Strategic Alignment Maturity: Information Resource Management 1

Chapter 3
Strategic Alignment Maturity
Information Resource Management 1

Topics
 The importance of IT and business
alignment
 Enablers and inhibitors to alignment
 The concept of alignment maturity and the
importance of alignment maturity
 The five levels of Strategic Alignment
Maturity
 The sixcriteria that characterizeeach level
of StrategicAlignment Maturity
 AssessingStrategicAlignmentMaturity
 StrategicAlignment as a process

Introduction
 Business-IT alignment refers to applying
Information Technology in an appropriate
and timely way, in harmony with business
strategies, goals, and needs. It is still a
fundamental concern of business
executives. This definition of alignment
addresses:
1. How IT is aligned with the business, and
2. How the business should or could be aligned with
IT. .

 Mature alignment evolves into a
relationship where IT and other
business functions adapt their
strategies together.
 When discussing business-IT
alignment, terms like harmony,
linkage, fusion, and integration are
frequently used synonymously with
the term alignment.

Important questions that need to
be addressed
 How can organizations assess
alignment?
 How can organizations improve
alignment?
 How can organizations achieve
mature alignment?

Strategic Alignment Maturity
 Five conceptual levels of strategic
alignment maturity:
1. Initial Ad Hoc Process. Business and IT not
aligned or harmonized
2. Committed Process. The organization has
committed to becoming aligned
3. Established Focused Process. Strategic
Alignment Maturity established and focused on
business objectives
4. Improved/Managed Process. Reinforcing the
concept of IT as a "Value Center"
5. Optimized Process. Integrated and co-adaptive
business and IT strategic planning

Convergence of Strategic
Alignment Gaps

Primary objectives of Assessment of the
Organization are to understand where IT and
Business Executives:
 agree that a criteria needs to be

improved
 agree that a criteria is good, but can be
better
 disagree with how good/bad a criteria is
 desire to focus their efforts to improve

The Six Strategic Alignment
Maturity Criteria
1. Communications
 Effective exchange of ideas and a clear
understanding of what it takes to ensure
successful strategies are high on the list of
enablers and inhibitors to alignment.
 Too often there is little business awareness on
the part of IT or little IT appreciation on the part
of the business.
 Given the dynamic environment in which most
organizations find themselves, ensuring ongoing
knowledge sharing across organizations is
paramount.
(Read the examples in page 74…)

Maturity Criteria – continued..
2. Competency/Value Measurements
 Too many IT organizations cannot demonstrate their
value to the business in terms that the business
understands. Frequently business and IT metrics of
value differ. A balanced "dashboard" that
demonstrates the value of IT in terms of contribution
to the business is needed.
 Service levels that assess the commitment of IT to
the business often help.
 However, the service levels have to be expressed in
terms that the business understands and accepts. The
service levels should be tied to criteria that clearly
define the rewards and penalties for surpassing or
missing the objectives.

For example…
 an organization that requires a Return on
Investment (ROI) analysis before a project
begins, but that does not review how well
objectives were met after the project was
deployed provides little value to the
organization.
 It is important to assess these criteria to
understand (1) the factors that lead to
missing the criteria; and (2) what can be
learned to improve the environment
continuously.
(more examples are found in page 75)

3. Governance
 Ensuring that the appropriate
business and IT participants formally
discuss and review the priorities and
allocation of IT resources is among
the most important enablers /
inhibitors of alignment. This decision-
making authority needs to be clearly
defined.

For example…
 governance in a large aerospace company
is tactical at the core business level and not
consistent across the enterprise. For this
reason, they reported a Level 2 maturity
assessment.
 IT can be characterized as reactive to CEO
direction. Developing an integrated
enterprise-wide strategic business plan for
IT would facilitate better partnering within
the firm and would lay the groundwork for
external partnerships with customers and
suppliers.

4. Partnership - The relationship that exists between
the business and IT organizations is another criterion
that ranks high among the enablers and inhibitors.
Giving the IT function the opportunity to have an
equal role in defining business strategies is obviously
important.
However, how each organization perceives the
contribution of the other, the trust that develops
among the participants, ensuring appropriate business
sponsors and champions of IT endeavors, and the
sharing of risks and rewards are all major contributors
to mature alignment. This partnership should evolve
to a point where IT both enables AND drives changes
to both business processes and strategies.

