A Commentary on
SHARING A VISION: COMPARING BUSINESS AND IS MANAGERS’ PERCEPTIONS OF STRATEGIC ALIGNMENT ISSUES by Jenny Leonard University of Sydney, NSW, AUSTRALIA
The article looks at the issues surrounding the realization of IS and business alignment from the point of view of business managers and Information Systems (IS) managers. Through the use of alignment models by Luftman and Weiss and Thorogood, the paper was able to present the position of IS managers or CIO’s in the organization in terms of governance, partnership and communication with the business managers. The paper also presented the CIO’s role of understanding the business as being crucial in achieving IS alignment. Moreover, the research concentrates on two basic questions: “How do IS and business managers perceive their own and each others’ contribution to the alignment maturity of their organization?” and “How do IS and business managers perceive their own and each others’ contribution to the alignment maturity of their organization?”. The discussion of this paper will focus on the points concluded in the article. For the first question, the author concluded that the results are encouraging in the CIO’s and CEO’s perception of each other contribution to the alignment maturity model of the organization. CIOs have improved their status in the organization, developed strong relationships with their business manager counterparts and increased their levels of business knowledge. In the second question, three issues or, as coined by the author, problems were presented. These issues are: (1) Business managers tend to view their organization’s alignment profile as a “technical resource” or “business enabler”, improving productivity. Unlike their CIOs, they do not necessarily envision the potential of IS as a competitive weapon (2) Business managers do not have the level of understanding of IS that IS managers believe they should have (3) Business managers disagree with IS managers regarding the time required to obtain advantages from strategic initiatives.
In the first issue of the article which is the CIO’s and CEO’s perception of each other contribution to the alignment maturity model of the organization, it is good to first look at the evolution of CIO’s role in the organization and its position in the alignment maturity model with regards to the three criteria, namely, governance, partnership and communication. In a study of five CIOs, Stephens et al (1992) provided empirical evidence that the ClO’s role is an executive rather than a functional manager. As the senior executive charged with bridging the gap between information technology and other functional units, and between the organization’s strategy and its use of information technology resources, the ClO’s role is primarily a strategic one’. In a study of 69 CIOs, Enns et. al (2003) said “over the past two decades, the role of the CIO has progressed from the new kid on the block to respected and equal partner in many top management teams. ClOs today play a key role in managing issues of strategic importance to their organizations.’” From the alignment maturity model, I can say that these studies on the roles of CIOs in the organization significantly shows the position of IS managers in the organization or in the criteria of governance. With regards to the nature of the partnership and communication of IS managers and business managers, Diamond (1993) said that “the IS executive’s role and relationship with other senior business executives is also crucial. The CIO must have access to senior management, input into business plans, and a seat at key business meetings. In other words, he or she must be part of the company’s inner circle. Ferguson of YMCA feels that a CIO who can’t walk casually into the president’s office for a discussion on business issues shouldn’t propose enterprise-wide solutions.” As a further discussion on the alignment maturity model of the organization, it is necessary to look at another model with a similar approach. As we had our group case exercise, one of our group mates discussed the Capability Maturity Model of the Software Engineering Institute. Stefanie Ulit cited that “the model has 5 levels of maturity, arranged from lowest to highest: initial, repeatable, defined, managed, and optimized. There are corresponding criteria for each level of maturity, which indicates the organization’s current business practices in dealing with development and management of systems.” With its implication on Information Systems and the organization, she said that “The CMM tries to address the problems that the companies have to deal with in managing and controlling the development and improvement of their own systems and processes, in accordance with their culture and the context of their industry. As a company aims for continuous process improvement, it has to assess what its current capabilities and resources are and how these can be respectively enhanced and maximized over time.” In the alignment profile of an organization it is also necessary to include its resources and capabilities. Diamond (1993) said that ‘aligning IT goals with business goals doesn’t just happen, however. Senior IT executives believe six critical forces affect IT’s success: the personality of the CIO and his or her relationship with senior management; the extent of IT’s involvement in business planning; the department’s organizational structure; communication links between IT and operating departments; the effectiveness of training for both end-users and IT staff; and factors in the external environment that create the need for IT solutions’. From this statement, I can see that alignment maturity of an organization does not only focus on the CIO’s governance, partnership and communication with the business managers but it also takes into account the capability of the end-users and the IT staff and of course the ever changing environmental factors.
