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The business-IT alignment model that Venkatraman and Henderson proposed was aimed at supporting the Information Technology integration into a business strategy. As such, it advocates the alignment within and between four domains. There are two dimensions of inter domain alignment: strategic fit and the functional integration. The strategic fit refers to the relationship between the internal and external domain, while the functional integration defines the manner in which the business and IT domains relate. The model presented by Venkatraman and Henderson was aimed at providing the manner of aligning information technology with the objectives of a business enterprise. This was hoped to help to realize the value of IT investments (Davenport 1998, pp. 127-130).
According to the authors of the model, the strategic impact being presented by the information technology calls for the understanding of critical components relating to the information technology strategy. The understanding facilitates the shaping and supporting of strategic business decisions in a manner that enables the organization to adapt to the changing business environment. Venkatraman and Henderson, therefore, defined a model that indicates some of the strategic choices that managers are faced with. Their model possesses the imperatives for the management of an organization: as with a business strategy. An information technology strategy needs to utilize both, the external and internal aspects of an organization. Secondly, functional integration and external/internal alignment ought to be considered, because any one of them would be inadequate (Peppard & Ward 2004, pp. 193-196).
Of late, there have been discourses regarding organizational transformations. Transformations have been necessary so as to take advantage of the fast-evolving and dynamic market environment. For quite sometimes, dynamism has been heightened by the introduction of information technology. Information technology regenerates in short cycles, a fact that requires entrepreneurs and business owners to anticipate dynamism in the market. Henderson and Venkatraman considered this transformation as an evolution aiming at integrating Information Technology with a variety of business models. They believed that bridging the gap between the two aspects was the only avenue that could enable the business to remain viable. Henderson and Venkatraman presented a model that could facilitate the measurement of maturity and readiness of an enterprise to handle dynamism in the market (McGhee & McAliney 2007, p. 23).
As portrayed in the above model, the authors highlighted the unique features that they hoped would align an enterprise’s strategy with the Information Technology infrastructure. Nonetheless, they highlighted two main features with regard to this alignment: the Information Technology strategy and the idea of strategic alignment. Their IT strategy was distinct from the technology’s processes and infrastructure. Moreover, the strategic alignment was presented in a manner that demonstrated distinct relationships between two variables. As such, they emphasized the need for basing an enterprise’s transformation on cross-domain alliance (Zahra & George 2002, pp. 145-147).
Business strategic alignment is defined as a dynamic state through which an organization utilizes information technology to facilitate the achievement of business objectives. The Soho art gallery’s objective is to improve financial performance, as well as competitiveness in the marketplace. A significant number of reports focus on the outcomes, i.e. the utility of the information technology in the enhancement of business value. Others focus on the means. In that case, they explicate the concordance between business decision makers and the information technology (Sanders & Courtney 1985, pp. 70-75). Therefore, a business alignment is the ability to exhibit a positive association between the accepted performance measures for a business enterprise and the information technologies.
The business-information technology alignment is unlike the normal experience in several organizations. In this case, the business and information technology professionals find it challenging to bridge the gap that exists between their cultures, incentives, and objectives. The challenge comes as a result of their mutual ignorance with regard to the other’s knowledge. The rift gives rise to inefficient IT systems. Consequently, the inefficiency leads to an inadequacy with regard to return on investment. As such, a business’s strategic alignment bears close association with the endeavor to improve the business value of a firm’s investments in information technology (Ross & Boehm 1989, pp. 901-905).
Information Technology is among the components that enable an enterprise to remain viable as it is able to adapt to the changing market conditions. It enables individuals to execute some of the key activities, and this facilitates the support for the business strategy. The implementation of Information Technology in business strategies is a new development, and as such, it has a variety of definitions. In this regard, the model presented by Henderson and Venkatraman has facilitated the conceptualization of the strategy presented by Information Technology in a manner that is multidimensional.
There are instances when the information technology and business professionals of an organization possess conflicting views. In most cases, the conflict results from misunderstanding, as well as their failure to bring forth the desired results. The failure gives rise to mistrust, a situation which makes the stakeholders keep on blaming each other. In some cases, a business alignment is sought in an endeavor to include the efforts of establishing trust between the two groups of professionals (Sauer & Horner 2007, pp. 80-91). This provides the mechanism for building consensus between the stakeholders.