For example…
 a large software development company
assessed their partnership maturity at a
level of 2. The IT function is mainly an
enabler for the company. IT does not have
a seat at the business table, either with the
enterprise or with the business function
that is making a decision. In the majority of
cases, there are no shared risks because
only the business will fail. Indications are
that the partnership criterion will rise from
a Level 2 to 3 as top management sees IT
as an asset, and because of the very high
enforcement of standards at the company.
 5. Scope and Architecture - This set of criteria
tends to assess information technology maturity. The
extent to which IT is able to:
• Go beyond the back office and into the front office of the
organization
• Assume a role supporting a flexible infrastructure that is
transparent to all business partners and customers
• Evaluate and apply emerging technologies effectively
• Enable or drive business processes and strategies as a
true standard
• Provide solutions customizable to customer needs

6. Skills - include all of the human
resource considerations for the
organization and go beyond the
traditional criteria of training, salary,
performance feedback, and career
opportunities. Also considered is the
cultural and social environment of the
organization.

Levels of Strategic Alignment
Maturity
Level l – Initial / Ad Hoc Process
 Organizations that are at Strategic
Alignment Maturity Level can be
characterized as having the lowest level of
Strategic Alignment Maturity. For example:
in the "Communications" criteria of the
model, understanding of the business by IT
is very low. Similarly, the attribute called
"Understanding of IT by business“ is also
very low for an organization at Level 1
maturity.

Level 1 Strategic Alignment Maturity
Criteria (communications and
competency/value measurement).

competency/value measurement). Cont..

Level 1 Strategic Alignment
Maturity Criteria
(governance and partnership).

Maturity Criteria

Maturity Criteria

Maturity Criteria

Maturity – continued…
Level 2-Committed Process - Level 2 organizations can
be characterized as having committed to begin the
process for Strategic Alignment Maturity. For
example, in the "Competency/Value Measurements"
criteria of the model, IT metrics (an "attribute") are
focused on cost and efficiency. Similarly, in the
"Partnership" criteria of the model, the business
perception of IT (again, another "attribute") is that IT
is emerging as an asset to the organization. This level
of Strategic Alignment Maturity tends to be directed
at local situations or functional organizations (e.g.,
marketing, finance, manufacturing, human resources)
within the overall enterprise.

Level 2 Strategic Alignment Criteria
(Communications and
Competency/value measurement)

Level 2 – Strategic Alignment Criteria
(governance and partnership)

Level 3-Established Focused Process (IT is embedded in
the business)
 This level of Strategic Alignment Maturity concentrates
governance, processes, and communications towards
specific business objectives. The reason for this focus is
because:
• The organization needs better decision-making processes
(governance) around which business processes are able to
invest scarce IT dollars
• The organization wants to focus on those business processes
that generate the most long-lasting competitive advantage
(and presumably, profitability), and
• The organization has to effectively communicate its vision and
get "buy-in" from all employees and management

Level 3 – Strategic Alignment Criteria
(Communications and
Competency/value measurement)

Level 3-Strategic Alignment Maturity
Criteria (governance and partnership)

Level 3-Strategic Alignment Maturity
Criteria ( skills and scope and
architecture)

Level 4-lmproved/Managed Process
 Organizations at Level 4 leverage IT assets on an
enterprise-wide basis and the focus of applications
systems is on driving business process enhancements
to obtain sustainable competitive advantage. A Level
4 organization views IT as an innovative and
imaginative strategic contributor to success. The
enterprise-wide emphasis of Level 4 organizations
breaks down the "process silos" that exist between
business units in lower level organizations in order to
capitalize on the information and knowledge
embedded in an organization's business processes
and practices.

level 4 Strategic Alignment Maturity
competency/value measurement).

Level 4 Strategic Angnment Maturity
Criteria

level 4 Strategic Alignment Maturity
Criteria (skills and scope and
architecture).

Level 4 continued…
 Level 4 organizations also utilize IT "hard"
(i.e., hardware and software) and "soft"
assets (e.g., knowledge and information
about customers, competitors, products,
and employee skills) by consciously
deploying enterprise-wide architectures.
One example of such architecture might be
an enterprise intranet portal, for collecting,
categorizing, and sharing customer/product
information as well as unstructured
information (e.g., Web URLs, journal
articles, etc.) about competitor products.