In the second issue, Business managers or CEO’s think that IS is a technical resource or business enabler while CIOs or IS Managers thinks that IS can be used as a competitive weapon. Porter(1985) said, ‘not all technological change is strategically beneficial; it may worsen a firm’s competitive position and industry attractiveness. High technology does not guarantee profitability’. However, Gamayanto (2004) used Porter’s Five Forces Model in the study Strategic Information Systems Management of Wollongong City Council and concluded that the model can actually be used to gain and drive business in the right direction. Boddy et. al. (2002) also suggested that the Five Forces Model can be used in the level of the individual firm to gauge the effect of IS on the competitive position of the firm. IS signifies an opportunity to gain a strategic advantage by using it to strengthen one or more of the five forces. Conde Dagdag, in the synthesis of our case exercise, cited that ‘Porter’s model speaks of the business environment in terms of conditions of entries of competitors, threat of product substitutes, the power of the buyers, the power of the suppliers, and saturation and rivalry of existing market players. An organization that uses Computer-based Information Systems (CBIS) appropriately in any or all these areas can tilt the balance to its favor’. Various studies has been conducted that affirmed the use of IS as a weapon for competitive advantage of an organization. It is, however, the role of the IS practitioners and CIOs to increase the level of understanding of the CEOs towards the capabilities of IS. Diamond (1993) said that ‘CIOs need to create and communicate a “vision” of where IT is going for their companies. They need to make sure that such key corporate stakeholders as senior management, business units or operations, and functional staffs, as well as the IT community, understand the major programs that will move the IT function from today to the future. They must also ask those same stakeholders to provide periodic updates on how IT is doing in achieving its goals and supporting the business’. On the side of the CEO’s, they must have an intentional effort of analyzing the maximum potential of IS in the industry rather than just seeing it as a support tool or business enabler. CEOs must capture the value and power of information resources in the organization. In the discussion of using information resources in creating strategic advantage, the firm’s resources, namely production resources, human resources and information resources must be combined to create competitive advantage. It is also noted that information resources include not only data but also technology, people and processes. In an analysis of Davenport’s article ‘Saving IT’s Soul: Human-centered Information Management’, Powell, et. al said that ‘Davenport (1994) made several observations that help to explain why human resources have such powerful performance impacts on IT systems. The core problem, the author asserts, is that most executives approach the IT decision by examining how people use machines instead of how they use information. The machines need people to make them productive because, according to the author ‘Most of the information in organizations and most of the information people really care about isn’t on computers. Managers prefer to get information from people; people add value to raw information by interpreting and adding context.’ Almost a decade later, Pankaj et al (2003) stated that business experts failed to understand the limitations of CBIS and therefore identified it as a confounding factor in supporting business processes.
In the third issue, Business managers do not have the level of understanding of IS that IS managers believe they should have. Diamond (1993), ‘the CIO has two training functions: training IT staff about business and training end-users about technology. If IT goals are ever to be in alignment with business goals, the IT staff must be more business oriented and customer focused.’ Kloes (1993), ‘an important responsibility of the CIO is senior-management education about information technology. This means that the CIO must keep top managers informed about what information can do for the firm and generate enthusiasm for new technologies and systems. IS chiefs need to show business executives how IT can be deployed and lead them toward innovative strategies’. The key element in increasing the level of understanding of business managers towards IS is proper training for both IT staff and end-users and better communication of IS objectives with the senior managers. Enns et al (2003) suggested that in order to develop and bring achievement to strategic information systems (SIS) projects, ClOs must be able to effectively influence their peers, which in most cases would be the senior managers. This clearly shows the managerial characteristics of a CIO is to be both influential and intentional when it comes to the alignment.