Business Alignment and Governance
The Soho art gallery endeavors at enhancing decision making so as to exploit the information technology and business disciplines in the best way possible. This is in line with the gallery’s IT governance. The gallery’s owners and management assume the responsibility of governing its information technology. This form of governing facilitates the formulation of organizational processes and structures that enable the sustenance and extension of the gallery’s objectives and strategies. Soho art gallery redesigns its operations so as to utilize the new IT infrastructure to the maximum. As such, for the gallery to benefit from the IT infrastructure there should be a change in the organizational management so as to bring it at par with the technical component (Dutta 2000, pp. 80-83).
Strategic management has been evolving at a rapid rate. With the growth of information technology, this form of management has been oscillating between the internal characteristics of an enterprise and its external perspective. The increase in resources and the associated activities has necessitated the incorporation of a business intelligence system in the operations of the gallery. The incorporation of a business intelligence system has raised the need for the gallery to manage its organizational knowledge in an endeavor to achieve its strategic goals. The main aim of a strategic alignment is the explanation of the gallery’s performance (Rhoades & O’Connor 1996, pp. 203-215).
While studying the influence of Information Technology on business activities, Henderson and Venkatraman established that the systematic frameworks of conceptualizing logic, patterns, and scope of transformation was inadequate. As such, they proposed an Information Technology Alignment that could place an enterprise in a better position of taking advantage of the opportunities that avail in the market. They termed such an alignment as a strategic fit. The strategic fit is viewed as a perfect framework for analyzing and comparing departmental goals and objectives to those of the entire firm. Below is the strategic fit model as presented by Henderson and Venkatraman (1999, p.).
Performance and profitability of a business enterprise rely on the business processes being employed, as well as the design of such processes. The current trend indicates businesses’ increasing reliance on information technology. Several ratios have been devised in an endeavour to assess the performance of the IT infrastructure and other business processes. According to the recent studies, however, the impact of information technology on the performance of a business enterprise has remained indistinct. This paper presents a simulation that models the supporting information technology infrastructure and business processes, as well as their dependences. The study distinguishes between the two layers: the information technology layer and the business process layer. On the layer dealing with information technology, the study proposes three generic information technology resources, as well as their characteristics (Henderson & Venkatraman 1993, p. 20). The layer dealing with the business process is partitioned into subtasks. Each of the subtasks has the capacity to issue bundled information that technology resource requests.
The business processes of the Soho art gallery focuses on the descriptions of the activities that comprise of information, as well as the material possessions of the enterprise. These activities are central to the gallery’s operations, as they comprise of tasks that direct the creation of value. Performance and profitability of an enterprise is reliant on the processes being employed and the manner in which these processes are laid down. Few processes are executable without the support of information technology. Nevertheless, the degree of deployable information technology keeps on varying. With a business intelligence system, the Soho art gallery has managed to automate the critical processes. Nevertheless, there are processes which retain the need for human involvement. For example, in the human resource department, officials need to evaluate the potential employees with over relying on the automated systems (Henderson & Venkatraman 1993, p. 20).
Taking a voluntary approach to organizational transformation makes the business strategy become the central concept of the analysis. This is a unique scenario which would differ if a deterministic approach is assumed. An enterprise’s strategic fit encompasses the business scope and governance, as well as the distinctive competencies. Business scopes are the choices that pertain to the market offerings (Akpan 2007, p. 30). These choices are established on structural mechanisms that help to organize business operations. These mechanisms are referred to as the business governance. They help to recognize the continuum that exists between hierarchy and markets. The infrastructure that Information Technology provides falls under the category of distinctive competencies (Schmidt 1997, pp. 773-785). These competencies are the attributes of a business organization that make it gain a competitive advantage over its competitors.
Organizations utilize a couple of ratios in their assessment of the performance of business and information technology processes. In order to vary the capacity of information technology while observing the impact of the variation on performance ratios, there is a need to formulate a simulation that models the IT infrastructure and business processes. This facilitates the comparison of a variety of scenarios while initiating the model and the associated parameters a couple of times. As such, the aim of a Business-Information Technology alignment is the optimization of the value of IT contribution to an enterprise. This facilitates the outlining of a strategic Information Technology roadmap (Na 2007, p. 600).
