Critical Success Factors of IT Strategy

Critical Success Factors of IT Strategy

DOI: 10.4018/978-1-4666-2512-9.ch006

Abstract

In this chapter, the authors discuss the critical success factors of IT strategy holistically across four dimensions of the strategic management process from strategy formulation to planning to execution and to value delivery monitoring, end-to-end. The most basic requirement for the success is that IT must be regarded as being part of the business, devoid of the “us” vs. “them” chasm (separating IT from the business) found in most traditional organizations where IT is viewed as a subservient role performing basically a “back office” function. Case examples are used to illustrate the alignment processes and the resulting business value accrued. Because IT leaders have to manage alignment in all four dimensions in order to maximize the strategic value of information technology deployment, the chapter also examines the evolutionary CIO leadership roles in value creation.
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Introduction

Service firms, such as those in banking, finance, telecommunications, logistics, and retail, are critically dependent on IT to achieve and maintain their competitive advantage. These firms tend to use IT as a business enabler or strategic weapon that focuses on core business processes and product/service development, respectively (Weiss, Thorogood, & Clark, 2006, p. 680). All firms need managerial capabilities to develop and sustain continuous business-IT strategic and tactical alignments in highly dynamic and changing market environments (Tarafdar & Qrunfleh, 2009; Byrd, Lewis, & Bryan, 2006; Bhatt & Grover, 2005).

As discussed in chapter 5, a successful IT strategy must align with the business. In this chapter, the authors further argue that business alignment should occur at every stage of the end-to-end strategic management process, from strategy setting and planning to detailed program execution and delivery. Moreover, there are many ways in which IT can create value for business. Formulation of business-aligned IT strategy must therefore incorporate the intended strategic role of IT in business as part of the overall strategic intent. Most publications (Luftman & McLean, 2004) on business-IT alignment to date have been centered on one dimension of the alignment issues—e.g. on strategic planning or organizational issues. Recently, Tarafdar and Qrunfleh (2009) have called for the need for studying the alignment at both the planning and execution levels, thus lending support to the end-to-end alignment proposition.

In this chapter, the authors discuss the critical success factors of IT strategy holistically across four dimensions of the strategic management process from strategy formulation to planning to execution and to value delivery monitoring, end-to-end. The most basic requirement for the success is that IT must be regarded as being part of the business, devoid of the “us” vs. “them” chasm (separating IT from the business) found in most traditional organizations where IT is viewed as a subservient role performing basically a “back office” function.

Case examples will be used to illustrate the alignment processes and the resulting business accrued. Because IT leaders have to manage alignment in all four dimensions in order to maximize the strategic value of information technology deployment, the chapter also examines the evolutionary CIO leadership roles in value creation.

This critical organizational culture requirement of “IT and business acting as one” is founded on the rigor and discipline of IT governance. IT governance is integral to the corporate governance, subject to periodic governance compliance audits by independent external entities. It is therefore a critical business discipline that all enterprises must master. This chapter will briefly describe this function as it applies to the end-to-end process of IT strategy. A more complete treatment will be covered in chapter 12.

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