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Information technology Alignment Planning—a case study
Information & Management 42 (2005) 619–633
Information technology Alignment Planning—a case study Dan Peaka,*, C. Steve Guynesa,1, Verlyn Kroonb a
College of Business, University of North Texas, P.O. Box 305249, Denton, TX 76203-5249, USA b Omaha Public Power District, 444 S. 16 St. Mall, Omaha, NE 68102, USA Accepted 27 February 2004 Available online 3 August 2004
Abstract This paper describes the Information Technology Alignment Planning Process—a strategic IT planning process created to complement the corporate planning model used by a major Utility company in the Midwest. Corporate planning activities produced the divisional strategies, critical success factors, and goals that then were used to by the IT Alignment Planning process to align IT within the company. The process is intended to aid in making the best possible use of IT resources in meeting the corporation’s business objectives. Fifty-eight managers from five major business units participated in the study. Several important factors and their resulting benefits were identified. The model utilized an intuitive color-coded alternative to statistical output that was readily accepted by management. We found that the process helped align IT with business strategies and improved and facilitated communication on IT project management and development. # 2004 Elsevier B.V. All rights reserved. Keywords: IT Alignment Planning; Corporate planning; Critical success factors; Business units; Goals; Main thing
1. Introduction IT Alignment Planning is a process that enables IT clients to achieve their objectives by delivering quality information from IT products and services. It involves the identification of requirements, delivery of information, products, and services, and continual monitoring and measurement of the effectiveness of the system [4].
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Corresponding author. Tel.: þ940 565 3110; fax: þ940 565 4935. E-mail addresses: [email protected] (D. Peak), [email protected] (C.S. Guynes), [email protected] (V. Kroon). 1 Tel.: þ940 369 7210; fax: þ940 565 4935.
Alignment of strategic corporate plans with strategic business unit plans still remains a key need of business executives [6,17]. In a supporting role, IT Alignment Planning also has emerged as a necessary task of many senior managers [15,11] while commercial IT research organizations such as Gartner [20,21] have listed IT Alignment as a top issue of American companies. Understanding and leveraging the business–IT partnership allows organizations to use IT as a business strategy enabler [14]. The resulting harmony can then be extended and applied throughout the organization. By tying the IT planning process directly to each business units’ critical success factors (CSFs), IT Alignment Planning takes a strategic view across the corporation. It identifies or discovers and creates
0378-7206/$ – see front matter # 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.im.2004.02.010
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new IT strategies, identifies and creates new IT resources, provides input into strategic and tactical planning processes, and factors in the effects of competition with the primary objective of improving information quality for IT clients [18,23,22]. IT alignment involves making good use of IT resources in meeting the corporation’s business objectives [3]. Strategically, it is a process for anticipating future IT requirements of the corporation to ensure that it will be prepared to meet the challenges of competitors. Tactically, it is a process of corporatewide IT resource allocation, analogous to labor or asset resource allocation. Operationally, it is a process for achieving IT effectiveness and efficiency, in an effort to keep the business running smoothly and supporting customer requirements. IT Alignment has become a top issue for management and is expected to remain so [7,12,16,19]. The IT Alignment Planning Process fits well with corporate strategic planning, particularly when it also involves corporate alignment.
2. Deregulation as a motivation for IT Alignment Planning in the USA The US electric utility industry, directed by US federal legislation, is transitioning from a regional, regulated environment to a national, competitive one where retail customers choose their supplier. Deregulation throughout the US is occurring on a state-bystate basis, with the push for competition originating from large consumers in markets where electricity prices are high. The US Congress reacted, in 1978, by passing the Public Utility Regulatory Policies Act (PURPA), which made it possible for non-utility generators to sell electricity in the wholesale power market, though it appears that electric transmission and distribution will remain regulated and noncompetitive [5]. Throughout the United States, industry and the state legislators are investigating the effect of deregulation on utility supply, delivery, and investments. Although all states are planning electric industry deregulation, each will decide when and may even halt the process. Some states have enacted a time-certain approach; the legislature designates a timetable for deregulation. However, Nebraska has adopted a condition-certain
Table 1 IT roles Role description
IT role in regulatory
IT role in competition
Business Planning Maintenance and support Consulting and advisory Visioning Developing business long-term vision Developing client long-term vision
Operational Operational Primary Secondary Secondary Secondary Secondary
Strategic Strategic Secondary Primary Primary Primary Primary
approach, where a set of pre-specified market conditions, as they arise, trigger deregulation. In Nebraska, the wholesale market price of electric power must match or fall below the Nebraska utility price for a specified period before the legislature can proceed with the plan [1]. 2.1. Deregulation brings competition Deregulation is a powerful motivator for transforming IT into a strategic role. In companies where IT plays a supporting role, the IT organization focuses on client support activities, but IT clients predict their own future. Thus, IT is not heavily involved in the long-term, executive-level planning process. In companies where IT plays a strategic role, it still supports its clients but is strategically involved with them—both IT and clients predict the future. IT is intimately involved in the long-term, executive-level planning process, because this role casts it as a strategic resource (Table 1). Deregulation highlights the importance of aligning business goals across the corporation and aligning business goals with IT. A competitive company can use IT Alignment Planning to connect strategic and tactical business goals with IT strategies, resources, systems, and services, providing business units with the information they need to be competitive.
3. The Alignment Planning context Omaha Public Power District (here termed ‘‘the Company’’) is a not-for-profit organization. It is a governmental subdivision of the state of Nebraska and owned by its approximately 300,000 customers. It is a
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vertically integrated retailer and wholesaler, containing both nuclear and fossil fuel generating plants, a transmission and distribution infrastructure, and marketing and service units. The management structure is hierarchical, with a President/CEO reporting to an elected board of directors. The eight board members, who campaign and run for public office every 2 years, serve as the representative rate-setting body. The president and the direct reports make rate recommendations to the board based on revenue estimates. Board-approved rates serve to recoup costs, maintain the operating capability, anticipate future requirements, and provide value to customer-owners and security to bondholders. In 1998, the Information Technology Division (ITD) of the Company jointly developed an IT Alignment Planning Model with their Energy Services Unit. The model was used to create an Energy Services IT Alignment Roadmap, which identified areas of concern and resulted in the plans for IT needed systems and related products. The alignment roadmap served as a pilot for the corporate-wide implementation of an IT Alignment Planning process. In 2000, the process was revised to make it more efficient. Data collection was automated with electronic group meeting software and spreadsheets were designed to analyze the data. With the support of upper management, the process was applied to the five Company business units with the object of providing a high-level, management view of information gaps and possible solutions.
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pany largely determined its own performance success, conditioned by the market environment, based on the performance results aggregated from lower-level goals. The PDR process also drove the performance measurement system for professional employees. PDR was documented in The Power of Alignment [9]. After corporate-level PDR, the corporate strategic plan was developed by the business units, divisions, and departments through all levels of the hierarchy. Responsibility is allocated by job function, except in cases of shared measures, where PDR identified key business processes that extended beyond divisional or unit boundaries. Management determined that shared measures fostered alignment across unit boundaries and contributed to an overall alignment with corporate business goals. Several PDR items are defined as follows. Main thing: The highest level purpose of the organization. The element that could improve performance in the near term. Determined by customers through consensus achieved at a facilitated meeting. Critical success factor: Key operational or cultural indicator of success. Stretch goal: An ambitious, highly targeted opportunity for breakthrough improvement in performance. It is actionable, measurable, and achievable. Because it is fundamental to organizational performance, a PDR Planning Goal could take years to achieve. 3.2. IT Alignment planning and information quality
3.1. Corporate strategic Alignment Planning Every year, the Company went through a strategic planning process: plan, deploy, and review (PDR). This was a process whose purpose was to focus the Company’s activities and resources against established priorities and to ensure alignment with corporate goals and measures. PDR was not a strategic planning method in a traditional sense, because it had no alignment component. Instead, PDR was a systematic, top-down, goal-oriented planning and alignment process that successively allocated performance responsibility for corporate-level goals from the top through the lower levels, which were funded through a budgeting process; performance against budget was measured from the bottom up. The Com-
The measures of information quality (IQ) were developed jointly by the IT and client organizations during the pilot study. For many years, IQ was a critical concern and active area of IT research [8,10,13]. However, the inconsistency of results and lack of an accepted IQ standard, other than TQM and the Baldridge Award methods, led us to develop an IQ measure that both the IT staff and clients considered appropriate.
