The strategic alignment model by Venkatraman and Henderson, as well as Oldach, aims to define a methodological framework that fosters alignment between business and corporate strategy.
Venkatraman and his colleagues argued in 1993 that the difficulty in realizing the value of investment is primarily caused by the lack of alignment between business strategy and the strategy of the investing organization. It is also due, in part, to a lack of dynamic and agile administrative processes capable of ensuring continuous alignment between business activity and the IT domain.
Four alignment perspectives are to be defined:
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Implementation of Strategy: This perspective sees business strategy as a factor influencing the choice of commercial organization design and the logic of IT infrastructure (the classic hierarchical vision of strategic management). The general management is the initiator; it formulates the strategy, and it is up to the IT management to implement the strategy (business ownership).
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Technological Potential: This perspective also perceives business strategy as a factor, but it stipulates that the formulation of the IT strategy should assist the chosen business strategy and corresponding specifications for IT infrastructure and processes. Senior executives must provide the vision for technology to articulate the logic and choices regarding the IT strategy that would best support the adopted business strategy. The role of the CIO should be that of the technology architect. They design and implement the SI infrastructure efficiently and effectively (scope, skills, and corporate governance).
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Competitive Potential: This alignment perspective is concerned with exploiting emerging technological opportunities.
- Impacts new products and services (i.e., business scope)
- Influences the main attributes of strategy (i.e., distinctive competencies)
- Develops new forms of relationships (i.e., business activity governance) Unlike the two previous perspectives, which consider business strategy as given (or as constraints for organizational transformation), this perspective allows for modifying the business strategy through emerging technological constraints. The specific visionary role of top management can help this perspective succeed by articulating how emerging technological competencies and functionalities can change the corporate governance model by affecting the business strategy. The role of the CIO is to act as a catalyst; they identify and interpret SI environmental trends. In this way, they help business managers identify potential SI opportunities and threats.
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Service Level: This perspective focuses on how to build a world-class SI organization within a company. In this perspective, the role of business strategy is indirect. This activity is often considered essential but not sufficient for wise use of SI resources and to remain alert to the rapid changes and demands of the user population. The specific role of top management in successfully completing this mission is to set priorities. They decide how scarce resources should be allocated.