In the fourth issue, Business managers disagree with IS managers regarding the time required to obtain advantages from strategic initiatives. Powell, et. al. (1997), ‘IT proponents argue that it takes time, and a critical mass of investment, for ITs to yield benefits, and some suggest that 1990’s growth figures prove these benefits are finally being realized’. When the benefits of IT were still contested in the early 1990s, IT people have only assurance to business that in time, they will reap the harvest of their large investments. But times have dramatically changed as we entered the new millennium. Alter (2002), ‘the more information intensive the business process is, the larger the roles the Information Systems play’. The roles that IS play in the business have been transformed from being functional to strategic. In the discussion of the eras of informational usage in organizations, in the 1960’s and 1970’s, the role of IT was for organizations to improve their efficiency and effectiveness. In the 1980’s and 1990’s, the role of IT was strategic as it increases individual and group effectiveness and transforms the industry. In the new millennium, IT’s role is for value creation as it calls for creating collaborative partnerships. From these role identifications, we can derive that IT has come a long way from being functional and strategic and now for value creation. These transformations connote additional investments, ample time and further research. Business managers should continually be well-informed of these benefits in spite of its complexities and time requirements.
In the discussion of strategic alignment and the interdependence of organization and information systems, it was highlighted that an alignment of IT in business can improve efficiency by minimizing operating costs and maximizing work structure. It is also noted that the alignment would also result to improved effectiveness by increasing response time, controls, scalability and accuracy. Many models/theories were also tackled that explains the optimized capacity of an organization when IS and business are properly aligned. With these growing contributions of IT to the business, there are many findings in the issue of alignment. In 2008, the Society for Information Management conducted a survey of 300 top executives (such as CEOs and CIOs) on what were their top 5 concerns in the organization. The Society for Information Management’s survey revealed that a majority of IT executives polled worry most about IT and business alignment. Building business skills in IT, IT strategic planning, attracting new IT professionals and making better use of information rounded out the top 5 concerns. The survey only affirmed that there is a continuing struggle in the alignment of IT and business. In some ways, it may be noted as a recurrent and growing concern since the issue of business and IT alignment came in second in rank when the same survey was conducted in 2007. A solution to this problem is proper training and education of the business managers to the potential of IS being a weapon for competitive advantage. Another solution would be to identify the distinct contribution of both the business managers and IS managers to the process of alignment. In the business perspective, IS must be viewed in terms of the organization structure, available technology and management. On the other hand, IS practitioners must have a better and deeper understanding of the business processes and strategies. The combination of these two actions would lead to stronger partnerships and enhanced communication. Lastly, a review of case studies on alignment and a discussion on best practices or approach would be beneficial to organizations.
References:
Davenport, T. (1994). “Saving IT’s soul: Human- centered information management”,
[http://hbr.harvardbusiness.org/1994/03/saving-its-soul/ar/1]
Diamond, Sid (1993) “It’s Time To Check Your Alignment” Chief Information Officer Journal. New York: Sep/Oct 1993. Vol. 5, Iss. 7
Enns, Huff, Higgins (2003) “CIO Lateral Influence Behaviors: Gaining Peers’ Commitment to Strategic Information Systems” MIS Quarterly, Vol. 27, No. 1
Kloes, David (1993) “Know Your Responsibilities”Chief Information Officer Journal. New York: Nov/Dec 1993. Vol. 6, Iss. 2
Powell,T ,Dent-Micallef, A (1997) “Information Technology as Competitive Advantage: The Role of Human, Business, and Technology Resources” Strategic Management Journal, Vol. 18, No. 5
Stephens, Ledbetter, Mitra, Ford (1992), “Executive or Functional Manager? The Nature of the CIO’s Job”MIS Quarterly, Vol. 16, No. 4
20 Information Technology Facts that Will Amaze, Amuse and Alarm
[http://www.cio.com/article/449285/_Information_Technology_Facts_that_Will_Amaze_Amuse_and_Alarm_]
Business and IS Alignment
A Commentary on
SHARING A VISION: COMPARING BUSINESS AND IS MANAGERS’ PERCEPTIONS OF STRATEGIC ALIGNMENT ISSUES by Jenny Leonard University of Sydney, NSW, AUSTRALIA
