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Summary of the various papers which were part of the ITIC - IT in control course of the MSC master accountancy in 2019/2020
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1.Henderson, J.C.; Venkatraman, N. (1993).Strategic Alignment, Leveraging Information technology
for transforming organizations
Introduction: The role and impact of information technology on organizations has
significantly increased over the last decades. It is transcending its traditional Backoffice role
and is evolving toward a strategic role with the potential to shape new business strategies.
However, there is a concern that the anticipated value is not being achieved. The inability to
realize value from IT investments is, in part, due to the lack of alignment between the
business and IT strategies of organizations. The strategic alignment is thereby based on two
assumptions: (1) economic performance is directly related to the ability to create a strategic
fit between the position of the organization in a market and the design of an appropriate
administrative structure; (2) the choices made by one business enterprise will over time
evoke imitative action. Thus, strategic alignment is not an event but a process of continuous
adaption and change. In this context, a critical lever for attaining this dynamic capability is
not a specific set of technological functionalities but the capabilities to leverage technology
to differentiate its operations. So, no single application could deliver a sustained advantage.
Rather, it is obtained through the capability of an organization to exploit the IT functionality
on a continuous basis.
Strategic allignment: the emerging concept: The concept is based on two building
blocks: strategic fit and functional integration. The former recognizes the need for any
strategy to address both external and internal domains. The external domain is the business
area in which the firm competes. In contrast, the internal domain is concerned with choices
pertaining to the logic of the administrative structure and the specific rationale for the
design of critical processes. Within the business domain, the fit external positioning and
internal arrangement has been argued to be critical. We content that IT strategy should be
articulated in terms of an external domain – how the firm is positioned in the IT market –
and an internal domain – how the information systems infrastructure should be configured
and managed. However, managers are often more comfortable with their capability to
understand position choices in the business than with their understanding of how to position
in the IT market.
The IT market involves three sets of choices:
1. Information technology scope: technologies that support current business strategy
initiatives or could shape new strategies.
2. Systemic competencies: attributes of IT strategy that could contribute positively to
the creation of new strategies or better support of the existing strategy.
3. IT governance: selection and use of mechanisms such as joint ventures or strategic
alliances, for obtaining the required IT competencies.
In a similar vein, the internal information system must address at least three components:
1. IS architecture; choices that define the portfolio of application, configuration of
hardware, software and communication
2. IS processes; choices that define the work processes central to the operations
, 3. IS skills; choices pertaining to the acquisition, training and development of
knowledge.
Why is distinction important? IT is historical a support function that is not essential
to the business of the firm. However, this is not true. IT emerges as a critical enabler of
business transformation with capabilities to deliver firm level advantage, it is imperative that
firms also pay attention to the three external component. The technological attributes lay a
very important role in shaping these new business strategy initiatives.
Need to align external and internal domain of IT . An inadequate fit between
external and internal domains of IT is a major reason for failure to derive benefits from IT
investments. One has only to scan the current business periodicals to recognize the
possibility of an IT strategy failing due to the poor supporting information system
infrastructure.
Need to integrate business and IT domains : the second dimension of the
allignment model if functional integration. The need to integrate the IT strategy and the
business strategy has long been advocated. This dimension specifically considers how
choices made in the business domain impact those made in the IT domain and vice versa.
The alignment model identifies the need to specify two types of integration. The first is
strategic integration and is the link between business strategy and IT strategy. The second
type is operational integration which deals with the corresponding internal domains, the link
between organizational infrastructure and processes and information system infrastructure
and processes, this highlights the criticality of ensuring internal coherence between the
organizational requirements and expectations and the delivery capability within the
information system.
Four dominant alignment perspective:
Business strategy as the driver: The first two cross domain relationships given here arise
when business strategy serves as the driving force:
1. Strategy execution; this perspective is anchored on the notion that a business
strategy has been and is the driver of both organizational design choices and the
design of IS infrastructure. This perspective is most common and widely understand
as it corresponds to the classic view of strategic management. It is important to
identify the specific role of management to make this perspective succeed. Top
management should play the role of the strategy formulator to articulate the logic
and choices pertaining to business strategy, whereas the role of the IS manager
should be that of the implementor. The performance criteria for the IS function is
based on financial parameters reflecting a cost center focus
2. Technology transformation: Involves the assessment of implementing the chosen
business strategy through appropriate IT strategy and the articulation of the required
IS infrastructure and processes. This perspective seeks to identify the best possible IT
competencies, as well as identifying the corresponding IS architecture. The impact of
business strategy and the corresponding implications for IS infrastructure and
processes should not be underestimated. The role of executive management is to
provide technology vision that would best support the business strategy. The role of
the IS management should be that of the technology architect who efficiently and
, effectively designs and implements the required Is infrastructure consistent with the
IT vision. Performance criteria are based on technology leadership, often a
benchmarking approach to assess the position of the firm in the IT market.
IT strategy as the enabler: The following two cross-domain relationships arise when
management explores how IT might enable new or enhanced business strategies with
corresponding organization implications.
3. Competitive potential: this perspective is concerned with the exploitation of
emerging IT capabilities to impact new products and services, influence the key
attributes of strategy and develop new forms of relationships. It allows the adaption
of business strategy via emerging IT capabilities. It seeks the best set of strategic
options for business strategy and the corresponding set of decision pertaining to
organizational infrastructure and processes. The specific role of top management to
make this perspective success is that of the business visionary – one who articulates
how emerging IT competencies and functionality and governance patterns in the IT
market would impact business strategy. Effective IT positioning can be used to
enhance or create new business strategies. It is an important enabler of the ability of
the firm to move quickly to acquire technology or achieve the competencies
necessary to embark on their strategy. The role of the IS management is one of
catalyst – one who identifies and interprets the trends in the IT environment to assist
to business managers to understand the potential opportunities and threats from an
IT perspective. The performance criteria are qualitative and quantitative
measurements pertaining to product leadership such as market share or growth.
4. Service level: how to build a world-class IS service organization. This requires an
understanding of the external dimensions of IT strategy with corresponding internal
design of the IS infrastructure and processes. It creates the capacity to meet the
needs of IS customers. The role of business strategy is indirect and viewed as
providing the direction to stimulate customer demand. The IS organization must
deploy resources and be responsive to the growing and fast changing demands.
Examples of analytical methods to analyze customers’ needs and the current
products and services are end-user-needs surveying, service level contracting and
architectural planning. The role of top management is to prioritize, how to allocate
the resources. The role of the IS manager is one of executive leaders, with the
specific task of making the internal service business succeed within the operating
guidelines from top management.
Key issues and management challenges
Differentiating strategic alignment from traditional linkage: The strategic alignment model
reflect and accommodates a long history of research. However, the concept differs from the
traditional view of linkage in four important ways: (1) the strategic alignment model calls for
a fundamental shift in the focus of the IS function from an internal orientation toward one of
strategic fit within the IT domain. This is important if we consider that IT has the potential to
shape business competencies and actions; (2) Future challenges deal with the selection of
appropriate alignment that best suit the business conditions and organizational objectives.
This requires considering a broader view of the potential role and scope of IT within
organizations; (3) the model highlights diversity of roles carried out by line and IS executives.
At other times, however, alignment requires roles including those of business visionary,
, technology visionary and prioritizer; (4) the criteria for performance evaluation expand from
cost and service consideration to a larger set involving multiple goals. The needs to view
organizational goals from multiple perspectives is widely recognized.
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