Strategic alignment, the solution to ensure that operations finally follow corporate strategy
Your company has drawn up an ironclad strategy and is ready to conquer the world! Oh wait... how do you ensure that the operational side of your business follows through and executes it perfectly?
That's where the notion of strategic alignment, and particularly strategic IS alignment, comes in.
All very well, but what exactly does it involve? How does this process ensure the successful deployment of the organization's vision?
To help you understand the concept of strategic alignment, let's focus on its definition and the different models that exist to implement it. As a bonus, here are a few tips and examples of tools to help you along the way.
What exactly is strategic alignment?
Strategic alignment: a generic definition
The term "strategic alignment" refers to the implementation of processes within a company to align its ambitions with its operations. The result: employees who, on a daily basis, carry out the right actions at the right time, to achieve the major objectives defined by management.
Strategic alignment can involve all levels and components of the organization, ensuring perfect coordination between the global strategy and :
- the organizational structure: the executive and management teams are organized in such a way as to support the company's vision and sustain communication at every level;
- the company's various departments: HR, sales, production, logistics...
... and, of course, IT.
Strategic alignment of information systems
This notion seems inseparable from IT services.
In fact, the expression refers mainly to the strategic alignment of information systems, and therefore :
- their own strategy,
- their organization,
- associated infrastructures.
💡 To wit: this concept was developed by John C. Henderson and N. Venkat Venkatraman in Strategic Alignment, or the Changing Dimensions of Information Systems in Organizations.
Why such a focus on IS?
Because management is becoming increasingly aware of the contribution made by IT to value creation. They're no longer just for production! And with good reason: information systems are a fertile breeding ground for innovation and competitive differentiation. It is therefore in our interest to connect IT strategy with global strategy and business lines.
☝️ We also refer to this principle as IT governance.
Why strategic alignment?
In an increasingly competitive environment, every company needs to define a vision, a course to follow to ensure its survival and growth.
But here's the thing... many experts agree that most strategic failures are due to poor execution rather than the strategy itself. Hence the importance of developing a real alignment process, to ensure 100% achievement of global objectives.
When it comes to information systems, the benefits of a strategic alignment approach are more than obvious. In particular, it makes it possible to :
- take into account the value of information systems in serving the organization's growth ambitions, information systems which sometimes drive global strategy in a spirit of innovation;
- turn the IT department into a cross-functional service, dedicated to all business lines, in order to improve operations for all;
- optimize (sometimes substantial!) IT-related expenditure, by concentrating efforts on value-creating projects.
The 4 models of strategic alignment
The principle of strategic alignment according to Henderson and Venkatraman
Theory is all very well... but how do you go about it?
Henderson and Venkatraman, who theorized the concept of strategic alignment, propose 4 models.
But to understand this, let's take a look at the notion of domain, since it characterizes the nature of the relationship between management and IT to promote alignment.
There are 3 types of domain:
- the anchor domain: this is the domain that drives and steers change;
- the pivotal domain: used to implement the initiated change;
- the impact domain: this is where most of the change takes place.
Next, there are 4 major components. These must be aligned to ensure perfect coordination:
- Corporate strategy, i.e. market positioning and business network.
- Organizational infrastructure and processes, or how the company organizes itself on a day-to-day basis:
- hierarchical structure,
- communication,
- departmental workflows, etc.
- IS strategy: here again, we're talking about strategy, but in relation to information systems:
- technologies,
- skills,
- governance, etc.
- IS infrastructure and processes: like general processes, these provide a framework for operations... but on the IS side. This component concerns :
- the applications used,
- the technologies used,
- the way in which development projects (what methodologies?) and day-to-day work are organized, etc.
Model 1: Strategy execution
- Anchor domain: corporate strategy,
- Pivotal domain : infrastructure and organizational processes,
- Impact domain: IS infrastructure and processes.
The strategy is established by senior management and business units.
The IT department must then simply implement it, building on the general processes already in place.
Model 2: Development of technological potential
- Anchor area: corporate strategy,
- Pivotal area : IS strategy,
- Impact area: IS infrastructure and processes.
Here too, the strategy is defined by management, but it will also trigger a redefinition of IS strategy (technological innovation to be deployed).