4. Theoretical foundation for the model Detailed planning alone or isolated strategic decision making will not provide a good change strategy.
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Fig. 1. Strategic Alignment Planning: critical success factors.
What is required is an integrated and dynamic view of the organization and its environment, where strategy making is part of a continuous process as a part of organizational growth and survival. Aligning the IT strategy with an existing business plan allows managers and planners to define a course of action and develop an IT strategy to bridge the gap between IT reality and the strategic target. Alignment takes into account management processes and practices, coordinated planning capabilities, accountability processes, service level agreements, and organizational principles, culture, and structure (Fig. 1). IT Alignment Planning advocates that an IT organization should plan with clients, not just for them. Thus IT will support the CSFs, processes, and drivers of all business units and becomes an integrative and binding force across the corporation (see Fig. 2). The deliverable for each business unit, a custom IT Alignment Roadmap, contains a list of ranked concerns (information gaps), a prioritized development plan with a schedule of candidate IT solutions, and a management-level portfolio of IS. The deliverable for the company, the IT Alignment Plan that integrates the business unit Roadmaps, provides consistent, corporate-wide IT vision and status, and also functions as a capital budgeting tool for major IT resources, projects, and systems (see Fig. 3).
Each IT Alignment Roadmap becomes a high-level IT planning product customized for each corporate business unit. Internal deliverables include: (1) a management-level portfolio of important IT systems and products, (2) a prioritized list of information solutions (e.g., systems, enhancements, strategies, projects, training programs) containing estimates of size, resources, new technologies, dependencies, cost benefit, and installation date, and (3) a solution delivery schedule. The IT Alignment Plan reconciles and integrates the IT Alignment Roadmaps. Internal deliverables include: (1) a consistent, comparative, prioritized view of new and current IT projects across the corporation that can be used for strategic planning and capital budgeting, (2) a consistent view of major information needs and concerns across the corporation. IT Alignment Planning creates links between the strategic and the operational levels of the corporation. 4.1. Four information dimensions used to assess information quality There are four information dimensions to assess IQ: CSFs, business process, information needs, and IT products and systems (Fig. 4). These four were selected as major elements of the PDR and company
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4.3. Information dimension II: business processes Managers are responsible for all or parts of a business process which transforms inputs to outputs, adding value for the customer. The Company has five major processes, while business units have approximately six. Vice presidents are responsible for all processes within control of their unit, and partially responsible for shared processes across units. Division managers are responsible for all processes within control of their division and partially responsible for shared processes across divisions or units. 4.4. Information dimension III: information needs Employees always need some information to complete their task; whether they are able to acquire it or not, it is an information need (IN). Information needs are divided into five categories. (a) General information. (b) Business core information, containing between five and seven specific elements; e.g., customer knowledge, service, and satisfaction. (c) People information; e.g., employee retention and recruitment, skill assessment and training. (d) Financial information; e.g., economic decision, analytical and forecasting for several units. (e) Information on IT; e.g., technology support effectiveness, system selection methodology.
Fig. 2. IT Alignment Planning: building the BU IT Alignment Roadmap.
IT planning processes to examine IQ from the strategic through operational levels, and to highlight the areas of concern by examining their dimensions two at a time. 4.2. Information dimension I: critical success factors A CSF is a key operational or cultural indicator of success within control of the organization. Each ‘‘main thing’’ is expressed with approximately three to six CSFs, against which responsible managers are measured. Managers are measured against one or more CSFs.
4.5. Information dimension IV: IT systems and products Information is provided to employees by IT, products, and services. Based on customer perceptions of performance and customer requirements, some IT products should be enhanced, some may call for more customer training, and some may suggest a study to define customer concerns. Fig. 4 illustrates the four business information dimensions, listed in order from most strategic to most operational. 5. Methodology Out of approximately 200 professional managers in the Company, 75 senior and upper-middle managers
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Fig. 3. Business unit IT Alignment Roadmaps align BU information requirements with the BU strategic plans.
were identified by IT and senior management as candidates to participate in the IT Alignment Planning process. A representative group who were both knowledgeable and willing participants were selected. In addition, all managers were allowed to involve senior professionals who possessed management-level understanding of their information needs as advisors or substitutes. Ultimately, 58 individuals participated in the study, including 49 managers and 9 selected professionals. Using their 1998 pilot study templates as a model, information templates for each business unit (BU) were prepared from four information matrices, constructed of paired information dimensions. The rows and columns of each matrix were filled with preliminary information. The CSFs columns were primed with those in the business unit strategic plan. The business processes and information systems were extracted from IT information architecture files. To complete the planning templates for each BU, the authors then met with IT
and BU managers to confirm the BU processes, identify information needs, and confirm which were the important information systems. The data collection process of IT Alignment involved four main steps. (1) Identify information needs of each business unit: Key management-level personnel from each business unit were identified and contacted. This information was used to prepare a template IT Alignment Roadmap and IQ survey. (2) Assess and visualize: The Information Quality Assessment Survey was administered electronically to managerial-level personnel for each business unit. Three surveys with approximately 700 questions were administered using an electronic data collection tool. The survey results were plotted in four 2 2 matrices, using color to indicate missing (black), inadequate (red), marginal (yellow), or adequate (green) informa-
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Fig. 4. The four business information dimensions reveal information concerns, which suggest IT solutions.
tion. Managers could view IQ trends in color— e.g., a predominantly green chart indicated that the BU perceived it was receiving adequate information. (3) Detect gaps between the business and its information: Based on perceived importance of information received, the survey results were stratified into three categories: high, medium, and low importance. Those areas receiving the highest importance and the lowest quality scores were the gaps, and these areas were grouped into information concerns which were presented to the business unit managers for verification and prioritization. (4) Identify solution IT strategies, projects, and systems: Based on the results and BU verification, both IT and the BUs jointly identified possible solutions for top information concerns. Solutions included: (a) strategies, such as studies, plans, tasks, (b) new projects, such as
product acquisition, process reengineering, enhancement, and (c) systems, such as new or acquired IS designed to address the issues. The IT alignment participant managers then estimated budget, cost/benefit, schedule, resource requirements and assigned priorities. These candidate solutions were entered into the BU IT Alignment Roadmap. Solutions that achieved the corporate acceptance thresholds became part of the final BU IT Alignment Roadmap and the IT Alignment Plan, and ultimately part of the IT strategic plan.