The article looks at the issues surrounding the realization of IS and business alignment from the point of view of business managers and Information Systems (IS) managers. Through the use of alignment models by Luftman and Weiss and Thorogood, the paper was able to present the position of IS managers or CIO’s in the organization in terms of governance, partnership and communication with the business managers. The paper also presented the CIO’s role of understanding the business as being crucial in achieving IS alignment. Moreover, the research concentrates on two basic questions: “How do IS and business managers perceive their own and each others’ contribution to the alignment maturity of their organization?” and “How do IS and business managers perceive their own and each others’ contribution to the alignment maturity of their organization?”. The discussion of this paper will focus on the points concluded in the article. For the first question, the author concluded that the results are encouraging in the CIO’s and CEO’s perception of each other contribution to the alignment maturity model of the organization. CIOs have improved their status in the organization, developed strong relationships with their business manager counterparts and increased their levels of business knowledge. In the second question, three issues or, as coined by the author, problems were presented. These issues are: (1) Business managers tend to view their organization’s alignment profile as a “technical resource” or “business enabler”, improving productivity. Unlike their CIOs, they do not necessarily envision the potential of IS as a competitive weapon (2) Business managers do not have the level of understanding of IS that IS managers believe they should have (3) Business managers disagree with IS managers regarding the time required to obtain advantages from strategic initiatives.
In the first issue of the article which is the CIO’s and CEO’s perception of each other contribution to the alignment maturity model of the organization, it is good to first look at the evolution of CIO’s role in the organization and its position in the alignment maturity model with regards to the three criteria, namely, governance, partnership and communication. In a study of five CIOs, Stephens et al (1992) provided empirical evidence that the ClO’s role is an executive rather than a functional manager. As the senior executive charged with bridging the gap between information technology and other functional units, and between the organization’s strategy and its use of information technology resources, the ClO’s role is primarily a strategic one’. In a study of 69 CIOs, Enns et. al (2003) said “over the past two decades, the role of the CIO has progressed from the new kid on the block to respected and equal partner in many top management teams. ClOs today play a key role in managing issues of strategic importance to their organizations.’” From the alignment maturity model, I can say that these studies on the roles of CIOs in the organization significantly shows the position of IS managers in the organization or in the criteria of governance. With regards to the nature of the partnership and communication of IS managers and business managers, Diamond (1993) said that “the IS executive’s role and relationship with other senior business executives is also crucial. The CIO must have access to senior management, input into business plans, and a seat at key business meetings. In other words, he or she must be part of the company’s inner circle. Ferguson of YMCA feels that a CIO who can’t walk casually into the president’s office for a discussion on business issues shouldn’t propose enterprise-wide solutions.” As a further discussion on the alignment maturity model of the organization, it is necessary to look at another model with a similar approach. As we had our group case exercise, one of our group mates discussed the Capability Maturity Model of the Software Engineering Institute. Stefanie Ulit cited that “the model has 5 levels of maturity, arranged from lowest to highest: initial, repeatable, defined, managed, and optimized. There are corresponding criteria for each level of maturity, which indicates the organization’s current business practices in dealing with development and management of systems.” With its implication on Information Systems and the organization, she said that “The CMM tries to address the problems that the companies have to deal with in managing and controlling the development and improvement of their own systems and processes, in accordance with their culture and the context of their industry. As a company aims for continuous process improvement, it has to assess what its current capabilities and resources are and how these can be respectively enhanced and maximized over time.” In the alignment profile of an organization it is also necessary to include its resources and capabilities. Diamond (1993) said that ‘aligning IT goals with business goals doesn’t just happen, however. Senior IT executives believe six critical forces affect IT’s success: the personality of the CIO and his or her relationship with senior management; the extent of IT’s involvement in business planning; the department’s organizational structure; communication links between IT and operating departments; the effectiveness of training for both end-users and IT staff; and factors in the external environment that create the need for IT solutions’. From this statement, I can see that alignment maturity of an organization does not only focus on the CIO’s governance, partnership and communication with the business managers but it also takes into account the capability of the end-users and the IT staff and of course the ever changing environmental factors.
In the second issue, Business managers or CEO’s think that IS is a technical resource or business enabler while CIOs or IS Managers thinks that IS can be used as a competitive weapon. Porter(1985) said, ‘not all technological change is strategically beneficial; it may worsen a firm’s competitive position and industry attractiveness. High technology does not guarantee profitability’. However, Gamayanto (2004) used Porter’s Five Forces Model in the study Strategic Information Systems Management of Wollongong City Council and concluded that the model can actually be used to gain and drive business in the right direction. Boddy et. al. (2002) also suggested that the Five Forces Model can be used in the level of the individual firm to gauge the effect of IS on the competitive position of the firm. IS signifies an opportunity to gain a strategic advantage by using it to strengthen one or more of the five forces. Conde Dagdag, in the synthesis of our case exercise, cited that ‘Porter’s model speaks of the business environment in terms of conditions of entries of competitors, threat of product substitutes, the power of the buyers, the power of the suppliers, and saturation and rivalry of existing market players. An organization that uses Computer-based Information Systems (CBIS) appropriately in any or all these areas can tilt the balance to its favor’. Various studies has been conducted that affirmed the use of IS as a weapon for competitive advantage of an organization. It is, however, the role of the IS practitioners and CIOs to increase the level of understanding of the CEOs towards the capabilities of IS. Diamond (1993) said that ‘CIOs need to create and communicate a “vision” of where IT is going for their companies. They need to make sure that such key corporate stakeholders as senior management, business units or operations, and functional staffs, as well as the IT community, understand the major programs that will move the IT function from today to the future. They must also ask those same stakeholders to provide periodic updates on how IT is doing in achieving its goals and supporting the business’. On the side of the CEO’s, they must have an intentional effort of analyzing the maximum potential of IS in the industry rather than just seeing it as a support tool or business enabler. CEOs must capture the value and power of information resources in the organization. In the discussion of using information resources in creating strategic advantage, the firm’s resources, namely production resources, human resources and information resources must be combined to create competitive advantage. It is also noted that information resources include not only data but also technology, people and processes. In an analysis of Davenport’s article ‘Saving IT’s Soul: Human-centered Information Management’, Powell, et. al said that ‘Davenport (1994) made several observations that help to explain why human resources have such powerful performance impacts on IT systems. The core problem, the author asserts, is that most executives approach the IT decision by examining how people use machines instead of how they use information. The machines need people to make them productive because, according to the author ‘Most of the information in organizations and most of the information people really care about isn’t on computers. Managers prefer to get information from people; people add value to raw information by interpreting and adding context.’ Almost a decade later, Pankaj et al (2003) stated that business experts failed to understand the limitations of CBIS and therefore identified it as a confounding factor in supporting business processes.
In the third issue, Business managers do not have the level of understanding of IS that IS managers believe they should have. Diamond (1993), ‘the CIO has two training functions: training IT staff about business and training end-users about technology. If IT goals are ever to be in alignment with business goals, the IT staff must be more business oriented and customer focused.’ Kloes (1993), ‘an important responsibility of the CIO is senior-management education about information technology. This means that the CIO must keep top managers informed about what information can do for the firm and generate enthusiasm for new technologies and systems. IS chiefs need to show business executives how IT can be deployed and lead them toward innovative strategies’. The key element in increasing the level of understanding of business managers towards IS is proper training for both IT staff and end-users and better communication of IS objectives with the senior managers. Enns et al (2003) suggested that in order to develop and bring achievement to strategic information systems (SIS) projects, ClOs must be able to effectively influence their peers, which in most cases would be the senior managers. This clearly shows the managerial characteristics of a CIO is to be both influential and intentional when it comes to the alignment.
