TECHNOLOGY MANAGEMENT

nuzo .M414 *««'*, IJAN

12

1990

^^S^^

STRATEGIC ALIGNMENT:

A

FRAMEWORK

FOR

STRATEGIC

INFORMATION

TECHNOLOGY

MANAGEMENT

John

C.

Henderson

N.

Venkatraman

August 1989

CISR

WP

No.

190

Sloan

WP

No.

3039-89-MS

90's

WP

No. 89-076

Center

for

Information

Systems

Research

MassachusettsInstitute ofTechnology Sloan Schoolof Management

77Massachusetts Avenue

STRATEGIC ALIGNMENT:

A

FRAMEWORK

FOR

STRATEGIC

INFORMATION

TECHNOLOGY

MANAGEMENT

John

C.

Henderson

N.

Venkatraman

August 1989

CISR

WP

No.

190

Sloan

WP

No.

3039^9-MS

90's

WP

No.

89^76

^1989 Massachusetts

Institute of

Technology

Center for Information

Systems Research

Sloan School of

Management

Strategic

Alignment:

A

Framework

for

Strategic

Information

Technology

Management

Abstract

Thispaperdevelops a

framework

forstrategicinformation technology

management,

termed

theStrategic

Alignment

Model. This

model

isdefined in terms

of four

domains

-- _BusinessStrategy, InformationTechnologyStrategy, Organizational Infrastructure

and

Processes,

and

Information

Systems

Infrastructure

and

Processes-- each _with theirconstituentcomponents. This

model

isdevelopedusingtwo

fundamental

dimensions

—

strategicintegration

and

functional integration

-

and

the cross-domainalignmentacross the twodimensions,

A

theoreticalperspective of strategic alignmentisdeveloped usingfourconcepts

—

(1)consistency in cross-domainanalysis, (2)completenessofthe analysis,(3) validity

ofthe process,

and

(4)comprehensivenessoftheprocess.

These

conceptsare usedto

develop asetofresearch propositions with importantimplicationsforthe

1.0 Introduction

The

emerging

roleofInformationTechnology(I/T)' in the strategyof

organizations isgenerally

known

and

widely discussed(Benjamin, Rockart, Scott

Morton and

Wyman,

1984; Earl, 1988; Keen, 1986;McFarlan, 1984; Rockart

and

ScottMorton, 1984;

Wiseman,

1985).

While

investments in I/T

have

accelerated^, the

main

challenge isthe realization of benefitsfrom them.

The

impactsofI/Tat different levels ofeconomic analysis

have

been problematic (Strassman, 1985).

At

a national

economy

level, researchers

have

failed toestablish asignificant

relationship

between

I/Tinvestments

and

increased productivity

(Loveman,

1988).

At

the firmlevel,theresults are

somewhat

mixed.

While some

casesof

above-averagebenefits

have been

reported,other cases arecited

where

substantial

investmentsin

LT

yield no appreciable value

(Kemerer

and

Sosa, 1989).

The

apparent

gap between

the decision to investin

LT

and

therealization ofbenefits highlightsthe riskfacingorganizations that areusingI/Tto initiate

new

strategies

and

transform theirbusinessprocesses.

Given

this risk, itisnot surprising that the

needforeffective strategicI/T

management

isviewedascritical byexecutives

(Dickson,etal., 1984).

A

central tenetof thispaperisthatstrategic

management

ofI/Trequires appropriate choicestopositionthe firm withrespecttoa

dynamic and

uncertain information technologymarketplace aswell aseffective decisionsthatdefine the

implementationstrategyforbuilding

and

operating the informationsystems

infrastructure. In essence,

we

argue thatthe challenge of

managing

the information

' By_I/Twemean_{computerhardware, software,communications andrelated}computer-based

applications.

systems function

must

parallel thatofthe strategic

management

of the enterprise.

As

such, effective

management

of

LT

willrequire alignment

among

a

complex

setof choices reflectingboth a strategic

and

a functional perspective. This paperdevelops theconceptofalignment

and

presents a

model

forI/T

management

thatisconsistent

withevolving conceptsof strategic

management

and

also addressesthe functiona^ complexities ofI/T

management. The

Strategic

Alignment

Model

isdeveloped using

two

fundamental

dimensions

-

(1) strategicintegration,

which

builds

upon

strategic

management

research relatingtothe integration ofstrategyformulation

and

implementation;

and

(2)functionalintegration,

which

builds

upon

atradition of information systemsresearch thatfocusesonthe integration ofI/T

management

withthe

management

ofother line

and

functional areas. These two dimensions

define four strategic choice

domains

(Business Strategy,InformationTechnology

Strategy, Organizational Infrastructure

and

Processes,

and

Information

Systems

Infrastructure

and

Processes) thatform the basisforthe Strategic

Alignment

Model.

The

theory underlyingthe alignment

among

these

domains

isdevelopedusingfour theoreticalconcepts-- ₍₁₎consistencyin termsofcross-domain relationships,(2)

completenessof the process, (3) validity of the process,

and

(4)comprehensivenessof the process. Inthe followingsections,

we

define the general alignment model,define

and

illustrateeach ofthese four theoretical concepts,

and

thenuse

them

asabasis

fordevelopingresearch proposals relatingto theeffectiveness of strategic I/T

planningprocesses.

2.0 Strategy-I/T

Alignment

2.1

There

iswidespreadacceptance that business

and

I/Tstrategiesshouldbe linked orinterdependent. Indeed,the operative word, linkage isusedby

many

researchers

tocharacterize

an

approach to I/Tplanning that respondsto, aswell as shapes,businessstrategies(Henderson

and

Sifonis, 1988; King, 1984;

McFarlan and

McKenney,

1983; Pyburn, 1983).

While

thishas achieved the status ofconventional

wisdom

among

practitioners,

and

isoften

an

unquestioned

axiom

among

researchers,the natureoflinkage hasnotbeen adequatelyclarified inthe literature.

That

is,theconceptoflinkage has been historicallyinvoked asa metaphorto argue forthe integrationof business

and

I/Tstrategieswithout adequate articulation orclarification

ofitscharacteristics.

Thispaperseeks toclarify the natureoflinkage,oras

we

willdefine,

"alignment". It arguesthat the strategy-I/Trelationship should be conceptualized intermsoftwo

fundamental

dimensions

and

theiralignment:

(a) StrategicIntegration involvingthe alignment

between

external

(marketplace)

and

internal (organizational)domains. This incorporates

the classicopen-system

view

oforganization

and

strategy(Andrews, 1980;

Lawrence and

Lorsch, 1967;

Thompson,

1967).

(b) FunctionalIntegration involvingtheintegration

between

the business

and

the //Tdomains. This isconsistentwith the recent trendtowardsthe

integration of differentfunctionstoattaincompetitive advantage.

(c)

Cross-Domain

Alignment

involving the relationships

among

domains

that lie alongthe

two

diagonalsofamatriximplied

by

the abovetwo

Figure 1

The

ProposedStrategic

Alignment Model

External

Strategic Integration Internal

KEY

M

Business

Business Strategy Automation A' Organizational Infrastructure

&

Processes I/T Information Technology Strategy l>inkage 'A I/S Infrastructure

&

Processes FunctionalIntegration StrategicIntegration FunctionalIntegration Cross-Domain Alignments 2.2 StrategicIntegration

Itisperhaps atruismthateffective

management

requires boththe positioning oftheorganization intheexternal

environment

(marketplace)

and

the

arrangement

ofthe internalstructure

ana

processesnecessaryto execute the positioning strategy

(Andrews, 1980;

Thompson,

1967). This formofalignment has been used

(Venkatraman

and

Camillus, 1984)to discuss therole ofstrategyinageneral theory

oforganizations

(Snow

and

Miles, 1983).

Snow

and

Miles note that strategyisbest

viewed

as the combinationof"external alignment

and

internal arrangement". Neither external alignment(strategy formulation) norinternal

arrangement

(strategyimplementation) aloneensures organizational effectiveness,thus

requiring

an

interdependent (i.e.,formulation-implementation)perspective.

