

• Primary tasks of the organisation - are they routine or non-routine?
• Degree of interdependency between those doing the tasks - is it high or low?
• Business environment of the organisation - is it stable or unstable?

3. Balance Scorecard

The balanced scorecard is a method for measuring how well business processes and practices are meeting an organisation strategic vision.

Thus, it is a technique for turning corporate vision into strategy and action.

The balanced scorecard methodology involves simultaneously taking four different perspectives on the business:

• Financial Perspective - monitors such measures as profitability, revenue growth and shareholder value
• Customer Perspective - requires measures such as service levels, satisfaction ratings, complaints and the volume of repeat business
• Internal Perspective - reports on the efficiency of internal processes (workflow) and procedures using measures such as the cycle time to record or fulfil a customer order
• Learning and Growth Perspective - is the key long-term predictor as it deals with employee issues: indicators here include intellectual assets as well as career and skills development

4. IS Projects

In order to achieve effective IS projects, it is important to align IS strategies with the overall business strategies.

First, you need to review the organisation's business profile which indicates the principles and boundaries that govern your IS strategies. It is also important to identify the major stakeholders and claimant groups, before identifying the goals for each group, then the purpose and strategy for each group. Business strategies need to be reviewed and approved by senior management before setting the IS strategies.

Figure 18 illustrates an example of a business profile:

To transform the business strategy set into an IS strategies, you need to convert each element in business strategies to its corresponding element in IS strategies. Table 11 shows examples of such conversion:

A business strategic analysis in this case would be helpful before engaging in project planning.

It is important to strategically plan for the resources required for the implementation of e-Business projects.

The required resources could fall in 4 categories:

• Technical resources
• Financial resources
• Human resources
• IT resources

Strategic Alignment Approaches and Measurement:

• Customer Orientation Approach
• Contingency Approach
• The Balanced Scorecard Approach

5. Project Plan Components

• Primary Purpose: Define the purpose of the IS project
• Goals and Objectives: Define the goals and objectives you want to achieve through the IS project
• Strategies & Tactics: Describe how your IS project plan fits with business and organizational strategies.
• Justifications: Provide evidence that supports the idea of your IS project, and justifications.
• Business Model: Illustrate the model you will be using in your IS. For example in e-Business/e-Commerce projects
• Processes: List necessary steps to build the IS.

IS project goals are general aims that lead to the main purpose of the e-Business project.

Example of goals for an e-Business that have a primary purpose of exporting product internationally could be:

• Open new markets world wide
• Increase sales
• Provide customer service online

IS project objectives are specific measurable targets that lead to the e-Business goals.

Examples of objectives that lead to the goals defined above are:

• First year open new export markets in Poland, Romania, and Austria.
• Second and third year cover eastern Europe
• By third year, exports should account to 20% of production

6. Strategic Alignment Model

In their 1999 paper, Henderson and Venkatraman suggested that strategic alignment consisted of four key components and their many inter-relationships. In particular, the model divides the role of 'information systems' into two parts, a strategy element and a competence element. This acknowledges that technology can sometimes provide opportunities that can change a business strategy and that confirms the need to have an IT strategy as well as a business strategy. The model shown in Figure 19, allows for four different perspectives (Table 11), or transformation processes, dependent on the external focus and internal infrastructure capabilities at any given time:

---

Reference(s)
	Book		Chaffey, D. & Wood, S. (2004) Business Information Management: Improving Performance Using Information Systems. Financial Times Prentice Hall: United Kingdom (UK), England, Essex, Harlow. [ISBN: 9780273686552]. [Available on: Amazon: https://amzn.to/3yZ6vdF].
	Journal		Henderson, J. C. & Venkatraman, H. (1993) Strategic alignment: Leveraging information technology for transforming organizations. IBM Systems Journal, Volume: 32, Issue: 1, Page(s): 472-484. [doi: 10.1147/sj.382.0472]. [Available on: IEEE: https://ieeexplore.ieee.org/document/5387398].
	Book		Johnson, G., Scholes, K. & Whittington, R. (2007) Exploring Corporate Strategy: Text & Cases with Companion Website Student Access Card: Text and Cases. 8th Edition. Financial Times Prentice Hall: United Kingdom (UK), England, Essex, Harlow. [ISBN: 9780273711926]. [Available on: Amazon: https://amzn.to/3f7sg4u].
	Book		Laudon, K. C. & Laudon, J. P. (2007) Management Information Systems: Managing the Digital Firm. 10th Edition. Pearson Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780132415798]. [Available on: Amazon: https://amzn.to/3UhgqDH].
	Book		Pearlson, K. E. & Saunders, C. S. (2004) Managing and Using Information Systems: A Strategic Approach. 5th Edition. John Wiley & Sons: United States of America (USA), New York (NY). [ISBN: 9781118281734]. [Available on: Amazon: https://amzn.to/3TMqOTZ].
	Book		Robson, W. (1997) Strategic Management and Information Systems: An Integrated Approach. 2nd Edition. Pitman: United Kingdom (UK), England, London. [ISBN: 9780273615910]. [Available on: Amazon: https://amzn.to/3EZNmvZ].

---

Reference (or cite) Article
	Kahlon, R. S. (2013) Aligning Information Systems & Business Strategies [Online]. dkode: United Kingdom, England, London. [Published on: 2013-01-23]. [Article ID: RSK666-0000071]. [Available on: dkode | Ravi - https://ravi.dkode.co/2013/01/aligning-information-systems-business.html].

---