Flexibility Takes Vigilance

By Paul Tallon  |  Posted 2003-11-11 Print this article Print

Companies dont need to accept misalignment as a necessary evil in a rapidly changing environment. Many have succeeded in creating IT backbones that can provide both increased strategic alignment and IT flexibility. For example, companies such as Delta Air Lines, Putnam Investments and eBay have used middleware in sophisticated ways to solve the paradox. Each has an IT infrastructure that provides flexibility and the ability to grow along with its business, all while providing applications that help the company pursue its strategic business goals. And at Vicor, a Massachusetts-based manufacturer of specialized power converters, an enterprise resource planning system helped to make IT more flexible, not less so. By serving as the backbone of a common infrastructure, enabling the company to provide a configuration tool on its Web portal, Vicors ERP system helped give customers the ability to design power converters that meet their particular specs, and submit their orders online.

Application service providers and outsourcing services provide companies with another way to achieve strategic alignment and IT flexibility at the same time. Outsourcing legacy systems can help a company to quickly get rid of inflexible, older systems. The utility model of IT services, embodied in recent agreements such as those between American Express and IBM Global Services, takes flexibility even further by allowing IT services to expand and contract in line with changes in the business environment. Such arrangements protect companies from having to pay for unused IT systems during periods of stability, or free them to make IT investments during periods of rapid change.

But CIOs beware: The alignment paradox cant be avoided just by picking certain technologies and avoiding others. Flexibility takes vigilance and smart management. IT executives must carefully size up the ability of each IT investment to either enhance flexibility or diminish it. Applying options-pricing models to your evaluation of an IT investment is one way to help you decide whether preserving flexibility for tomorrow is worth the cost today.

And as always, culture is important. At companies like Delta and Vicor, business executives are willing to share information with IT, and the CIO is a respected business partner and collaborator, not an inferior. There needs to be a mind-set that encourages shared networks and common IT procurement policies, and an across-the-board willingness to give up best-of-breed systems that could be incompatible.

The critical alignment lesson for companies is this: Increased strategic alignment will improve ITs value to the business, but only if the company is wired flexibly enough to react to sudden business change. Just as ice hockey legend Wayne Gretsky said, "I skate to where the puck is going, not to where it is," IT executives must think about where their business is going and ask whether their current IT spending can get them there without the need for significant retooling.

Paul Tallon is Assistant Professor of Information Systems at the Carroll School of Management, Boston College, and a Research Associate at the Center for Research on Information Technology and Organizations at the University of California, Irvine. His research interests focus on IT business value, strategic alignment and IT evaluation techniques.


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