In the fourth issue, Business managers disagree with IS managers regarding the time required to obtain advantages from strategic initiatives. Powell, et. al. (1997), ‘IT proponents argue that it takes time, and a critical mass of investment, for ITs to yield benefits, and some suggest that 1990’s growth figures prove these benefits are finally being realized’. When the benefits of IT were still contested in the early 1990s, IT people have only assurance to business that in time, they will reap the harvest of their large investments. But times have dramatically changed as we entered the new millennium. Alter (2002), ‘the more information intensive the business process is, the larger the roles the Information Systems play’. The roles that IS play in the business have been transformed from being functional to strategic. In the discussion of the eras of informational usage in organizations, in the 1960’s and 1970’s, the role of IT was for organizations to improve their efficiency and effectiveness. In the 1980’s and 1990’s, the role of IT was strategic as it increases individual and group effectiveness and transforms the industry. In the new millennium, IT’s role is for value creation as it calls for creating collaborative partnerships. From these role identifications, we can derive that IT has come a long way from being functional and strategic and now for value creation. These transformations connote additional investments, ample time and further research. Business managers should continually be well-informed of these benefits in spite of its complexities and time requirements.
In the discussion of strategic alignment and the interdependence of organization and information systems, it was highlighted that an alignment of IT in business can improve efficiency by minimizing operating costs and maximizing work structure. It is also noted that the alignment would also result to improved effectiveness by increasing response time, controls, scalability and accuracy. Many models/theories were also tackled that explains the optimized capacity of an organization when IS and business are properly aligned. With these growing contributions of IT to the business, there are many findings in the issue of alignment. In 2008, the Society for Information Management conducted a survey of 300 top executives (such as CEOs and CIOs) on what were their top 5 concerns in the organization. The Society for Information Management’s survey revealed that a majority of IT executives polled worry most about IT and business alignment. Building business skills in IT, IT strategic planning, attracting new IT professionals and making better use of information rounded out the top 5 concerns. The survey only affirmed that there is a continuing struggle in the alignment of IT and business. In some ways, it may be noted as a recurrent and growing concern since the issue of business and IT alignment came in second in rank when the same survey was conducted in 2007. A solution to this problem is proper training and education of the business managers to the potential of IS being a weapon for competitive advantage. Another solution would be to identify the distinct contribution of both the business managers and IS managers to the process of alignment. In the business perspective, IS must be viewed in terms of the organization structure, available technology and management. On the other hand, IS practitioners must have a better and deeper understanding of the business processes and strategies. The combination of these two actions would lead to stronger partnerships and enhanced communication. Lastly, a review of case studies on alignment and a discussion on best practices or approach would be beneficial to organizations.
References:
Davenport, T. (1994). “Saving IT’s soul: Human- centered information management”,
[http://hbr.harvardbusiness.org/1994/03/saving-its-soul/ar/1]
Diamond, Sid (1993) “It’s Time To Check Your Alignment” Chief Information Officer Journal. New York: Sep/Oct 1993. Vol. 5, Iss. 7
Enns, Huff, Higgins (2003) “CIO Lateral Influence Behaviors: Gaining Peers’ Commitment to Strategic Information Systems” MIS Quarterly, Vol. 27, No. 1
Kloes, David (1993) “Know Your Responsibilities”Chief Information Officer Journal. New York: Nov/Dec 1993. Vol. 6, Iss. 2
Powell,T ,Dent-Micallef, A (1997) “Information Technology as Competitive Advantage: The Role of Human, Business, and Technology Resources” Strategic Management Journal, Vol. 18, No. 5
Stephens, Ledbetter, Mitra, Ford (1992), “Executive or Functional Manager? The Nature of the CIO’s Job”MIS Quarterly, Vol. 16, No. 4
20 Information Technology Facts that Will Amaze, Amuse and Alarm
[http://www.cio.com/article/449285/_Information_Technology_Facts_that_Will_Amaze_Amuse_and_Alarm_]
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