Week4 - Strategic Alliance Model

Source / Reference:
1)  "Strategic Alignment: Leverage Information Technology for transforming organization" by J C Henderson and N Venkartraman 1993
2) Henderson, J., & Venkatraman, N. (1996). “Aligning Business and IT Strategies,” Competing in the Information

Age, Luftman, New York, Oxford University Press.
3) “Maximize strategy execution by aligning organizational resources” by Katarina Kling, Ph.D. & FlavioKosminsky

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

No alignment strategy is the best. It depends on the industry and organization’s nature.

As four alignments use the two strategies as the starting point, and organization might have different approaches on their business strategy in their unique industrial culture, we cannot ensure that one could be the best to fit in every organization for every business strategy. Yet, we can only focus on different natures of organization to identify the best among the four alignments.

SAM: Strategy Execution

Strategy Execution is a classic hierarchical view of strategic management, which is driven by business strategy. It is assessed by the financial parameters such as cost and service center. The concept of this strategy is simple: Use the organizational infrastructure to be the guide or framework to design the IT infrastructure. As the objective to implement a strategic alignment model is to complement with the business strategy in order to achieve the goal, implementing strategy execution model can provide a good strategy formulation for organization provided that the organization has a visible and clear organizational infrastructure. Otherwise, stick with an ill-structured organization would only make the organization worse. In other words, for an organization which has an unhealthy organizational infrastructure, implementing strategy execution would make things worse. The strategy fits in four dimensions: Expert, competitive, learning and entrepreneurial. (Katarina Kling, Ph.D. & FlavioKosminsky, 2006)This strategy fits those organization with good business strategy and well-structured organization.

SAM: Technology Transformation

Technology Transformation that seeks to identify the best possible IT competencies is driven by business strategy. Also, it is assessed by a benchmarking approach which is a set of standard tests for assess the relative performance of the strategy and is not constrained by the current organization design. Since the free-constrained design of IT strategy, it is flexible that the IT strategy can be designed in perfect and made the best possible IT competencies. However, as the role of top manager is Technology visionary who lacks of knowledge of the organization’s background and external environment, the design of IT strategy might not be well-planned and un-adaptable for the organization. This strategy fits organization in industry in which it requires large IT competencies and free-constrained design on business strategy.

SAM: Service Level

Service level that ensures the effective use of IT focuses on how to build a world-class IT service organization. And its performance is assessed by the level of customer satisfaction. This strategy takes advantage of indirect role of business strategy which provides the direction to stimulate customer demand and makes the IT strategy dominant. This dominant could make the organization to create the best IT service. However, back to the principle of implementing SAM, it complements the business strategy to achieve the goal. As the organization takes the IT strategy as the starting point instead of business strategy, the principle or the original idea of the organization might violate which causes over-dominance. This strategy fits organization in

Service industry, in which the customer is always first . Prolonging this perspective can result in information technology outsourcing (Henderson &

Venkatraman, 1990 and 1996).

SAM: Competitive Potential

Competitive potential that allows adaptation of business strategy via emerging IT capabilities seeks to identify the best set of strategic options through IT. And its performance is assessed by business/product leadership such as market share, growth and new product introduction. The whole idea of this SAM is to take the starting point as IT strategy, through it to design the business strategy and the organizational infrastructure. The benefit for this strategy is to make the best set of strategic options through IT. It requires a group of long-sighted management and good vision for the role of top manager. And since most big firms’ business strategy are so complicated that this strategy fits big firms as it allows good adaptation of business strategy.

Conclusion

It is clear that alignment strategy can benefit and strengthen one organization’s business, but it is necessary to choose the best one to fit in due to the uniqueness of the nature of each organization (scale, adaption, environment, human force). Otherwise, expenses would be wasted on IT investment and indeed, that’s the most common reason for those companies they do not realize and think the importance of IT.