Business-IT alignment from a value-based perspective Value-based business-IT ALignment http://www.vital-project.org 2 1 3 VITAL/services VITAL/design VITAL/maturity VITAL Business-IT alignment from a value-based perspective Pascal van Eck University of Twente

Overview What is business-IT alignment? State of the art in research and practice The need for a more synthetic approach Value modeling as a tool for business-IT alignment An overview of the VITAL project, and its relation to other NWO/STW funded research Oct. 12, 2006 SIREN 2006

Business-IT alignment: definition Allocation of IT budgets such that business functions are supported in an optimal way outcome “the continuous process, …, of consciously and coherently interrelating all components of the business – IT relationship in order to contribute to the organisation’s performance over time” process from Maes et al., 2000 Oct. 12, 2006 SIREN 2006

Business-IT alignment internal external Prod./market Make-or-buy HRM Services Make-or-buy HRM functional integration strategic alignment Adm. infra. Processes Skills Architecture Processes Skills IT demand IT supply Adapted from: Henderson, & Venkatraman, (1993). Strategic alignment: Leveraging information technology for transforming organisations. IBM Systems Journal, 32(1):472-484. Oct. 12, 2006 SIREN 2006

Alignment research in MIS Approach: observe and analyze strategic alignment by means of rigorous empirical methods Researchers include: N. Venkatraman P. Weill J. Luftman Y. Chan Journals include: MIS Quarterly IS Research J. Strat. Inf. Sys. Qualitative validation: Avison, D., Jones, J., Powell, P., Wilson, D. (2004). Using and validating the strategic alignment model. J. Strat. Inf. Sys. 13:223-246. http://dx.doi.org/10.1016/j.jsis.2004.08.002. Eck, P. van, Blanken, H. and Wieringa, R. (2004). Project GRAAL. Towards Operational Architecture Alignment. Int. J. of Coop. Inf. Sys. 13(3):235-255. http://www.cs.utwente.nl/~patveck/?page=IJCIS04 Oct. 12, 2006 SIREN 2006

In practice: Manage IT! BiSL ASL ITIL Demand Side Supply side Functional management Application Technical User organization ASL ITIL BiSL Users Management Suppliers maintaining and managing of the technical infrastructure resources to store, process and provide information producing, maintaining and adapting application programs and the databases software house maintaining and leading information of the organization, supporting the organization by means of the management of the information. IT Management Frameworks ICT service organization Demand Side Supply side Figure by Roberto Santana Tapia, adapted from Van der Pols, R., Donatz, R., & Van Outvorst, F. (2005). BiSL. Een Framework voor Functioneel Beheer en Informatiemanagent. Van Haren Publishing. Title stolen from Thiadens, Th. (2005). Manage IT! Springer Verlag.

Problem, and solution elements Problem: guidance for engineering/planning/synthesizing the business-IT relationship is lacking Solution direction: economic value-based approach to alignment in networked businesses Oct. 12, 2006 SIREN 2006

Jump to relevant publications Contents Case study introduction Economic value viewpoint Design guidelines Process viewpoint Reflection on the case study Conclusion (of this part) Jump to relevant publications Oct. 12, 2006 SIREN 2006

Case study: “Amsterdam Times” Business idea: newspaper offers readers on-line access to its contents Subscribers have to use dialup-account provided by “Amsterdam Times” “Amsterdam Times” causes many telephone connections Telecom consortium pays for this But that doesn’t matter Idea was never implemented Oct. 12, 2006 SIREN 2006

Case study modelling approach Four viewpoints Value viewpoint Process viewpoint Information systems viewpoint Infrastructure viewpoint Based on work by Jaap Gordijn Applied in consultancy projects in ISPs, news, ads, energy, music, banking In this presentation Oct. 12, 2006 SIREN 2006

Contents Case study introduction Economic value viewpoint Design guidelines Process viewpoint Reflection on the case study Conclusion (of this part) Value object hierarchy Value network Oct. 12, 2006 SIREN 2006

1. Value object hierarchy Oct. 12, 2006 SIREN 2006

Design guidelines (example) Find fine-grained value object by deconstructing coarse-grained object Called ‘split-ups’ (horizontal/vertical) Consists-of and contributes-to relations Oct. 12, 2006 SIREN 2006

Introduction to e3value 1/2 e3 value modeling concepts Actor: economically independent entity Value object: thing of value to the actors Value transfer: economical activity Value exchange: pair of value transfers e3value.com Oct. 12, 2006 SIREN 2006

Introduction to e3value 2/2 Dependency paths indicate causal relations between value exchanges A dependency path is not a business process!! Oct. 12, 2006 SIREN 2006

Based on economic reciprocity Costs are associated with each value activity Economic validity can be assessed Oct. 12, 2006 SIREN 2006

