IT Strategy and the Overall Business Strategy Essay

I- Introduction commerce strategies were basically developed as weapons in the competition. However, with the rapid change in argumentation environment, competition roles have changed forcing companies to re restore their federal agency in order to compete.With the evolved role of IT, organizations started to think to use IT as a strategical weapon either as a competitive advantage or even as an enabler for growth. However, unfortunately IT solely was not enough to take that role.So, organizations needed to rethink and reinvent new management or caper beat out practices in order to maximize the obtained IT cling to. As a result, organizations adopted best practices such as IT assembly line conglutination to align IT with their backing strategic goals in order to survive and succeed in the competition.The aim of this paper is to determine whether an IT outline focused on maintaining a with-it position is the most in effect(p) way to support any kind of boilers suit profe ssion dodge or not. The main hypotheses of the research are that (1) IT strategy focused on maintaining a avant-garde technology position isnt enough (or isnt the most effective way) to support the overall business strategy because (2) it has to be aligned with the overall business strategy.The paper first of all defines the term IT business alignment, then analyzes the rate of flow stance, and finally it ends with a conclusion.II- DefinitionsBefore analyzing the current situation, it is necessary to define an important term such as IT air Alignment. Tapia, R. S. (2006) gives a simple straight-to-the-point definition for the term IT Business alignment the problem of matching work offered by IT with the requirements of the business. (p.1)III- Situation AnalysisIn order to test the research hypotheses or to prove that an IT strategy focused on maintaining a van technology position is not the most effective way to support any kind of overall business strategy, this section will a nalyze the current situation of IT projects and the relationship with their business strategic goals and requirement.1. IT projects fail to deliver a jimmyResearch showed that the gap between IT and business strategic goals still significantly exists. A significant percentage of IT projects fail to deliver a time value as shown in figure (1). According to Needmuchwala, A. A., 2008, 41% of IT projects failed to deliver the expected value. And he presented another interesting fact such as more(prenominal) than of IT projects were canceled (p.3) not to mention that only 11% of organizations consider technology as a strategic weapon (p.3)Figure (1) Failure types of IT projects(Sample size 800 IT managers in 8 countries)Source Dynamic Markets Limited (2007). IT Projects Experience certainty (cited in Needmuchwala, A. A., 2008. Evolving IT from Running the Business to Changing the Business) Another survey conducted by Shpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007) showed t hat a hug percentage of IT projects (three-quarters of companies as shown in figure 2) failed to deliver as expected and drifted in the maintenance zone where IT projects were disconnected from the overall strategic goals and objectives. (p.52) Whereas the 11% companies in the alignment trap shown in this survey even failed to deliver results on date or on budget and spent 13% more than the average and had 14% lower revenue growth. (p.52)Figure (2) IT alignment Survey results(Sample size more than 500 senior and IT executives worldwide)Source Shpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007). Avoiding the Alignment Trap in Information Technology Now, the current situation tells us that IT strategies focused only on maintaining cutting-edge technology position, away from business strategy, are not the effective way to support the overall business strategy. Another way to prove that is to prove that the strategic alignment between IT strategy and business strategy is the effe ctive way to support the overall business strategy and to deliver a business value.2. IT Business alignment proved to deliver value2.1 The Need for Strategic AlignmentBefore mentioning any facts about IT business alignment, Figure (3) shows levels of relationship between IT and business strategy and the value offered in each alignment level. These development stages were suggested by Wyatt-Haines, R. (2007) and are chosen here to explain the necessity of the engagement between IT and business strategy. Facts show that many IT functions fail to deliver even at the first basic level following the business (Wyatt-Haines, R., 2007, p.6) and this is obviously happens when IT simply fails to understand business needs or in another word, the basic engagement with business strategy.Figure (3) Levels of Relationship Between IT and Business StrategyRelationship with businessIT knowledge Stages (Levels of Alignment)1. Following2. Enabling3. LeadingGoals/Functions of IT in each development sta ge/ alignment levelReacts to business needsMaximizing value predicting, resourcing prioritiesExtremely aligned, a key player in leading thinking