Strategic Alignment
(Venkatraman)

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Aligning business and information strategy. Explanation of Strategic Alignment of Venkatraman, Henderson and Oldach. ('93)

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What is Strategic Alignment? Description

Strategic Alignment may be described as an organizations ability to determine an IT Strategy that optimally and flexibly supports the business strategy whilst maximizing the value of the investment in IT.

 

The Strategic Alignment model of Venkatraman, Henderson and Oldach seeks to enable a clear view of the organizational drivers which affect organizational decision making with regards to the alignment between the Business and IT Strategy of an enterprise.


Venkatraman and his colleagues argue in 1993 that the difficulty experienced by firms in realizing value from IT investments is primarily caused by the difficulties inherent in achieving an optimal alignment between the business strategy and the IT strategy of the organization. Secondly it is caused by the lack of a dynamic, self corrective administrative process that ensures continuous alignment and re-alignment between the business and IT domains whilst making efficient use of finite resources.


They describe four dominant alignment perspectives relating to the organizational and political strategic drivers for IT development. These views are intended to aid the analysis of the dominant forces within the organization that potentially impact the effective alignment of Business and IT Strategy.



Strategic Alignment Aligning Business IT

Four Alignment Perspectives

  1. Strategy Execution. This perspective views the business strategy as the primary driver of both organization design choices and the logic of the IT infrastructure (the classic, hierarchical view of strategic management). Top Management formulates the strategic objectives for IT based on the business strategy; IT Management is only strategy implementer. IT Management will seek to provide IT capabilities that will support the business strategy through the achievement of key performance indicators as determined by top management and defined within the business/marketing strategy. [Arrow 1]

  2. Technology Potential. This perspective also views the business strategy as the primary driver. However it involves the formulation of an IT strategy to support the chosen business strategy and the corresponding specification of the required IT infrastructure and processes. The top management should provide the technology vision to articulate the logic and guide the choices pertaining to an IT strategy that would best support the chosen business strategy. The role of the IT manager should be that of the technology architect. He designs and implements efficiently and effectively the required IT infrastructure that is consistent with and allows strong control over the external components of IT strategy (scope, competences and governance). [Arrow 2]

  3. Competitive Potential. This alignment perspective is concerned with the exploitation of emerging IT capabilities to:

    • impact new products and services (i.e. the business scope),
    • influence the key attributes of strategy (i.e. distinctive competences), as well as
    • develop new forms of relationships (i.e. business governance).

    Unlike the two previous perspectives, which considered business strategy as pre-defined and fixed and a constraint for organizational transformation, this perspective allows feedback into the modification of the business strategy via emerging IT capabilities. The specific role of the top management to help this perspective succeed is that of the hybrid IT/ business visionary, who advocates how the emerging IT competences and functionality as well as changing governance patterns in the IT marketplace would impact positively the business strategy. The role of the IT manager is to act as a catalyst and advisor. He identifies and interprets the trends in the IT environment. In doing so he assists the business managers to understand the potential opportunities and threats from an IT perspective. [Arrow 3]

  4. Service Level. This alignment perspective focuses on how to build world class IT organization within an organization. In this perspective, the role of business strategy is indirect. This perspective is often viewed as being necessary in early stages of IT maturity, but not being sufficient, to ensure the effective use of IT resources and to be responsive to the growing and fast-changing demands of the end-user population. The specific role of the top management to make this perspective succeed is that of the prioritizer. They decide how the scarce resources should be allocated, both within the organization as well as in the IT marketplace (in terms of joint ventures, licensing, minority equity investments, etc.). The role of the IT manager is one of business leadership, with the specific tasks of ensuring that the internal business succeeds within the operating guidelines issued from top management. [Arrow 4]


Strategic Alignment Forum
  Survey Instrument for Strategic IT Alignment?
I am doing my MBA thesis on strategic IT alignment. My intention is to do a quantitative research.
I am looking for a reliable survey instrument (questionnaire) to assist me in my research.
Can anyone help?...
     
 
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  New Role? Chief Marketing Technologist
According to Scott Brinker and Laura McLellan (2014), marketing is increasingly becoming a technology dependent function in business.
Research firm Gartner predicts that by 2017 a company's Chief Marketing Officer will be spending more on techno...
     
 
  Principles for Aligning IT with Corporate Strategy
Despite of the rapid rise of information technologies in the last decades, the implementation of IT in business strategies does not seem to go without problems. This is mainly because top management is misunderstanding or even totally ignoring the pr...
     
 
  Business and IT Governance Model
What high level tools do we have to communicate business - IT governance?
In my humble opinion, there is still a huge gap between business (strategy) and supporting and enabling IT (strategy).

In a high definition study, I tried to figu...
     
 
  A Multidisciplinary Approach to Strategic Alignment
A review of the techniques and methodologies that are applied in the quest for strategic alignment reveals a recognition that strategic alignment must be approached from multiple perspectives using insights and knowledge from various domains.
Th...
     
 
  Apply Cynefin Framework for IT Strategy
Gartner in October 2012 released a publication entitled: Leverage the Cynefin Framework to Improve IT Operations Decision Making. In the report Gartner forecasts:
"By 2016, the <...
     