Design guidelines (examples) Consist-of / contributes-to relations indicate value activities Bundle objects if it is likely that they generate more profit in combination than separately May generate more revenue Client only considers combination of value Oct. 12, 2006 SIREN 2006

Contents Case study introduction Economic value viewpoint Design guidelines Process viewpoint Reflection on the case study Conclusion (of this part) Oct. 12, 2006 SIREN 2006

Process viewpoint construction Interpret each transaction as service provisioning from provider to customer Develop service delivery process for each transaction Oct. 12, 2006 SIREN 2006

Design guidelines Determine steps needed to: Establish service delivery relation (once) Actual service delivery (many times) Terminate service delivery relation (once) Determine process steps for service quality and transaction atomicity Service provider process steps may require consuming third-party services Oct. 12, 2006 SIREN 2006

Establish service delivery relation Transaction “Article online” Oct. 12, 2006 SIREN 2006

Deliver service Transaction “Article online” Oct. 12, 2006 SIREN 2006

Establish service delivery relation Transaction “IP Access” Oct. 12, 2006 SIREN 2006

Contents Case study introduction Economic value viewpoint Design guidelines Process viewpoint Reflection on the case study Conclusion (of this part) Oct. 12, 2006 SIREN 2006

Back to the value model! Horizontal split-up Oct. 12, 2006 SIREN 2006

Oct. 12, 2006 SIREN 2006

Contents Case study introduction Economic value viewpoint Design guidelines Process viewpoint Reflection on the case study Conclusion (of this part) Oct. 12, 2006 SIREN 2006

This is only the beginning … http://www.vital-project.org/coop Coordination Process Correctness and Trust Assumptions COOP VALUE MODEL COORDINATION PROCESS CROSS-ORGANIZATIONAL SETTINGS Vrije Universiteit Jaap Gordijn Vincent Pijpers University of Twente Roel Wieringa Lianne Bodenstaff Oct. 12, 2006 SIREN 2006

VITAL: Value-Based IT ALignment Economic value-based approach to alignment in networked businesses “IT investment decisions just like any other investment decision” Three parts: VITAL/services: focus on service specification VITAL/design: focus on architecture VITAL/maturity: focus on implementation Oct. 12, 2006 SIREN 2006

IT alignment & service provisioning Oct. 12, 2006 SIREN 2006

VITAL team Pictured: Jaap Gordijn, Hans Akkermans, Roel Wieringa, Pascal van Eck Here today: Roberto Santana Tapia, Novica Zarvic And: Zsofia Derzsi, Sybren de Kinderen, Maya Daneva Oct. 12, 2006 SIREN 2006

Participating companies ABN AMRO Atos Origin Belastingdienst C/ICT BiZZdesign Cap Gemini CIBIT/SERC Cisco Systems Deloitte Gartner GetronicsPinkRoccade HP ICTU KLM KPN Labyrint OrangeWing Consulting Ordina Sogeti Twynstra Work Innovation Unisys Oct. 12, 2006 SIREN 2006

CROSS-ORGANIZATIONAL SETTINGS My research landscape Jacquard (NWO, STW) NWO open competition 2 1 3 VITAL/services VITAL/design VITAL COOP VALUE MODEL COORDINATION PROCESS CROSS-ORGANIZATIONAL SETTINGS Sentinels (STW, NWO) Bsik (MinEZ) a project Oct. 12, 2006 SIREN 2006

Thanks! VITAL Pascal van Eck – p.vaneck@utwente.nl Value-based business-IT ALignment http://www.vital-project.org 2 1 3 VITAL/services VITAL/design VITAL/maturity VITAL Thanks! Pascal van Eck – p.vaneck@utwente.nl Dept. of Computer Science University of Twente P.O. Box 217 7500 AE Enschede, The Netherlands http://www.cs.utwente.nl/~patveck

Relevant publications & links Eck, P. van, Gordijn, J., Wieringa, R. (2004). Value-based Design of Collaboration Processes for e-Commerce. In: Soe-Tsyr Yuan and Jiming Liu (editors), Proceedings 2004 IEEE International Conference on e-Technology, e-Commerce and e-Service, EEE'04. pp. 349-358. IEEE Press. ISBN 0-7695-2073-1. Eck, P. van, Gordijn, J., Wieringa, R. (2004). Risk-Driven Conceptual Modeling of Outsourcing Decisions. In: Paolo Atzeni et al., Conceptual Modeling - ER 2004. Proceedings of the 23rd International Conference on Conceptual Modeling, Shanghai, China. LNCS 3288, Springer-Verlag, pp. 709-723. Wieringa, R., Eck, P. van, Blanken, H. (2004). Architecture Alignment in a Large Government Organization. A Case Study. In: Proceedings of the CAiSE Forum, CAiSE, June 7 - 11, 2004, Riga, Latvia. Oct. 12, 2006 SIREN 2006