6. Assessing information quality and information gaps Clients of IT assessed the quality of information they received as they performed their jobs. To assess the IQ of a paired set of information dimensions,
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clients were asked: ‘‘Are both of these dimensions important to me as I perform my job?’’ and if the answer was ‘‘Yes,’’ then ‘‘What is the quality of information that I receive as I perform my job?’’. Mentally acclimating study participants to the questions that described the impact of paired dimensions on them required mental effort and patience on everyone’s part. IQ scores collected from management were recorded in four Information quality matrices. 6.1. Matrix A—business processes to CSFs This represented the highest strategic level of inquiry. Managers will be responsible for all or part of one or more processes. They will also be assigned to perform to one or more CSFs. Management was asked to assess IQ they receive as they performed a process and as they satisfied the CSF (Fig. 5A). 6.2. Matrix—information needs to CSFs Every manager had information needs that could be assessed individually. However, by assessing how that information need was served in the performance of a specific CSF focused on the issue and served as the basis for user-directed discussion (Fig. 5B). 6.3. Matrix C—business processes to IT systems or products Managers and their employees are clients of IT and users of IT systems and other products. Managers were provided with a list of IT systems and products they identified as important to them, and then asked to assess the quality of information they received from them as they performed a specific business process (Fig. 5C). 6.4. Matrix D—information needs to IT systems or products This represents the lowest operational level of inquiry. Managers were asked to assess the quality of information they received in fulfilling their information needs. A low IQ Score indicated that a specific IT system provided inadequate support for a specific information need (Fig. 5D).
6.5. Information Quality Scores When the respondents (IT client managers) assessed the quality of the information they received, the resulting numerical assessment ratings were called Information Quality Scores (IQS). Respondents could choose from five color-coded Information Quality Scores, where the IQS could be: 3 (adequate ¼ green), 2 (marginal ¼ yellow), 1 (inadequate ¼ red), 0 (missing ¼ black), or N/A (not applicable ¼ white). Stoplight colors were intuitive to managers, and a matrix of such scores could easily be interpreted by most people. A mostly green matrix indicated overall adequate information, while a mostly red matrix indicated inadequate information (Fig. 6). 6.6. Information concerns An information concern is the information gap for an IT client; it is then a candidate for immediate attention. Although IQ matrices may exhibit multiple areas where IQSs are inadequate, the true objective is to identify a high-concern areas that require priority attention. If the respondent has identified an information area as important and does not feel that he/she has been receiving adequate information, then there must be an information concern—resulting from a low IQS and a high information need importance rating (INIR). This is the first indicator of information importance. It is the average rating that respondents assign to each of their stated information needs (IN). Respondents could rate an IN as having low (0), medium (1), or high (2) importance. They entered their ratings into the http://www.facilitate.com electronic meeting software, which collected, calculated, and assigned an average score for each user information need [2]. Thus, INs for all BUs were scored the same way across the corporation. Because BUs competed with each other for IT services and project resources, comparable scoring was essential. It partially eliminated the inclination of some managers to bias their responses for comparative advantage. It also gave senior managers an apples-to-apples view of information needed across the Company; it was the senior managers who were the final authority on project priorities. The number of voters was the second indicator. When managers rated the IQ they received for a
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Fig. 5. (A) Information Quality Matrices with Paired Information Quality Dimensions and Information Quality Scores: (A) business process to crictal success factor; (B) information need to critical success factor); (C) business process to IT system or product; (D) information need to IT system or product.
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Fig. 5. (Continued ).
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Fig. 6. Facilitate.com questionnaire responses: a column of information quality scores in matrix B—information needs to CSFs.
question, they were asked to respond only if the question area was important in their job. For example, if two managers in the same business unit had orthogonal responsibilities, each would respond to different questions. If a higher percentage responded to one, the higher percentage response was deemed more important. Corporate managers understood the implications of majority voting and were willing to adjust importance levels after the scores were tabulated. As the INIR scores were interpreted in the context of the IT alignment process, this process was more likely to provide IT clients the information they believed that they needed. 6.7. The importance of visualization and color A key feature of the IT Alignment Planning process was being able to visualize information quality. A
group of clients and IT managers authored this technique. When the planning model was being developed, the pilot group consistently stressed the need for intuitive visual scoring and analysis. Numbers and statistics told a part of the story, but they wanted a picture to aid them. After considering a number of alternatives, the group settled on colors as the preferred technique. During the pilot study, managers assigned Information Quality Scores with color alone. The group would discuss each square and decide its appropriate color. As the discussion progressed, the matrices would gradually evolve into splashes of color. Not surprisingly, color scoring was intuitively compelling but extremely slow. The group agreed that the scoring process should be faster. Data collection was automated by using a GDS tool: http://www.facilitate.com. This tool cut data collection time substantially and
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made it practical to implement IT Alignment Planning across the entire company. A color data display has, become the primary output feature of the process. 6.8. Assigning an Information Quality Score During data collection, respondents were asked to assess the quality of information they received as they performed their jobs. If they were receiving the ‘‘right’’ information to make the best decisions or the ‘‘right’’ information to do their job, then the IQ was adequate. Detailed knowledge of neither the delivery technology nor the information origin was necessary. Respondents were also asked to use their own perception of IQ, reflecting their own job needs, points of view, and best judgment. To score an item, respondents went through a two-stage assessment process. First, the information had to be important to them. If not, they skipped the question, and it received the default N/A. Second, if the information was important, they assessed the IQ: if any important aspect was questionable (e.g., not immediately available, inaccurate, unreliable), the item would receive a score of 2 (marginal) or less (see Fig. 6). Managers may believe that they need information, whether it was available or not. Regardless, the IT Alignment Planning process attempted to identify information gaps wherever they existed and resolve them.
7. Formulating it solutions BU CSF and business processes studied during the BU strategic planning process can generate IT Alignment information gaps. These, when identified and ranked in importance, encouraged discussion between the IT organization and the BU for possible solutions. Sometimes these solutions were apparent, but sometimes they required additional thought and activity. IT solutions included new projects, systems, and other IT products. Solutions also included the development of new IT strategies. To plan and implement a solution, IT managers aggregated groups of related projects and activities into activity (work) streams and then estimated the required resources, finally putting them into an activity stream schedule—the master. As
a result, IT Alignment tied the information gaps identified at the strategic and process levels of the organization to IT system and product solutions. Thus strategic information concerns were operationalized into solutions that could contain a spectrum of projects, systems, products, and other means, or just a single task or project. Specific BU solutions were indentified and listed in the BU IT Alignment Roadmaps, where they were prioritized and scheduled into activity streams that gave managers a grouped, high-level perspective of similar solutions. Once all proposed BU solutions had been justified as valid cases, aggregated activity streams and projects from across the Company were reconciled in the IT Alignment Plan with strategic input provided by senior management. Finally, all activities and projects, with enabling technology and resource requirements, were factored into the IT Strategic Plan (Fig. 7). 7.1. The summary information quality matrix The Summary Information Quality Matrix in Fig. 8 was a four-quadrant synthesis of the four paired information dimension matrices. It was a composite, color-coded, meta-matrix of the four information quality matrices created for each BU, representing a continuum on the y axis from operational information (lower left quadrant) to strategic information with a continuum on the x axis from individual, functional information requirements (lower left quadrant) to business process information requirements. Each quadrant was then assigned a color that summarized the numerous IQ cells into a single quadrant cell. Using this scheme, Matrix A (upper right quadrant) provides the most strategic view of the organization’s IQ, showing that the organization’s business process information supported its CSF. Matrix D (lower left quadrant) provided the operational view, showing how well its job information requirements were being met by IT systems or products. The IQ of each BU, then, was summarized to four quadrants. At a glance, a manager could then absorb the quality of information being received by a dozen BU summary matrices. An outcome of IT client assessment, using a summary matrix with a green ‘‘A’’ quadrant and a red ‘‘D’’ quadrant shows that the clients have been receiving adequate strategic
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Fig. 7. Business Unit IT projects are reconciled in the IT Alignment Plan.
information but inadequate operational information. The summary matrix provided a scorecard for IT, measuring how its clients perceived that they were being supported.