 
  Strategic Alignment is Important
The strategic alignment concept basically throws light on how IT can be helpful for business strategy. Business is totally backed up by the latest information and technology. Strong IT embedded organisations are making their names in the world....
     
 
  Practical Implementation of IT Strategy
The Venkatraman model for strategic alignment offers a framework for understanding the organizational drivers for technological development and alignment. These drivers will change over time and alter the loci of the decisions that will affect the t...
     
 
  How is Strategic Alignment Managed?
How should Strategic Alignment be managed within an organization?...
     
 

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Best Practices - Strategic Alignment Premium
  Aligning Project Management with the Business Strategy
What are the major alignment problems when we're trying to align project management with the business strategy of an organization?...
     
 

Expert Tips - Strategic Alignment Premium
 

Realizing Strategic Alignment in your Organization

Although the Strategic Alignment Model clearly recognizes the necessity of a continuous alignment, it does not provide a practical and holistic framew...
Usage (application): Implementation of Strategic Alignment, Best Practices
 
 
 

Balanced Scorecard and Strategic Alignment

Kaplan and Nortonís Balanced Scorecard concept has been applied to IT and IT processes, for the achievement of a Strategic Alignment. In this view, Usage (application): IT Strategy and IT Governance
 
 
 

The Basis of the Strategic Alignment Model

Strategic Alignment Model is based upon the concepts of strategic correspondence and functional integration:
1. Strategic Correspondence a...
Usage (application): Understanding the Assumptions of Strategic Alignment
 
 
 

Maturity Level Model (Luftman)

An organization can assess its alignment and governance effective level through the Maturity Model. This is a scoring method that estimate the ...
Usage (application): Assess and Improve Strategic Alignment Effectiveness
 
 
 

Characteristics of Organizations with an IT-driven Business Transformation Strategy

Today organizations need to move quickly through a wide range of business transformations, often caused by new and complex technologies. These technol...
Usage (application): IT-driven Strategy, IT-led Strategy, Competitive Potential, Innovation Accelerators, Disruptive Innovation
 
 
 

Challenges to Establish Strategic Alignment

In my view the major challenges to the establishment of Strategic Alignment are reflected in the term. The strategic perspective is long term. Busi...
Usage (application): Realizing Strategic Alignment
 
 
 

Information Economics Method

Another governance and alignment technique is the Information Economics Method developed by Robert J. Benson and Marilyn Parker. According to t...
Usage (application): IT Governance and Alignment
 
 
 

How to Align Sales People with the Strategy

Strategy is an important but sometimes underestimated component within the sales department of organizations. This is caused party by the C-suite who ...
Usage (application): Strategy Execution, Employee Participation, Aligning Sales with Strategy, Strategic Alignment
 
 

Resources - Strategic Alignment Premium

The Strategic Alignment Model (Henderson and Venkataraman)

This presentation presents the strategic alignment model by Henderson and Venkataraman and includes the following sections:
1. Strategic alignmen...
Usage (application): IT Strategy, Henderson, Venkataraman, Strategy Domains, Infrastructure Domains, Information Strategy
 

IT - Business Alignment

Presentation about IT <--> Business alignment, specifically emphasizing its inhibitors. The presentation includes the following sections:
1. Intr...
Usage (application): IT Strategy, Business Strategy Alignment, IT Service Delivery, IT Alignment
 

Organizational Agility and the Role of Information Systems

Presentation about Agility, specifically focusing on the role of IT. The presentation includes the following sections:
1. How do firms compete? Usage (application): Organizational Agility
 

Why it's so Hard to Align IT Solutions with Business Needs?

DEFINITIONS
- A Business Need is defined as "a type of high-level business requirement that is a statement of a business objective, or an ...
Usage (application): Basic Understanding of IT Alignment, IT Complexity, Misaligment Consequences, Solution Gaps, Solution Excesses
 

Project Management of Information Technology Projects

This presentation provides information about project management, thereby especially focusing on a context of information technology. The presentation ...
Usage (application): Project Management, Information Technology, Three Sphere Model
 

Information Systems in Today's Organizations

Presentation about Information Systems in the world of today. The presentation includes the following sections:
1. Role of Information Systems to...
Usage (application): Information Technology, Objectives, Information Systems, Management Information
 

Closing the Communication Gap: The Six IT - Business Alignment Process Metrics

This video explains why aligning IT with Business has been on every CIO's to do list over the past 20 years. It is all about the 2-way communication g...
Usage (application): IT Alignment, Business Alignment, Alignment Metrics
 

Change Management in an Information Technology / IT Context

This presentation provides information about the planning and implementation of change, focusing on a context of information technology. The presentat...
Usage (application): Change Management, Information Systems Planning, Information Systems Architecture, Information Systems Implementation
 

Strategic Alignment Diagram

Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in intranets, websites, books, ma...
Usage (application): Business <> Information Strategy
 
 

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Compare with Strategic Alignment: Strategic Thrusts  |  Twelve Principles of the Network Economy  |  7-S framework  |  Organizational Configurations  |  Impact/Value framework  |  Ashridge Mission Model


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