Strategic Management and Information Technology
In the world of constant change within the dynamic business environment and for the achievement the satisfactory results, most company is forced to develop and implement effective strategic management (Bijata, & Piotrkowski, 2014). Strategic management is viewed as a pattern of deliberate and emergent actions based on the strategy realization and implementation (Mintzberg & Walker, 1989); for the purpose of facilitating competitive advantage and organizational superior performance (Kong, 2008). Based on Bijata, & Piotrkowski (2014), strategic management is conducted on multiple organization levels; and one of the lowest levels is the operational ones where Information Technology (IT) strategy resides.
Information technology (IT) is imperative for the survival of an organization in the highly competitive global market in the 21st century; and the effective use of IT is placed upon the enterprise IT management (Ping-Ju, Straub, & Liang, 2015). The foundation of IT is built upon the organizational IT financial investment; and the demonstration of the IT value in relation to the IT investment is the fundamental (Agarwal, & Lucas, 2005). The most important predictor of the value of an organizational IT is the company IT governance and management effectiveness (Weill, & Ross, 2004), where companies extract the most value from IT when they have a well communicating and design IT process (Weill, & Ross, 2004; 2005). Kearns, and Sabherwal (2007) suggest that the implementation of effective IT governance framework is the foundation for business value recognition.
IT and Business Alignment Importance
Company strategic alignment and the recognition of the importance of these alignments on the top leader level is crucial to the organizational project success (Brown, 1999; Gobeli & Larson, 1986; Pinto & Slevin, 1988; Youker, 1999). IT-based business management of a company requires an effective integrating strategic IT and business frameworks that: 1) focus on over-all strategic initiatives, 2) identify and integrates the company 4 domains (1-business strategy, 2-IT strategy, 3-organization infrastructure, and 4-processes), and 3) manage the integration between all company domains (Henderson & Venkatraman, 1989; Morton, 1991).
Based on Luftman (2003), a mature alignment between businesses and IT share a the common and effective trait among areas such as: 1) governance, 2) communications, 3) IT value recognition, 4) IT collaboration, 5) IT systems usage prevalence among customers and partners, and 6) top IT talent attract and retain strategies. Luftman, and McLean (2004) emphasize the two important work items that top IT executive leaders need to consider: 1) fully understand the business that they manage, and 2) focus to achieve the alignment between the business they serve and the IT activities they management. IT-Strategy alignment framework is proven to potentially help organizations to create comprehensive views of different project profiles that is necessary for the momentum development for change reaction and proaction (Weiss, & Thorogood, 2011, pg.39).
IT-business strategic alignment holds the consensus as one of the top management concern among many literature (Guillemette & Pare 2012; Kappelman, McLean, Luftman, & Johnson, 2013). While some literature support the fact that successful alignment between IT and business leads to increase in profitability and business competitive advantage sustainability (Baker, Jones, Cao, & Song, 2011; Sabegh & Motlagh 2012); others support that the failure in IT-business alignment potentially results in failed IT initiatives and resources wasting leading to undesirable organizational and financial outcomes (Chen, 2010; Ravishankar, Pan, & Leidner, 2011).
From the practitioner standpoint, the business-IT alignment is the factor for the derivation of organizational efficiencies and innovations that are mediated from measurements such as 1) decision making, 2) business process automation, and 3) customer satisfaction improvement (Margolies, Shapanka, Schoelen, Beams, Simmons, Hucks, Lawler, Waddell, & Harding, 2013). Bickel (2012) suggests that the IT-business alignment assist firms to effectively utilize IT resources to 1) exploit market opportunities, 2) raise profitability, and 3) build sustainable competitive advantage.
