Strategic IT-alignment model
Henderson and Venkatraman’s strategic alignment model maps the relationships between the firm’s strategy and IT, and between operations and the IT infrastructure. It helps to assess the alignment of the IT strategy with the business strategy. The model distinguishes two dimensions:
The model uses the term ‘strategic fit’ for the degree of technological fit between the four strategic quadrants based on the two dimensions (as shown in the Figure 58.1) and it clarifies two things:
Figure 58.1 Strategic IT-alignment model
Source: after Henderson and Venkatraman (1991)
The model underlines the fact that the IT strategy can never be considered, or modified, without being aligned to the business strategy. This is something that cannot be emphasised too strongly. The model functions as a tool to complete this necessary alignment.
The model should be used as a framework to map the relationships between business strategy and IT strategy, and between operations and IT infrastructure, in situations where IT is very important for realising the chosen business strategy. The model provides insight in three ways:
Henderson and Venkatraman’s vision entails four dominant strategic perspectives that are aligned as illustrated by the various arrows in Figure 58.1.
In this traditional view of strategic management, there is a hierarchical relationship between a company’s business strategy and information systems infrastructure and processes. The (board of) management defines the strategy, which is subsequently translated into an IT infrastructure. Business strategy is considered to be the driver of both organisational infrastructure (structure follows strategy) and the logic of the IT infrastructure.
The business strategy is the starting point for the IT strategy and infrastructure. The management view of technology, as defined within the business strategy, will drive the choices in IT strategy. The IT strategy is then translated into an appropriate IT infrastructure. The technological potential differs from the strategic perspective because it demands that the IT strategy is formulated in line with the business strategy. The IT strategy should also support the specification of the (internal) IT infrastructure and processes. The infrastructure, when implemented, must be consistent with the (external) IT strategy.
The competitive potential differs in perspective from the previous strategic perspectives, because it assumes that the business strategy is changeable in line with IT capabilities. Exploiting the IT capabilities could influence the development of new products or services, new ways of steering and managing relationships, and new elements of the business strategy. The (board of) management only supports the business strategy in this perspective, in the sense that it envisages how emerging IT capabilities and new ways of governing will influence the business strategy. The IT manager should translate the developments and trends in the IT environment into opportunities and threats for the (board of) management.
From the service level perspective, the business strategy is indirect and only barely visible. The organisational infrastructure is based on the IT infrastructure, which is the sole result of the IT strategy. There is a danger that an organisation built in this way will require huge investment in IT processes, acquisitions and licences. Management should therefore be involved in resource allocation.
The model assumes that both business strategy and IT strategy are the responsibility of top management. In reality, IT projects go wrong because top management considers them solely from the perspective of the IT strategy. In effect, they have ‘delegated’ the IT strategy to ‘experts’. The model does identify the need for alignment, but it does not offer solutions for this frequent conflict.
Henderson, J.C. and Venkatraman, N. (1991) ‘Understanding strategic alignment’. Business Quarterly 55(3), 72.
Henderson, J.C. and Venkatraman, N. (1993) ‘Strategic alignment: leveraging information technology for transforming organisations’. IBM Systems Journal 32(1), 4–16.