 Level 5-0ptimized Process -
organizations leverage IT assets on an
enterprise-wide basis to extend the reach
(the IT extrastructure) of the organization
into the supply chains of customers and
suppliers. It is often difficult to determine if
a Level 5 organization is more a technology
company than it is a securities, insurance,
travel, or retail company (e.g.,
"Travelocity" or Amazon.com). A sustained
governance process integrates the IT
strategic planning process with the
strategic business process.
Criteria (communications
and competency/value measurement).

Level 5. Strategic Alignment
Maturity Criteria

Maturity Criteria
(skills and scope and architecture).

Assessing Strategic Alignment
Maturity
 An essential part of the assessment process is recognizing
that it must be done with a team including both business
and IT executives. The convergence on a consensus of the
maturity levels and the discussions that ensue are
extremely valuable in understanding the problems and
opportunities that need to be addressed to improve
business-IT alignment. As previously discussed, the most
important part of the process is the creation of
recommendations addressing the problems and
opportunities identified. The most difficult step, of course, is
actually carrying out the recommendations. This section ties
the assessment metrics together. The examples and
experiences provided in the preceding section on the Six
Strategic Alignment Criteria, together with the procedure
described in the next section, served as the vehicle for
validating the model.

Assessing Strategic Alignment
Maturity
 Each of the criteria and levels are described by a set
of attributes that allow a particular dimension to be
assessed using a 1 to 5 Likert scale, where:
1. this does not fit the organization, or the organization is
very ineffective
2. low level of fit for the organization
3. moderate fit for the organization, or the organization is
moderately effective
4. this fits most of the organization
5. strong level of fit throughout the organization, or the
organization is very effective

Strategic Alignment as a
Process

Process
 1. Set the Goals and Establish a Team. Ensure
that there is an executive business sponsor and
champion for the assessment. Next, assign a team of
both business and IT leaders. Obtaining appropriate
representatives from the major business functional
organizations (e.g., marketing, finance, R&D,
engineering) is critical to the success of the
assessment. The purpose of the team is to evaluate
the maturity of the business-IT alignment. Once the
maturity is understood, the team is expected to define
opportunities for enhancing the harmonious
relationship between business and IT

Process
2. Understand the Business-IT Linkage.
The Strategic Alignment Maturity
assessment is an important tool in
understanding the business-IT linkage. The
team evaluates each of the six criteria. This
can be done via executive interviews, group
discussion, a questionnaire, or a
combination. A trained facilitator can be
valuable in guiding the important
discussions.

Process
3. Analyze and Prioritize Gaps. Recognize that the
different opinions raised by the participants are
indicative of the alignment opportunities that exist.
Once understood, converge on a maturity level. The
team must remember that the purpose of this step is
to understand the activities necessary to improve the
business- IT linkage. The gaps between where the
organization is today and where the team believes it
needs to be in the future are the gaps that need to be
prioritized. Apply the next higher level of maturity as
a roadmap to identify what can be done next.

Process
4. Specify the Actions (Project Management).
Naturally, knowing where the organization is with
regard to alignment maturity will drive what specific
actions are appropriate to enhance IT-business
alignment. Assign specific remedial tasks with clearly
defined deliverables, ownership, timeframes,
resources, risks, and measurements to each of the
prioritized gaps.
5. Choose and Evaluate Success Criteria. This step
necessitates revisiting the goals and regularly
discussing the measurement criteria identified to
evaluate the implementation of the project plans. The
review of the measurements should serve as a
learning vehicle to understand how and why the
objectives are or are not being met.

Process
6. Sustain Alignment. Some problems just won't go
away. Why are so many of the inhibitors IT related?
Obtaining IT-business alignment is a difficult task.
This last step in the process is often the most difficult.
To sustain the benefit from IT, an "alignment
behavior" must be developed and cultivated. The
criteria described to assess alignment maturity
provides characteristics of organizations that link IT
and business strategies. By adopting these behaviors,
companies can increase their potential for a more
mature alignment assessment and improve their
ability to gain business value from investments in IT

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Chapter 3

Strategic Alignment Maturity

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