Alignment of Business process management with organization strategy
This chapter briefly explains the basic concepts, which will be useful to understand our research in strategic alignment. In this chapter we will introduce different aspects of aligning organization strategy with BPM. In this respect, we introduce the concept of organization strategy, BPM and the strategy and business Process alignment model, which will be used in the alignment of the organization strategy with business process management.
Strategic alignment through Information system triangle
Now-a-days in most of the organizations information technology (IT) plays a vital role in strategic alignment and has become more significant in establishing the business strategies. In the organizations, it is critical for the executives to maintain IT alignment with the business strategies (Rusa, 2008). In this respect, IT is applicable in every part of the business processes (Luftman, 2004). In the organizations, IT is applied as a primary force for driving the organizational changes or as a driver for the transformation of organizations (Turban E, et al., 2006). In this context, Information System Strategy Triangle Framework is used because it relates business strategy with IS strategy and organizational strategy (Pearlson & Saunders, 2006).
Alignment of business and organizational strategy
For business executives, the strategic alignment is a crucial aspect (David Avison, 2004). The original concept of the strategic alignment had been developed more than a decade ago, which assists the executives of the organizations to look to achieve the alignment for their business and technological strategies (Colemam, 2006). Alignment process is progressive and dynamic in achieving the goals across the organizations and it requires well-built support from senior management, good working relationship, prioritization, trust, strong leadership and valuable communication (Luftman& Raymond, 1999).
Most of the literature demonstrates the strategic alignment is based on the Henderson &Venktraman (1999) framework, which indicates four dimensions and the strategic alignments between them (Ward &Peppard, 2003). Another framework is used for strategic alignment that is named as Strategic Triangle, which is proposed, by Pearlson &Saunders (2006).
The Strategic Triangle by Pearlson and Saunders
The alignment may be defined as “the situation in which a company’s current and emerging business strategy is enabled, supported and unconstraint by technology” (Hoque, 2005). In addition Piccoli (2008) describes the strategic alignment as a high degree of co-alignment between the priorities and the activities of IS functions and the directions of the firms (Thomas A.Pollack, 2010). The strategy triangle illustrates that dominant business strategy should drive the organizational and informational strategies which are obligatory for a successful organizational structure. The successful firm always considers these three strategies should be aligned and they proposed that organization and IS strategies to supplement their business strategy. The business strategy is at the top of the triangle. The triangle is shown in figure 2 (Pearlson &Saunders,
Three fundamentals domains of the triangle
Pearlson &Saunders (2006) depict that strategic triangle is based on three elements.
1) Business strategy
For business strategy there should be a clear vision, which arranges the set of actions to fulfill the aims, goals and purposes, on which the business may complete their processes (Pearlson &Saunders, 2010). Henderson &Venkatraman (1993), describe the business strategy as a strategy, which shows the plan of any organization to achieve success in the business environment. Business strategy is concerned with the decisions like product-market. Business strategy depends upon three components: business scope, business competencies and business governance (Henderson &Venkatraman, 1993).
2) Organizational strategy
The organizational strategy includes people, process, structure, employing practices and plans, which aid the organizations to achieve their business goals and it implements business strategies. The main role of the organizational strategy is to arrange and monitor the work process (Pearlson & Saunders, 2010). Different framework has been developed for representing the critical attributes of organizational strategy. One of them is business Diamond introduced by Hammer and Champy in 1994 shown in figure 4. This framework exhibits the organizational plans it is important for identifying the organizational issues (Pearlson&Saunders, 2006; Rusu &Mekawy, 2010).
3) Information system strategy (IS)
IS uses IT as a roadmap for organizations that reveals the information services which helps to achieve the business goals. IS strategy is another component which enables an organization to implement business strategy (Pearlson&Saunders, 2006; Rusu&Mekawy, 2010). JetBlue’s vice president define IS strategy as “what the business need and then go to find the technology which supported” (Hogue et al). IS strategy is concerned to align the IS development with business needs acquires the strategic advantages for the proper utilizing of IT in the organizations (Earl, 1989; Fadeel R. Shamekh, 2008). IS presents the aims of business and clarify the information that support those aims. It should be implemented on computer systems, which provide the information when organization needed (Allen, 1995; Fadeel R. Shamekh, 2008).
Alignment of business strategy and business process
In 1985, Porter stated that strategies are always linked to the organizations, which describe how organizations manage their activities and the processes with the value chain, which are basis for the competitive advantages. However, in contrast to take attention on business and IT alignment, a little concentration has been taken by strategic alignment of the business processes. Different research that relates to the business process, business process management (BPM), business process improvement (BPI) and business process redesign (BPR) demonstrates that alignment between business processes and strategies is crucial for the success of the company. For the success of the business process management projects the company policies and the strategies should be aligned with the BPM. In this way the organizations can achieve their competitive advantages and goals (Lee&Dale, 1998).
For the alignment of the business process and business strategy several efforts have been made but there is no approved method for the linkage between the business processes with strategies. For example many researchers used the value chain and BSC for keeping the alignment strategic development. Value chain system is related to the interdependent set of the activities, which helps to improve the value for the customer (Porter, 1985). On the other hand, BSC is applied as a performance measurement system, which makes sure that there is a persistency among process, financial, customers and internal business processes and learning and growth (Farnaz&Maria, 2010).
Nevertheless, for the successful alignment; factors are identified by the BPM and IT alignment literature. These factors are strategy, processes, people, management, information technology, organizational culture, organizational structure and performance measurement. In the next section, we will describe the strategy and business process alignment model based on these critical success factors.
Strategy and business process alignment model
On the basis of various challenges in the BPM, BPI, BPR and business and IT alignment an alignment model has been developed which addresses the alignment on the basis of the strategy, process, organizational structure, management, information technology, performance measurement, people and organizational cultural.
In the success of any organization, strategy is the key point of the business. The world economy made organizations to think about the relation between the customers and the contractors. To sustain a competitive organization there is a need to align business processes with different strategies or approaches. The major step in the alignment of the business process is to formulate the strategy. Most of the authors argue that strategy is used to fetch the processes. However, adopting a good process will lead the organizations toward the success in the market. For the customer satisfaction, reduction in cost and to shrivel the life cycle, the companies utilizes the “strategy driven process change” (William&James, 1998; Garvin, 1995). Strategy also gives the direction that how activities are linked to create value to the customer. Corporate strategy helps to determine the objectives and guidance, how organizational capabilities can be utilized to gain a competitive position in the market (Majed Al-Mashari& Zairi, 1999), (Hammer, 1990). Porter (1996) explained, “The essence of strategy is choosing to perform activities differently than rivals do”.
Strategy is not only used for the selection of the processes, it also helps to link and configure the activities in its value chain for management process, core process or networked process. The selection of the process will be a significant impact on the customer satisfaction and delight the financial performance of the organization (Cheng&chiu, 2008).
2) Business process
The importance of firm’s strategy is reflected by its business processes. The business process in this model is interconnected with management, organizational culture, organizational structure, information technology, management and people (Farnaz&Maria, 2010). Business process helps the organization to be more efficient when the people have cooperation among them to achieve the organizational objectives (Garvin, 1995). For the success of the efficient and the effective business the strategy should support the business processes (Henderson & Venkatraman, 1993). Processes should be customer oriented which assist the enterprise to stay efficiently in the market and make a return on investment (Harper business, 1993).
In this critical situation, Vernadat (2002) described the “Quality cost delay” model, which shows the better management in the business processes with the help of the information technology. This model shows the business process must be aligned with the business strategies. The motivation of this model is business process must help the organizations to maintain the better results in the business operations when it is properly designed (Grover & Otim, 2009). The process redesign is directly impact on the time and cost of the product for the customers (Cheng&Chiu, 2008).
People look as mjor factor in the success of organization and play a vital role in the implementation of the business processes. This factor may be in the form of individual or groups who constantly develop and try to apply their process, management skills and knowledge for the improvement of the business performance. When the individual or groups work together for accomplishing the desired results, the process collaboration and communication is considered major factor. When people work in teams, there should be process management leaders who have the skills, knowledge and experience, willingness to lead a team, take responsibility and be liable for business processes (Rosemann& Brocke, 2010). People have various assets, which would be improving the process in efficient and effective way. These assets are skills, knowledge, manners, culture and job. The loyalty of the people have also critical role in the success of the organizations.
Garvin (1995) describes that when organization intend to change the process most of the people don’t know how to react to it so the job redefinition occurs. In this way organization is changing its culture and behavior pattern. In addition there is a need to re-skill, train and educate the people. In short, for organizations, skilled and competitive people are major assets to alive in the market (Garvin, 1995).
4) Organizational culture
Culture is the one of the crucial factor in the success of the organizations’ business processes. All the organizations have their own set of rules and values which transcends into their culture shared it’s the people. It could be a soft skill but difficult to change in the organizations. In sense of cultural change it’s difficult for the organization to shift in the process orientation from functional orientation (Carr, 1993; Mashari & Zairi, 1999). When the organization desires to change a process then
implicitly it changes its organizational culture. Culture involves the entire human and social changes and the management facilitates adjustment in culture by redesigning the new processes to overcome the resistance to change (Carr, 1993; Talwar, 1993; Mashari & Zairi, 1999; Grover, 1995).
Management has a great impact in changing the culture and it is the responsibility of the management to train and educate people, to make changes in reward system, and creating a culture for change by communication and involving the occupations (Mashari&Zairi, 1999).
5) Information technology
Information technology is the foundation for the business processes redesign in most of the organizations. Michael (1994) describes that one aspect of the IT is to reduce the cost and increase the scope of the coordination to help in developing the shared database for those processes. Since last decade, IT has a great importance in the cause success of the organization. IT capability supports business processes in effectiveness and efficiency. Robert Herres (1995) explained in roundtable the crucial role of IT as “technology forced us to think about how and where our processes intersect” (Garvin, 1995).
6) Management commitment and support
For business process project, the management commitment and support is necessary at all levels of organization. Kettinger & Teng (1998) describes that for the improvement of the business process, management system, style and measurement should be supported. It means to help the organization generate maximum output with minimum waste. Harrington also argues that top management and it’s dutifully is crucial to have effective business process. The top management should take a strong interest to conduct the business process. This interest should not only maintain the resources but also manage the time for completion, inspire the employees with rewards and also cooperate to manage the time and money (Diaz & Sligo, 1997).
Many authors agree that there should be stability between functional and non-functional teams. The team should have a leader who is responsible for managing the business processes and that leader should be attached with the higher management for communication (Harrington, 1991; Gravin, 1999). Allaire argued in roundtable “be independent, but cooperate and work together”.
7) Organization structure
For successful alignment, organizational structure is also an important factor. For effective and efficient process it requires the coordination, mechanism, formal and informal structure (Kettinger & Teng, 1998). Organizational structure helps to maintain the culture of the organization and also helps how to make the teams and distributes the responsibilities among the top management and the project teams (Farnaz & Maria, 2010).
Organization structure determines “how BPR team is going to look, how human resources are integrated, and how the new jobs and responsibilities should be formulized” (Al-Mashari & Zairi, 1999). Process based organizations always cross the boundaries and departments and are rather cross-functional in nature. Cross functional project team is also a critical factor that related to the organizational structure which the principal is to makes an appropriate alignment between strategy and business process (Al-Mashari & Zairi, 1999). Job and labor integration is one of the most important factors of organizational structure for human resources. It means a clear job description is obligated (Farnaz & Maria, 2010).
