Lecturer: Essay Example

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    Business
  • Document type:
    Essay
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    Masters
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Factors that influence the successful execution of IT strategy

Lecturer:

QUESTION: Analyse the factors that influence the successful execution of IT strategy

Introduction

Information Technology strategy describes a comprehensive plan made up of principles, objectives and tactics that relate to the use of technologies within a specific organisation, and which guide the organisation’s management towards a corporate objective (Anderson 2001). The strategies are chiefly focused on the technologies and the individuals who manage the technologies. They encompass a mixture of technology management facets, such as human capital management, cost management, risk management, hardware management and software management. The prerequisites for successful execution of IT strategy include strong leadership and coordination within the organisation (Gates 2010). However, several factors influence the successful implementation of IT strategy. This paper explores several published evidences to explore the factors that influence successful execution of the IT strategy.

Definitions and discussions of key concepts

The concept of IT strategy integrates several elements of management, namely information technology and technology strategy. Rieck and Dickson (1993) define technology strategy as a comparatively new management theory concept that depicts how businesses use technology to gain competitive advantage. Despite this, little practical information exists that can help organisations to integrate technological issues into an organisation’s overall strategy. To confront this problem, a time-based utilitarian model of the IT strategic process is suggested by Rieck and Dickson (1993).

Information Technology (IT) is a broad theme that is concerned with technology-related components of information processing, specifically within an organisation. IT contends with application of computer hardware and software to collect, process, store, transmit, protect and retrieve information (Yeganeh n.d.).

IT strategy is part of strategic planning, which refers to the process of determining a company’s plans to achieve its missions and goals. The outcome of strategic planning is essentially a strategic plan that details a high-level strategy and elaborates the components that influence it. By nature, IT strategy is directional, as it is aimed at specific objective.

Critical analysis of relevant literature:

Factors influencing the successful execution of IT strategy

Workforce Capability

A study by Smith et al (2007) established that getting the right team is a critical success factor for successful execution of IT strategy. The workforce capability influences the ability of an organisation to execute its strategic plans. This perspective relates to analyses by American Management Association (2006), which rated workforce capability as a key factor influencing successful implementation of IT strategy.

On a five-point scale, American Management Association (2006) found that workforce capability averaged 3.64. A survey by Vaughan (n.d.) looked into the ways in which the workforce influences IT strategy execution. It was found that an organisation’s workforce that consists of talented and highly skilled individuals is of significant advantage as it promotes successful execution of the strategy. However, employees may also be perceived as a risk.

American Management Association (2006) interviewed Leaders magazine CEO Mark Mactas, who had explained that in order to successfully execute IT strategies, companies need to understand that workers are critical component of risk, as well as, one of the chief avenues in understanding and mitigating the risks. Nielsen et al. (2008) noted that in the modern-day economy where many companies pursue a range of strategies, IT strategy execution is bound to fail unless the workforce understands the strategies, possess the talents and skills to execute them and are motivated to do so. Risks related factors, such as the high cost of labour to operate the technologies and cases of high turnovers cause IT strategy to fail.

According to Smith et al. (2007), a critical factor that distinguishes companies that get high IT business value, in addition to those that do not, is that senior managers within the highly performing businesses take strong leadership role in making decisions on IT management. However, failure of the management to take this role is a recipe for tragedy. Smith et al. (2007) presented an analysis of a focus group of CIOs and IT managers, who agreed that getting the right people to participate, which also imply getting a line of business managers in addition to other key stakeholders involved in IT strategy, significantly influences effective implementation of the IT strategy.

Business Model

Integrating IT strategy in the existing business models facilitate successful implementation of IT strategies. As stated by Smith et al. (2007), business models are critical success for successful implementation of IT strategies. Smith et al. (2007) noted that business strategies and models are usually confused with each other. A business model elaborates ways in which different pieces of business fit together. It ensures that the IT strategy is focused on the value that the company has to create.

However, this depends on the clarity of the model, as it is only through this that it can effectively deliver value in a unique and imitable way. Hence, it is important that the company’s management, including the IT manager or the chief information officer (CIO), entirely understand how businesses operate as a whole.

According to Smith et al. (2007), the realisms of IT and businesses are typically separate from each other, hence the business and the IT strategies have the potential to conflict or become misaligned. A study by Ghobakhloo et al. (2012) found that despite the fact that a greater willingness exists among the business managers to recognize the impacts of IT on their business, translation of their business ideas and concepts into business discourses must be done by IT.

Strategic Alignment

Alignment describes the top-to-bottom arrangement of goals in a business, information sharing among business units and a company’s ability to understand and leverage the meanings of the external organisation environment. American Management Association (2007) cited a report by Accenture called the Executive Issues 2005, which noted that a company’s capacity to align the IT strategy to major components of its foundation, such as high performance, market positioning and unique capabilities are what influences its competitive essence.