As a result, this model leads to changes in IS infrastructure and processes.
Model 3: developing a technology-based competitive advantage
- Anchoring domain: IS strategy,
- Pivotal domain: corporate strategy,
- Impact area: infrastructure and organizational processes.
The strategy adopted by IS (particularly in terms of innovation) influences the company's positioning. Products and services are designed to offer competitive advantages.
The organization's infrastructure and general processes are then aligned with IS objectives.
☝️ This model is mainly found in technology-driven organizations, such as those operating in the digital or telecommunications sectors.
Model 4: Improving service quality
- Anchoring domain : IS strategy,
- Pivotal area: IS infrastructure and processes,
- Impact area: infrastructure and organizational processes.
The IT Department's strategy is supported by an infrastructure and processes developed to improve service quality.
This pattern then impacts the company's infrastructure and processes, which must be optimized to improve overall performance.
💡 Good to know: you can juggle between the different models depending on the subject and your objectives.
Example of strategic IS alignment and the approach to adopt
Start with what already exists
Starting with what already exists means taking into account the company's specific characteristics:
- its DNA,
- its general organization,
- internal and external environment, etc.
☝️ Encouraging alignment also means considering the personalities present within the structure. For example, this desire for cohesion can be disrupted if decision-makers are not IT-savvy and do not understand the constraints faced by IT departments. The same applies in the opposite direction, where CIOs are not always fully aware of business issues.
As a result, strategic alignment often involves change management.
Identify obligations to redefine strategy
By obligations, we mean requirements that derive from corporate strategy and lead to a rethinking of IS strategy. In other words, how can information systems help the organization achieve its objectives?
For example, if management wants to develop an innovative product to seize a new market opportunity, the IT department will have to analyze the existing situation:
- both its internal infrastructure, to identify areas for improvement ;
- and external factors, to see what new possibilities (in terms of technology in particular) are available.
The result will be a redefined IS strategy.
Planning and steering strategy
Aware of the summit to be crossed, and therefore of the changes to be introduced, the IT Department is in a position to plan the projects to be carried out, obviously prioritizing those most useful to the objective of strategic alignment.
Each project is then implemented by means of a management system that ensures perfect coordination with objectives throughout the project lifecycle, even if this means making adjustments where necessary.
Promoting communication and visibility
Strategic alignment remains largely a matter of communication, the common thread running through the process. Otherwise, how can you ensure that the challenges facing management, IT and the business are all the same?
Dialogue and listening are therefore essential, right from the start of the strategic alignment process. For example, the IT department must put in place systems to receive feedback from business users and, of course, from management.
☝️ This means setting up an optimal communication structure to :
- circulate information as effectively as possible,
- facilitate the sharing of ideas,
- encourage teams to get together.
Use appropriate software
Improving strategic alignment requires the use of software capable of supporting communication and facilitating operational management.
In this sense, PPMs, or project portfolio management software, are proving to be valuable allies.
Here are a few examples:
- 🛠️ Planisware Orchestra: with Planisware Orchestra, you can prioritize projects and develop those most closely aligned with overall strategy. These projects (IT or other) are then easily planned and managed throughout their lifecycle. The software also streamlines communication and provides a consolidated view of all operations, for better team coordination. Finally, you'll benefit from optimum support in deploying and using the software.
- 🛠️ Project Monitor: Project Monitor is PPM software that helps you align your IS with corporate strategy. Within the tool, you can break down your IT master plan into projects, and gain a comprehensive overview of your IT portfolio (planning, budget, resources). Project Monitor offers customizable multi-project dashboards and information on projects, their weather and project tracking indicators. You'll be able to focus on projects that require decisions, or that are drifting off course. You'll benefit from an overview that makes it easy to make the right decisions and stay on budget.
Strategic alignment in a nutshell
Strategic alignment ensures that all the company's activities are carried out in line with its overall vision.
Although it potentially concerns all departments, the term is mainly used in the context of management/IS alignment.
The advantage? Achieving the major strategic objectives defined by senior management.
To achieve this, organizations can rely on models, best practices (communicate!) and appropriate tools such as PPM.
Article translated from French