Week 4: The Strategic Alignment Model (SAM)

Source/Reference: 

[1] "Strategic Alignment: Leverage Information Technology for Transforming Organization" by J C Henderson and N Venkartraman 1993 

[2] Lee Cheuk Him’s post, Week 4 – The Strategic Alignment Model (SAM), URL http://leech-9076.blogspot.com/2012/02/source-reference-1-strategic-alignment.html

Subject:

In Lecture 4 – Which alignment strategy in SAM model is the best? and why?=======================================================================
Response:

It cannot be strongly defined that which alignment perspective the best is. The answer is largely dependent on the strategy of the organisation, the nature of its business, the needs of customers, and the business environment Sometimes, there is only one is ‘feasible’ to the organisation. However, it is possible that not the only one is aligned between the business and the IT strategy simultaneously due to many influencing factors. The alignment was used may even shift to the other potential perspective(s) since those of independent variables change over the time. Therefore, it is crucial that the top management must realise what the concepts of dominant alignment perspectives in the SAM are before adopting them.

The SAM (Henderson and Venkatraman, 1993) consists of four domains, Business Strategy, IT Strategy, Business Infrastructure, and IT Infrastructure. Thus, there are a total of four dominant alignment perspectives resulting from the cross-domain alignments. Each alignment perspective has also three external or internal domains made and one of domains usually is a driver of the rest domains. Each alignment perspective has its existed value. In the following, the actions of four dominant alignment perspectives are introduced on each in this post.

SAM: Strategy Execution perspective

The alignment perspective that is the most focus and classic of general companies is the Strategy Execution perspective. The driver is the business strategy. It supports the top management articulates the business logic and choices related to a business strategy so that the IS manager designs and implements the IS infrastructure and processes that support the chosen business strategies. And, the performance is measured by the financial parameters typically, cost center focus. E.g. some companies can reduce the time required to the processing orders by the IS after employed the Strategy Execution perspective. It directly reduces the operational cost for the entire process. The cost center will not contribute the profit making of the business even though so.

SAM: Technology Transformation perspective

The alignment perspective is appropriate to the firms of technology development. The Technology Transformation perspective is again driven by the business strategy as well as the Strategy Execution perspective. Nevertheless, here the role of the top management is a technology visionary that is responsible to identify the best possible IT competencies through appropriate positioning in the IT marketplace included the strengths and the weaknesses of the IT infrastructure, and so far how the risks posed by of the new IT manage. And, the role of IT manager is a technology architect that designs and manages the technologies defined by the top management, so that the architecture can support the IT vision and mission. The technology leadership is a standard to measure its performance of IT market position. Benchmarking approach will be the best practice to compare the organisation itself with other same industry and make such improvements.

SAM: Service Level perspective

The third one is described is the Service Level perspective which is a customer-oriented alignment, aims to deliver the best value to satisfy the customer demands by the alignment of IT infrastructure. It is appropriate to the service industry. The driver for the alignment perspective is the IT strategy. It supports the top management prioritizes and articulates to allocate the limited resources within the organisation and also in the IT marketplace, and can be responsive to the growing and fast-changing demands of customers. And, the IS manager, as the role of executive leadership, supports key areas of the internal business and balances the short-term objectives with the long-term investment in IT. Therefore, the performance criteria are the degree of the customers’ satisfaction. Besides, the role of the business strategy is relatively indirect to influence the perspective.

SAM: Competitive Potential perspective

The key of the Competitive Potential perspective is to how enable the adoption of new business strategy with emerging IT capabilities. From the new business strategy then realises the competitive advantages of the organisation. So, the driver of the alignment perspective is the IT strategy that focuses to provide the value-add to the business strategy and enable the new strategic opportunities for the business. The top management acts as a business visionary that must enable to smooth transform the business through IT for achieving the vision. The IS manager acts as a catalyst who identifies and interprets the trends in the IT environment to assist the business managers to understand the potential opportunities and threats from an IT perspective. The business performance is measured by the business or product leadership such as the market share, the growth and the new product introduction.

Thus, the four dominant alignment perspectives can have their different degrees of functionality to the business. However, the IS manager should carefully consider which alignment perspective is feasible to adapt the business because inappropriate alignment can hinder the development and integration of the business strategy and the IT strategy and cause the adverse effect to the business of the organisation. Besides, if the organisation has multiple goals, it may usually need more than one alignment to the business. The organisation would shift its alignment as the organisation strategy, customer needs, or the business environment is ever-changing. So, the coordination of multiple alignments is necessary and important.

In addition, the IS manager needs to understand and examine both the business and the IT strategies and infrastructures in order to a smooth running on the business. Also, both the CEO and the CIO need to determine where it is preceded related to the business strategy and the IT strategy. Hence, they must communicate with others senior executives and also assess where the company is preceded related to the business strategy and the IT strategy. 

In fact, it proved that the model is designed to encourage and facilitate the appropriate response to changing business conditions. An organisation may be comfortable in one alignment perspective now, but may change to others in the future which depend on its business environment and competitors. As said by Henderson and Venkatraman, “We do not believe that there is one universally superior mode to formulate and implement strategy. If there were, it would not be strategic because all firms would adopt it”. In conclusion, there is no the best alignment perspective, and there is only the appropriate alignment perspective to the business under business conditions.

In the following, there are my little comments on the post of the classmate.

My comment: Lee’s view and argument are same as mine that also think no one is the best alignment. And, it only depends on many business conditions such as the business nature. In addition, I agree the communication is one of important components before employing an alignment so that realises more about the business and IT strategies and infrastructures together and facilitates the development of the alignment.