An organization is said to have attained a successful IT alignment when it possesses a shared apprehension on the manner in which the IT applications, services, and technologies contribute to the contemporary and future business’s objectives (Dutta 2000, pp. 80-83). Such an organization focuses on the manner of extending scarce resources, such as money and time. The two resources represent the tradeoffs that the firm is ready to make. In such a case, Information Technology is organized in a manner that enhances the reliability of daily operations. This facilitates innovative solutions, as well as predictability as the organization responds to problem management (Raymond 1990, pp. 16-25).
In essence, the strategy is constituted of 3 dimensions: the scope of information technology, the range and type of systems, and the systems’ capabilities. In this regard, the strategic fit model that Henderson and Venkatraman presented facilitates the incorporation of Information Technology capabilities into the business strategy. This has, in effect, helped in building consensus on what the Information Technology strategy is comprised of. This helps to bridge the gap between the external alignments of a firm with its design of processes and structures.
Taking a resource based view, a business IT alignment can be considered to be the resource that contributes to performance. The application of dynamic view alignment is interpreted as the capacity to achieve an effective IT-business fit. Dynamic capabilities reflect on the turbulent environments in a manner that deals with the ability to notice and seize opportunities as they emerge, as well as reconfigure the resources. Most studies on business-IT alignment have had a positive impact on firms’ performances (Rhoades & O’Connor 1996, pp. 203-215). Business and information technology alignment is focused on three aspects: shared domain knowledge, structural knowledge, and cognitive linkage.
The shared domain knowledge has been found to be an important aspect during the performance of an information system. Researchers view this as a significant factor with regard to the prediction of short- and long term alignment. They have found the information technology and business structural linkage as one that encompasses various communication enables. The cognitive linkage that exists between the organization and the information technology infrastructure results into a mutual influence that propels the business performance to the greater heights. As such, most business enterprises emphasize on the operational levels of the business-IT alignment. This facilitates the operational integration that involves the business structure as well as the alignment domain (Ross & Boehm 1989, pp. 901-905).
Organizations have been categorized into two domains: the business domain and the support infrastructure. Currently, the main support infrastructure has been the information technology. Information technology presents tools for supporting business strategies and business models. Research works have indicated that divisions hinder progress of an enterprise. This is because the management is made to optimize in organizations, a scenario that lowers the performance of an enterprise (Davenport 1998, pp. 127-130). This issue prompted Henderson and Venkatraman to study and analyze the rewards of bridging the gap between Information Technology and business operations. They aimed at developing a strategy that could deliver quality results. The strategy was aimed at assisting the enterprises to attain strategic and competitive advantage in their operations (Na 2007, p. 600).
A Business-Information Technology Alignment is said to have been achieved following the culmination of four steps: the setting of conditions, scanning for enabling technologies, determination of the information technology value imperatives, and the development of IT Mission and Vision (Kearns & Lederer 2003, p. 25). Upon the completion of a Business-Information Technology Alignment, the organization gains the support of the executives as it participates in the development of the strategic information technology. This follows the understanding of emerging technologies, trends, and applications. This understanding influences the enterprise, as well as its organization of Information Technology. Proper Business-IT Alignment requires the understanding of the manner in which the company’s objectives and goals contribute to its advancement (Akpan 2007, p. 30).
There is a need to frequently re-visit the Business-IT Alignment. This would facilitate its correction and alignment towards the corporate direction. In today’s business world, enterprises have rejuvenated their endeavors to undertake strategic business-IT alignment. Until the mid-1980s, the procedure of business management focused primarily on scheduling and providing resource data to the management of computer and construction industries. Currently, however, business-IT alignment incorporates more than just a data schedule. Enterprises have started to work on their alignment so as to remain competitive in the current radically changing work environment. As such, information technology projects have become an important part of business life as it would be difficult for an enterprise to manage growth without enhancing its operations (Na 2007, p. 600).
Business-IT alignment is, however, a costly endeavor as it requires installation of expensive hardware and software with great expertise. To facilitate effectiveness, the stakeholders of an enterprise require intense training, especially when information systems never existed. Failures of information systems results into catastrophic losses to the business enterprise. This is because of the loss in costs that had been employed during the installation, as well as the time wasted. To reduce such failures, various researchers have suggested statistical methodologies that facilitate the management of software projects. As such, enterprises have recognized the need to incorporate Business Intelligence so as to help to deal with day-to-day challenges that they endure (Akpan 2007, p. 30).