Competing in the Information Age: Align in the Sand

430 Pages·2003·2.56 MB·English

by  Jerry N. Luftman

Competing in the
Information Age:
Align in the Sand,
Second Edition
Jerry N. Luftman,
Editor
OXFORD UNIVERSITY PRESS
Competing in the Information Age
Competing in the
SECOND EDITION
Jerry N. Luftman
EDITED BY
Information Age
A L I G N I N T H E S A N D
1
2003
1
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LibraryofCongressCataloging-in-PublicationData
Competingintheinformationage:aligninthesand/[editedby]Jerry
N.Luftman.—2nded.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN0-19-515953-5
1. Organizationalchange. 2. Strategicplanning. 3. Information
technology—Management. 4. Competition. I. Luftman,JerryN.
HD58.8.C6462003
004'.068'4—dc21 2003004709
2 4 6 8 9 7 5 3 1
PrintedintheUnitedStatesofAmerica
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Preface
Sincethereleaseof“CompetingintheInformationAge:StrategicAlignment
in Practice” in 1996, a substantial shift has taken place in our industry.
Businesspeople are beginning to understand the importance of information
technology (IT). Many suggest that those competitors with the best infor-
mation systems and intelligence will be the winners. In numerous cases it is
impossible to distinguish business strategies from IT strategies. About half
of all investments in information technology are driven by functional (line-
of-business; e.g., marketing, finance, research and development) executives.
Many CIOs (chief information officers) sit at executive board meetings
where information technology is translated into business value. Other sig-
nificant changes that have affected corporations and our lives since 1996
include the implications of terrorism and security, the focus on morals and
ethics, and the dynamics of our economy. In all of these cases, it is clear
that information technology will provide the driving force behind business
transformation in the information age.
There are large numbers of articles, books, case studies, and anecdotes
that discuss what is being done by IT to affect all aspects of a firm’s com-
petitive strategy. More and more industries are recognizing thatinformation
technology can be instrumental in both integrating cross-organizational re-
sources and shaping core business capabilities. Ignoring the Internet as a
fundamental part of the business strategy is simply not an option. Having
a website is not enough. The information age has opened new channels for
selling products. Empowered by evolving technologies, customersareunfor-
giving. Misfortune awaits the organization that doesnotmeetthechallenge.
Businessismovingfromtechnologyassupportingthebusinesstotechnology
as an integralpartofthe business.Aswithalltransformations,thesechanges
donotcomeeasily.Executivesmusttakechargeoftheirorganizations’future
in the information age. At a minimum, having a harmonious IT-business
relationship is key. One thing that hasnot changedisthechallengeofalign-
ing IT and business strategies.
The purpose of this book is to present a new set of practical and pow-
erful tools to help ensure that businesses get the full benefit from their
investments in IT. Senior executives are provided with an understanding of
how to manage the new ways of doing business in an innovation-driven
information economy. We have learned a lot from applying the tools pre-
vi Preface
sented in the initial book. The strategic alignment model still is anessential
vehicle for clarifying and ordering the process of bringing an organization’s
business strategic plan into harmony with the information technology that
is necessary to make that plan work. Our experiences have helped identify
and measure the key elements that facilitate the important relationshipthat
must exist among IT and business organizations. Defining what will be
demanded of managers and firms to survive and succeed in the information
age remainsamajorchallenge.Thisbookpreparesorganizationstomeetthe
challenge.
Acknowledgments
This book has its origins in research that began in the mid-1980s. Much of
the original work has been published and presented around the world. A
greatdealhaschanged.Alothasbeenlearned.Thedemandtoalignbusiness
and IT strategies, however, remains a top issue facing management today.
The chapters in this book present an evolution of the original research
and initial book. An international team of authoritative leaders,researchers,
consultants, and teachers make up the authors of this important book. Vita
of the contributing authors follow the Contents.
While researching, writing, and editing this book, I have become in-
debted to a large number of individuals and organizations, only a few of
whom can be mentioned here. I am greatly appreciative to The Conference
Board and Society of Information Systems (SIM) for sponsoring this im-
portantresearch.IBM,especiallytheAdvancedBusinessInstitute,willalways
be a part of me. Recognition is due to Stevens Institute of Technology for
giving me time to research and teach these important ideas to the future
leaders of industry, including the participants in the executive information
management programs.
Of course, a large degree of thanks is due to the hundreds of organi-
zations that have been used in creating, developing, and advancing the ap-
plication of the Strategic Alignment Model. This includes the thousands of
students attending the Stevensgraduateprograms,wherethought-provoking
discussion has led to many of the new insights.
This book is dedicated to the families of all of the contributors. I es-
pecially want to dedicate it to my wife, Vivian, who has shown me for over
33 years that being aligned is not just an IT-business thing.
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Contents
Contributors xi
Introduction 3
JerryLuftman
Part I Align in the Sand
1 Assessing Strategic Alignment Maturity 15
JerryLuftman
Part II Communications
2 Integrating Business and IT Strategy: Reframing the
Applications Development Portfolio 51
MichaelJ.Earl
3 Recognizing the Functionality of the Future 62
JamesC.WetherbeandGlennJ.Browne
Part III Competency/ValueMeasurement
4 Assessing the Value of IT 77
JerryLuftmanandC.TimothyKoeller
5 Creating and Sustaining IT-Enabled Competitive
Advantage 107
DavidFeeny,BlakeIves,andGabrielePiccoli
6 Competing in Mobile Business 137
SirkkaJarvenpaaandKeremTomak
Part IV IT Governance
7 IT Governance 161
JerryLuftman
8 The IT Organization of the Future 191
CarolV.Brown
Part V Partnership
9 Chief Information Officers: Strategic Roles
and Peer Influence 211
SidL.Huff,HarveyG.Enns,andScottL.Schneberger