Fig. 8. The summary information quality matrix, which aggregates scores of each of the four information quality matrices.
8. Limitations Despite a successful pilot study with a major business unit, other units expressed apprehension, because the pilot took 8 months. The VP of the pilot unit championed the process and, with the support of the company President, all units eventually participated. Immediate and full participation would have greatly sped up the process. The number of individuals involved and the data collected was daunting. Not surprisingly, the meetings required for each participating manager were either met with enthusiasm or resistance. For example, two BUs meeting together to collect data as a group had some traveling managers, requiring that data be collected from them individually, using an online questionnaire with identical formats and questions—but no facilitator. In four cases, the researchers met with
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managers to take them individually through the questions. This attention doubled the data collection time from the scheduled two months to four months. Maintaining matrix spreadsheets for each BU and then consolidating them was a non-trivial task. Microsoft Excel lends itself well to displaying colored cell values but is awkward to program. Finally, training the managers to think in paired information dimensions was challenging and demanded patience and understanding. The authors met individually with every manager to explain the IT Alignment Planning process. At GDS sessions, the authors preceded the data collection activity with an explanation and demonstration. However, once the data was processed, managers exhibited interest and enthusiasm, especially since the validation prioritized their own unit’s IT projects and services side-by-side with those of competing units.
9. Conclusions The IT Alignment Planning process was a successful 4-year activity that involved a pilot implementation and company-wide implementation of the IT Alignment Planning process. The benefits for the company are summarized in Table 2. A corporate-wide alignment of the business unit goals and associated IT with the IT unit goals and priorities was achieved. Our evidence for the success of the activity came from management feedback in the annual IT evaluation questionnaire. Also, the added understanding of BU projects and their priorities significantly aided in the preparation of the IT Strategic Plan. Table 2 A summary of results Major results and benefits of the IT Alignment Planning process Aligns corporate and client business goals with IT Creates a decision and capital budgeting tool for IT projects across the corporation Dovetails with the corporate strategic planning process Develops IT vision integrated with business goals and critical success factors Facilitates executive-level understanding and communication on IT across the company Helps improve operational IT support of clients while addressing long-term client needs Brings IT and client closer together
The process produced a uniform and consistent decision tool: a capital budgeting tool, for proposing, evaluating, and measuring IT projects across the corporation. It is also noteworthy that the second iteration required significantly less time to collect information than the first. The major reason for time efficiency was the use of a GDS tool. Such tools can also aid the posting of IQ questions in a Web questionnaire. Managers need not meet to participate. In addition, senior managers could monitor the whole alignment process using the tools. Non-IT perceptions of ‘‘not good enough information’’ called attention to problems that had not previously been addressed. The products of this planning activity, together with a high level of user satisfaction, were shared throughout the company. The IT Alignment Planning process improved and facilitated communication on IT and the projects throughout the company, from the executive to the operational level, and brought the IT and client units closer together.
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D. Peak et al. / Information & Management 42 (2005) 619–633 [12] G. Leo, Information Management—Commentary, CMA Magazine, October (1994) 7–8. [13] G. Varun, K.D. Fiedler, J.T.C. Teng, Exploring the success of Information Technology Enabled Business Process Reengineering, IEEE Transactions on Engineering Management, 41.3 (1994) 276–284. [14] H. Gary, C.K. Prahalad, Competing for the future, Harvard Business School Press, Cambridge, MA, 1996. [15] H. Michael, Reengineering work: don’t automate, obliterate, Harvard Business Review, July–August (1990) 104–112. [16] J. Henderson, N Venkatraman, Aligning Business and IT Strategies, in: J. Luftman (Ed.), Competing in the Information Age: Practical Applications of the Strategic Alignment Model, Oxford University Press, New York, NY, 1996. [17] C. Hess, Five steps for aligning IT with the business, Guidelines #G-07-2351, GartnerGroup, January 17 (1999). [18] K. Huang, Y. Lee, R. Wang, Quality Information and Knowledge, Prentice Hall, Upper Saddle River, NJ, 1999. [19] G. Labovitz, V. Rosansky, The Power of Alignment: How Great Companies Stay Centered and Accomplish Extraordinary Things, Wiley, New York, 1997. [20] Y. Lee, S. Diane, K. Beverly, W. Richard, AIMQ: a methodology for assessment, Information & Management 40, 2002, pp. 133–146. [21] L.C. Henry, The T-Form Organization: Using Technology To Design Organizations For The 21st Century, Jossey-Bass Inc., San Francisco, CA, 1996. [22] L. Jerry, T. Brier, Achieving and sustaining businessIT alignment, California Management Review, 42.1(Fall) (1999) 109–122. [23] S. Madnick, R.Y. Wang, Introduction to Total Data Quality Management (TDQM) Research Program, No. TDQM-92-01, Total Data Quality Management Program, MIT Sloan School of Management, Sloan, 1992. Daniel A. Peak received his PhD in business computer information systems in 1994 from the University of North Texas (UNT), with majors in business computer information systems and in finance. An associate professor, he has recently moved back to the UNT College of Business Administration after serving at the University of Nebraska at Omaha’s College of Information, Science and
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Technology, which he helped develop. His research interests include IT governance, strategic IT planning, media systems and human factors. Dr. Peak has more than 20 years of IT consulting and planning experience with numerous Fortune 500 companies, and has won and participated in numerous production and research grants. C. Stephen Guynes is a regents professor of business computer information systems at the University of North Texas. He received a doctorate in quantitative analysis from Texas Tech University. Dr. Guynes’ areas of specialization are client/ server computing, visual computing, data administration, and information resource management. His most recent research efforts have been directed in the areas of client/server computing and data administration. Some of the journals in which Dr. Guynes has published include Information & Management, Communications of the ACM, The Journal of Information Systems Management, Journal of Accountancy, Journal of Systems Management, The Journal of Database Management, The CPA Journal, The Journal of Computer Information Systems, Information Strategy, Computers and Security, and Computers and Society. Verlyn Kroon is Division Manager of Information Technology and CIO of Omaha Public Power District, a publicly owned, business-managed electric utility with approximately 300,000 customers in southeastern Nebraska. As a 29 year veteran in the electric utility industry, he has extensive leadership experience in both the information technology and corporate planning functions of business. His special interests are in technology planning, and in providing innovative, practical ideas which add real value to the business. He shares his business experiences with numerous technology advisory boards and academic institutions in the Omaha metropolitan area to further the education of information technology professionals. He sponsored several applied information technology research projects for his employer with faculty of local universities and is an advocate for strengthening collaboration of the academic and business communities.
