Justification for IT Capital Projects

Introduction:

After being appointed as the Strategic Investment Review committee member by the CEO of the manufacturing company, my job is held to analyse the company’s current condition and use IT as a pivotal to fulfil the CEO’s requirements to strategically develop competitive advantage using the upcoming projects.

In order to fulfil and select the best practices or projects for the current financial year Strategic Alignment Model (SAM) and SWOT analysis model is selected.

Strategic Alignment Model (SAM)

This model is proposed by Henderson and Venkatraman which mainly consists of three dimensions: 1) Strategic Fit, 2) Functional Integration and 3) Cross-Dimension Alignment. Strategic fit refers to the consistency or alignment between the internal and external domains (see figure 1 from the appendix). The functional integration aligns internal business strategies and IT strategies both internally and externally. Cross-Dimension refers to the alignment in between the IT infrastructure with business strategy and IT strategy with the business processes (Henderson and Venkatraman, 1993)¹.

Strategic alignment model is chosen for this analysis as it focuses on the priorities set by the CEO and below is discussed the reasons for selecting the model for the ranking of the IT projects.

Business Strategy

      Business Scope: It defines the objectives of the business and provides the basis for the products and services for the business.

      Distinctive Competencies: It is the attributes or features of strategies which brings out competitive advantage for the business.

      Business Governance: It deals with the structure or regulations involved in the business operation.

Organisational Infrastructure and Processes

      Administrative Infrastructure: This infrastructure deals with the structures in the organisation, people’s, their roles, responsibilities and the relationships in the organisation.

      Processes: Processes are the workflows of the organisation in which the workflows.

      Skills: Skills are the capabilities available with the people of the organisation to carry out the work to support the business strategy.

IT Strategy (buvanesh_s, 2019)²

      Technology Scope: This model also considers the IT technologies and capabilities available by the organisation.

      Systemic Competencies: It deals with the features of IT technologies which gives the business competitive advantage over others.

      IT Governance: Governance in IT is the structure in which the organisation conducts its IT operations for the business.

IT Infrastructure and Processes

      Architecture: This model defines the architectures or the specific instances of then technology such as applications, databases hardware etc.

      Processes: It deals with the system in which maintenance, monitoring, controlling and development of IT technology takes place.

      Skills: In this context skills are the capabilities of the people to maintain and develop the IT infrastructure.

Critical analysis:

The Strategic Alignment Model ensures that the operating elements of the business all links together and work in harmony. This alignment will allow organisations to use IT efficiently in order to achieve the objectives of the business (JamesDempsey1, 2019)³.

The four perspective of SAM:

1. Strategic Execution: In this perspective we can see that the business strategy has been articulated and is the driver for the organisational design and design of IT infrastructure and this perspective helps in creating better culture and attract effective people.
2. Technology Transformation: This perspective mentions that a business strategy through appropriate information technology strategy and finding a clear IS infrastructure and processes to identify the best possible IT opportunities. Through this the company is able to stay secure and up-to-date with the IT infrastructure.
3. Competitive Potential: In this perspective the aim is to leverage existing and emerging IT capabilities, influence the key attributes for the business strategy, anchor the IT strategies and form a dynamic business model (Henderson and Venkatraman, 1999)⁴. This enables the company in creating efficient business model using IT to increase the revenue and reduce the costs.
4. Service Level: This perspective describes that IT strategy is the driver and the main focus is to build world class IT/IS organisation within a business.

SWOT Analysis Model

It is a tool used for strategic planning and management of the organisation which can be used to build organisational strategy and competitive strategy. SWOT is the framework used to evaluate an organisation, a plan, project or business activities (GÜREL, 2017)⁵. Therefore, it is a significant tool for analysing situations which helps managers to identify organisational and environmental factors.

It mainly involves four areas consisting Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are identified by examining the elements in its environment and opportunities and threats are determined by examining the elements outside its environment (See Figure 2 from the appendix).

Critical Analysis:

SWOT analysis model is chosen for this analysis as it focuses in identifying the strengths, weaknesses, opportunities, and threats of the different projects of the organisation. Using this strategy and keeping in mind the priorities of the company’s CEO the projects will be ranked.

      Strengths & Opportunities Strategies: It helps in generating strategies that uses the strengths of the company to benefit from the opportunities.

      Weaknesses & Opportunities Strategies: Generates strategies to take advantage of the opportunities by overcoming the weaknesses of the company.

      Strengths & Threats Strategies: Helps in deriving strategies using strengths to avoid the threats of the company.

      Weaknesses & Threats Strategies: Aims to generate strategies to minimise weaknesses and avoid threats for the company.

Strategic Alignment Model

SWOT Analysis Model

Comparative Analysis

Out of the two models mentioned for the projects ranking, SAM provides better perspective for selecting or ranking the projects as it analyses the strategic fit and functional integration between all the four environments of the business. It also emphasises on strengths, weaknesses and vulnerabilities of the business process. It also considers the technological environment and the information system architecture and infrastructure which is also the priority set by the CEO for selecting the projects for the financial year. Therefore, we can conclude that SAM is better suited for evaluating the projects in this context.

References

1. Henderson, J. and Venkatraman, H. (1993). Strategic alignment: Leveraging information technology for transforming organizations. IBM Systems Journal, 32(1), pp.472-484.
2. buvanesh_s (2019). Strategic alignment. [online] Slideshare.net. Available at: https://www.slideshare.net/buvanesh_s/strategic-alignment [Accessed 19 Aug. 2019].
3. JamesDempsey1 (2019). Strategic Alignment Model presentation. [online] Slideshare.net. Available at: https://www.slideshare.net/JamesDempsey1/strategic-alignment-model-presentation [Accessed 19 Aug. 2019].
4. Henderson, J. and Venkatraman, H. (1999). Strategic alignment: Leveraging information technology for transforming organizations. IBM Systems Journal, 38(2.3), pp.472-484.
5. GÜREL, E. (2017). SWOT ANALYSIS: A THEORETICAL REVIEW. Journal of International Social Research, 10(51), pp.994-1006.

Appendix

 1.

Figure 1: SAM – Source: (Henderson and Venkatraman, 1993)¹

2.

Figure 2 – Source: (GÜREL, 2017)⁵