Hence, failure of the strategy to align implies that successful execution of IT strategy would remain futile. In a report by American Management Association (2007), called the AMA/HRI, Strategy Execution Survey 2006 inquired from managers whether businesses should value certain alignment actions. It was established that the alignment actions are amongst the highly-rated strategic actions. Among the actions that were rated the highest included aligning an organisation’s goal to IT strategy and the IT strategy to the corporate objectives.

Santa et al. (2010) posited that incapacity to realise value from investing in information systems is because of misalignment between an organisation’s IT strategies and operational strategies. In addition, Anderson (2001) pointed out that successful organisations have a superseding strategy that drives both IT strategy and organisational strategy. Therefore, organisations that succeed in implementing IT strategies are those that carefully align the three strategies as interrelated and that affect each other.

The significance of strategic alignment was explored by Delery and Doty (1996), who established that successful alignment between a business’ strategy and IT strategy, is a critical success factor to successful execution of business strategies. In their study that explored how to develop and implement strategies of successful IT deployment, Shupe and Behling (2006) established that if an organisation’s strategy does not align with the overall organisational vision, the perpetual conflict is likely to be realised. Simply put, no single IT application can successfully bring sustained competitive advantage. Instead, advantage is delivered using an organisation’s capacity to make the most of IT functionality continually. Therefore, to achieve this competitive advantage, the IT strategy has to be aligned with the operational and organisational strategies.

Santa et al. (2010) defines strategic alignment as dynamic process of continual change and adaptation. Sabherwal et al. (2001) pointed out that alignment among several business dimensions may be described as the extent to which such dimensions meet mutual coherence and theoretical norms. Hence, any business strategy, whether IT or operational, must be synchronised to sustain the stated alignment because of an ever-changing environment.

Culture and cultural conflicts

Culture is a critical factor to successful implementation of IT strategy. A study by Leidner and Kayworth (2006), found that organisational cultures that support strategy implementation display clear and open communication, capacity to engage worker’s passion, acceptance of failure and respect for innovation and ideas. Leidner and Kayworth (2006) explained that culture theory has been applied extensively to explain diverse social behaviours and how they influence strategies within organisational setting, such as corporate strategy and IT strategy. In exploring how cultural conflicts may challenge successful execution of IT strategies, Leidner and Kayworth (2006) proposed the Theory of IT-Culture Conflict, which suggests that conflicts will always exist due to differences in culture at national and organisation levels, resulting from the intersection of international, national, organizational, and departmental values or attitudes ingrained in use of particular IT.

Hence, while an organisation’s leadership plays a critical role in initiating IT strategy, an organisation’s culture determines whether the IT strategy will be successfully implemented. Corporate culture integrates the behaviours, beliefs as well as assumptions that individuals in an organisation share. It comprises values, processes and norms (Pennypacker 2008).

Yeganeh (n.d.) explored the implementation problems that are associated with technology transfer and cited Kedia and Bhagat (1988) who proposed four factors that influence the process. These include the characteristics of technology, socio-cultural differences, technology and organisational cultural difference. Alvin and Joachimsthaler (1992) conducted document analysis on IT strategy implementation and proposed three contextual factors that influence strategy, namely the type of task, the competitive issues and the organisational culture.

Hofstede and Bond (1988) examined transfer of IT across different countries and suggested several factors that challenge successful implementation of technology. According to Hofstede’s dimensions of culture greatly influences IT strategies in a range of ways since several aspects of national culture come into play (Soares et al. 2007). Indeed, Hofstede and Bond (1988) work excels in explaining the link between organisational forms and national culture. The researchers conducted document analysis of employee attitude surveys that were carried out across 66 countries within IBM subsidiaries, from 1967 to 1973, to explore the influences of national cultures on IT strategy. The researchers created four aspects of national culture including masculinity, avoidance, individuality influence and power distance, as the key critical success factors for effective IT strategy implementation.

Therefore, culture greatly influences how effectively IT strategy is implemented. The significance of attaining the objective of IT strategies, how effectively performance is communicated, who should access the technology and the cultural issues that should be addressed in creation of the structured approach to effective execution of the IT strategy.

Challenges businesses face in successful execution of IT strategy

IT strategy is confronted by a range of challenges that affect its successful execution. Among the leading factors related to unrealised performance include inadequate resources, poor communication strategies, unclearly defined execution actions and lack of accountabilities.

Resistance

Executing IT strategy typically involves introducing and managing IT to meet organisational objectives, which signifies some level of change to an organisation. Such a change may meet resistance to change. Vaughan (n.d.) argues that every system tends to be biased by the individual who created it, since the values, beliefs and values of the design team are ingrained in their creation. Markus (1983) suggested three theories that explored why resistance may happen. Individuals or departments may resist, due to factors that are unique to them, and which the IT strategy has the potential to eliminate. Two, the resistance may result from problems intrinsic in the IT strategy. For instance, individual resist systems or decisions that are based on poor designs of the IT strategy. Third, resistance may result due to the interaction between the features of the people being requested to adopt the IT strategy and features of the system.

Hence, companies that seek to execute IT strategies leave themselves vulnerable to power realignments resulting from system’s design (Vaughan n.d.). By seeking to only involve the management in executing the strategy, it can cause the downstream workers to feel isolated. These can cause resistance to change, hence slowing the implementation of the IT strategy. It is also significant to note that since technology introduces change between the tasks performed, the management and the tasks performed, it can cause significant resistance to change on the part of employees who view that the new technologies threaten their job status within the organisation.

Insufficient resources

Inadequate financial and human resources hinder an organisation’s capacity to successfully implement its IT strategic plans. According to a survey by American Management Association (2007), the executive management’s strategic aspirations exceed the resources they are can allocate, so as to attain the IT strategic goals. According to Yang et al (2008) the problems related to having few resources, as well as, ways in which the resources are assigned, may pose great barrier to realisation of IT strategies. These imply that in an organisation with many underlying operational strategies and whose sustenance compete for resources against IT strategies, allocation of many resources to the operational projects can inadvertently affect the capacity of the IT strategies to be executed successfully.

Government regulations

Government regulations form a major barrier to successful execution of IT strategy and organisational strategy. In the United States for instance, the US Patriot Act and the Sarbanes-Oxley Act (SOX) have been suggested as the two leading forms of government regulation that challenge organisational actions, including successful IT strategy (American Management Association 2007). For instance, the state regulations may restrict acquisition of certain IT infrastructure. A case in point is the analogue to digital television migration that has affected IT strategies of most media houses in Africa to successfully implement their strategies originally tied to analogue TV broadcasting.

Indeed, boards of directors have become more emphatic on understanding what regulators want and their expectations. According to a survey of the Board of Directors in the United States, by American Management Association (2007), 58 percent of those interviewed claimed that SOX requirements, as well as, other regulations that affect internal management strategies of organisations should be dropped as they lead to stagnation due to their tendency to make companies excessively cautious.

Competitive and economic pressures

Pressures that relate to the economy and competition create challenges for organisations that sometimes affect their capacities to execute strategies. Gichoya (2005) suggested that predominant unfavourable economic and competitive conditions form significant barrier to successful implementation of IT strategies. The two factors are complicated by the reality that they are a function of the modern-day dynamic business environment. For instance, in some occasions, rapidly changing competitive conditions may call for a change in the IT strategy, since strategies tend to fail due to the changing conditions and since the strategies involuntarily drift off course (Ozah et al. 2010). A case in point is where the long-term strategies of Apple Inc are thrown off the course by its competitor Samsung, which has an IT strategy that gives Samsung more competitive advantage, such as influencing production of smartphones that causes ‘paradigm shift in the organisation. This may complicate Apple’s execution of its initial IT strategy, since Samsung cuts into projected margins.

Communication problems and uncertainties

Uncertainties within the organisation cause confusions, which significantly challenge successful execution of IT strategies. Factors signifying uncertainties are those that hinder organisations from successfully executing their strategies (American Management Organisation 2007). Such factors included poor communication and feedback mechanisms in the organisation, unclear goals on what should be expected from the IT strategies, as well as, conflicting accountabilities. These show the disorder that employees may be confronted with, in attempts to attain goals that support the IT strategy. Hrebiniak (2006) conducted a survey to identify the main challenges that the management faces in executing the IT strategies. The survey resulted to 243 responses. The major obstacle inferred from the research included unclear strategies, poor information sharing practices, lack of strategic implementation model and uncertainties.

Conclusion

Integrating IT strategy into the existing business models facilitate successful implementation of IT strategies. Additionally, having the right team is a critical success factor for successful execution of IT strategy. This is since workforce capability influences the ability of an organisation to execute its strategic plans. Culture is also a critical factor to successful implementation of IT strategy as it greatly influences how effectively IT strategy is implemented. IT strategy also faces a range of challenges that affect its successful execution. Among the leading factors related to unrealised performance include inadequate resources, poor communication strategies, unclearly defined execution actions and lack of accountabilities. Government regulations form a major barrier to successful execution of IT strategy and organisational strategy. Predominant unfavourable economic and competitive conditions also form significant barrier to successful implementation of IT strategies. IT strategy may also face change resistance, which inhibits its effective execution.

References

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