Information technology Alignment Planning—a case study Dan Peaka,*, C. Steve Guynesa,1, Verlyn Kroonb a
College of Business, University of North Texas, P.O. Box 305249, Denton, TX 76203-5249, USA b Omaha Public Power District, 444 S. 16 St. Mall, Omaha, NE 68102, USA Accepted 27 February 2004 Available online 3 August 2004
Abstract This paper describes the Information Technology Alignment Planning Process—a strategic IT planning process created to complement the corporate planning model used by a major Utility company in the Midwest. Corporate planning activities produced the divisional strategies, critical success factors, and goals that then were used to by the IT Alignment Planning process to align IT within the company. The process is intended to aid in making the best possible use of IT resources in meeting the corporation’s business objectives. Fifty-eight managers from five major business units participated in the study. Several important factors and their resulting benefits were identified. The model utilized an intuitive color-coded alternative to statistical output that was readily accepted by management. We found that the process helped align IT with business strategies and improved and facilitated communication on IT project management and development. # 2004 Elsevier B.V. All rights reserved. Keywords: IT Alignment Planning; Corporate planning; Critical success factors; Business units; Goals; Main thing
1. Introduction IT Alignment Planning is a process that enables IT clients to achieve their objectives by delivering quality information from IT products and services. It involves the identification of requirements, delivery of information, products, and services, and continual monitoring and measurement of the effectiveness of the system [4].
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Corresponding author. Tel.: þ940 565 3110; fax: þ940 565 4935. E-mail addresses: [email protected] (D. Peak), [email protected] (C.S. Guynes), [email protected] (V. Kroon). 1 Tel.: þ940 369 7210; fax: þ940 565 4935.
Alignment of strategic corporate plans with strategic business unit plans still remains a key need of business executives [6,17]. In a supporting role, IT Alignment Planning also has emerged as a necessary task of many senior managers [15,11] while commercial IT research organizations such as Gartner [20,21] have listed IT Alignment as a top issue of American companies. Understanding and leveraging the business–IT partnership allows organizations to use IT as a business strategy enabler [14]. The resulting harmony can then be extended and applied throughout the organization. By tying the IT planning process directly to each business units’ critical success factors (CSFs), IT Alignment Planning takes a strategic view across the corporation. It identifies or discovers and creates
0378-7206/$ – see front matter # 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.im.2004.02.010
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new IT strategies, identifies and creates new IT resources, provides input into strategic and tactical planning processes, and factors in the effects of competition with the primary objective of improving information quality for IT clients [18,23,22]. IT alignment involves making good use of IT resources in meeting the corporation’s business objectives [3]. Strategically, it is a process for anticipating future IT requirements of the corporation to ensure that it will be prepared to meet the challenges of competitors. Tactically, it is a process of corporatewide IT resource allocation, analogous to labor or asset resource allocation. Operationally, it is a process for achieving IT effectiveness and efficiency, in an effort to keep the business running smoothly and supporting customer requirements. IT Alignment has become a top issue for management and is expected to remain so [7,12,16,19]. The IT Alignment Planning Process fits well with corporate strategic planning, particularly when it also involves corporate alignment.
2. Deregulation as a motivation for IT Alignment Planning in the USA The US electric utility industry, directed by US federal legislation, is transitioning from a regional, regulated environment to a national, competitive one where retail customers choose their supplier. Deregulation throughout the US is occurring on a state-bystate basis, with the push for competition originating from large consumers in markets where electricity prices are high. The US Congress reacted, in 1978, by passing the Public Utility Regulatory Policies Act (PURPA), which made it possible for non-utility generators to sell electricity in the wholesale power market, though it appears that electric transmission and distribution will remain regulated and noncompetitive [5]. Throughout the United States, industry and the state legislators are investigating the effect of deregulation on utility supply, delivery, and investments. Although all states are planning electric industry deregulation, each will decide when and may even halt the process. Some states have enacted a time-certain approach; the legislature designates a timetable for deregulation. However, Nebraska has adopted a condition-certain
Table 1 IT roles Role description
IT role in regulatory
IT role in competition
Business Planning Maintenance and support Consulting and advisory Visioning Developing business long-term vision Developing client long-term vision
Operational Operational Primary Secondary Secondary Secondary Secondary
Strategic Strategic Secondary Primary Primary Primary Primary
approach, where a set of pre-specified market conditions, as they arise, trigger deregulation. In Nebraska, the wholesale market price of electric power must match or fall below the Nebraska utility price for a specified period before the legislature can proceed with the plan [1]. 2.1. Deregulation brings competition Deregulation is a powerful motivator for transforming IT into a strategic role. In companies where IT plays a supporting role, the IT organization focuses on client support activities, but IT clients predict their own future. Thus, IT is not heavily involved in the long-term, executive-level planning process. In companies where IT plays a strategic role, it still supports its clients but is strategically involved with them—both IT and clients predict the future. IT is intimately involved in the long-term, executive-level planning process, because this role casts it as a strategic resource (Table 1). Deregulation highlights the importance of aligning business goals across the corporation and aligning business goals with IT. A competitive company can use IT Alignment Planning to connect strategic and tactical business goals with IT strategies, resources, systems, and services, providing business units with the information they need to be competitive.
3. The Alignment Planning context Omaha Public Power District (here termed ‘‘the Company’’) is a not-for-profit organization. It is a governmental subdivision of the state of Nebraska and owned by its approximately 300,000 customers. It is a
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vertically integrated retailer and wholesaler, containing both nuclear and fossil fuel generating plants, a transmission and distribution infrastructure, and marketing and service units. The management structure is hierarchical, with a President/CEO reporting to an elected board of directors. The eight board members, who campaign and run for public office every 2 years, serve as the representative rate-setting body. The president and the direct reports make rate recommendations to the board based on revenue estimates. Board-approved rates serve to recoup costs, maintain the operating capability, anticipate future requirements, and provide value to customer-owners and security to bondholders. In 1998, the Information Technology Division (ITD) of the Company jointly developed an IT Alignment Planning Model with their Energy Services Unit. The model was used to create an Energy Services IT Alignment Roadmap, which identified areas of concern and resulted in the plans for IT needed systems and related products. The alignment roadmap served as a pilot for the corporate-wide implementation of an IT Alignment Planning process. In 2000, the process was revised to make it more efficient. Data collection was automated with electronic group meeting software and spreadsheets were designed to analyze the data. With the support of upper management, the process was applied to the five Company business units with the object of providing a high-level, management view of information gaps and possible solutions.
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pany largely determined its own performance success, conditioned by the market environment, based on the performance results aggregated from lower-level goals. The PDR process also drove the performance measurement system for professional employees. PDR was documented in The Power of Alignment [9]. After corporate-level PDR, the corporate strategic plan was developed by the business units, divisions, and departments through all levels of the hierarchy. Responsibility is allocated by job function, except in cases of shared measures, where PDR identified key business processes that extended beyond divisional or unit boundaries. Management determined that shared measures fostered alignment across unit boundaries and contributed to an overall alignment with corporate business goals. Several PDR items are defined as follows. Main thing: The highest level purpose of the organization. The element that could improve performance in the near term. Determined by customers through consensus achieved at a facilitated meeting. Critical success factor: Key operational or cultural indicator of success. Stretch goal: An ambitious, highly targeted opportunity for breakthrough improvement in performance. It is actionable, measurable, and achievable. Because it is fundamental to organizational performance, a PDR Planning Goal could take years to achieve. 3.2. IT Alignment planning and information quality
3.1. Corporate strategic Alignment Planning Every year, the Company went through a strategic planning process: plan, deploy, and review (PDR). This was a process whose purpose was to focus the Company’s activities and resources against established priorities and to ensure alignment with corporate goals and measures. PDR was not a strategic planning method in a traditional sense, because it had no alignment component. Instead, PDR was a systematic, top-down, goal-oriented planning and alignment process that successively allocated performance responsibility for corporate-level goals from the top through the lower levels, which were funded through a budgeting process; performance against budget was measured from the bottom up. The Com-
The measures of information quality (IQ) were developed jointly by the IT and client organizations during the pilot study. For many years, IQ was a critical concern and active area of IT research [8,10,13]. However, the inconsistency of results and lack of an accepted IQ standard, other than TQM and the Baldridge Award methods, led us to develop an IQ measure that both the IT staff and clients considered appropriate.