Followingthis general logic, Figure 1 depictstwodifferenttypesof strategic integration.

The

leftside reflectstheclassicformulation

-

implementation

alignment.

The

right side depicts acorrespondingtype ofalignment from theI/T

perspective.

While

we

define each

domain

ofFigure 1 later in Section 2.5, itis

importanttounderscore the correspondence

between

these two typesof strategic integration.

LT

strategyisanalogous tobusiness strategy inthesense that itisdefined in

termsof the externaldomain. Hence,

an

I/Tstrategydefines the position of the firm in theI/Tmarketplace.^ Similarly, I/S infrastructure

and

processes isanalogousto

organizational infrastructure

and

processesin the sense thatitisdefinedin termsof

an

internal domain. I/Sinfrastructure

and

processes reflectthe internal

arrangementsofthe I/Sfunction necessary toexecute the I/Tstrategy.

We

useI/S

(information systems) insteadofI/T to helpdifferentiate inour terminologythe distinction

between

afocuson the general

market

ofinformation technology

and

those particular technologies(i.e., hardware,software,systems, etc.) thatform the internal infrastructure.

2.3

Functional

Integration

Functionalintegration reflectsa strategic perspective forthe

management

ofa function.

We

seeincreased recognition ofthisperspective in functionssuchas

^ _{OneperspectiveistoviewI/Tvendorsas criticalsuppliers. Thus,I/Tstrategywill affectsupplier}

powerand, therefore, willhaveadirectimpactontheprofitabilityofthefirm. In that sense, the StrategicAlignment Modelisanattempttoexplicitlyassessandinterpret thissupplier-firm relationshipandunderstandthe implications ofthisrelationshipformanagingtheI/S infrastructure..

marketing (Wind and

Robertson, 1983), finance (Myers, 1984)

and

information technology (King, 1984;McFarlan, 1984; Parkeretal., 1988;Sharpe, 1989;

Boynton

and

Zmud,

1987). In thispaperthe functional integration involvestwotypesof

alignment; one is

between

business strategy

and

I/Tstrategy, the otherbetween

organizational infrastructure

and

processes

and

I/S infrastructure

and

processes. Functional integration

between

business

and

I/Tstrategies isconcernedwith the integration

between

the positions ofafirmin the product-marketarena

and

the position in the I/Tmarketplace.

Our

argument

isthat

an

appropriate alignment

between

these twostrategiesisa

fundamental

requirementforrealizingvaluesfrom

I/Tinvestments. Further, these strategicchoices affectnotonlythe transformation oftheorganizational processesbutalsothedesign ofI/Sinfrastructure

and

processes (Rockart

and

Short, 1989;

Zmud

etal., 1986).

The

second typeof functional integration isthe alignment

between

organizationalinfrastructure

and

processes

and

I/Sinfrastructure

and

processes.

That

is,the abilityto design,

implement and

operate the I/Sinfrastructure (i.e.,

applications,data

and

technology) isdirectly related tothe organizational

infrastructure -- _{structure, processes,}etc. Similarly, the designoforganizational infrastructuredetermines therequirementsfortheI/Sinfrastructure

and

processes.

These

twotypesoffunctional integration highlightthe needforintegration

between

the business operations

and

the technological (especially I/T

and

I/S)operations.

2.4

Cross-Domain Alignment

As

depicted inFigure 1,there are twotypesof cross

-domain

(i.e.,diagonal)

alignmentdefinedby these twodimensions.

The

cross

-domain

alignment

between

business strategy

and

I/Sinfrastructure

and

processes depictsaclassic linkage

view

I/Tstrategy

and

organizational infrastructure

and

processesreflectsa

view

of

automationofthe

work environment (Mumford,

1981; ZubofT, 1988). Specifically,

creating a linkage

between

business strategy

and

I/Sinfrastructures

and

processes requires the specification of

work

processes, roles

and

authority structuresin order

to relate

how

the I/Sproducts

and

services willimpactthe businessstrategy.

That

is,

the business strategy

must

be

decomposed

into

work

processes inordertodefine the

requirementsofthe I/Sinfrastructure

and

processes.

The

automation typeofcross-domain alignmentrepresentsthe potential for

emerging

technologyto

change

or alterorganizationalprocesses. This

view

emphasizesthe potentialvalueofI/T

and

how

theI/Sinfrastructure

and

processes provide a service organizationto supportthis potential.

Thus,

we

define the proposedStrategic

Alignment Model

in termsofthe

dimensionsoftwo typesofintegration

and

cross-domainalignments. Specifically,

we

arguethat neitherstrategicintegration nor functional integration alone is

adequate toeffectively

manage

I/T. Stateddifierently, each isnecessary,butnot

sufficientforderiving value fromI/Tinvestments. Further, the cross-domain

alignmentderives itslogic

and

meaning

throughthetwo basicdimensionsof

integration.

We

willlater argue that theeffectivenessof strategicI/T

management

canbeunderstood intermsofcross-domainalignment.

2.5

Four

Domains

of the

Model

Thus

far,

we

have

discussed therationale ofalignmentintermsoffourbasic

domains

beingaligned, namely: businessstrategy,organizational infrastructure

and

processes, I/T strategy

and

I/Sarchitectures

and

processes. In the following

2.5.1

Business

Strategy isdefined in termsof the choices pertainingto the positioning ofthe businessin theproduct-market arena. Itreflectsthesetofgoals

(ends),

means

(actions)

and

underlying assumptionspertainingto the choicesthat

position thefirm in a product-marketarena.

The

conceptofbusiness strategy not only covers abroad terrainbuthasalso

beendefinedusing

many

typologies

and

classifications(Hofer

and

Schendel, 1978;

Venkatraman

and

Grant, 1986).

However, most

discussionsofbusiness strategy

deal with questionsofbusiness scope(in termsofproduct-marketchoices)

and

the

specificorientationto compete in the chosenmarket.

The

specificorientation ofa

strategyis

viewed

intermsoftwo components: distinctivecompetences

and

governancestructures. Distinctivecompetences referstothose attributes ofstrategy

which

contribute to adistinctive, comparative advantage over competitorsin the

product-market arena

(Snow and

Hrebiniak, 1980).

Common

attributesinclude (but arenot limitedto): pricing,quality,value-addedservice, deliverychannels

and

image.

Governance

structure involves thearticulation of collaborative

mechanisms

forobtaining competitive advantage,includingvalue-addedpartnerships,strategic

alliances,etc. This

component

ofbusiness strategyiscritical sinceneither"pure"

markets

norclassicalhierarchies alone define the set ofavailable

mechanisms

for

effectivestrategy (Harrigan, 1985). Thus, a business

may

be able tocompete

more

effectivelythrough acarefullydesigned

network

ofpartners

and

alliances than

alonein uncertain complex, turbulent,

and

dynamic

markets. Indeed, these collaborative

mechanisms

are not onlyon the increasebutalsoeffective in theI/T

sector

(Koh and

Venkatraman,

1989).

2.5.2

Organizational

Infrastructure

and

Processes

isdefined in termsofthe choicespertainingto the particular internalarrangements thatsupportthe

organization'schosenposition in the product-marketarena. Itreflectsthe goals (ends),

means

(actions)

and

underlying assumptionspertainingtothedesignof

management

structure

and work

processes.

While

there isawide range of possibleconstructs forrepresentingthisdomain,

we

focuson those

components

thatarecriticallyintertwinedwith theI/T

and

business strategy issues(Galbraith, 1977;

Lawrence and

Lorsch, 1967; Leavitt, 1965): (a)administrative infrastructurethatincludes the organizationalstructure, roles

and

responsibilitiesnecessaryto executethe businessstrategy;(b)

work

process that includes the articulation ofthe

work

flow

and

itsassociated information flow that are necessarytoexecutestrategies;

and

(c)skills

and knowledge

indicatingthe capability oftheorganizationto

implement

astrategy.

As we

willargue later, the choices

made

in this

domain

bothdirectlyaffectthe abilityto executebusiness strategy

and

establishcritical requirementsfortheI/S architectures

and

processes.

2.5.3

Information

Technology

Strategy isdefinedintermsofthe choices pertainingtothe positioning ofthe businessin the information technology marketplace. Itreflectsthesetofgoals(ends),

means

(actions)

and

underlying assumptionsthatrelate tothese choices.

Three

components

underlie this strategy

and have

importantparallelswithbusinessstrategy.

These

are: (a) technology scope, (b)distinctivecompetences,

and

(c)governancestructure. Technologyscope,

analogous tobusinessscope, refersto thetypes

and

rangeofI/Tfunctionalitythat will be

made

availabletothe organization. Strategic choicespertainingtoscope oftencenter

on

adoptionof

an emerging

technology. For example, usingexpert

systemstodecentralizetheunderwriting authoritytothe independent agents enables

new

businessstrategiesfor

an

insurancecarrier. Similarly, theuseof

an

electronic

imaging

system forpaper-intensive operationslikecreditcards enables

these choices position the firm in the

LT

market. For example,the choices

might

increaseordecrease the firm's

dependency

onparticularvendors.

Distinctivecompetenciesrefersto those choicesthataffect theability ofthe firmtodifferentiate its

LT

infrastructure.

As

withdistinctive characteristics ofa businessstrategy,there are a

number

of characteristicsthat

may

differentiate the technology strategy pursued. For example, thedegreeofconnectivityreflected in the infrastructurecanaffectcharacteristics suchas availabilityor access to

information, flexibilityorcost. Decisionsto adoptorprovide standards such as operatingsystems (e.g.,

UNIX),

communication

protocols(e.g., OIS),application

environments

(MAPA,

SQL,

etc.)or

hardware

(e.g.,

common

PC

architecture), increase the potentialforconnectivityacrossvendors

and

directlyaffect flexibility

and

availabilitywithin

and between

organizations.

Of

course, adoptionofsuch standardsalso reducesthe abilityto use specificinformation systemsasa competitivebarrier

and

thus

must

be assessed in termsofcurrentor

emerging

businessstrategy.

Other

factors thatreflectthe distinctive

competency

oftheI/S

infrastructureinclude price/performance,reliability or capacity.

Each

ofthese characteristicsdefinesparameterswithin

which

the infrastructure

must

operate.

For example,

emerging

technologyarchitectures

may

wellcreate a

new

process/performancecurve thatenable adoptersto radicallyalterthe economicsof

usingI/Ttosupportstrategy.

The

governanceissue in

LT

strategy isparalleltogovernance in business

strategy. Traditionally,

LT

governance has focusedonissues ofprivacy

and

security.

However,

asthe role ofinformation technology in interorganizational strategy increases(Barrett

and

Konsynski, 1982;

Cash and

Konsynski, 1985; Malone,Yates,

and

Benjamin, 1987),thegovernance of

LT

infrastructure

emerges

as

an

important elementof

LT

strategy.

Rotemberg and

Saloner(1989) discussthe distinction

between

cooperative

and

competitive advantage in the contextof relativeownership

ofinformation technology networks.

More

specifically,thenetworksof

ATMs

and

airline reservationssystemsillustrate thecomplexitiesof thegovernance structure intermsofownership/influencerelationships

and

the relative abilityofthe

participatingfirmsto provide proprietaryservices across thenetwork.

The

importantpointisthatthe use of

LT

for

an

interorganizational competitive strategy

has strategic implicationsforchoices relatingto governanceofthe

emergent

technologyinfrastructure.

2.5.4

Information

Systems

Infrastructure

and

Processes

are defined in termsof choicespertainingto internalarrangements

and

theprocesses thatdeterminethe

range

and

types ofl/S products

and

services deliveredto theorganization. Itreflects

the goals(ends),

means

(action)

and

underlying assumptionsthatrelate to these choices. Thisisparallel totheorganizational infrastructure

and

processes of the businessdomain. Inotherwords, while organizationalstructure

and

management

processrelateto business strategyimplementation,the information systems

architectures

and

processes relate to the implementationofI/Tstrategy.

The

three

components

of this

domain

areinfrastructure, processes

and

skills.

I/Sinfrastructure issimilartoorganizational infrastructure. Itrepresentsthe definitions,governingpolicies

and

rules,

and

impliedpriorities forthree

key

I/S

management

areas: applications, data

and

technology configurations.

The

applicationsarchitectureis theinterrelation ofsystemproducts thatmanipulate,

storeor retrievedata inordertosupport the information processingrequirementsof thefirm.

The

data a'-chitectureisadefinition

and

implementationofdataentities,

relationships

and

policiesthatdeterminethe integrity

and

accessibilityof data. Finally,thetechnology configuration

component

isthe setofhardware,software

and

communications

technologies thatdetermine the specificcharacteristics ofthe

embedded

technology infrastructure. Increasingly,eachofthese areasis

managed

soasto enable coordinationacross

them

withoutrequiringtightcoupling,e.g., a

change

tothe logicof

an

application does not require redefiningthedatabase.

The

processes

component

relatesto

work

processes thatare critical tothe

efficient

and

effective operationofthe I/S infrastructure.

Such

processes

would

include

methodology

and

proceduresfor

development

ofsystems, security/backup procedures, datacenteroperations, cost/control systems

and

soon. In essence,these arethe underlyingproduction processes for

managing

and

adaptingthe I/S

infrastructure.

Finally,the

human

resourcecomponent, aswith lineorganizations,isa critical

component

ofthe I/S architectures

and

processes. This

component

reflectsneedsfor

new

skills,

knowledge

orvalueswithin theI/S function.

The

criticality ofthis

component

shouldnotbe overlooked. For example, Martin (1982),

Mumford

(1981)

and

otherspointout that introduction of

changes

in architectures(i.e.,adoptinga

data resource

management

strategy)orprocesses (adopting

computer

aided software

engineering techniques)oftenimpliesmajor changes in the skillsetsofthe

work

force.

In

summary,

each

domain

requiresconsistency

among

asetof interrelated

components. Further, these

domains

serveto define themajor elements that

must

be

effectivelyalignedto derive the

maximum

benefitsfrom

VT

investments. Figure 2 is

an expanded

version oftheStrategic

Alignment Model

with theinternal

components

Figure 2

The

Proposed Strategic

Alignment

Model

External

Strategic Integration Internal

Business

BusinessStrategy I/T I/TStrategy Automation Organizational

Infrastructure

&

Processes

I/SInfrastructure

&

Processes FunctionalIntegration

KEY

<

StrategicIntegration FunctionalIntegration Cross-Domain Alignments

3.0

Four

Theoretical

Concepts

ofStrategic

Alignment

3.1

Consistency

in

Cross-Domain

Analysis

One

approach to alignmentisto focuson the setof bivariatefit

between

all

possible

domains

identified in Figure 1.

As

discussedbefore, thevertical links representthe classical external-internal integration. For example, thefit

between

business strategy

and

organizationalstructure

and

processesin the business

domain

reflectsthe interplay

between

businessstrategy formulation

and

implementation;

the fit

between

I/Tstrategy

and

I/Sinfrastructure reflectsthe interplay

between

I/T

strategyformulation

and

itsimplementation.

The

horizontal linksrepresent functional integration.

The

fit

between

business strategy

and

I/Tstrategyreflects

the interplay

between

strategicchoices acrosstwo domains:positioningof the business intheproduct-marketarena

and

in theI/Tmarketplace. Similarly, the fit

between

organizational infrastructure

and

processes

and

I/Sarchitectures

and

processes reflectstheinterplay

between

twosetsofinternal

arrangements

acrossthe

two

domains.

Our

argument

isthatthe adoptionof bivariate fitisseriously limited. For example, while the fit

between

business

and

I/Tstrategies ensuresthe formulation of I/T-enabledstrategicoptions, theimplications forimplementation are providedby

thefit

between

business strategy

and

organizationalinfrastructure

and

processes,

and

the fit

between

I/Tstrategy

and

I/S architectures

and

processes.

There

is

considerablesupportfor thethesisthatsuccessfulexploitation of

LT

capabilities requires appropriate changesin internal

arrangements

(i.e.,organizational

infrastructure

and

I/S architectures).

Thus

any

one bivariate fitignores

considerations ofothercrucial relationships. Further, in the largerbodyoftheory

perspective relate topossible inconsistencies

among

multiple formsof interrelated bivariatefits(Child, 1975; Miller, 1981)

and have

been

termed

as errors oflogical

typing (Bateson, 1979).

A

multivariate coalignmentperspective attemptstoovercome the limitations of bivariate fit. In essence,

we

propose thatefiectivestrategicI/T

management

process

must

address both functional integration

and

strategic integration. Infact,

many

currentI/Tplanningprocessesadoptthisperspective. Forexample, enterprise

modeling(Martin, 1982) representsa processthatexplicitlyanalyzes linkage

through strategicintegration(i.e., fit

between

business strategy

and

organizational

processes)

and

functional integration(i.e., fit

between

organizational processes

and

I/Sarchitectures).

Note

thatthis processisframed bytheassumptions

and

decisions of

an

apriori strategicbusinessplanning processthatgenerated these goals.

That

is,

enterprise modeling, as

most

often described,does notattemptto address external

market

positioningissues.

An

enterprise

modeling

processis

an

explicit

means-ends

analysisthat links strategicgoalsto the three

key

I/S architectures: Applications,

Data

and

Configurations.

While

currentimplementationsof thisprocessoftenadvocateone

typeof architecture,e.g., adataarchitectureversusa systems/processarchitecture,

the trendin I/Splanning appearsto beconvergingto onethat recognizes the necessityofeach

(Zachman,

1986). It isinterestingtonote thatalternativesto

Enterprise

Modeling

oftenemphasize issues ofskills

and knowledge

within the organization

and

issues ofroles,responsibilities

and

formal reportingrelationships

(Mumford,

1981;

Bostom and

Heinen, 1977).

The

importantpointisthat these

approaches enabletheplanners toexplicitly

examine

the linkage issue.

That

is,

rather thanat anabstractlevel ofattemptingto relate I/Sarchitectures tostrategic

goals.

Thus,

we

propose thatattention to both strategicintegration

and

functional integrationisa necessaryrequirementforeffectivestrategic

LT

management.

We

definethisperspective as internal consistency ofthe

management

process.

The

conceptofconsistencyhasbeen identified as oneelementofeffectivestrategic I/S

planning systems (Henderson

and

Sifonis, 1988;King, 1983).

Henderson

and

Sifonis (1988), forexample, defined consistencyin termsofahierarchicalsetof

means/ends

relationships. Consistencyisachieved

when

the

means/ends

relationships at a

strategic level aredisaggregated intoasetofcompatible

means/ends

relationshipsat a functional level. In

many

I/Splanningapproaches, consistencyisoften addressed through functiondecomposition, i.e.,function, process

and

activity.

A

similar notion ofconsistency withrespecttoends can befound in the useofhierarchicalsystems

suchasobjectives, goals

and

targets tohelp representthe translation of abstract,

long-termintention into concrete,short-term behavior.

3.2

Eight Perspectives

of

Cross-Domain

Analysis

The

Strategic

Alignment Model

providesforeightperspectives of internally consistentcross-domain analysis(seeTable 1).

Each

perspective, involving both functional integration

and

strategic integration,isbrieflydiscussedin the following

sections.

3.2.1

Technology

Exploitation. In recentyears, severalcases

have

beencited

where

LT

haschallenged, influencedorshapedbusiness strategy (McFarlan, 1984;

Rockart

and

ScottMorton, 1984;

Wiseman,

1985). Technologyexploitation for

strategicthrustscanbe viewed in termsofI/Tchoicesenablingorthreatening strategiesin the product-marketarena. Further, I/Tstrategieshave the potential

forredefiningthe natureofbusiness

and

competition as well as the boundariesofthe

marketplace (Cash

and

Konsynski, 1985). Indeed, partof thecurrentexcitement aboutI/Tisdue to the potential thatI/Toffersto alterthe rangeof strategicoptions available tobusinesses (Johnston

and

Vitale, 1988). Itisimportantto note thatthis

cross-domain perspective involvesthe considerationofnotonlythe impactof information technologyon business strategy butalsothe implications for

organization

and

management

processes.

An

example

of

an

analytical approach

often

employed

asa technology exploitation planningprocessisthe use ofvalue chain analysisbothtoexplore strategicoptionsfor interorganizational linkage

and

toassesstheimplications ofthesestrategiesforintegrationof

key

businessprocesses (Rockart

and

Short, 1989).

3.2.2

Technology

Leverage.

In contrast totechnology exploitation, technology leverage involves the formationof

an

I/Tstrategy thatbestsupports a chosen

business strategy in combination with the assessmentof

how

these choices have an impact on existingI/S architectures

and

processes. Forexample,

USAA

embarked

on ajointtechnology

development

with a

key

vendorinorderto create

and

adopta

new

approach to

document

handling. Thisstrategyrequired

them

to

make

major changesto theexistingI/S infrastructure acrossallthree architectures: applications,

data

and

configuration. Thisprocess reflectstechnology leverage thatisa

cross-domain

perspective that involves the considerationofnotonly the impactofbusiness strategyonthe I/Tstrategybutalsothe implicationsfor I/Sinfrastructure

and

processesforsuccessful implementation. This viewisoften associatedwith the general issueoftechnologyscanning

and

management.

3.2.3 Strategy

Implementation.

Here,the focus isnotexplicitlyon the I/T

implementation throughorganizational structure

and

processes

and

the associated

I/Sinfrastructure. Strategyimplementation isacross-domain perspective that involvesthe assessmentof the implications fororganizational

and

management

processes of a businessstrategy as well asthe impactoforganizational

and

management

processeson therequirements forparticularI/S infrastructure

and

processes. This approach emphasizesdetailed analysisofbusiness processes

and

theirrelationshipstoboth goals

and

I/S products

and

services often associated with methodologiessuch asEnterprise

Modeling

(Martin, 1982).

3.2.4

Technology

Implementation.

Thisperspective involves notonlythe

implementationofI/Tstrategythrough thedesignofI/Sinfrastructure

and

processes

butalsotheimpactofthisdesign onthe scope ofI/Sproducts

and

servicesthatwill be available to theorganization. Note thatin the technology implementation

perspective,business strategy isnotexplicitlyrecognized.

Thus

thiscross-domain perspectiveinvolves the implications ofI/TstrategyforI/Sinfrastructure

and

processes

and

theimpactofthose choicesonthe organizationalinfrastructure

and

processes. This perspectiveisoften

viewed

asanecessary processforensuring

effective uses of theI/Sresources. In

many

cases itsuse

emerges

from thebeliefthat

theI/Sfunction has insuflicienttechnical leadership.

The

abovefourperspectivesshare one

common

theme -

namely, atop-down

orientation

where

eitherthebusiness strategyortheI/Tstrategydirecttheother strategy

and

subsequent implementationconsiderations. In contrast,the otherfour perspectivesreflectabottom-uporientation. Here,eitherthe current organizational infrastructure

and

processesorthecurrentI/Sinfrastructure

and

processessignal theimplicationsforstrategicchoices atthe levelofbusiness

and

I/T strategies.

Thus,while a top-downorientation

may

reflectthe preference ofprofessional planners, theStrategic

Alignment Model

(as

shown

inTable 1) reflectsa rangeof

perspectives that couldalso supportthe notionofinternally consistent,bottom-up

analysisofa cross-domain relationship.

The

fourbottom-upperspectivesare discussed below.

3.2.5

Organizational

Exploitation. This perspectiverecognizes

an

internally consistent process that

emerges

from organizationaction. Inperspective, the local

knowledge

and

innovation ofthe individualor

work

unitare

communicated

and

interpreted in termsof the implications foreffectivebusiness strategies.

Given

this

interpretation, appropriate choicesforpositioningthe firminthe I/Tmarketplace

are

made.

Thus,Organizational Exploitation isa cross-domain perspective that

identifiesthe implicationsoforganizationactionforbusiness strategy

and

articulatesthe impactofthese consequencesonthe I/Tstrategy. Thisbottom-up

processhas

become

quite

common

foruser-based technologiessuchaspersonal

computersorDecision Support Systems. Itisinterestingtonote that these processes operated outsideof the

more

traditional top-down viewof strategicI/T

management.

And

yet,

many

of the strategic usesoftechnologycan be tracedbackto

emergent

strategies, i.e.,strategicusesoftechnology that evolvedfromorganization innovation driving theadoptionofI/T strategies(see forexample,

Copeland

and

McKenney,

1988).

3.2.6

Organizational

Requirements.

In thisview, the organization istreatedasa

market. ThisI/S

management

processinvolves

market

analysis, thedesign of appropriate products

and

services

and

adoption ofan

VT

strategy that willsupport

the

demands

for

development

and

sustained deliveryofthese products

and

services.

Thus, OrganizationalRequirementsisa cross-domain perspective thatidentifies the

impactofthe organization ontheI/S infrastructure

and

processes

and

the implicationsofthese

demands

forstrategicI/Tpositioning. Thisbottom-up I/S

product

and

service perspectiveis alsoadvocatedfor

an end

user

environment

that

viewstheI/Sfunction as a

major

supplier/distributor.

3.2.7 I/S Capacity. Thisperspective isseldom advocated

by

professionalplanners,

and

yet

may

have

relevance for

some

organizations. In thisview, the I/S

infrastructure

and

processes are taken asthe anchor.

The

strategicI/S

management

processisone thatseeksto

maximize

theuseofthisresource in the pursuitofa business strategy. Thus, I/SCapacityisacross-domain perspective thatidentifies

the impactofI/Sproducts

and

servicesonthe organization

and

thenevaluates the implicationsofthe I/Sproduct/service useon businessstrategy. CurrentI/S

planning techniques that seek to understand

and

optimallysize I/Tcapacityreflect

this

management

perspective.

3.2.8 I/S

Requirements.

In thisperspective, the requirementsoftheI/S

infrastructure

and

processes provide thebasisforstrategicI/Tchoices.

These

choices,i.e.,decisionsthatposition thefirmin

an

I/Tmarketplace,are evaluatedin

termsof theirabilityto enable orthreaten businessstrategy. Thus,I/S

Requirementsis across-domain perspective that evaluates the implicationsofI/S

infrastructure

and

processesonI/Tstrategic choices

and

theimpactofthese choices

on

businessstrategy.

Such

processesyield

an emergent

I/T-businessstrategy relationshipevolvingfrom

an

I/Sfunctional perspective.

Note

alsothateach perspective reflectsa

domain

anchor(indicated

by

•

in

Table 1). This anchoris thepotentialsourceofdecisionbias.

The

assumptions,

language

and

orientation ofthe processwill be heavily influenced

by

thisinitiating frame.

Of

course, bitis isnot inherently bad. Ratheritisthe existenceof

unknown

In

summary,

eachofthe perspectiveshasthe potential tosupport

an

internally consistentcross-domain analysis.

However,

itisalsoclearfrom Table 1 thateach

perspectiveislimited.

That

is, in eachcase one

domain

isnotdirectlyincorporated in the analysis.

To

redressthis limitation,

we

discuss the

need

forcompletenessof analysis next. Propositionsconcerningthe relativeeffectivenessofinternally consistentprocesseswill be discussedin Section4.0.

3.3

Completeness

of

Analysis

Itisclearthatconsiderationsof

any

oneofthe eightformsofcross-domain

analysiswill leave unchallenged one

domain and

itsassociated relationships. For example, technologyexploitation(1) does not address (i.e., ittakes as given) issues relating tothe I/S infrastructure

and

processes,

and

istherefore incomplete.

Our

definition ofcompletenessinvolvesthe following: (a) aclosed loop addressing all the fourdomains,

and

(b) it

examines

aparticularcross-domain relationship fromboth a

top-down

and

abottom-up orientation.

Thisdefinition ofcompleteness isanalogous totheconceptoforganizational learning. Argyris(1977, 1982)

and

othersargued that theconceptofsingle-loop learning involvestheadjustmentofbehavior with respecttoagiven assumption set

(frame). Thisadaptation process actsto

minimize

deviationfromthisdesiredstate.

Inthis context,a completeI/S process not only

examines

a cross-domain (hence hierarchical) relationship,but also

examines

thisrelationshipfromboth a top-down

and

abottom-upperspective.

Note

that

by

restricting thecombinationofinternally consistentanalyses,a given

domain

anchorismaintained. Figure 3

shows

four

common

formsofcomplete processes, highlightingthe cross-domainrelationship that

Figure3

Complete

Processes(Single Loops)

Preferred Process Alternate Process

Domain

Anchor

Label

Diagram

Table 1 Refer-ence Label

Diagram

Table 1 Refer-ence

LT

Strategy Competi-tive

FT

impact •4 1

'^

l.B

in

imple-mentation 4,A

D—

D

Organi-zation Organiza-tion-led

FT

exploi-tation • •

—

r' r* * < A,4 Organi-zation

demand

n—

o

B,l Business Strategy Strategy execution •

<

\ \ \

3,D

I/T infra-structure * 1^ 1 2,C I/S I/S resource

maximi-zation X \

<

C,2

I/S operations

<

I

—

!*

D,3

Key:

Numbers

represent top-downperspectives,

while lettersrepresentbottom-upperspectives;

and

•

=

Domain

Anchor

Three

observations are appropriate. First, note that theinterpretation ofeach

consistent process

assumes

astartpoint(indicated

by

-k).

A

closed-loop process

requiresa

domain

anchor,

and

foreach anchor, there are fundamentally twochoices.

A

currentpractice setis

shown

on theleftside ofFigure 3,while thecompeting

model

is

shown

tothe right.

While

these alternatives are possible,there is little

1980;

Marcus and

Robey, 1988). For example,IITimplementation isaclassic

"technology imperative"decision process

and

has beendescribed aslesseffective

relative toa competitive IIT perspective

(Marcus and

Robey, 1988). Figure3

illustratesa rangeof

common

approachestoI/Sdecision

making,

buta

more

careful

empirical assessmentof the superiority of thecurrentpractice setiswarranted

before generalization concerningthe relative effectiveness ofthese approaches can

bedrawn.

A

second observation

may

be lessapparent.

The

selection ofa

domain

anchor

(creation ofabias)

and

theexecution of a consistent decisionprocessare both a strength

and

a weakness. Thisis reflectedbythe cross-domain relationshipthatis

examined.

That

is, the given processwillpromote aparticulartype oforganizational learning. Forexample, strategyexecution (3,D) isoften proposed as a preferred

approach (Martin, 1982). Thisprocesshasthe strengthof tightly linkingthe I/S

architectureto the strategyofthefirm. Further, the adoptionoftechnology enables theI/Sresource tobe optimized with respectto thisstrategy.

However,

the processis

based on astrategicI/Sdecision-makingprocess thatdoes notexplicitly

examine

how

emerging

technology could bestbeexploited.* Thus, alternativeI/S

decision-making

processescouldbe initiated

by

exploring

how

technology could

have an

impact on strategy

and

itsimplicationsfor

changing

business processes

and

organizationstructures.

These

strategicopportunities arethen definedin termsof potential

LT

products

and

serviceswithappropriate changestotheI/S function.

Thisalternative, reflectedbyCompetitiveIITImpact,

may

wellincrease the

likelihoodthat

new

technology iseffectivelyexploited.

While

ithas this strength,

such

an

approach

may

beless effective asa

means

to explore

how

thesestrategic

* _{Notethatadvocates arguethatbycreatingbothapplication anddataarchitectures, theI/S}

resource islesssensitivetochangesinbusinessprocessesandhence can supportchangesin

initiativespropagate acrossmultiple businessprocesses

and

affecta complex,

embedded

technology.

Another

way

to

compare

StrategyExecution

and

CompetitiveI/TImpactisto

note that they address differentcross-domainalignments. Strategy Execution focusesthe consistentalignment with businessstrategy. This approach leadsto

linkage

between

business strategy

and

I/Sarchitectures

and

processes. Competitive I/TImpactaddresses the automationalignment

by

exploring

how

technology could

transformorganization structure

and

processes.

Value

fromI/Tinvestmentevolves

from

enabling

new

strategy-structurealignments

combined

withtheability to

provide appropriate service levels.

We

will arguein Section 4that organizational contingenciesdetermine

when

a given formofacomplete processis

most

effective.

Finally,

we

shouldnote that

many

variationsofincomplete processesexist.

Considertwo (illustrative) formsofincompleteness

shown

inFigure4.

The

first is

created by

combining two

forms oftop-down decision

making. Both

arestrategy driven,hence, hasthestrength ofincreasing the likelihoodthatthebusiness strategyisdriving boththe definition ofI/Sproducts

and

services

and

the choices thatpositionthe firm in

an

I/T marketplace. Unfortunately, thetwo paths

meet

at

I/Sinfrastructure

and

processes,

and

there

may

wellbe inconsistentresults.

One

perspective isbusiness strategy interpreted throughthe organization, theotheris

business strategy interpretedthrough the positions in theI/Tmarketplace.

At

best,

thisprocessreflects a typeofdialectic strategic

management

process requiringa resolutioncomponent, i.e.,resolvingconflicting

demands

on theI/Sinfrastructure

and

processes.

At

worst, itreflects twocompeting top-down views(i.e.,business

and

technical) withoutrecognition ofthe inherentinconsistency

(Mason and

Mitroff, 1981).

Figure4

implemented

given the

embedded

technology

and

the impliedI/Tstrategydecisions

(e.g.,pertainingtoscope, distinctivecompetencies,orgovernancestructures).

Such

a technologyrisk isessentiallytherisk that the envisionedinfrastructure willfailor

atleast farexceed expectedcosts. Inessencethis potential risk

and

those analogous

riskscreated byotherformsofincompleteplanningprocessesform thebasis forour

propositionsthatcompletedecision-makingprocesses areeffective.

These

propositionswillbe discussed inSection 4.

3.4 Validity ofthe

Process

A

concern raisedby

Churchman

(1971),

Henderson and

Sifonis (1988),

Mason

and

Mitroff(1981),

Weick

(1979)

and

othersrelatesto thepotential threattovalidity ofadecision-makingprocessintroduced

by

the

domain

anchor.

One

possible solution

tothisthreat istosurface

and

examine

the assumptions underlyinga given anchor.

Thisalternative can also involve

implementing

a processthatchallengesthe

assumptionsofaplanningframe

(Mason

and

Mitroff, 1981). Thisprocessof surfacing

and

challengingassumptionsisanalogousto theconceptofdouble-loop learning. Double-loop learning,Argyris(1977), canbe thoughtofasa process that challenges the existingframeofreferenceor

paradigm

usedbythe organizationfor

problem

solving

and

control. In contrasttosingle-looplearning, adouble-loop learning process does notseektorestore or resolvedeviation from

an

existingsetof conceptsorstandardsbut attemptstochallenge

and

perhapsreformulate these conceptsorstandards.

The

Strategic

Alignment Model

highlightstwo formsofvalid process:

weak

and

strong.

Each

isdiscussed below.

3.4.1

Forms

ofValidity:

Weak

and

Strong

Weak

Validity.

We

define a planningprocess as

having

weak

validityif it

relationship. Note that a closed-loop processimplies both internalconsistency

and

completeness. For example, one formofavalid process beginswithacomplete

processfrom a strategy frame usingStrategy Execution, i.e., strategy implementation

and

I/S requirements. (See Table 1 forthese basic perspectives.)

The

formerprocess linksstrategyto I/S throughorganization whilethe latterlinksI/S tobusiness strategy through

LT

strategy. Thisapproach isdepictedas a complete process labeled Strategy Execution in Figure 3. In orderto challenge the assumptions underlyingthis process, a second, perhapsconcurrent.'processisinitiated from

business strategytoI/S infrastructure

and

processes throughI/Tstrategy(i.e.,

TechnologyLeverage). Thisis followedby aprocessofI/Scapacitymaximization.

The

combination ofthese two basicprocesses is

shown

asl/Tinfrastructure in Figure

3

and

emphasizesthe technology positioningdecisions inorder tobalance the StrategyExecutionprocess.

The

resultisa double-loopprocessthat

examines

the linkagerelationship through twoperspectives (i.e.,internalorganization

and

external technologypositioning). In practice, such a process often reflectsa two-cycle strategicplanningprocessthat involves line planning[StrategyExecution)

and

technology planning{I/TInfrastructure).

As

notedearlier, eachperspective

representsacomplete planningprocess that providesa

means

toexploretheissue of linkage,both top-down

and

bottom-up. Thisisa

weak

formofvalidity, however,in thatitconcentrates onlyonthissinglecross-domain alignment, i.e.,linkage.

Strong Validityisdefined as a double-loopdecision-makingprocessthat exploresboth cross-domain alignmentrelationships: linkage

and

automation. For example, a strategy execution (3,D)could be

augmented by an

I/T exploitation (A,4).

This processnotonly provides a

mechanism

tochallenge the assumptionsof a given

planning frame butwill alsoaddress both types ofcross-domainrelationships.

We

alignment.

That

is, the

outcome

ofthe decision-makingprocessesisthe attainment

of strongbidirectional linkage

between

each

domain

anchor

and

the explicit

explorationofboth cross-domain alignments. Propositionsconcerningthe relative effectiveness ofthis processare discussedin Section 4.

Itisinteresting toconsiderthe useofsocio-technical processes

(Mumford,

1981;

Bostom and

Heinen, 1977) as a

means

to generate a validI/T

management

process.

Thisapproachexplicitly separatesthedesignofasocial systemsolutionfrom the designofa technologysolution.

The

separation offersthepotential tochallenge the biasofthe technologistas well as the social systemdesigner.

However,

ifthe

socio-tech processisinitiatedfromastrategicbusinessframe (i.e.,both processestake as

giventhe business strategy), thedecision-makingprocess is

modeled

as

combining

3,D

and

2,C.

As

such itresults in a

weak

form of validitythatemphasizeslinkage.

A

strongformof validitycouldbe created ifthe socialsystemdesign reflected a

bottom-up

process thatchallenged the businessstrategy.

Such an

approach (2,C

and

A,4)

would examine

bothcross-domain relationships.

The

conceptof bidirectionallinkage

between

two

domain

anchors,e.g.,

business strategy

and

organization,isoften advocated (King, 1978;Pyburn, 1983).

For example, iterativeoradaptive planningisused toemphasize the desiredstate of exploring both strategyfrom

an

organization perspective

and

organizationfroma strategyperspective.

However,

itis

much

easierto

draw

arrows on paperthatpoint in oppositedirectionsthanitis to actuallyenact

an

iterative

management

process thatviewsissuesfromoppositeperspectives.

We

arguethata valid process

must

achieve the ideal ofadaptive processes while also

examining

both formsof

cross-domain

alignment.

While

it

may

bepossible toconstruct a single planning event

that

would

achieve suchends,

we

believe itis

more

likelyto requiremultiple

additionalcost,

and

hence the need isto demonstrate thatsuch efTortsin factresult in

measurably

improvedeffectivenessofthe strategicI/T

management

process.

To

thisend,

we

propose in Section 4 asetofpropositionsconcerningtheeffectiveness of

I/S planningprocesses

and

indicate

how

the propositionscould be formulated

and

testedas alternative structuralmodels.

An

issue thatisseparable from completeness

and

validityisthe degree of

comprehensiveness foundin a given planning method. For example,

an

alternative

approach toEnterprise

Modeling

isfound in CriticalSuccess Factors (CSF).

These

two approachesboth reflecta strategy implementation(3) perspective butdiffer

significantly with respecttothe levelof detail involvedin the

means/ends

analysis.

Rockart(1979), forexample, referredto the

CSF

conceptas a "quick

and

dirty"

BSP

(an earlyform ofEnterprise Modeling).

The

level ofcomprehensivenessintroducesa fourthcharacteristicthatisdiscussedinSection 3.5.

3.5

Comprehensiveness

of the

Decision-Making

Process

A

final characteristic ofthedecision-makingprocessfocusesonthe levelof

detail requiredto completethe analysis. Historically, theI/S fieldhas been

influenced

by

a desire to

minimize

the risk ofomittinga

key

elementordetail in a

means/ends

analysis. Thus,

we

have

the concept of Enterprise

Modeling

(Martin, 1982) thatattemptstodefine all goals

and

allprocessessoastoensure theresulting architecturesare complete

and

consistent.

Some

advocatesofa data-oriented

approachto strategicI/Splanning, forexample, arguefor

an

ideal

outcome

that definesthe total setofalldata entities

and

theirrelationships(Martin, 1982).

The

implementation processfor the approach then

segments

this totaldata

model

in

This

view

ofplanningisin stark contrasttoplanningprocesses that advocate a

high degreeoffocus. CriticalSuccess Factors (Rockart, 1979),forexample,do not

attemptto

model

allprocesses,only those that "are criticaltotheongoingsuccessof thefirm". Inthisview, the risk ofomission isincreased in return for afocuson high

returnopportunities. Further,the costs,time

and

complexityoftheplanning

processare greatly reduced.

Such

approachesare often

recommended

when

the competitive

environment

isunstable

and

a long,detailed"engineering"ofa strategy

appearsinfeasible.

And

yet, these approaches

have

beencriticized for their sensitivitytoarange ofpotential

method

biases (Davis, 1979).

We

note that aconsistent

and

validdecision-makingprocesscanbe carriedout atvariouslevelsofcomprehensiveness.

The

degree ofcomprehensivenessis,

therefore, a fourth parameterofdecision-makingprocess

may

accountforprocess effectiveness.

That

is, two processes

may

bevalidbutdifferin termsof theirlevelof

comprehensiveness.

As we

willdiscussin Section 4.0,organizational contextissues

such as the stabilityof thecompetitive

environment

may

help todetermine

when

a

given levelofcomprehensiveness iswarranted.

4.0

Research

Propositions

In thissection,

we

briefly discussthree researchpropositions relatingto

strategic I/TorI/S planning

methods

that evolve fromtheStrategic

Alignment

Model.

Due

tospace limitations,the discussionofthese propositionsisgeneral.

Specifichypotheses

and

the

measurement

models usedtoexplore

them

are available

fromthe authors.

PI: Effective I/TorI/Sstrategicplanningprocesses willexhibitinternal consistency.

Thisisthe basic proposition ofthe Strategic

Alignment

Model. Thisproposition

arguesthat

any

single bivariateanalysisfails toeffectivelyexplore across-domain relationship.

As

a result, these planning processes will notsupporteitherlinkageor

automation

and

willprove ineffective.

While

the firstproposition isviewed asa necessarycondition,ourexperience

and

reviewof the strategic I/Splanningliterature suggest thatthisis a"strawman".

That

is,bivsiriate planningprocessesare notadvocated byI/Sresearchersor

planners.

The

secondproposition, however, doesbeginto address awide rangeof

planningprocesses currentlyadvocated in the I/Sfield. Propositions2A, 2B,

2C

and

2D

are illustrated

by

Figure 5. Formally,these propositions canbe represented as:

nj<n2

=

n3<n4<n5

where

n isplanning effectiveness.^

P2A:

On

average,aunidirectional, cross-domain analysisisthe least

effective formofconsistentI/Splanning.

The

rationaleforthisproposition lies in boththe risk associatedwith

incompleteness(i.e., exclusionofone

domain

oftheStrategic

Alignment

Model)

and

alsothefailuretochallenge the

domain

anchor.

'

A

_{discussion ofplanningeffectivenessisbeyondthe scope ofthispaper Thereader shouldsee}

P2B:

On

average,single-loop planning(complete butinvalid)

and

focused

planning(incomplete butvalid)will be equallyeffective

and

superiorto

unidirectional planning.

Thisproposition proposes increasedplanningeffectiveness

by

addressing eitherthe completeness orvaliditydimension.

Both

formsofplanningare currently

used(Rockart, 1979;

Boynton

and

Zmud,

1987).

Due

to lack of a priori theoryon the relative importanceofcompletenessversus validity,theproposition doesnot further delineate therelative effectiveness ofthese two approaches.

P2C:

On

average, double-loopplanningwill be the

most

effectiveform of strategicI/S planning.

P2D:

On

average,strong double-loop planningwillbe

more

effective than

weak

double-loopplanning.

These

propositionsargue that acomplete

and

validplanningprocesswillbe

most

effective. Thisapproach not only addressesall planning

domains

butseeks to

challenge the assumptionsofa

domain

anchor. Proposition

2D

arguesthat strong validityis,on average,

more

effective than

weak

validity.

Each

ofthesepropositionsisstatedasholding onaverage.

One

couldeasily

imagine

asetoforganizational contextfactors(contingencies) that

would

result in

working

to improve theeffectivenessofagiven planningprocess. For example, one major contingencyrelatestothe level ofuncertainty. Galbraith(1977),

Thompson

(1967)

and

others

have

arguedthat increasedenvironmental uncertainty requires increased information processingin ordertosustain orimproveorganizational performance. In effect,effortsto enacta completeand/or valid planningprocess

Figure 5

I/S

Planning

Effectiveness

Complete

COMP-

LETE-NESS

Partial Single-Loop

Planning

Unidirectional

Planning

OR

Weak

Double-Loop

Planning

D

B

Focused

Planning

L

Strong Double-Loop

Planning

Invalid

Weak

Validity

VALIDITY

P2: Hj

<

Hj

=

Hg

<

n^

<

Hg Strong Validity

reflectincreasedinformation processing forthe strategicI/Splanning. This

contingencyleadstothethird proposition.

P3

A:

Under

conditionsoflowor

moderate

uncertainty,focusedor single-loop

planningwillbe equallyaseffective as double-loop planning.

In essence, thisproposition argues that conditionsoflowor

moderate

uncertainty enable theorganization to appropriatelyselecta

domain

anchororto

appropriately relaxthe conditionof strategic alignment. For example, low

uncertaintyconcerningcritical trendsin information technologywill increasethe effectivenessof a focused planningprocess usingStrategy Execution.

P3B:

Under

conditionsofhigh uncertainty, comprehensive planning

processes(of

any

form) willbeless effective.

P3C:

Under

conditionsofhigh uncertainty, double-loopplanningwillbe

more

effective than single-looporfocusedplanning.

These

propositions argue thatthe levelofcomprehensiveness

and

validity of theplanningprocessshould reflectthe levelof

knowledge

heldbythefirm.

To

the extent that uncertaintyis high,the stabilityof

any

givenplanning assumption is

problematic (Fredrickson, 1984).

As

such, attempts to

minimize

the risk ofomission

duringthe planningprocesswillbe ineffective. Similarly,theplanningprocess

shouldattemptto surface

and

explicitly explorecritical assumptions.

While

each of these propositionscould be expanded, theyserve to highlight

how

theStrategic

Alignment

Model

can be usedtosystematically explore the

characteristics ofvariousstrategic I/S planningmethodologies. Ultimately, introducingthe notion ofcontingencies, i.e.,organizationalcontext,suggests that

efiectivenessof aplanning processrequires a selection ofa process thatfits the organizationalenvironment.

The

Strategic

Alignment Model

provides a

model

to

differentiate

among

planningprocesses and, hence, provides the foundationfor

building aperspectivetheoryforstrategicI/S planning.

