Essay About Business-Ict Alignment And Operational Business

Productivity
Productivity
An ABC-based approach for operational Business – ICT Alignment
Guido Dedene1,2,3 ([email protected])
Stijn Viaene1,2 ([email protected])
Bjorn Cumps1 ([email protected])
Manu De Backer1 ([email protected])
1 Katholieke Universiteit Leuven, Department of Applied Economics
2 Vlerick Leuven Gent Management School
3 Universiteit Van Amsterdam, Business Studies Department
Abstract
This paper focusses on Business-ICT Alignment at the operations level by means of an Activity-Based Costing approach.
The Service and Technology Operations are defined as cost drivers for the Business and Service Activities by using
analytical production functions (so-called profiles). Service Level Agreements are the boundary conditions for determining
these profiles. Managing the profiles ensures operational Business – ICT Alignment, especially for Capacity Planning and
Cost Management purposes. Two Case Studies illustrate the methodology.
Keywords: Business – ICT Alignment – Service Level Agreements – Information Management – Capacity Planning – ICT
Cost Management
1. Introduction
Business – ICT Alignment is an ongoing concern in ICT Governance literature. Allthough a
lot has been published already on this subject, many research questions remain, such as:
• What is a workable definition of Business – ICT Alignment ?
• Can Alignment be demonstrated and/or measured in some way ?
• What methods and techniques exist to establish Business – ICT Alignment in practice ?
Most of the literature so far has focussed on the Alignment of Business strategy and ICT
strategy. It is clear that Alignment is needed for other Information Management Areas, such
as operational Alignment. This paper wants to contribute to the understanding of operational
Business – ICT Alignment and is organised as follows. First, Alignment is discussed in the
context of a generic framework for Information Management (Maes 1999, Maes 2003). In
particular the framework distinguishes different layers of Alignment, including strategic as
well as operational Alignment. Next, an analytic methodology for operational Alignment is
developed. This methodology is based on Activity-Based Costing (ABC) and relies on some
basic results from capacity planning and performance management of computer
configurations (Overweg 1993). The paper concludes by presenting two case studies and
discussing some other applications of this methodology.
2. Business – ICT Alignment and Information Management
‘Alignment has become an important principle in managing the relationship between
Business and Information & Communication Technology (In this paper the term ‘ICT is
preferred over ‘IT since Information & Communication are considered to belong together in
a dual atomic fashion). Some contradictory definitions have been developed in literature
(Maes 2000), relying mainly on synonyms such as ‘balance, ‘coordination, ‘fit
(Venkatraman 1984), ‘linkage, ‘harmony, etc… Recent literature (Maes 2000, Benson
2004) tried to refine the notion of Alignment and makes the distinction between
• Strategic Alignment
• Structural (also called functional) Alignment
• Operational (also