How to Align IT with Business Needs - Page 1


Once a company establishes a strategy then the systems are developed to realize the strategy through effective use of information technologies and other organizational procedures. For example, Dell established and implemented integrated systems with partners that produce a customized PC to minimize the time to start using the PC. Similarly, Amazon.com developed technologies such as OneClick and business partnerships with many bookstores so that the customers could quickly select and purchase books from a very large virtual bookstore.

The first and most important step after e-business strategy is to develop a design of e-business that aligns the company information systems and other systems with the strategy. The design must be developed to keep flexibility and change as a core requirement because everything is changing. Traditional business design approaches started with core competencies that drove the products/services which were delivered to the target customers. The new model starts with examining customer needs (e.g., the Dell idea of minimizing the time the customer has to wait before using the PC), developing products/services to satisfy these needs, and then relying on the competencies of service providers by outsourcing product development. Both models are shown in Figure 1.

The challenge faced by companies is to understand and exploit the confluence of trends in customers (e.g., speed of service demanded by the customers and appeal of self service), organizational trends (e.g., outsourcing and continued innovation), and technology trends (e.g., integration of user views and back-end systems, broadband and mobile networks, component-based software).

The main question is: which cell should a company focus on? A variety of models have been developed for establishing strategies. See [ McNurlin 2001] for more details. The best known models in this category are the Porter Models that are briefly reviewed here.

This does not mean that the traditional model does not work. In fact, both models work at different times. The trick is to know what model works when. The new model implies a great deal of flexibility because customer needs change very quickly. This model heavily relies on outsourcing because outsourcing gives flexibility (if your business needs change, you get new service providers). It also implies heavy reliance on information technology (IT) to quickly understand and respond to customer needs. Basically, information technology must be aligned with the business needs of an organization. For example, Michael Hammer [Hammer 1990] defines and promotes business process reengineering (BPR) as the use of the power of modern IT to radically redesign business processes in order to achieve dramatic improvements in performance.

In essence, IT must enable the organization to survive and prosper in the competitive global economy. While there is a general agreement on the importance of aligning IT with business, the approaches and views differ widely. This short discussion is intended to establish an overall context within which the issues of e-business application engineering/reengineering can be presented.

Different views and models for aligning IT with business needs have been discussed widely in the management literature. While the models and approaches differ between IT management scholars, the basic principles of aligning business and IT are the same. Let us discuss a model presented by Henderson and Venkataram [Henderson, J. and Venkatraman, "Strategic Alignment: Leveraging Information Technology for Transforming Organizations", IBM Systems Journal, Vol. 32, No. 1, 1993, pp. 4-16]. ] to illustrate the key concepts. This model is accepted in the IT management research community and has been used by many researchers as a framework for further work. . In addition, this model has been adopted by IBM for management training and is used by the IBM Consulting Group. The basic Henderson-Venkataram model views business and IT in terms of strategy and infrastructure (see Figure 2). The four closely interacting components of this model are: business strategy, IT strategy, business infrastructure, and IT infrastructure.