week4-Strategy Alignment Model(SAM)-2nd post

Source / Reference:
1)  “Strategic Alignment: Analysis of Perspectives” by P. Coleman and R. Papp 2006

http://sais.aisnet.org/2006/Coleman-SAIS2006-paper.pdf

Subject:
In Lecture 4 - Which alignment strategy in SAM model is the best? And why?
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Response:

Figure 1: Strategic Alignment Model

I think there is no best alignment strategy. More than one approach may be required to comprehensively align the information technology (IT) with business. As they all involve only 3 out 4 of the components in the model, there is/are limitation(s) for each of them. One firm may adopt it/them in different time, different business environment and different countries. Otherwise, working on only one perspective may not efficiently solve the problems.

Besides, the firms should choose the strategy that is suitable and feasible for them. It is because many factors including the corporate culture, nature of the firm and IT experts available will affect the effectiveness of alignment between business and IT. In my opinion, the 4 perspectives have different driver and different weakest component that they have different influence to the firms. Their effectiveness is different for different firms, even though the firms apply the same perspective. Here is some analysis of characteristics for the 4 perspectives according to my understanding about the SAM model.

 

Figure 2: The 4 perspectives of SAM

For strategy execution, IT tools are designed, employed or adjusted according to the business processes. With the business strategy acting as the driver and well-defined application area in the business process, it will be easier to decide what IT to employ. There is/are objective(s) of adoption of IT, which then confine the resources to be used by planning. As there is only slight change (or re-design) in business process and the business strategies the company applied, it will be less time-consuming for alignment of business process and IT. IT strategy does not have to be changed cross-functionally to align with the business strategy. In other words, it does not necessary refer to alignment in large scope of the business. It is a much faster and easier way to business re-engineering. This may explains why it is popular that there were 20% of the companies used this approach to do business process management [1]. However, if the company wants to employ the IT infrastructure by changing its position in the IT market or if the company wants a radical change, this perspective may not be a prominent choice. It may not be applicable for firms which want to follow the market and employ the new IT tools.

For technology transformation, IT competencies are identified. There will be no significant change in business process. IT strategies are adjusted according to the change in business strategies. IT infrastructure is employed and redesigned to align with the business. As the performance is measured in terms of IT market position(e.g. the leadership, purchasing, bargaining power in employing IT), more criteria(e.g. the comparative advantages and effectiveness brought by use of IT) other than financial aspect need to be assessed. However, the problems of business processes may be less concerned. There may be some processes not necessary but they may have wasted resources. Improvement in IT strategy may not be effective enough for redundant processes.

For competitive potential, business infrastructure is altered to align with the business strategy, which is functionally fitting the IT strategy. By finding and making use of the new IT competencies, new business opportunities can be identified. New business strategies are developed and thus brings corresponding new business infrastructure required. The organization infrastructure designed to strategically fit the business strategies are usually new products, work flow, and new market. So, market share, growth of the firm, and new product introduction are the performance criteria. However, it may be irrelevant and not useful enough for those which are have little applicable emerging IT competencies available (e.g. traditional food stores). It may not be suitable for the businesses having high risk in changing the business strategy too.

For service level, it ensures the effective use of IT that it concerns how IT improves the delivery of products and services. Business processes, organizational structure, human resources are re-structured due to the new IT applications and systems. Business processes are streamlined or simplified to improve supply chain and customers’ satisfaction. This perspective is especially useful for service companies. Compared to the products provided, the price offered or the materials used, the front-line staffs are important to boost sales revenue and improve goodwill. The enhanced processes can increase delivery and front-line support. However, companies selling tangible products may require unified business strategies to cooperate and achieve better resources allocation. It may be incompatible for these companies to change ‘organizational infrastructure’ without strategic alignment with 'business strategy'. IT strategies and organizational infrastructure are improved in this perspective. It may require large scale of business process engineering to fulfill the expectation. It means it is costly and involve high risk (e.g. staffs are not familiar with the new business operation, unpredictable changes in external environment that no routine solution prepared).

Though strategy execution is the most popular approach, popularity does not mean the best. It is just because of the ease of alignment.The domains and perspectives of SAM have inferior parts that some of them may not be always applicable to the companies. It may result in loopholes and thus adverse effect may occur in the business. Managers should consider whether they have enough resources, IT management skills, IT knowledge, etc. in order to apply the right perspective(s).

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Comment on Eleanor’s week 4 blog:

She gives a clear introduction to SAM and the 4 perspectives. She shares the same view with me that there are limitations and merits for the 4 perspectives. None of them is comparatively better. The best alignment strategy is the one best fit with the situation of the firm. However, it would be better if she can share more of her understanding about the SAM.