From the academics perspective, the theoretical frameworks and empirical research consistently cover the positive aspect of the business-IT alignment that include: 1) sale revenue increase (Kearns, 2005), 2) operational efficiency (Oh, & Pinsonneault, 2007), 3) performance improvement (Rivard, Raymond, & Verreault, 2006), 4) reductions of cost (Johnson, & Lederer, 2010), and customer value enhancement (Celuch, Murphy, & Callaway, 2007). With the recognition of the importance of IT and business alignment, the next challenge for a corporation is to identify the mechanism for such accomplishment; and Enterprise Architecture is one of the solution (Buchanan, & Soley, 2002; Enagi, & Ochoche, 2013)
IT-Business Alignment and Enterprise Architecture Relationship
According to Bijata, and Piotrkowski (2014), the main focus of IT strategy is the delivery of the properly organized resources and process for the effective implementation of an organizational strategy; and the tool for the definition of the IT strategy is enterprise architecture. Enterprise Architecture (EA) is a principle of model-based IT and business management (Närman, Buschle, & Ekstedt, 2014) that provides guidance for improvement in existing system architecture, and assist in decision making for future system architecture development (Johnson, & Ekstedt, 2007). For Glazner (2009), EA exists for the purpose of building simulation and seeking opportunity for enterprise profitability boost. EA is proven as an established principle for prober IT management – (Bradley, Pratt, Byrd, Simmons, 2011; Burton, & Allega, 2010; Ross, & Beath, 2006; Ross, Weill, & Robertson, 2006; Venkatesh, Bala, Venkatraman, &Bates, 2007).
Tamm, Seddon, Shanks, and Reynolds, (2011) define EA as the high level view, the representation and the definition of an enterprise’s business and IT system, the processes, the sharing components and the interrelationships parts within the enterprise. EA’s objective is twofold: 1) to define a suitable operating platform that is capable to support the current state and provide a systematic possibilities forward to future target architecture for the organizational business processes and IT systems, and 2) to guide and align the development of the roadmaps for the accomplishment of the organizational business-IT vision (Tamm, Seddon, Shanks, and Reynolds, (2011).
This document describes a research on the application of the enterprise architect frameworks such as 1) Zachman (Zachman, 1999), 2) TOGAF (The Open Group, 2009), 3) NAF (NATO Consultation, Command and Control Board, 2007), 4) DoDAF (DOD, 2009) and 5) any other. The effectiveness of the EA framework is analyzed based on the common four factors (application usage, system availability, service response time, and data accuracy) and analysis framework developed by Närman, Buschle, and Ekstedt (2014). The objective of this research is to 1) explore the enterprise architecture and a concept of enterprise architecture framework as an effective tool for the strategic management process in organization; analyzed by Bijata and Piotrkowski (2014) and 2) study the effectiveness of EA framework application as the mediator for the organizational decision making; and extend the model developed by Närman, Buschle, and Ekstedt (2014) using mixed method for the study instead of just quantitative method.
Enterprise architecture or EA is a formal description of the functions and the structure of the core components of an enterprise such as 1) people, 2) information, 3) technology and 4) processes, the interrelation between these components, and the government of its creation and development (Bijata & Piotrkowski, 2014). Bijata and Piotrkowski (2014) parse the EA as follow: 1) architecture means a fundamental organization of a system that includes system elements, interrelations between systems, system environment, design principles, and organization evolution, and 2) enterprise means large companies, group of units with single objective or common goal or a corporation.
Enterprise Architecture Framework
Enterprise architecture framework is a structure or a tool that include structure for supporting the development and creation of architectures specific to an organization (Bijata & Piotrkowski, 2014).
Strategic management is a pattern of deliberate and emergent actions based on the strategy realization and implementation for the purpose of facilitating competitive advantage and organizational superior performance (Bijata, & Piotrkowski, 2014). Based on Bijata, & Piotrkowski (2014), strategic management is conducted on multiple organization levels; and one of the lowest levels is the operational ones where Information Technology (IT) strategy resides
IT Role and Challenges
The role of information technology (IT) as an imperative component to the realization of the organizational competitive advantages has been established for many years (Enagi, & Ochoche, 2013). Technology is no longer just a simple ‘number cruncher’ system for the financial and accounting functions, but its role is a support of the entire range of business operation that comprises of both internal and external activities dealing with almost all business human interaction (customers and suppliers) (Luftman, 2004). IT is a business enablement tool that 1) provides greater access to information, 2) assists business to function more efficiently and effectively, 3) captures and maintains accurate and up to date information, and 4) enable business to make long-term strategic plans (Olugbode, Richards, & Biss, 2007)
According to Buchanan, and Soley, (2002), IT is a challenging business where 1) the operational environment is a fast pace and consistently changing, 2) the enterprise IT solutions are often expected with quick delivery and business improvement measurement, 3) new technology adoption is required with high frequency, and 4) the organizational department of IT investment constantly challenge the low return on investment (ROI), request justification for the cost of IT development, and value of the whole IT organization. The acknowledgement of the failure to the derivation of IT return in investment is further elaborated through a study of 145,000 major IT projects conducted by Fortune 500 firms between 1998 and 1999; an expense total of more than $265 billion in IT development to only meets less than 25% of the project goals, and lower than 12% of the enterprise strategic goal (Enagi, & Ochoche, 2013).
The failure for justification and derivation of return in investment from the IT projects is majorly the failure of 1) IT governance and management (Weill, & Ross, 2004), 2) organizational IT communication and design process (Weill, & Ross, 2004; 2005), 3) IT collaboration (Luftman, 2003), and 4) IT recognition of the business it serves. The combination of all these IT failures is defined as the failure of the IT and business alignment (Buchanan, & Soley, 2002; Brown, 1999; Gobeli & Larson, 1986; Pinto & Slevin, 1988; Youker, 1999; Henderson & Venkatraman, 1989; Morton, 1991; Luftman, 2003; Guillemette & Pare 2012; Kappelman, McLean, Luftman, & Johnson, 2013).
Ross, Weill, Robertson, (2006) argue that 1) the alignment between IT and business is crucial to the success of the implementation of IT into business, and 2) the effective execution of IT strategy requires the development and application of 3 key principles: 1) enterprise architecture, 2) an operating model, and 3) IT engagement model. Gregor, Hart, and Martin, (2007) confirm the alignment of IT and business theory with the following statements: 1) organizations have recognized the alignment of information technology and business as the vital component for the achievement of positive business outcomes, and 2) business is maximized in performance when the organization aligning its business strategy to the information systems using the consolidated information system strategy.
IT-Business Alignment and Enterprise Architecture
Business-IT alignment is required for a successful enterprise operation in the twenty first and moving forward where dissatisfaction with the strategic planning and the IT delivered value must be handled by committed senior management, and skilled people of an organization (Buchanan & Soley, 2002).EA and EA frameworks adoptions have been proven to be beneficial and the tools the achievement more business-IT alignment, lower IT costs, and high operational efficiency (Buchanan & Soley, 2002; Närman, 2012). EA is recognized as the tools to align TT with the business or to keep the organizational processes aligned with the enterprise strategies (Bernaert, Poels, Snoeck, Backer, & Manu, 2013).
According to Jeanne, Weill, Robertson (2010), EA is the foundation for organizational business execution, and the basis and criteria of each business requirement fulfillment. Bijata and Piotrkowski (2014) argue that business execution consist of three core elements: 1) operating model – standardization and integration of business process and higher organizational strategies, 2) enterprise architecture – structured business process and IT infrastructure according to business requirement logics, and 3) IT cooperation model – the supervision system that monitor and enforce the alignment from the current to future business target.
EA and EA Frameworks
EA is the description of functions of enterprise core components (people, information, technology, process and their interrelationship) and EA frameworks are the tools and structure that allow companies to customize and develop EA that fits specific organizational requirements (Bijata & Piotrkowski, 2014). Bernaert, Poels, Snoeck, Backer and Manu (2013) argue that 1) EA is an execution approach to align things and operation in a company that includes process and strategy, and 2) EA is the core componenent for controlling enterprise complexity, processes and systems. The primary reason for EA existence and lasting to this point is because of its stability, efficiency and effectiveness in business-IT alignment (Henderson and Venkatraman 1993; Bernaert, Poels, Snoeck, Backer & Manu, 2013).
There are many well-known EA frameworks, methods, metamodels, languages and ontologies that serve as foundations for EA development that includes: Zachman famework (Zachman, 1999), The Open Group Architecture Framework or ArchiMate (TOGAF) (The Open Group, 2009), the U.S. Departemnt of Defense Architecture Framework (DoDAF) (DOD, 2009), NAF (NATO Consultation, Command and Control Board, 2007) and more than forty other frameworks (Bijata & Piotrkowski, 2014). For this research, EA functionalities, features, differences, gaps, efficiencies and business-IT effectiveness are determined to be best explored and understood through details of some of the major and most popular EA.
Among the EA framework, Zachman (1999) is debatably the first and the most famous EA framework. Based on Zachman (1999), this EA framework is structured in two core dimensions: 1) focus and 2) view to model, organize and classify the view or the representation of an organization. Each dimension (focus and view) has six parts that comprises: 1) focus includes scope, business model, system model, technology model, detailed representations and functioning enterprise, and 2) view includes what, how, where, who, when and why (Zachman, 1999). The gap of Zachman EA framework is its limitation to the classification of architecture models according to taxonomy; it is not a framework for EA development that includes the attachment of categorized architecture models to any metamodel and support for further analysis. (Bernaert, Poels, Snoeck, Backer & Manu, 2013; Närman, Buschle, & Ekstedt, 2014).
The second famous EA framework is DoD (2009) or DoDAF, Department of Defense Architecture Framework or the Federal Enterprise Architecture framework. DoD (DOD, 2009) depicts 1) the guidance setting architecture requirements for the DoD and the individual military services and 2) the interoperability and effectiveness of architecture guidance establishment for the entire DoD. DoDAF is an evolution of DoD architecture framework for Air Force command, communications, controls, computers, surveillance, intelligence, and reconnaissance (Long, 2009). According to DoD (2009), DoDAF has three values that includes: 1) architecture concept and guidance for architecture development and management, 2) outline of individual framework products, and 3) data focus for architecture usage. DoDAF provides product outline that is good for architecture decision documentation (Long, 2009). Närman, Buschle, and Ekstedt (2014) argue that DoD or DoDAF move beyond Zachman framework limitation (classification of architect model) and offer modeling suggestion, but lack the analysis performance direction and procedure. The limitation of Zachman (framework development) and DoDaf (analysis support) lead to the requirement of other framework usage such as TOGAF.
TOGAF or The Open Group Architecture Framework is an architecture framework and method that support EA development and management (The Open Group, 2009). According to The Open Group (2009), TOGAF has an Architecture Development Method (ADM) which it considers and purposefully proposes to be the standard architecture development method for any EA framework that includes four major components: 1) business architecture, 2) information system architecture (application and data), and 3) technology architecture. TOGAF ADM is based upon ArchiMate, the standard language and metamodel for EA description (The Open Group, 2012; Lankhorst, 2009). ArchiMate extends and describes the four major components of TOGAF (business, application, data, and technology) with additional four sections for each component that includes: 1) information (static), 2) (dynamic) behavior, 3) (static) structure and 4) (dynamic) motivation. (The Open Group, 2009).
Figure 1 from The Open Group (2009)
The intensive elaboration as a complete solution of an EA framework is arguably make TOGAF with ArchiMate one of the difficult approaches to implement because the EA framework requires extensive training and certification (Bernaert, Poels, Snoeck, Backer & Manu, 2013). From the EA analysis perspective, Närman, Buschle, and Ekstedt (2014) argue that while TOGAF has EA analysis components that is based on performance and IT cost, there is a lack of formal integration between the analysis mechanism and metamodel; and this poses challenges and difficulties to the EA analysis implementation.
Most EA includes the three core layers: 1) business, 2) application, functions and data, 3) technology (DOD, 2009; The Open Group, 2009; Zachman, 1999). The business layer is the starting point of an organizational EA development and the requirement for a business strategy which compose of four core dimension: 1) strategic dimension, 2) actor dimension, 3) operational dimension, and 4) object/input/output dimension (Bijata & Piotrkowski, 2014). These four dimension answers the basic questions for: 1) why, 2) who, 3) how and 4) what most enterprise architectures (DOD, 2009; The Open Group, 2009; Zachman, 1999). Additional dimension such as when and where is accounted in some AE framework such a Zachman (1999).
Different EA frameworks use different terminology that describes the same layers as aforementioned, and others; but most EA frameworks includes these five criteria’s: 1) control (control the complexity of processes and systems), 2) provide holistic overview, 3) objective (translate corporate strategy to daily operations), 4) fit organization target (comprehensible and understood by organizational target employees or associates), and 5) enterprise (optimize the company as a whole or single unit instead of silos or individual business domains) (Lankhorst, 2005).
There is a consensus on the benefits of EA among researchers as follow (Lankhorst, 2009; Ross, Weill, & Robertson, 2006; Bernaert, Poels, Snoeck, Backer & Manu, 2013): 1) common architecture (accounts for all stakeholders of the company and provides acceptable design for all stakeholders), 2) describe only relevant and high levels of mains areas of company and its operations, 3) agile with changes and provide quick and testable solution along with documentation, 4) display organizational gaps and optimization opportunities, 5) represent relationships of elements and 6) EA adoption is the best fit with current business procedures.
From the decision-making perspective in relation to EA analysis, Närman, Buschle, and Ekstedt (2014) argue that the process involves 1) defining the scenarios – scope of where analysis should happen, 2) determine the properties of interest – categories such as functionality, security or availability, and 3) develop architecture metamodel for the analysis of interested properties, 4) analyze scenario’s properties to decision maker and 5) make a decision. Närman, Buschle, and Ekstedt (2014) also emphasize the lack of formal integration between the metamodel and the analysis mechanisms among most available EA frameworks.
The limitation on EA analysis includes: 1) DOD (2009) has no formal EA analysis support, or one which is tightly integrated within the framework itself, 2) TOGAF or ArchiMate has the EA analysis specifically on performance and IT cost and the older version includes tight integrated framework analysis metamodel (The Open Group, 2009). There are a while number of research on EA analysis that covers non-functional properties such as 1) interoperability (Ullberg, Lagerström, Johnson, 2008), 2) security (Sommestad, Ekstedt, Johnson, 2010), 3) data accuracy (Närman, Holm, Höök, Honeth, Johnson, 2012), and 4) modifiability (Lagerström, Johnson, & Höök, 2010); where all of them works within the analysis of a single properties.
EA framework has been the advanced approach and serving as the guide for the communication and decomposition of the enterprise architectures, but it is lack of the tools and procedures for the analysis of potential behavior of the proposed EA (Glazner, 2009). Glazner (2009) extends practice of EA and develops simulation models for analyzing the architectural factors affecting enterprise performance and enterprise that fill the gaps of: 1) discrete event modeling, agent based/system dynamics modeling, and 2) the integration of discrete model/simulation into a single model. Glazner (2009) completes the research with an EA analysis model, a hybrid simulation model that 1) handles “what-if” behavioral analysis of EA and 2) suggest changes to EA that potential produce up to 20% improvement on profitability; but it lacks the connection to the enterprise decision-making.
According to Ernst (2008), EA management is one of the major challenges of modern enterprises, and the integral concern for reasons such as EA is only executed as need for a flexible IT, and 2) regulation and laws that enforce company information must include EA information. Ernst (2008) uses qualitative method to prove M-Patterns as the best-practice for EA management. Sasa, and Krisper (2011) also study the EA management pattern but focus more in the business processes, instead of EA or EA framework factors in relation to decision making.
In term of analysis attributes, response time and data accuracy is proven to be the two popular attributes for EA analysis among researchers (Al-Jaar, 1991; Montgomery, 2006; Barber, Graser, & Holt, 2002; Dunsire, O’Neill, Denford, & Leaney, 2005; De Miguel, Lambolais, Hannouz, Betgé-Brezetz, & Piekarec, 2000). Al-Jaar (1991) used experimental methods (measurement ) to measure response time, where Montgomery (2006) use simulation-based methods to create response time simulation. Data accuracy or data quality is analyzed using Quality Entity Relationship (QER) model and the Polygen model, a relational algebra based method by Zang, Ziad, and Lee (2001). Lee, Pipino, Funk, & Wang, (2006) use Information Product Maps model (extension of UML profile) to depict information flow for data quality analysis. There are limited methods available for the performance of integrated EA analysis.
Integrated EA Analysis Method
An integrated framework for EA analysis based on four common variables/measurements/properties (1-application usage, 2-system availability, 3-service response time, and 4-data accuracy) is developed and tested by Närman, Buschle, and Ekstedt (2014). TOGAF ArchiMate metamodel is used for the assessment of the four properties, where the four metamodel is integrated into one for the EA analysis (Närman, Buschle, & Ekstedt, 2014). The TOGAF Architmate metamodel use the probabilistic relational model (PRM) that features Bayesian networks (Friedman, Getoor, Koller, & Pfeffer, 1999), and the p-OCL (probabilistic Object Constraint Language), an extension and improvement of OCL with probabilistic reasoning is used for the integrated metamodel (design theory) by Närman, Buschle, and Ekstedt (2014).
There are more than fifty different enterprise architecture frameworks available around the world, and utilized by multiple companies (Bijata & Piotrkowski, 2014). There are differences in measurement of the application effectiveness of AE framework; and there are also challenges in measurement of some EA framework application on all levels. Not until recent, there is a common measurement of EA application developed by Närman, Buschle, and Ekstedt (2014), and an analysis of linkage between EA and strategic management by Bijata and Piotrkowski (2014).
Bijata and Piotrkowski (2014) argue that enterprise architecture is a tool for supporting strategic management of an organization, and IT operation is part of the strategic management. One of the main challenges in IT strategy creation is the effective translation of organizational strategy into IT area strategy, and traceability with control over its execution (Bijata & Piotrkowski, 2014). While Bijata and Piotrkowski (2014) argues the importance of EA in relation to organizational strategic management, Närman, Buschle, and Ekstedt (2014) presents an integrated EA framework for assessment of multi-attribute information systems analysis. Based on Närman, Buschle, and Ekstedt (2014), the integrated EA framework assess systems based on four common variables/measurements: 1) application usage, 2) system availability, 3) service response time, and 4) data accuracy.
Based on these developed common measurements (Närman, Buschle, & Ekstedt, 2014) and the strategic management theories (Bijata & Piotrkowski, 2014), there is not yet a study on the application of the integrated EA framework, and utilize the common measurements for its effectiveness analysis. This study is intended to fill this gap through 1) conducting a case study to apply the integrated EA frameworks to measure its effectiveness, and 2) evaluate the effectiveness of integrated EA framework four measurements as mediator to organizational decision making.
Statement of Purpose
This is a research on the impact of the application of EA frameworks on strategic management. The effectiveness of the application of the integrated EA framework is measured based on the prevalence of the EA framework application within company, and the four common variables developed by Närman, Buschle, and Ekstedt (2014) that includes: 1) application usage, 2) system availability, 3) service response time, and 4) data accuracy. A company can potentially use one, two or a combination of multiple EA frameworks to achieve its objective; the company can potential create its own EA framework. The objective of this research is to utilize the integrated EA framework (Närman, Buschle, & Ekstedt, 2014) to measure the effectiveness of a company’s systems; which realize the effectiveness of the company’s actual EA framework application in relation to organizational decision making.
- Is there a relationship in the application of EA and the effectiveness of strategic management?
- Null Hypothesis: there is no relationship in the application of EA and the effectiveness of strategic management
- Alternative Hypothesis: there is significant relationship in the application of EA and the effectiveness of strategic management
- Is there a relationship in the application of EA and the effectiveness of strategic management decision making?
- Null Hypothesis: there is no relationship in the application of EA and the effectiveness of strategic management decision making.
- Alternative Hypothesis: there is significant relationship in the application of EA and the effectiveness of strategic management decision making.
Di Tran – Research Proposal
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