4. Theoretical foundation for the model Detailed planning alone or isolated strategic decision making will not provide a good change strategy.
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Fig. 1. Strategic Alignment Planning: critical success factors.
What is required is an integrated and dynamic view of the organization and its environment, where strategy making is part of a continuous process as a part of organizational growth and survival. Aligning the IT strategy with an existing business plan allows managers and planners to define a course of action and develop an IT strategy to bridge the gap between IT reality and the strategic target. Alignment takes into account management processes and practices, coordinated planning capabilities, accountability processes, service level agreements, and organizational principles, culture, and structure (Fig. 1). IT Alignment Planning advocates that an IT organization should plan with clients, not just for them. Thus IT will support the CSFs, processes, and drivers of all business units and becomes an integrative and binding force across the corporation (see Fig. 2). The deliverable for each business unit, a custom IT Alignment Roadmap, contains a list of ranked concerns (information gaps), a prioritized development plan with a schedule of candidate IT solutions, and a management-level portfolio of IS. The deliverable for the company, the IT Alignment Plan that integrates the business unit Roadmaps, provides consistent, corporate-wide IT vision and status, and also functions as a capital budgeting tool for major IT resources, projects, and systems (see Fig. 3).
Each IT Alignment Roadmap becomes a high-level IT planning product customized for each corporate business unit. Internal deliverables include: (1) a management-level portfolio of important IT systems and products, (2) a prioritized list of information solutions (e.g., systems, enhancements, strategies, projects, training programs) containing estimates of size, resources, new technologies, dependencies, cost benefit, and installation date, and (3) a solution delivery schedule. The IT Alignment Plan reconciles and integrates the IT Alignment Roadmaps. Internal deliverables include: (1) a consistent, comparative, prioritized view of new and current IT projects across the corporation that can be used for strategic planning and capital budgeting, (2) a consistent view of major information needs and concerns across the corporation. IT Alignment Planning creates links between the strategic and the operational levels of the corporation. 4.1. Four information dimensions used to assess information quality There are four information dimensions to assess IQ: CSFs, business process, information needs, and IT products and systems (Fig. 4). These four were selected as major elements of the PDR and company
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4.3. Information dimension II: business processes Managers are responsible for all or parts of a business process which transforms inputs to outputs, adding value for the customer. The Company has five major processes, while business units have approximately six. Vice presidents are responsible for all processes within control of their unit, and partially responsible for shared processes across units. Division managers are responsible for all processes within control of their division and partially responsible for shared processes across divisions or units. 4.4. Information dimension III: information needs Employees always need some information to complete their task; whether they are able to acquire it or not, it is an information need (IN). Information needs are divided into five categories. (a) General information. (b) Business core information, containing between five and seven specific elements; e.g., customer knowledge, service, and satisfaction. (c) People information; e.g., employee retention and recruitment, skill assessment and training. (d) Financial information; e.g., economic decision, analytical and forecasting for several units. (e) Information on IT; e.g., technology support effectiveness, system selection methodology.
Fig. 2. IT Alignment Planning: building the BU IT Alignment Roadmap.
IT planning processes to examine IQ from the strategic through operational levels, and to highlight the areas of concern by examining their dimensions two at a time. 4.2. Information dimension I: critical success factors A CSF is a key operational or cultural indicator of success within control of the organization. Each ‘‘main thing’’ is expressed with approximately three to six CSFs, against which responsible managers are measured. Managers are measured against one or more CSFs.
4.5. Information dimension IV: IT systems and products Information is provided to employees by IT, products, and services. Based on customer perceptions of performance and customer requirements, some IT products should be enhanced, some may call for more customer training, and some may suggest a study to define customer concerns. Fig. 4 illustrates the four business information dimensions, listed in order from most strategic to most operational. 5. Methodology Out of approximately 200 professional managers in the Company, 75 senior and upper-middle managers
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Fig. 3. Business unit IT Alignment Roadmaps align BU information requirements with the BU strategic plans.
were identified by IT and senior management as candidates to participate in the IT Alignment Planning process. A representative group who were both knowledgeable and willing participants were selected. In addition, all managers were allowed to involve senior professionals who possessed management-level understanding of their information needs as advisors or substitutes. Ultimately, 58 individuals participated in the study, including 49 managers and 9 selected professionals. Using their 1998 pilot study templates as a model, information templates for each business unit (BU) were prepared from four information matrices, constructed of paired information dimensions. The rows and columns of each matrix were filled with preliminary information. The CSFs columns were primed with those in the business unit strategic plan. The business processes and information systems were extracted from IT information architecture files. To complete the planning templates for each BU, the authors then met with IT
and BU managers to confirm the BU processes, identify information needs, and confirm which were the important information systems. The data collection process of IT Alignment involved four main steps. (1) Identify information needs of each business unit: Key management-level personnel from each business unit were identified and contacted. This information was used to prepare a template IT Alignment Roadmap and IQ survey. (2) Assess and visualize: The Information Quality Assessment Survey was administered electronically to managerial-level personnel for each business unit. Three surveys with approximately 700 questions were administered using an electronic data collection tool. The survey results were plotted in four 2 2 matrices, using color to indicate missing (black), inadequate (red), marginal (yellow), or adequate (green) informa-
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Fig. 4. The four business information dimensions reveal information concerns, which suggest IT solutions.
tion. Managers could view IQ trends in color— e.g., a predominantly green chart indicated that the BU perceived it was receiving adequate information. (3) Detect gaps between the business and its information: Based on perceived importance of information received, the survey results were stratified into three categories: high, medium, and low importance. Those areas receiving the highest importance and the lowest quality scores were the gaps, and these areas were grouped into information concerns which were presented to the business unit managers for verification and prioritization. (4) Identify solution IT strategies, projects, and systems: Based on the results and BU verification, both IT and the BUs jointly identified possible solutions for top information concerns. Solutions included: (a) strategies, such as studies, plans, tasks, (b) new projects, such as
product acquisition, process reengineering, enhancement, and (c) systems, such as new or acquired IS designed to address the issues. The IT alignment participant managers then estimated budget, cost/benefit, schedule, resource requirements and assigned priorities. These candidate solutions were entered into the BU IT Alignment Roadmap. Solutions that achieved the corporate acceptance thresholds became part of the final BU IT Alignment Roadmap and the IT Alignment Plan, and ultimately part of the IT strategic plan.
6. Assessing information quality and information gaps Clients of IT assessed the quality of information they received as they performed their jobs. To assess the IQ of a paired set of information dimensions,
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clients were asked: ‘‘Are both of these dimensions important to me as I perform my job?’’ and if the answer was ‘‘Yes,’’ then ‘‘What is the quality of information that I receive as I perform my job?’’. Mentally acclimating study participants to the questions that described the impact of paired dimensions on them required mental effort and patience on everyone’s part. IQ scores collected from management were recorded in four Information quality matrices. 6.1. Matrix A—business processes to CSFs This represented the highest strategic level of inquiry. Managers will be responsible for all or part of one or more processes. They will also be assigned to perform to one or more CSFs. Management was asked to assess IQ they receive as they performed a process and as they satisfied the CSF (Fig. 5A). 6.2. Matrix—information needs to CSFs Every manager had information needs that could be assessed individually. However, by assessing how that information need was served in the performance of a specific CSF focused on the issue and served as the basis for user-directed discussion (Fig. 5B). 6.3. Matrix C—business processes to IT systems or products Managers and their employees are clients of IT and users of IT systems and other products. Managers were provided with a list of IT systems and products they identified as important to them, and then asked to assess the quality of information they received from them as they performed a specific business process (Fig. 5C). 6.4. Matrix D—information needs to IT systems or products This represents the lowest operational level of inquiry. Managers were asked to assess the quality of information they received in fulfilling their information needs. A low IQ Score indicated that a specific IT system provided inadequate support for a specific information need (Fig. 5D).
6.5. Information Quality Scores When the respondents (IT client managers) assessed the quality of the information they received, the resulting numerical assessment ratings were called Information Quality Scores (IQS). Respondents could choose from five color-coded Information Quality Scores, where the IQS could be: 3 (adequate ¼ green), 2 (marginal ¼ yellow), 1 (inadequate ¼ red), 0 (missing ¼ black), or N/A (not applicable ¼ white). Stoplight colors were intuitive to managers, and a matrix of such scores could easily be interpreted by most people. A mostly green matrix indicated overall adequate information, while a mostly red matrix indicated inadequate information (Fig. 6). 6.6. Information concerns An information concern is the information gap for an IT client; it is then a candidate for immediate attention. Although IQ matrices may exhibit multiple areas where IQSs are inadequate, the true objective is to identify a high-concern areas that require priority attention. If the respondent has identified an information area as important and does not feel that he/she has been receiving adequate information, then there must be an information concern—resulting from a low IQS and a high information need importance rating (INIR). This is the first indicator of information importance. It is the average rating that respondents assign to each of their stated information needs (IN). Respondents could rate an IN as having low (0), medium (1), or high (2) importance. They entered their ratings into the http://www.facilitate.com electronic meeting software, which collected, calculated, and assigned an average score for each user information need [2]. Thus, INs for all BUs were scored the same way across the corporation. Because BUs competed with each other for IT services and project resources, comparable scoring was essential. It partially eliminated the inclination of some managers to bias their responses for comparative advantage. It also gave senior managers an apples-to-apples view of information needed across the Company; it was the senior managers who were the final authority on project priorities. The number of voters was the second indicator. When managers rated the IQ they received for a
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Fig. 5. (A) Information Quality Matrices with Paired Information Quality Dimensions and Information Quality Scores: (A) business process to crictal success factor; (B) information need to critical success factor); (C) business process to IT system or product; (D) information need to IT system or product.
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Fig. 5. (Continued ).
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Fig. 6. Facilitate.com questionnaire responses: a column of information quality scores in matrix B—information needs to CSFs.
question, they were asked to respond only if the question area was important in their job. For example, if two managers in the same business unit had orthogonal responsibilities, each would respond to different questions. If a higher percentage responded to one, the higher percentage response was deemed more important. Corporate managers understood the implications of majority voting and were willing to adjust importance levels after the scores were tabulated. As the INIR scores were interpreted in the context of the IT alignment process, this process was more likely to provide IT clients the information they believed that they needed. 6.7. The importance of visualization and color A key feature of the IT Alignment Planning process was being able to visualize information quality. A
group of clients and IT managers authored this technique. When the planning model was being developed, the pilot group consistently stressed the need for intuitive visual scoring and analysis. Numbers and statistics told a part of the story, but they wanted a picture to aid them. After considering a number of alternatives, the group settled on colors as the preferred technique. During the pilot study, managers assigned Information Quality Scores with color alone. The group would discuss each square and decide its appropriate color. As the discussion progressed, the matrices would gradually evolve into splashes of color. Not surprisingly, color scoring was intuitively compelling but extremely slow. The group agreed that the scoring process should be faster. Data collection was automated by using a GDS tool: http://www.facilitate.com. This tool cut data collection time substantially and
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made it practical to implement IT Alignment Planning across the entire company. A color data display has, become the primary output feature of the process. 6.8. Assigning an Information Quality Score During data collection, respondents were asked to assess the quality of information they received as they performed their jobs. If they were receiving the ‘‘right’’ information to make the best decisions or the ‘‘right’’ information to do their job, then the IQ was adequate. Detailed knowledge of neither the delivery technology nor the information origin was necessary. Respondents were also asked to use their own perception of IQ, reflecting their own job needs, points of view, and best judgment. To score an item, respondents went through a two-stage assessment process. First, the information had to be important to them. If not, they skipped the question, and it received the default N/A. Second, if the information was important, they assessed the IQ: if any important aspect was questionable (e.g., not immediately available, inaccurate, unreliable), the item would receive a score of 2 (marginal) or less (see Fig. 6). Managers may believe that they need information, whether it was available or not. Regardless, the IT Alignment Planning process attempted to identify information gaps wherever they existed and resolve them.
7. Formulating it solutions BU CSF and business processes studied during the BU strategic planning process can generate IT Alignment information gaps. These, when identified and ranked in importance, encouraged discussion between the IT organization and the BU for possible solutions. Sometimes these solutions were apparent, but sometimes they required additional thought and activity. IT solutions included new projects, systems, and other IT products. Solutions also included the development of new IT strategies. To plan and implement a solution, IT managers aggregated groups of related projects and activities into activity (work) streams and then estimated the required resources, finally putting them into an activity stream schedule—the master. As
a result, IT Alignment tied the information gaps identified at the strategic and process levels of the organization to IT system and product solutions. Thus strategic information concerns were operationalized into solutions that could contain a spectrum of projects, systems, products, and other means, or just a single task or project. Specific BU solutions were indentified and listed in the BU IT Alignment Roadmaps, where they were prioritized and scheduled into activity streams that gave managers a grouped, high-level perspective of similar solutions. Once all proposed BU solutions had been justified as valid cases, aggregated activity streams and projects from across the Company were reconciled in the IT Alignment Plan with strategic input provided by senior management. Finally, all activities and projects, with enabling technology and resource requirements, were factored into the IT Strategic Plan (Fig. 7). 7.1. The summary information quality matrix The Summary Information Quality Matrix in Fig. 8 was a four-quadrant synthesis of the four paired information dimension matrices. It was a composite, color-coded, meta-matrix of the four information quality matrices created for each BU, representing a continuum on the y axis from operational information (lower left quadrant) to strategic information with a continuum on the x axis from individual, functional information requirements (lower left quadrant) to business process information requirements. Each quadrant was then assigned a color that summarized the numerous IQ cells into a single quadrant cell. Using this scheme, Matrix A (upper right quadrant) provides the most strategic view of the organization’s IQ, showing that the organization’s business process information supported its CSF. Matrix D (lower left quadrant) provided the operational view, showing how well its job information requirements were being met by IT systems or products. The IQ of each BU, then, was summarized to four quadrants. At a glance, a manager could then absorb the quality of information being received by a dozen BU summary matrices. An outcome of IT client assessment, using a summary matrix with a green ‘‘A’’ quadrant and a red ‘‘D’’ quadrant shows that the clients have been receiving adequate strategic
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Fig. 7. Business Unit IT projects are reconciled in the IT Alignment Plan.
information but inadequate operational information. The summary matrix provided a scorecard for IT, measuring how its clients perceived that they were being supported.
Fig. 8. The summary information quality matrix, which aggregates scores of each of the four information quality matrices.
