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- Herausgeber: WS
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2021
Information technology – or IT – has come to be regarded as a critical component of an organization's business strategy. In fact, companies may not reach their potential if their IT strategy isn't closely integrated with other business strategies. By collaborating with the business leaders in their organizations, IT managers can create technical solutions that support business objectives and add value to the organization.
In companies where IT and business leaders work together successfully, IT can be used to improve business processes and to drive innovation and change. This often results in new products and capabilities that give the company a competitive edge. So to get the most value from technology, leaders should take an integrated view of IT in their organizations. They can do this by ensuring their business and IT strategies are aligned.
This course can help you evaluate how well your company's IT and business strategies are aligned. It begins by describing the elements that an IT-influenced business strategy typically contains.
You'll find out how you can analyze the current IT situation in your own organization to determine at which stage of strategic alignment your company is.
You'll also learn to assess how your organization currently uses IT – and the value your organization hopes to gain from its IT systems.
Finally, you'll explore some strategies you can use to improve alignment between the activities of the IT Department and the business goals of your organization.
By learning how well the IT and business strategies are aligned in your own organization – and how to improve strategic alignment if necessary – you can help ensure that IT fully supports your business and plays a key role in its future success.
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IT Strategy Essentials
IT Strategy Essentials: Business and IT Strategy Alignment
Information technology – or IT – has come to be regarded as a critical component of an organization's business strategy. In fact, companies may not reach their potential if their IT strategy isn't closely integrated with other business strategies. By collaborating with the business leaders in their organizations, IT managers can create technical solutions that support business objectives and add value to the organization.
In companies where IT and business leaders work together successfully, IT can be used to improve business processes and to drive innovation and change. This often results in new products and capabilities that give the company a competitive edge. So to get the most value from technology, leaders should take an integrated view of IT in their organizations. They can do this by ensuring their business and IT strategies are aligned.
This course can help you evaluate how well your company's IT and business strategies are aligned. It begins by describing the elements that an IT-influenced business strategy typically contains.
You'll find out how you can analyze the current IT situation in your own organization to determine at which stage of strategic alignment your company is.
You'll also learn to assess how your organization currently uses IT – and the value your organization hopes to gain from its IT systems.
Finally, you'll explore some strategies you can use to improve alignment between the activities of the IT Department and the business goals of your organization.
By learning how well the IT and business strategies are aligned in your own organization – and how to improve strategic alignment if necessary – you can help ensure that IT fully supports your business and plays a key role in its future success.
Business and IT Strategy Alignment
1. Aligning IT and Business Strategies
2. Levels of IT and Business Integration
3. Assessing the Value of IT in Your Organization
4. Improving IT Strategic Alignment with Business
Aligning IT and Business Strategies
A business strategy contains the mission, vision, and objectives of an organization. It also contains the organization's market strategy, unique value proposition, and distinctive value configuration.
An IT strategy contains information on applications and human resources. Details about the way IT is to be organized and the technical infrastructure itself are also included.
By aligning their business and IT strategies, organizations can achieve the best return on their IT investment.
An IT-enabled business strategy contains the business expectations the company has of IT. It also includes the company's future IT plans.
Elements of business and IT strategies
Information technology – or IT – has been traditionally regarded as an entity separate from the main functional areas of a business. As a result, IT was often overlooked when an organization's strategic plans were being developed. However, as IT has evolved, it has come to be regarded as a critical component of an organization's business strategy. When an organization's IT strategy is developed to align and support its business strategy, the organization is best positioned to succeed.
A strategy is not simply a to-do list. Rather, it's a carefully designed plan of action that can help you achieve important goals. A business strategy describes the long-term direction an organization wants to take and how it can get there.
A business strategy generally contains a number of key elements, including the mission, vision, and objectives of the organization. It also typically includes the market strategy the organization plans to adopt, and the unique value proposition it intends to offer customers. Business strategies usually also contain a distinctive value configuration, which outlines how the organization aims to conduct its business.
Mission, vision, and objectives
The mission of an organization states what the organization does and the reason for its existence. For example, the mission of a software firm could be to provide software solutions to customers.
A company's vision sets out what the company wants to achieve. For example, the software firm's vision could be to become the leading provider of software solutions in Europe.
The objectives of an organization state the direction in which the firm is heading. For example, an objective of the software firm could be to merge with another company to become the leading software provider in Europe.
Market strategy
The market strategy of a company describes the market segments and products or services the company wants to focus on.
For example, a software firm could focus on providing financial software to small- and medium-sized corporate clients.
A pie chart, labeled "Market segments." The largest segment is labeled "Corporate clients".
Value proposition
A company's value proposition is the unique set of benefits it offers to customers. This set of benefits is different from those offered by the company's competitors.
For example, a company that sells financial software online could have a unique value proposition saying it has the lowest prices and is easiest to use.
Value configuration
The value configuration of an organization describes how the company can establish an advantage over competitors to create value for its customers. One value configuration is the value chain, where value is created by efficiently conducting a chain of activities. For example, an automobile manufacturer may use parts that were manufactured by other companies. It can add value to its manufacturing process by offering superior quality control and incorporating additional features.
Value can also be created in a value shop, where value is created by solving customer problems. For example, an IT company creates value by providing services to clients such as network monitoring and project management.
A third value configuration is the value network, where companies create value by connecting interdependent customers. For example, a telecommunications company creates value by providing cable for telephone, Internet, and television services simultaneously.
An IT strategy also contains a number of key elements. It contains information on any new applications the company requires. It also contains plans to develop the competencies of the people who work in the IT division, as well as details about the way the IT organization is to be structured within the company and the technical infrastructure itself.
The first element in an IT strategy is information about any new applications that are required by the company – for example knowledge management systems. Details such as whether the applications are to be developed or purchased, and how they meet user requirements, should be contained in the IT strategy.
A second necessary element of an IT strategy is a plan that ensures the future effectiveness of the people who work in the IT division. Such a plan typically includes the types of human resources needed – for example IT professionals, managers, and developers. It should also include the specific skills required and the salary levels that are forecast to be paid.
The third key element is a description of how IT will be organized and controlled. This part of the strategy defines the various tasks and roles within the IT division – for example managing data, installing applications, and designing and maintaining networks. It also establishes the IT division's management structure. This section should also include details about any IT services, including whether they are to be provided internally or outsourced.
A fourth important element of an IT strategy is choosing the future technical infrastructure. This includes selecting hardware, software, and network configuration; deciding how the various components will interact with one another; and determining how security is to be implemented.
Question
Based on what you've just learned, is the following statement true or false?
An IT strategy should be focused on hardware, software, and future IT applications, rather than on people or human resources.
Options:
True
False
Answer
The statement isn't true. An IT strategy should contain a plan to develop the future competence of human resources, as well as information on the technical infrastructure and applications.
Value of aligning strategies
Aligning an organization's business strategy with its IT strategy generally improves the company's overall performance. It can lead to more efficient processes, the development of better products and services, cost reductions, faster response times, and more efficient supply chain management. To achieve strategic alignment, the IT strategy should be developed at the same time as the business strategy, and integrated into it.
Because aligning business strategy with IT strategy tends to have a positive impact on organizations, strategic alignment should be a top priority for senior managers. They should regard IT as a way of meeting business goals and providing value.
To align IT strategy with business strategy, every aspect of the IT strategy should support the business goals of the organization.
In other words, all IT systems, applications, processes, and budgets should agree with the overall corporate strategy and objectives.
When a company's business strategy is properly aligned with its IT strategy – that is, when it's IT-enabled – it can prove valuable in different ways.
Consider this situation. Graham is the chief information officer of a large insurance company. Last year, he worked closely with senior management to align the company's IT strategy with its overall business goals and objectives.
The company's key goals this year are to increase revenues and to make it easier for customers to initiate claims. So as part of its IT-enabled business strategy, the company has upgraded its web site so customers can make claims online and then track the progress of the claims as they're being processed. This sets the company apart from its competitors and has resulted in an increase in the number of new policies being purchased.
The increase in revenue means the company has already recouped more than it invested in upgrading the web site. Senior management hopes to use the web site to market new insurance products in the coming months.
Question
In what ways has Graham's company benefited by aligning its business and IT strategies?
Options:
The overall performance of the company has improved
The company has developed an advantage over its competitors
The company has maximized its return on the money invested in upgrading the web site
The web site can be used to market new products in the future
The company can charge more for its insurance products
The company can afford to downsize the customer support team and hire extra IT professionals
Answer
Option 1: This option is correct. Strategic alignment helps the organization perform better. In this case, sales and revenue have increased.
Option 2: This option is correct. The alignment of business and IT strategies helps organizations deliver products and services to customers in new and innovative ways.
Option 3: This option is correct. Strategic alignment allows companies to achieve the best possible return on the money that's been invested in IT.
Option 4: This option is correct. Aligning business and IT strategies provides flexibility for organizations to respond to new business opportunities when they arise.
Option 5: This option is incorrect. Strategic alignment doesn't mean that the company can charge more for its products.
Option 6: This option is incorrect. The alignment of business and IT strategies doesn't directly influence downsizing or hiring decisions.
IT-enabled businessstrategies
As mentioned earlier, an IT-enabled business strategy is more than just the combination of an IT strategy and a business strategy in a single document. It's the alignment of the two strategies in order to meet key business objectives and goals. As such, it lays out the organization's overall business strategy, and states the business expectations the company has of IT. It also contains the company's IT strategy, its current IT assessment, and it describes the company's future IT plans.
Business strategy
An IT-enabled business strategy contains the organization's business strategy. This generally includes the mission, vision, and objectives of the organization, along with its market strategy, value proposition, and value configuration.
Business expectations of IT
The business expectations a company has of IT should be included in an IT-enabled business strategy. For example, the company might expect IT to contribute to the delivery of improved products and services or the design of more efficient business processes.
It might also expect IT to increase sales, deliver better value to customers, reduce operating costs, and be flexible and cost-effective to implement.
IT strategy
An IT-enabled business strategy should incorporate the company's IT strategy. The IT strategy contains information on IT applications and the future competence of human resources. It also describes how IT is to be organized and controlled within the company, as well as the technical infrastructure itself.
IT assessment
An IT assessment is a comprehensive review of a company's technology systems and environment. The assessment should reveal how technology helps or hinders the business, and should recommend how to use technology to meet the business goals.
The assessment can include network and systems performance reviews, software audits, concept testing and development, strategic evaluations, technical reviews, and risk management.
IT plans
An IT-enabled business strategy contains the company's long-term IT plans. IT plans are concerned with how IT should be deployed, managed, and implemented in the future.
For example, older technologies may need to be replaced, and new technologies developed or purchased. Entire IT systems may need to be modified as a result of mergers, acquisitions, and other corporate activities. All planning decisions should be cost-effective and in line with business goals.
Many companies struggle to maintain a tight relationship between their business and IT functions. But creating an IT-enabled business strategy is worth the effort.
By integrating their business and IT strategies, organizations tend to perform better, increase revenues, and gain a competitive edge.
Question
Match each example to the element of an IT-enabled business strategy it represents.
Options:
The company's mission is to provide legal services to clients
Senior managers hope to deliver better value to customers by using IT
A manager compiles information on the number of IT professionals the company requires for future projects
A review of a company's networks and systems performance is conducted
A company plans to upgrade its existing database management system in six months
Targets:
Business strategy
Business expectations of IT
IT strategy
IT assessment
IT plans
Answer
A company's mission should be included in its business strategy. Its vision and objectives should also be included.
Helping to deliver better value to customers could be one of the business expectations a company has of IT. Other expectations might be to reduce costs and increase sales.
An IT strategy includes information on the types of human resources needed in the future. It should also include information on the specific skills required.
Reviewing networks and systems performance forms part of an IT assessment. This assessment might also include software audits, and concept testing and development.
Upgrading existing IT systems is a typical element of a company's long-term IT plans. All planning decisions should be cost-effective and in line with business objectives.
Elements of an IT-enabled Business Strategy
Purpose:Use this job aid to help you determine the key elements of an IT-enabled business strategy.
Key elements of an IT-enabled business strategy
Key element
Description
Business strategy
Business expectations of IT
IT strategy
IT assessment
IT plans
Levels of IT and Business Integration
An organization's business and IT strategies should be integrated if the organization is to achieve benefits.
There are five levels of IT-business integration. The first, most basic, level is efficient use of IT within an organization. Level two describes the effective integration of IT systems, and level three results in the alteration of a company's overall business methodology. The fourth level is concerned with the alteration of a company's business network. And the fifth – and highest – level results in a change of business direction.
Efficiency and integration of systems
An IT Department that exists only to purchase and implement technology, and to modify software applications, is unlikely to be successful. In today's competitive marketplace, IT professionals should be aware of the company's larger concerns. All technology purchases should be conceived and implemented in support of business goals.
An organization's business and IT strategies should be coordinated and integrated if the organization is to achieve maximum benefits. Integrating strategies generally improves a company's overall performance. An analysis of the current IT situation within a company can reveal the level of IT-business integration that exists there.
Question
Take a moment to consider the IT situation in your own workplace.
How well integrated are the IT and business strategies within your organization?
Options:
Very integrated
Somewhat integrated
Not at all integrated
Answer
Option 1: That's great! You say your organization's IT and business strategies are very well integrated. Your company should be able to maximize the value that strategic alignment offers.
Option 2: You indicate your organization's IT and business strategies are somewhat integrated. That's a good start. You should aim to improve integration levels within your company in order to achieve greater benefits.
Option 3: You say your organization's IT and business strategies aren't at all integrated. You should work at coordinating your IT and business strategies, to ensure IT delivers value to your organization.
There are five levels of IT-business integration. The potential benefits to be gained increase as organizations move to higher levels:
the first, most basic, level is efficient use of IT within an organization
level two describes the effective integration of IT systems
level three results in the alteration of a company's business methodology
the fourth level is concerned with the alteration of a company's business network, and
the fifth – and highest – level results in a change of business direction
At level one, IT is used to improve the efficiency of one localized area within a business. And the focus is mainly on ensuring the IT service is delivered in a cost-effective and reliable way. For example, managers may choose to deploy standalone systems within their own areas, such as a financial system or human resources system. These systems may be written in different languages, use different databases, and even operate on different hardware platforms.
Usually, managers deploy these systems to respond to operational challenges within their own particular areas. They don't consider the wider benefits these systems could bring to the organization.
This level of IT integration underutilizes the potential of IT. It also fails to exploit its wider capabilities.
In addition, competitors can easily introduce similar standalone systems. So any strategic advantage the company may have gained by introducing these systems in the first place is quickly neutralized.
Question
At the lowest level of IT-business integration, how is IT generally used?
Options:
To improve efficiency in one department or area of a company
To improve efficiency in two or more functional areas of an organization
To improve efficiency in all areas of a business
Answer
Option 1:
