Butterworth Strategic Information Management_6 potx

Table 10.6 Processes and events influencing short-term alignment within BU 4 Time Processes and events within BU 4 Interpretation 1969–1987 Career path of head of systems for BU 4: 18 years in corporate IT . For 7 years before he joined the BU, he developed mainframe systems for BU 4. Result: IT head has a good knowledge of mainframe investment systems, but has no line experience. 1982–1987 BU 4 executives are not involved in the IT projects, spend some time in developing PC-based systems for analysis of investment options. Result: BU 4 executives are more conversant with PC technology, have little large systems experience. 1987 IT group is decentralized into investment business unit from corporate IT . First IT event is a demonstration of new mainframe transactions and algorithms. Not much interest is shown in this. Result: Executives see no reason to talk to IT people, no channels are created. Head of systems does not sit on the management team. 1988–1990 Two IT Initiatives are commenced: a giant asset-matching mainframe system and an Executive IS. The EIS had mixed support and was cancelled when the champion was transferred. The mainframe system was starved of resources and made little progress. Reason: Executives have no experience in championing large projects. IT director has no access to executives, no real understanding of the workings of the BU. 1990–1992 During the project, IT cannot communicate with line managers. As a line VP remembers: ‘we hear a lot about it [the big systems project], we don ’t see very much. We know it’ s been delayed, we know it’ s overrun on costs, we don’ t know what the problems are, we’ve had people try to explain them to us, and never understood it all. Most times, when systems people come in to explain something, the tendency is to lapse into the jargon and it just . . . whew! . . . right over our heads. And you tend to fall asleep in the process. So you say, well, it must be working, somebody says it ’s going to come together, and I guess . . . we’ll find out. Reason: No shared language has been established; no trust exists between the line and IT. Result: The project lurches along. Budget was originally $1 million, expenses are at $7 million, projected to double. IT is isolated within the BU. ‘There’ s an overall reputation an IT project takes twice as long and costs twice as much, and never does what it’ s supposed to do . . . which is a real bad reputation. By 1992 Very low level of mutual understanding of objectives (short-term alignment). ‘Right now, the responsibility is all on him [the head of systems] to do a mind read of everybody, do it in a way that somehow sees something that the other guy doesn ’ t even know exists, and comes up with the right answer. Impossible. But we sit back as management and say, ‘You systems people, boy.’ It’ s kind of a no-win situation.’ Reason: Low levels of shared knowledge has led to low levels of IT implementation success and low levels of alignment. 288 Strategic Information Management . . . project,’ everyone says, ‘Those systems people screwed up again. And you can just shift the whole blame off to the other guy. He’s not even in the meeting, so you can really beat him about the head. And everybody feels so much better after they’ve done that. When interviewed, the executives exhibited very low levels of mutual understanding of objectives. BU 4 also exhibits very low connections between IT and business planning. This could be interpreted as a result of the low level of shared domain knowledge or the lack of IT success. However, a wider appraisal of BU 4 planning practices reveals that very few strategy meetings of any type are held in BU 4. Budgets are discussed, strategies are not. Therefore, what initially looks like strong confirmation of the model is an artifact of the absence of a planning culture within BU 4. The strongest influences in this business unit seem to be from the lack of shared knowledge between the IT and the business managers. They cannot speak each other’s language and, as a result, leadership is abdicated and IT projects fall. IT managers are kept out of the decision-making loop with the result that no shared understanding is created. Business Units 9 and 10: contingent findings BUs 9 and 10 exhibited mixed support for the model and were investigated further to try to determine the causalities within them. In BU 9, the interest was in what impact a low level of IT implementation success had on an otherwise successful organization, since the model suggested that such a lack might inhibit alignment. The analysis revealed that the very high level of shared domain knowledge among executives had resulted in opening up many channels of communication between them. The vice president was committed to information technology (IT is the competitive advantage in our business . . . I am a complete believer that technology can radically change the cost structure and the way we do work). Even though the recent implementations had been only partially successful, their mutual respect and belief in IT had led them to a redoubling of efforts rather than a pulling away from IT or a deterioration in communication. When interviewed, BU 9 executives exhibited a high level of mutual understanding of objectives. The conclusion was that the high level of shared domain knowledge had mitigated the expected influence of poor IT implementation success. This finding is shown on Figure 10.3 with a dotted line. BU 10 was an opposite case (low shared domain knowledge, high IT success, high level of mutual understanding of objectives), and an investiga- tion was undertaken to determine the effect of his low shared domain knowledge. The peculiarity of this case was in the nature of its IT history. Within this small business unit, both business managers and IT people had Shared domain knowledge IT implementation success Communication between business and IT executives Connections between business and IT planning Short-term alignment Short-term business direction Measuring the Information Systems–Business Strategy Relationship 289 worked for the last five years to implement PC-based technology in direct contravention of corporate IT policy. They had the first local area network in this large organization and used it very successfully for production systems and low-cost local e-mail. This and other accomplishments seemed to have bound the IT and line people together into a highly cohesive team. Unfortunately, the method of rating shared domain knowledge as cross- functional experience used in this study seemed to be too restrictive for this business unit because their very close cooperation on projects over a long period of time had imbued both the head of the business unit and the IT manager with a deep understanding of each others’ domain. A more holistic scale for shared domain knowledge might have resulted in a different score. Therefore, the finding from this business unit was that the scale for shared domain knowledge should reflect long-term working relationships as well as job transfers. Business Unit 3: a lack of business direction The previous discussion developed the argument that a high level of shared domain knowledge or a high level of IT implementation success would lead business units to high levels of communication and, through this mechanism, to high levels of short-term alignment. BU 3 is an anomaly to this argument, in that it displays high or moderate levels of the preconditions, but low levels of short-term alignment. BU 3 was a newly created business unit and was just in the process of formulating a set of one to two year objectives. When questioned, executives could not articulate these, thereby achieving a low rating on short-term alignment. Consideration was given to eliminating BU 3 from the data set because it was younger than the other business units and therefore might Figure 10.3 Explanatory model for short-term alignment 290 Strategic Information Management contaminate the findings. However, the belief is that there are more reasons than age that could create the situation of unarticulated short-term business plans (for example, a recent industry ‘shock’ or a recent negative shift in organizational fortunes). In these cases, the business units might be of mature age but not exhibit any short-term alignment because of a lack of short-term objectives. The existence of a short-term business direction was therefore added to the model (see Figure 10.3). This direction would consist of a set of one to two year objectives, either found in written plans or articulated by management. This is believed to be a necessary precondition for short-term alignment. Conclusions: short-term alignment When the data were analyzed within each business unit shown in Table 10.4, the strongest resulting explanatory model contained five influential elements: shared domain knowledge, IT implementation success, communication, connections in planning and short-term business direction. The relationships suggested by the data are shown in Figure 10.3. Apart from the prerequisite factor of a short-term business direction, the biggest distinction found between business units with high and low levels of short-term alignment was the frequency of structured and unstructured communication between IT and line executives. The conclusion was that, over time, executives in a business unit create the kind of communications environment that is comfortable for them. Those who are respected are able to get involved in activities that are well outside their sphere of influence. Those who are not respected tend to get left out, either by not being invited onto senior committees or by not being involved in discussions about important business issues. How do IT people gain admission to cross-functional committees and informal discussions? From BUs 1 and 4, it can be seen that two factors, shared domain knowledge and IT implementation success, can interact to produce high or low levels of communication. From BU 9 and 10, the conclusion is that having both a high level of IT implementation success and a high level of shared domain knowledge may not be necessary for high levels of communication. It seems that high levels of either can result in high levels of communication, and through this mechanism, lead to high levels of short- term alignment. Further, it seems that very high levels of shared domain knowledge can compensate for the expected influence of a low level of IT implementation success. The connections in the planning construct had a moderate influence on short-term alignment, but no strong evidence could be found that planning practices were influenced by shared domain knowledge or IT implementation success. Contrary to communication patterns, which resulted from a mix of Measuring the Information Systems–Business Strategy Relationship 291 organizational and individual preferences, connections in planning seemed to reflect only organizational practices. In other words, if a shared planning process existed between IT and the line, one would also expect to find shared planning between most other units in the organization. If no planning process was found in IT, most likely there would be little planning done in the business units. The problems encountered in measuring and gauging the influence of this construct will be further discussed in the long-term alignment section. Long-term alignment Three business units (1, 3, and 5), were rated as having a high and three (4, 6, and 10) as having a very low level of long-term alignment (i.e. no vision). Data on the constructs in the research model are shown in Table 10.7. High values are unshaded, moderate values are bold and italicized, and low values are bold, italicized, and have heavy borders. As can be seen from an examination of the data, there is some general support for the model, but only the shared domain knowledge construct unambiguously distinguishes the high achievers from low achievers in creating a shared vision for IT. The data from each business unit were examined to look for evidence of causality. Since the history of BU 1 and BU 4 was discussed earlier in the context of short-term alignment, only aspects that relate directly to long-term alignment will be examined here. BUs 5 and 6, which showed only partial support for the model, will then be discussed and conclusions drawn. BUs 3 and 10 are not discussed since their stories support the model. Before beginning the discussion about long-term alignment, it should be noted that the respondents in business units with a high level of long-term alignment were not aware of or could not communicate exactly when their IT vision had been formed, it seemed to be just an accepted fact that they would spend most of their IT development resources in one part of their business. No insight was found about a particular time, either during a planning session or a senior management meeting, when the strategy was created. Causal analysis of Business Unit 1 BU 1’s long-term vision for IT was to concentrate on empowering the salespeople with information analysis tools, and the ability to complete transactions at the customer’s site. Implementation of this sales system would make the company a world leader in individual life sales processes. An interesting aspect of this goal is that it focused on only the major parts of the organization (sales; new business) of which the VP of IT was not in charge (he was also the VP of administration). Table 10.7 Factors for BUs with ‘High’ or ‘No Vision’ Ratings on Long-term Alignment (high values are shown in normal font, moderate values in bold italics, and low values in bold italics inside heavy bor ders.) Alignment, BU Communication Connections in planning Shared domain knowledge IT implementation success HIGH BU 1 Two days of executive meetings per month, two other cross- functional teams. IT people visit each sales branch several times/ year. All projects, including IT, are discussed and voted on at the same meeting. IT VP has 10 years line experience. Five administrative managers are ex-IT people. Leader in use of IT in sales, stable administrative backbone in place. HIGH BU 3 Six frequently-held-meetings permanent teams include both IT and line managers. IT director is in charge of business planning. Tight connections between all areas. Most line executives have managed IT projects. One IT executive has line experience. This young BU has mixed success to date. HIGH BU 5 One permanent team with IT and line executives. Lots of direct contact between SVP and IT executives. IT plans are derived from business plans. No integrated planning or review . SVP has Master ’s in Computer Science; IT manager has line experience. Implementation success has been very mixed, mainly negative. NO Vision BU 6 Frequent contact between IT manager and SVP. IT executive is also in charge of administration (similar to BU 1). Agents have input into the type and the priority of IT projects. Offsite planning includes IT manager. One executive has a high level of IT experience. IT manager is also in charge of administration. Although BU6 was successful in the mid-1980s, their recent IT projects have not been successful. NO Vision BU 10 Two cross-functional teams. High level of direct contact between IT manager and executives. IT plan is created after business plan is drafted. Low level of cross-functional experience. Successful IT implementations, Innovative PC systems. NO Vision BU 4 No regular meetings of executives and IT director. Each executive makes his/her own plan, submits only budgets for discussion. IT manager is a career IT person; no line person has direct IT experience. The EIS was discontinued; a large strategic IT project is two years late and 500% over budget. Measuring the Information Systems–Business Strategy Relationship 293 No evidence was found to suggest that the planning meetings within BU 1 were the critical times at which the IT vision was formulated. In fact, there were no separate IT planning meetings. At the business planning meetings, although the sales system project was thoroughly discussed and endorsed, vision did not appear to originate there. The construct that helped in understanding how they could have forged this vision was communications. Because the IT people were regularly visiting the sales offices (unlike IT people in most other insurance organizations in North America) there seemed to have been a deep understanding formed within IT that this area offered the most leverage to the business. A dialogue had ensued with business executives about the exact nature of the support that was required. Over time, the ideas become more focused and clear and resulted in a sales support vision that was taken to the planning meetings. It has already been explained how the shared domain knowledge within IT and a high level of IT implementation success influenced the communications process, so they too must be seen to influence long-term alignment, albeit indirectly. Therefore, for BU 1, all constructs in the model played a part, but the ongoing communications between IT people and agency people generated and sustained the shared IT vision, our measure for long-term alignment. Causal analysis of Business Unit 4 Within BU 4 there were silos, in which each line executive was working in isolation and the IT director had no strong connection with any of them. The IT director’s previous experience was centered on the mainframe, whereas the line executives primarily used PC systems to analyze trading and investment data. The IT and business executives were worlds apart. The most recent IT strategic plan, formulated three years before the interviews, was never circulated to management and only one of the four projects suggested in it was actually pursued. They had not identified a long-term business direction, so a consultant had been hired to create one. It was no surprise to find a lack of vision about how IT might leverage the business. The findings suggested that executives within BU 4 were quite uninformed about how IT could be used to improve their results. Their current strategic business planning initiative did not include IT. The conclusion reached was that this attitude, at least in part, was the result of a very low level of shared domain knowledge and low levels of communication between IT and line management. They had no way to get internal advice about IT and no respect for an IT director who did not understand their business. Business Unit 5: an unusual leader Two other units, BU 5 and BU 6, are interesting in that they seem to refute most of the assumptions inherent in the model. In BU 5, most of the factors 294 Strategic Information Management are rated only moderate; however, the business unit was rated as having a high level of long-term alignment. In BU 6, most of the factors were rated as being high or moderate, however, the business unit was rated as having no vision. The analysis centered on two questions: (1) were any constructs in the original model instrumental in explaining the results and (2) were there other constructs that might help in understanding the apparent anomalies? In BU 5, there was a high level of agreement among executives about the role that IT could play in their future. They needed better access to internal data to support marketing decisions such as pricing and product features. However, the rating of the model elements (moderate levels of IT success, communication, and connections in planning) make this high level of IT vision interesting. In analyzing the causal links within BU 5, it was found that the influence of the head of the business unit was stronger than the more ‘institutional’ factors represented in the model. This senior vice president had a Master’s degree in Computer Science and was, by far, the most IT-experienced senior executive within the sample of ten business units. Because of his strong computing background, he (unlike virtually all of his peers in the business units) was willing to set a direction for the IT part of the business and was very clear about how IT should be used. Because of the power of his position in the organization and the level of his expertise, his views prevailed and required few formal communication channels or planning processes to entrench them as the dominant vision. Therefore, an unusual level of shared domain knowledge (primarily in the senior line manager, although it was also present in the IT manager) seemed to be the most important construct in explaining long-term alignment in BU 5. Business Unit 6: no long-term business direction In BU 6, there was no agreement whatsoever about the future direction for IT. This was especially interesting because IT had made this business unit a market leader in the early 1980s. They had created an IT system to support their insurance product and this system had helped them capture over 60% of the Canadian market. Unfortunately, the makeup of the industry had changed since then and several very strong competitors had copied the software, given better price breaks to the customers, and taken away half of the market. Their attempt to regain competitive advantage through improved software had floundered because of a combination of poor project management and a low level of customer adoption. When the BU 6 executives were interviewed, they were suffering a crisis of confidence. Not only had their market share been slashed by competitors but their strategic weapon, information technology, had also failed to provide the promise of recovery. Shared domain knowledge Long-term alignment Long-term business direction Measuring the Information Systems–Business Strategy Relationship 295 So, although BU 6 had created strong communication links between IT and senior line managers, and their IT and business planning was highly integrated, these management processes had not yet shown them a way out of their strategic dilemma. The analysis concluded that low levels of success in their IT implementation, coupled with a lack of long-term business direction, were the constructs which most strongly influenced their lack of IT vision. Conclusion: long-term alignment When the data were analyzed for each business unit within Table 10.7, the strongest resulting explanatory model contained one influential element from the model: shared domain knowledge. In addition, long-term business direction was added to the model as a necessary antecedent for long-term alignment. Although communication was seen to be influential in BU 1, 3 and 4, there was less support for it in other business units and it was not included in the model. In Figure 10.4, a heavy dotted line has been drawn between shared domain knowledge and long-term alignment. The thickness of the line represents the strength of the relationship, the dotted format represents the indirect nature of the relationship. Although the belief is that there are intervening factors between these two constructs, they were not discovered in this research. There is no strong evidence that a vision for IT is created through the communication events tracked. In addition, no evidence could be found that planning processes actually contributed to the creation of an IT vision. The planning processes seemed to be useful only for validation and funding once the vision had been created. Figure 10.4 Explanatory model for long-term alignment 296 Strategic Information Management Conclusions Overall, substantial parts of the research model were corroborated for short- term alignment, one element proved to be influential in creating long-term alignment, and one new construct, existence of a business direction, emerged from the data. In the next section, the findings are related back to previous research and new propositions are suggested. A discussion of the limitations of the study and implications for future research follows. The chapter concludes with recommendations for practitioners. Summary of results regarding short- and long-term alignment In general, it was relatively easy to discover the influence of constructs on the creation of short-term alignment. Organizational stories, minutes from meetings, respondents’ explanations, and the researchers’ interpretations often converged to create plausible causal explanations. The origin of the short-term business or IT objectives could be traced and the meetings at which they were discussed by IT and business executive identified. How the level of shared domain knowledge had influenced communication and the understanding that IT and business executives displayed toward each other’s objectives, could also be explained. Such linkages were not apparent when it came to explaining the presence or absence of long-term alignment. The one construct that seemed to predict long-term alignment was shared domain knowledge, but a causal explanation for its influence was not found. One significant issue was that how or when IT visions were created could not be found. Actions by individuals seemed to strongly influence the creation and dissemination of vision, and vision itself was difficult for respondents to articulate, and difficult to measure. Apart from measurement problems, it is possible that creation of a shared, long-term vision for IT would be better explained with process analysis rather than factor models. The suspicion is that there are several paths to a shared IT vision and that a longitudinal, ethnographic study is required to illuminate the antecedents of this construct. The relationships between findings and prior empirical work are shown in Table 10.8. One observation was that IT implementation success cannot be used to predict the level of communication or connections in planning without taking into account the level of shared domain knowledge. A high level of shared domain knowledge may moderate the expected negative influence of a low level of IT implementation success on the other two factors. In simpler language, managers within a business unit with high levels of shared domain knowledge understand and respect each others’ contribution and trust that each is giving their best effort. 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(2000) Factors that influence the social dimension of alignment between business and information 310 Strategic Information Management technology objectives MIS Quarterly, 24(1), March, 81–113 Copyright 2000 by the Management Information Systems Research Center (MISRC) of the University of Minnesota and the Society for Information Management (SIM) Reprinted by permission Questions for discussion 1 2 3... of the strategic IS management profile, interrupt the evolutionary changes However, organizations hesitate to make such revolutionary changes in strategic IS management profiles Complete revolutions apparently require a combination of strong triggers Finally, post-revolution adjustment to one dimension of the strategic IS management profile seems to follow revolutionary changes 312 Strategic Information. .. theoretical ideals for the strategic IS management profile To assess alignment, an organization’s actual strategic IS management profile may be compared to these theoretical ideals The dynamics of alignment may be examined by viewing the changes in an organization’s strategic IS management profile Strategic IS management profile We view a company’s IS management using its strategic IS management profile,... structures, as shown in Figure 11.1 The strategic IS management profile resembles prior comprehensive models of IS alignment, especially Henderson and Figure 11.1 Strategic information systems management profile Information Systems–Business Strategy Alignment 315 Venkatraman (1992) and Broadbent and Weill (1990) We describe the alignment between business and IS strategies as strategic alignment’ (Chan et al.,... 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