8. Limitations Despite a successful pilot study with a major business unit, other units expressed apprehension, because the pilot took 8 months. The VP of the pilot unit championed the process and, with the support of the company President, all units eventually participated. Immediate and full participation would have greatly sped up the process. The number of individuals involved and the data collected was daunting. Not surprisingly, the meetings required for each participating manager were either met with enthusiasm or resistance. For example, two BUs meeting together to collect data as a group had some traveling managers, requiring that data be collected from them individually, using an online questionnaire with identical formats and questions—but no facilitator. In four cases, the researchers met with
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managers to take them individually through the questions. This attention doubled the data collection time from the scheduled two months to four months. Maintaining matrix spreadsheets for each BU and then consolidating them was a non-trivial task. Microsoft Excel lends itself well to displaying colored cell values but is awkward to program. Finally, training the managers to think in paired information dimensions was challenging and demanded patience and understanding. The authors met individually with every manager to explain the IT Alignment Planning process. At GDS sessions, the authors preceded the data collection activity with an explanation and demonstration. However, once the data was processed, managers exhibited interest and enthusiasm, especially since the validation prioritized their own unit’s IT projects and services side-by-side with those of competing units.
9. Conclusions The IT Alignment Planning process was a successful 4-year activity that involved a pilot implementation and company-wide implementation of the IT Alignment Planning process. The benefits for the company are summarized in Table 2. A corporate-wide alignment of the business unit goals and associated IT with the IT unit goals and priorities was achieved. Our evidence for the success of the activity came from management feedback in the annual IT evaluation questionnaire. Also, the added understanding of BU projects and their priorities significantly aided in the preparation of the IT Strategic Plan. Table 2 A summary of results Major results and benefits of the IT Alignment Planning process Aligns corporate and client business goals with IT Creates a decision and capital budgeting tool for IT projects across the corporation Dovetails with the corporate strategic planning process Develops IT vision integrated with business goals and critical success factors Facilitates executive-level understanding and communication on IT across the company Helps improve operational IT support of clients while addressing long-term client needs Brings IT and client closer together
The process produced a uniform and consistent decision tool: a capital budgeting tool, for proposing, evaluating, and measuring IT projects across the corporation. It is also noteworthy that the second iteration required significantly less time to collect information than the first. The major reason for time efficiency was the use of a GDS tool. Such tools can also aid the posting of IQ questions in a Web questionnaire. Managers need not meet to participate. In addition, senior managers could monitor the whole alignment process using the tools. Non-IT perceptions of ‘‘not good enough information’’ called attention to problems that had not previously been addressed. The products of this planning activity, together with a high level of user satisfaction, were shared throughout the company. The IT Alignment Planning process improved and facilitated communication on IT and the projects throughout the company, from the executive to the operational level, and brought the IT and client units closer together.
References [1] Wanted Industrial Engineers for Continuous Improvement, IIE Solutions, 29.12(December) (97) 26–29. [2] Omaha Public Power District Annual Report, 2000. [3] Status of State Electric Industry Restructuring Activity—As of February 2003, http://www.eia.doe.gov/cneaf/electricity/ chg_str/regmap.html, 2003. [4] Facilitate.com Collaboration software, http://www.facilitate. com, 2003. [5] R.J. Baets, Some empirical evidence of IT strategy alignment in banking, information and management, Information and Management 30, 1996, pp. 155–177. [6] A.W. Brian, How Fast is Technology Evolving? Scientific American February (1997). [7] H. Richard, B. Clark, D. Young, Creating a learning project environment: aligning project outcomes with customer needs, Information Systems Management 14.3, 1997, pp. 54–60. [8] W.E. Deming, Out of the Crisis, MIT Press, Cambridge, MA, 1986. [9] DOE/EIA-X037, The restructuring of the electric power industry: a capsule of issues and events, energy information administration, http://www.eia.doe.gov, January 2000. [10] F. Philip, W.E. Toothman, Reengineering Done Right, Information Systems Management, Winter (1994) 7–14. [11] G. Leo, Information Management—Commentary, CMA Magazine, March (1993) 9–10.
D. Peak et al. / Information & Management 42 (2005) 619–633 [12] G. Leo, Information Management—Commentary, CMA Magazine, October (1994) 7–8. [13] G. Varun, K.D. Fiedler, J.T.C. Teng, Exploring the success of Information Technology Enabled Business Process Reengineering, IEEE Transactions on Engineering Management, 41.3 (1994) 276–284. [14] H. Gary, C.K. Prahalad, Competing for the future, Harvard Business School Press, Cambridge, MA, 1996. [15] H. Michael, Reengineering work: don’t automate, obliterate, Harvard Business Review, July–August (1990) 104–112. [16] J. Henderson, N Venkatraman, Aligning Business and IT Strategies, in: J. Luftman (Ed.), Competing in the Information Age: Practical Applications of the Strategic Alignment Model, Oxford University Press, New York, NY, 1996. [17] C. Hess, Five steps for aligning IT with the business, Guidelines #G-07-2351, GartnerGroup, January 17 (1999). [18] K. Huang, Y. Lee, R. Wang, Quality Information and Knowledge, Prentice Hall, Upper Saddle River, NJ, 1999. [19] G. Labovitz, V. Rosansky, The Power of Alignment: How Great Companies Stay Centered and Accomplish Extraordinary Things, Wiley, New York, 1997. [20] Y. Lee, S. Diane, K. Beverly, W. Richard, AIMQ: a methodology for assessment, Information & Management 40, 2002, pp. 133–146. [21] L.C. Henry, The T-Form Organization: Using Technology To Design Organizations For The 21st Century, Jossey-Bass Inc., San Francisco, CA, 1996. [22] L. Jerry, T. Brier, Achieving and sustaining businessIT alignment, California Management Review, 42.1(Fall) (1999) 109–122. [23] S. Madnick, R.Y. Wang, Introduction to Total Data Quality Management (TDQM) Research Program, No. TDQM-92-01, Total Data Quality Management Program, MIT Sloan School of Management, Sloan, 1992. Daniel A. Peak received his PhD in business computer information systems in 1994 from the University of North Texas (UNT), with majors in business computer information systems and in finance. An associate professor, he has recently moved back to the UNT College of Business Administration after serving at the University of Nebraska at Omaha’s College of Information, Science and
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Technology, which he helped develop. His research interests include IT governance, strategic IT planning, media systems and human factors. Dr. Peak has more than 20 years of IT consulting and planning experience with numerous Fortune 500 companies, and has won and participated in numerous production and research grants. C. Stephen Guynes is a regents professor of business computer information systems at the University of North Texas. He received a doctorate in quantitative analysis from Texas Tech University. Dr. Guynes’ areas of specialization are client/ server computing, visual computing, data administration, and information resource management. His most recent research efforts have been directed in the areas of client/server computing and data administration. Some of the journals in which Dr. Guynes has published include Information & Management, Communications of the ACM, The Journal of Information Systems Management, Journal of Accountancy, Journal of Systems Management, The Journal of Database Management, The CPA Journal, The Journal of Computer Information Systems, Information Strategy, Computers and Security, and Computers and Society. Verlyn Kroon is Division Manager of Information Technology and CIO of Omaha Public Power District, a publicly owned, business-managed electric utility with approximately 300,000 customers in southeastern Nebraska. As a 29 year veteran in the electric utility industry, he has extensive leadership experience in both the information technology and corporate planning functions of business. His special interests are in technology planning, and in providing innovative, practical ideas which add real value to the business. He shares his business experiences with numerous technology advisory boards and academic institutions in the Omaha metropolitan area to further the education of information technology professionals. He sponsored several applied information technology research projects for his employer with faculty of local universities and is an advocate for strengthening collaboration of the academic and business communities.