and planningRelationship with business strategyUnderstanding of business needsUnderstanding of business strategyUnderstanding of business environmentBusiness Results/ foster (Alignment adjoin)Delivering valueStrategic successCreating strategic opportunitiesSource Development Stages (Following-Enabling-Leading) were adopted fromWyatt-Haines, R. (2007). Leadership Impact finished ITAlso, Jahnke, A. (2004) assured that the full participation and engagement of the business is the only guarantee to turn IT capabilities into business benefits.So, the strategic alignment in this case is considered to be a necessity not a luxury.Now, after realizing the fact that IT alignment is a necessity to obtain a business value, its time to analyze the IT business alignment current situation. First of all, research findings showed that management practices such as strategic alignment contributes to higher levels of IT business value. (Tallon, P. P. & Kraemer, K. L. & Gurbaxani, V., 2001, p.1 Sample size 304 business executives worldwide). Also, according to CIO update (2004), 96% of IT executives predict a positive impact of aligning IT strategy with the corporate strategy. (As shown in figure 4)2.2 The ROI or the value of the AlignmentTo make sure that IT business alignment is an effective way to support the business strategy, this section also will focus on the situation of the successfully aligned companies to make sure that the strategic alignment enables companies to obtain a value or ROI.First, Holmes, A. (2007) found these companies who succeeded in aligning IT with the business strategy generated a new revenue stream more than twice as often as other companies who said they were not aligned.Figure (4) IT alignment survey results(Impact and Challenges)Source CIO update (2004). Aligning IT & Business Strategies Still ElusiveAlso , the survey mentioned before- conducted by Shpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007) showed that the successfully highly aligned highly effective companies (7% of respondents as shown in figure 2) recorded a compound annual growth rate over three years- 35% higher than the survey average. (p.53) These companies successfully -as the authors described them- have put IT where it belongs at the heart of the business processes that define organizations position in business environment or the food market. (p.58)So, IT in these companies didnt focus on the cutting-edge technology position but it focused on how to support the business strategic position by aligning IT strategy with the overall business strategy.IV- ConclusionNow, after analyzing the current situation of IT projects, it is obvious that an IT strategy focused only on maintaining a cutting-edge technology position is not enough (or not the most effective way) to support any kind of overall business strategy, because facts say that IT disconnected and separated strategies failed to support business overall strategies and even became a heavy burden on their organizations.On the other hand, aligned IT strategies proved to deliver a value and this value differs and are maximized depending on the engagement level with business strategy. In another word, the first success factor is to strategically align IT with the business goals and requirements heart and soul to support the business strategic position and not the cutting-edge technology position.Finally upon these findings- the crime as described by Jahnke, A. (2004) is the overlook of alignment because the lack of alignment represents a waste of money, a waste of effort, and wasted opportunities.ReferencesCIO update (2004). Aligning IT & Business Strategies Still Elusive. CIO. Retrieved April 29, 2008 from http//www.cioupdate.com/insights/article.php/3328551Holmes, A. (2007). The ROI of Alignment. CIO. Retrieved April 29, 2008 from htt p//www.cio.com/article/27969/The_ROI_of_Alignment/Jahnke, A. (2004). Why is Business-IT alignment So ticklish?. CIO. Retrieved April 29, 2008 from http//www.cio.com/article/32322Needmuchwala, A. A. 2008. Evolving IT from Running the Business to Changing the Business. Retrieved April 29, 2008 from http//www.tcs.com/SiteCollectionDocuments/White%20Papers/DEWP_05.pdfShpilberg, D. & Berez, S. & Puryear, R. & Shah, A. (2007). Avoiding the Alignment Trap in Information Technology. MIT Sloan Management Review, Fall 2007, 49(1) pp. 51-58. Retrieved April 29, 2008 from http//sloanreview.mit.edu/wsj/insight/pdfs/49102.pdfTallon, P. P. & Kraemer, K. L. & Gurbaxani, V. (2001). Executives Perceptions of the Business Value of Information Technology A process-oriented approach. Journal of Management Information Systems, 16(4), 145-174. Retrieved April 23, 2008 from http//repositories.cdlib.org/cgi/viewcontent.cgi?article=1057&context=critoTapia, R. S. (2006). A Value-Based Maturity Model for IT A lignment in Networked Businesses, Netherlands. Retrieved April 29, 2008 from http//eprints.eemcs.utwente.nl/2778/01/Subprojectproposal.pdfWyatt-Haines, R. (2007), Leadership Impact Through IT, Business Leadership Review IVIV, October 2007. Retrieved April 29, 2008 from http//mbaguide.mbaworld.com/downloadblrarticle/1047/index.htm