8) Performance measurement
Strategic alignment is not one time event but it is an adoption of continuous processes and changes, hence it is a dynamic process. Therefore, it needs to measure and judge the values, which can be, obtain by performance measurements at various levels of organization for the component of the alignment, strategy, IT, People, process and management (Farnaz & Maria, 2010). In this respect, measurement process is initiated with different goals and policies. These policies and goals are further translated by IS without exploiting the other techniques such as monitoring, auditing and benchmarking (Al-Mashari & Zairi, 1999). Different factors are included to determine the performance measurement such as time, cost, and quality and capital in addition to compare these factors with new processes where the old processes are replaced (Farnaz & Maria, 2010).
The authors make a distinction about corporate measures at different levels like operational or process measures level. Authors describe that performance measurement and management should be derived from the strategy (Armistead, 1999). All kind of measures are linked with customer satisfaction (Farnaz & Maria,
2010). The most significant factor is that the strategy must be aligned with the performance measures. For this purpose balanced Scorecard is considered the best approach for the alignment on process level to the strategic goals (Norton & Kaplan, 1996). Strategic objectives are describes in four perspectives in the BSC. These four perspectives are used to find out the performance measures for the long term for the short-term objectives. These four perspectives named as (1) financial, (2) customer,
(3) internal business process, (4) learning and growth. Therefore, BSC is used to measures the performance for all alignment factors like strategy, people, IT, processes and management.
Finally, authors argue that for the measurement of processes efficiency can require the improvement in the processes. Thus, performance measurement is considered as a ground for quality improvement and continuous improvement in the processes (Farnaz & Maria, 2010; Guha & Kettinger, 1993).
1.4 THESIS OUTLINE
2 Research Method
2.1 PHASE1: DEVELOPMENT OF THE APPROACH
2.2 PHASE2: CONDUCTING CASE STUDIES: PREPARING FOR EMPIRICAL VALIDATION OF THE APPROACH
2.3 PHASE3: EMPIRICAL STUDY
2.4 PHASE4: ANALYZING CASE STUDIES
2.5 RESEARCH QUALITY
3 Alignment of Business process management with organization strategy
3.1 STRATEGIC ALIGNMENT THROUGH INFORMATION SYSTEM TRIANGLE
3.2 ALIGNMENT OF BUSINESS STRATEGY AND BUSINESS PROCESS
3.3 BUSINESS PROCESS AND BUSINESS PROCESS MANAGEMENT AS BASIS FOR ALIGNMENT
3.4 WHY ORGANIZATION NEED BUSINESS PROCESS MANAGEMENT
3.5 THE ROLE OF ORGANIZATION STRATEGY IN ALIGNMENT
3.6 WHY ORGANIZATION REQUIRES STRATEGY ALIGNMENT WITH BUSINESS PROCESS MANAGEMENT
3.7 THE NEED OF APPROACH FOR STRATEGIC ALIGNMENT WITH BUSINESS PROCESS MANAGEMENT
4 The approach for aligning Business Process Management with Organization Strategy
4.5 INFORMATION TECHNOLOGY
4.8 PERFORMANCE MEASUREMENT
5 Empirical Cases
5.1 NORDEA BANK JÖNKÖPING
5.3 TRELLEBORG SEALING SOLUTIONS
6 Discussion & Analysis
6.1 THE NATURE OF ALIGNMENT PROCESS IN SMES
6.2 SIGNIFICANCE OF ALIGNMENT PROCESS IN SMES
6.3 FAR-REACHING EFFECT OF ALIGNMENT PROCESS IN SMES
6.4 SIGNIFICANT ALIGNMENT FACTORS IDENTIFIED IN SMES
6.5 LESS IMPORTANT FACTORS IN THE SMES
7.1 THE PROPOSED APPROACH FOR ALIGNING BUSINESS PROCESS MANAGEMENT AND ORGANIZATION STRATEGY
7.2 THE ALIGNMENT FACTORS IN SMES
7.3 UTILIZATION OF IDENTIFIED FACTORS IN SMES FOR ALIGNMENT
7.6 RECOMMENDATION FOR FURTHER STUDIES
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