5.0

Conclusion

The

Strategic

Alignment Model

(SAM)

argues thatstrategicI/T

management

must

address bothstrategicintegration(internal

and

external)

and

functional integration (business

and

I/S).

The

SAM

providesthe

framework

todefine four

conceptsof strategicI/T

management:

consistency, completeness,validity

and

comprehensiveness.

The

setofpropositionsillustrate

how

the effectiveness of

any

givenI/S

planningprocess relatesto thesefour concepts. Further, majorcontingenciessuch as

environmentaluncertainty

may

moderate theeffectof theseconceptson planning

processeffectiveness.

As

a result,

maximizing

theeffectiveness ofa givenstrategic

I/Splanningprocesswillrequire

an

appropriate selectionofplanningmethod.

Further, asequenceofplanning processescanbe

made

more

effective through

selectionof

methods

in a

manner

that

maximizes

the effectiveness of the overall

planningsystem.

Ultimately, the Strategic

Alignment Model

reflectsthe impactofvarious types of risk ondecision effectiveness. Incompletenessintroduces risk associatedwith

relaxingortakenasgiven the state of

any

one

domain

anchor. Invalid

decision-making

processesincurthe risk of

method

bias(i.e.,effectof

an

unchallenged

domain

anchor).

Low

comprehensivenessreflectstherisk ofomittingcritical

elementsor detailsduringanalysis.

To

theextent that these risksare understood, selection of aplanning

method becomes

a

fundamental

issue ofrisk/return and, hence,

an

important

and

ongoingresponsibility of strategic

management.

This

research seeksto build a prescribed

model

thatwill aid

managers

in

making

this

Acknowledgements

The

authors

would

like to

acknowledge

thecontributionsto thisresearch

made

by

Christine

BuUen,

Gary

Getson, CharlesGold,

Jim

Sharpe, Cesar

Toscano

and

other individuals

who

have

servedon ouracademic

and

industry advisorypanels.

References

Andrews,

Kenneth

R.

The

Conceptof CorporateStrategy,RevisedEdition,

Homewood,

IL: R.D.Irwin, 1980.

Argyris,Chris. "Double LoopLearningin Organizations."

Harvard

Business

iJeuieu;,55, No. 5(1977), 115-125.

"Organizational Learning

and

Management

Information Systems."

Data

Base, 13, No. 2,3, (Winter-Spring 1982), 3-11.

Armstrong,J. Scott.

'The

Valueof

Formal Planning

forStrategic Decisions:

Review

ofEmpiricalResearch," Strategic

Management

Journal, 3 (1982), 197-211.

Barrett,Stephanie,

and

Benn

Konsynski. 'Inter-Organization Information Sharing Systems."

MIS

Quarterly, Special Issue,

December

1982, 93-105.

Bateson, G.

Mind

and

Nature.

New

York:E.P.Dutton, 1979.

Benjamin, RobertI.,

John

F. Rockart, Michael S. Scott

Morton

and

John

Wyman.

'InformationTechnology:

A

StrategicOpportunity." Sloan

Management

Review,

25,No. 3 (1984), 3-10.

Bostom, RobertP.,

and

J. Stephen Heinen.

"MIS

Problems

and

Failures:

A

Socio-TechnicalPerspective,Parts I

and

II."

MIS

Quarterly, 1,No. 3 (1977), 17-32;

and

1,

No. 4(1977), 11-28.

Boynton, A.

C,

and

R.

W. Zmud.

"InformationTechnology

Planning

inthe 1990's:

DirectionsforResearch

and

Practice."

MIS

Quarterly, 11,No. 1 (1987), 61.

Cash,J.I.

and

B.Konsynski. 'IS

Redraws

Competitive Boundaries."

Harvard

Business Review,63,No. 2 (1985), 134-142.

Child,J. "Managerial

and

Organization FactorsAssociatedwith

Company

Performance - PartEI,

A

ContingencyAnalysis." Journal _of

Management

Studies, 12

(1975), 12-27.

Churchman,

C.West.

The

Design ofInquiringSystems: BasicConcepts ofSystems

and

Organization.

New

York: Basic Books,Inc., 1971.

Copeland,

Duncan

G.

and

James

L.

McKenney.

"AirlineReservationsSystems: Lessons from History."

MIS

Quarterly, 12(1988), 353-370.

Davis,

Gordon

B.

"Comments

on theCriticalSuccess Factors

Method

for Obtaining

Management

Information

Requirements

inArticle

by John

F. Rockart."

MIS

Quarterly, 3,No. 3 (1979). 57-58.

"StrategiesforInformation

Requirements

Determination."

IBM

Systems

Journal, 21 {1982), A-30.

Day, George S.

'Tough

Questions forDevelopingStrategies." JournalofBusiness

Dickson,

Gary

W., RobertL. Leitheiser,

James

C.Wetherbe,

and

Mai

Niechis.

"Key

Information

Systems

Issuesforthe 1980's."

MIS

Quarterly, 8,No. 3 (1984), 135-159. Earl, Michael,ed. Information

Management:

The

StrategicDimension. Oxford:

Clarendon Press, 1988.

Ein-dor, Philip,

and

Eli Segev. "Strategic

Planning

for

Management

Information Systems."

Management

Science, 24(1978), 1631-1641.

Fombrun,

CharlesJ., Noel M.Tichy,

and

Mary

Anne

DeVanna.

Strategic

Human

Resource

Management.

New

York: Wiley, 1984.

Fredrickson,J.

'The Comprehensiveness

ofStrategic Decision Process: Extension, Observations,

and

Future Directions."

Academy

of

Management

Journal, 27(1984), 445-466.

Galbraith,J. OrganizationDesign. Reading,

MA:

Addison-Wesley, 1977. Grant,

John

H.,

and William

R. King.

The

Logic ofStrategicPlanning. Boston:

Little,

Brown

and

Company,

1982.

Hall,

William

K.

"The

Impactof

Managerial

Behavioron

Planning

Effectiveness."

Managerial Planning, 26,No. 2 (1977), 19-23.

Harrigan,

Kathryn

R. StrategiesforJoint Ventures. Lexington,

MA:

Lexington

Books, 1985.

Hax,

Amoldo

C,

and

NicoldsS. Majluf. Strategic

Management:

An

Integrative Perspective.

Englewood

Cliffs, NJ:Prentice-Hall, 1984.

Henderson,

John

C,

John

F. Rockart,

and John

G.Sifonis. 'Integrating

Management

Support

Systems

intoStrategicInformation

Systems

Planning."

Journalof

Management

InformationSystems,4,No. 1 (1987), 5-23.

,

and

John

G. Sifonis.

'The

Value

ofStrategicISPlanning:

Understanding

Consistency, Validity,

and

IS Markets."

MIS

Quarterly, 12 (1988), 187-200. Herold,

David

M.

"Long-Range Planning and

OrganizationalPerformance:

A

Cross-ValuationStudy."

Academy

of

Management

Journal, 15 (1972), 91-102. Hofer, Charles W.,

and

Dan

E.Schendel. StrategyFormulation: Analytical Concepts. St.Paul,

MN:

West

Publishing

Company,

1978.

IBM,

Information

Systems Planning

Guide, Business

Systems Planning

ReportNo. GE20-0527-2, 3rdEdition,July 1981.

Janson,

Marius

A.,

and

L.

Douglas

Smith. "Prototypingfor

Systems

Development:

A

CriticalAppraisal."

MIS

Quarterly, 9,No.4 (1985),305-316.

Johnston, H.Russell,

and

MichaelR. Vitale. "CreatingCompetitive

Advantage

With

Interorganizational Information Systems."

MIS

Quarterly, 12 (1988), 153-165.

Karger,

Delmar

W.,

and

Zafar A. Malik.

"Long

Range

Planning

and

Organizational

Keen, P. G.

W.

Competing

in Time:

Using

TelecommunicationsforCompetitive

Advantage. Cambridge,

MA: