Business-IT Alignment and Service Oriented Architecture

A Proposal of a Service-Oriented Strategic Alignment Model

Llanos Cuenca

, Andrés Boza

, Angel Ortiz

and Jos J. M. Trienekens

Research Centre on Production Management and Engineering (CIGIP), Universitat Politècnica de València,

Camino de Vera s/n Valencia, Spain

University of Technology Eindhoven, Eindhoven, The Netherlands

Keywords: Service-Oriented Architecture, Business-IT Alignment.

Abstract: Since its inception, SOA has been postulated as the solution to the problems of alignment between business

and IT. However, these problems still remain, especially at external level where the business strategy should

be aligned with the IT strategy. Based on the Henderson and Venkatraman’s strategic alignment model and

the literature review of strategic aspects in SOA this paper proposes a Service-Oriented Strategic Alignment

Model (SOSAM) in order to achieve business services and information technology external strategic

alignment. The business strategy includes the definition of business service scope, the distinctive business

service competencies and the business service governance; and the IT strategy includes the definition of

technology service scope, the service systemic competencies and the service governance.

1 INTRODUCTION

The current situation dominated by globalization

forces competence between enterprises. As a result,

supply chains and networks are now looking to

enforce collaborative agreements, which would

produce more efficient workflow, flexibility,

effectiveness, agility and coordination between

chain links (Vargas et al., 2013). The competitive

advantages in the changing business environment

have transferred organizational structures from

single enterprises to extended or collaborative

enterprise network (Cuenca et al., 2011a; Boza et al.,

2014). The cross-organisational business process in

a business network which has to be optimised,

concerning synchronized work-sharing of network

actors, is considered as the central design subject of

collaborative production. Hence, the service-

orientated approach enables enterprises to define

sub-processes as services and to link them flexibly

to process chains (Vanderhaeghen et al., 2007).

Service-Oriented Architecture (SOA), has

emerged as new generation technology architecture

in this area. SOA represents the latest trend in

integrating heterogeneous systems it provides

guidelines on how services are described, discovered

and used.

Although in practice there is an emphasize on

the IT side of SOA (Lewis et al., 2007), the

conceptual vision of SOA does not only incorporate

business and IT, but also architectural goals,

governance models and policies to foster

enforcement of standards and technical requirements

of SOA over time (Marks and Bell, 2006). There are

three major steps necessary to reach Business-IT

alignment: identifying the requirements and

strategies for achieving alignment; identifying the

components of alignment that are required;

identifying methods, techniques, and tools that can

enhance Business-IT alignment (Chang et al., 2009).

In this sense, this paper proposes a Service-

Oriented Strategic Alignment Model (SOSAM) in

order to achieve business services and information

technology external strategic alignment.

The structure of the paper is organised as

follows: first, Section 2 and section 3 offer a review

of business-IT strategic alignment and SOA

concepts respectively. Section 4 proposes the

Service-Oriented Strategic Alignment Model

(SOSAM) for the business services and information

technology alignment through the definition of the

components included in business strategy and IT

strategy. Finally, Section 5 provides a summary of

the conclusions.

490

Cuenca L., Boza A., Ortiz A. and J. M. Trienekens J..

Business-IT Alignment and Service Oriented Architecture - A Proposal of a Service-Oriented Strategic Alignment Model.

DOI: 10.5220/0004973204900495

In Proceedings of the 16th International Conference on Enterprise Information Systems (ICEIS-2014), pages 490-495

ISBN: 978-989-758-029-1

 2014 SCITEPRESS (Science and Technology Publications, Lda.)

2 BUSINESS AND IT

ALIGNMENT

Supply chains and collaborative networks have to be

able to manage the technological complexities of

their information systems and information

technology, while ensuring that these generate added

value to business processes. This can only be

achieved if there is an alignment between business

and IT (Vargas et al. 2013; Cuenca et al., 2011a).

According to the most important elements

provided for several authors suggest the following

definition for strategic alignment: “The strategic

alignment of business and IT is a dynamic and

continuous process that enables integration,

adjustment, consistency, understanding,

synchronization and support between business

strategies and strategies of IT, in order to contribute

and maintain the correct performance of the

organization, creating a competitive advantage that

is sustained over time”.

The foundation bases of SAM are theoretical and

not practical. In this sense, Luftman (2000)

introduces the alignment maturity model (AMM) as

a practical component. This model is based on the

concepts that are treated conceptually in the SAM,

but also incorporates a practical aspect to the field of

strategic alignment, proposing a model to measure

the degree of maturity of the alignment between

business and IT, enabling the company that applies it

to identify, how it is, where and how to improve.

Several authors have extended or used SAM from

different conceptual aspects seeking to ensure

strategic alignment (Maes, 1999; Wang et al., 2008;

Hu and Huang, 2006; Mekawy et al. 2009 and Dong

et al., 2008). Other authors have made their research

and findings based on the AMM to propose practical

conceptual models (Adaba et al. 2010; Bagher et al.

2010). However, all previous models can only be

applicable to the individual business; some authors

have proposed few models for alignment in the

inter-enterprise context (Santana et al., 2008; Pijpers

et al. 2009; Cuenca et al. 2011a).

SAM is composed of four domains that consist

of three components each. These twelve components

define what each quadrant is as far as alignment is

concerned. All the components working together

determine the extent of alignment for the company

being assessed (Henderson and Venkatraman 1993,

Papp 2001, Sakka et al. 2010). Different approaches

have been raised in the field of alignment in

enterprise collaboration; Chituc and Azevedo (2005)

emphasize the importance of the business view that

allows collaborative networks to be regarded as

combinations of inter- and intra-enterprise business

processes. VERI (Gall and burn, 2007) is designed

to measure the espoused readiness of an organization

to collaborate virtually and the actual preparedness

to operate virtually. Santana (2009) proposes

ICoNOs MM, a two dimensional maturity model

(MM) that addresses five levels of maturity as well

as four domains to which these levels apply:

partnering structure, information system

architecture, process architecture and coordination.

Alonso et al. (2010) define a maturity model, named

ECMM (Enterprise Collaboration Maturity Model),

with the main objective of assessing organizations

that desire to know their collaboration and

interoperability maturity level with respect to a set

of best practices. Vargas et al (2012; 2011) analyze,

relate and synthesize the research that has addressed

the disciplines of collaboration and strategic

alignment, both individually and jointly, in order to

identify possible future lines of research from

conceptualization performed. Cuenca et al. (2011b)

propose the elements to be included into the

enterprise architectures in order support the

alignment between business strategy and IT strategy

in extended enterprises from an enterprise

engineering perspective. Da Piedade et al. (2012)

introduce an approach to alignment measurement

leveraged by the new paradigm of performance

prediction and present an alignment metric for

collaborative networks.

These proposals do not take into account the

service-oriented approach. The objective of this

paper is centred in the external perspective of the

alignment (Business strategy and IT strategy

domains) and how this alignment is tackled in

oriented-service architectures.

3 SERVICE-ORIENTED

ARCHITECTURE

Within SOA the main focus is to decouple business

processes from applications and systems (Deb et al.,

2005). As a result, business models and applications

can evolve independently. A vital role in this process

is played by business services, which are services

used by (high-level) business processes (Deb et al.,

2005; Erl, 2005; Dow et al., 2008). Because these

business services can employ other business and/or

application services to serve a specific business

function, discovering and creating suitable business

services is one of the key success factors in

achieving the main goals of a business-driven SOA

Business-ITAlignmentandServiceOrientedArchitecture-AProposalofaService-OrientedStrategicAlignmentModel

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(Deb et al., 2005). The single term Business Service

is used to mean some goods or service that a

business component offers to other business

components and/or to external parties. A Business

Component is a part of an enterprise that has the

potential to operate independently, in the extreme

case as a separate company, or as part of another

company. A business component is a logical view of

part of an enterprise that includes the resources,

people, technology and know-how necessary to

deliver some value. Service orientation enables the

definition of components with well defined

boundaries. To achieve the desired business

outcome, these components collaborate with other

components through services. A Business Service is

a reusable combination of IT components that

delivers a business oriented service. In SOA,

software applications are packaged as services.

Services are combined according to certain business

logic to deliver specific functionality and quality of

service. Each service has an associated declarative

policy that specifies quality of service, availability,

and other attributes necessary to meet the overall

business process goal. A service is considered an

abstract business concept that represents the

functionalities of business (Iacob and Jonkers,

2009). According to Chen (2008), to achieve

competitive advantage, challenges remain regarding

how to “orchestrate” the lower level IT

infrastructure services to deliver the desired

business-level customer services or to effect service

innovation that increases firm performance in a fast

changing regulatory and competitive environment.

Simply put it, the issue is how to align IT with

business. A service in a business sense is defined as

a provider client interaction that creates and captures

value (IBM, 2004). Within IT, a service is defined as

a self-contained, distributed component with a

published interface that supports interoperability, is

discoverable, and is dynamically bound (Crawford et

al., 2005). The wide disparity of definitions is

fundamentally a problem for business-IT

alignment—the two communities see services as

very different things. Although “services” in the

computing sense differ from service concepts in the

business sense, service orientation embraced by both

the business and IT communities presents an

unprecedented new opportunity for alignment. Using

coarse-grain services as a binding force, SOA allows

for a potentially truer alignment with business goals.

We can expect service-oriented enterprise requires a

flexible and robust IT infrastructure to model,

assemble, integrate, and manage business processes

and deliver cost-effective, modular and scalable

service innovations that are customized to the

enterprise’s requirements, timetables and priorities.

It is necessary to define service interactions between

business components (Chang et al., 2009). Different

approaches have been arising in the field of

alignment in service-oriented, Shishkov et al. (2006)

propose a design approach addressing the problem

of business-software alignment. Chen (2008)

proposes BITAM-SOA framework with the aim to

consider all these aspects by combining SOA,

engineering alignment methods, enterprise

architecture, and business performance management.

Schepers et al. (2008) propose a lifecycle approach

to SOA governance. Antikainen and Pekkoloa

(2009) identify several factors influence the

alignment of SOA development with business

objectives. Abdi (2010) develop a model which

explains the interplay between strategic alignment

dimensions of governance, communication, and

architecture enabled by SOA, and enterprise agility.

Joachim et al. (2013) show how SOA governance

affects IT ﬂexibility and reuse. An empirical

evaluation based on data from 81 ﬁrms using SOA

reveals the differential impact of various SOA

governance mechanisms (structures, processes, and

employees/relations).

These proposals cover partial aspects related to

the external involved domains in the strategic

alignment model, so they partially solve the problem

alignment at this level. It is necessary to analyze and

gather the necessities and solutions with the aim of

ensuring the external alignment under a service-

oriented approach. Indentifying and defining

elements to be incorporated in each involved domain

will result in the proposal of the service-oriented

strategic alignment Model (SOSAM).

4 PROPOSAL OF A

SERVICE-ORIENTED

STRATEGIC ALIGNMENT

MODEL (SOSAM)

The objective of this paper is centred in the external

perspective of the alignment (Business strategy and

IT strategy domains) and how this alignment is

tackled in oriented-service architectures. In this

sense the starting point of the proposal is the

identification of the business strategy domain and IT

strategy domain and their components in a service-

oriented approach in order to improve the strategic

definition and alignment.

From the literature review we have identified the

ICEIS2014-16thInternationalConferenceonEnterpriseInformationSystems

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strategic SOA concepts at strategic level. Then, we

have classified them according to the components

identified in SAM (Henderson and Venkatraman,

1993). From the results of the analysis we can

conclude that in a service-oriented approach, it is

necessary to take into account other aspects to

ensure the alignment between business strategy and

IT strategy.

The new components in Service-Oriented

business strategy are defined as follow:

Business Service Scope: The business service

scope includes everything that might affect the

business service environment. It refers to markets,

products, services, customers/clients, and the

location of the business as well as buyers,

competitors, suppliers, and potential competitors.

The domain classification of the business service

must be defined, such as, fundamental services,

productive services, individual consumption services

or public services. It includes the business

components and the goods or services that a

business component offers to other business

components and/or to external parties. For each

business component must be defined the resources,

people, technology, the know-how necessary to

deliver some value, and the reasons for component’s

existence. It includes the business processes of the

collaborative network and processes needed for

information exchange, the explicit aspects of the

relationships, contractual basis and business

management plans. (Cherbakov et al., 2005; Sanz et

al., 2007; CCID Consulting, 2007; Tohidi, 2011)

Distinctive Business Service Competencies: It

includes all the things that make the business service

a success in the market place. This includes the core

competencies of the business service that allows it to

compete with other businesses services. This also

includes the brand, research, manufacturing and

product development, the cost and pricing structure,

and the sales and distribution channels used by the

business service. It contains the operations, and

professional and specialized support offered as

business services to business partners (or business

process of other organization) in order to facilitate

collaboration and created value. Relevant properties

of the service, activities performed and necessary

resources must be described. Distinctive contractual

agreements, information sharing, communication,

knowledge exchange, trust and commitment.

(Bettencourt et al., 2002; IBM, 2004; Crawford et

al., 2005; Deb et al., 2005; Erl, 2005; Sanz et al.,

2007; Dow et al., 2008; Tohidi, 2011; Hachani et al.,

2013).

Business Service Governance: This component

refers to the relationships that exist between the

stakeholders of the collaborative network and senior

management, mainly the board of directors. This

also includes any governmental regulations and

relations between other strategic business partners. It

is necessary to define the new role of the users; it

requires a change in attitude from people. They need

to see their job as a value-adding service offered to

consumers, instead of focusing on their own area of

expertise. It includes collaborative decision making,

governance structure and compliance, inter-

organizational policies, roles and responsibilities

specification, and communication-oriented

coordination. It establishes executive accountability

for the management and performance of the work

and results. (Sanz et al., 2007; Schepers et al., 2008;

Joachim et al., 2013)

The new components in Service-Oriented IT

strategy are defined as follow:

Technology Service Scope: All of the essential

information applications, technologies and software

services that can be re-used and composed based on

business needs. An associated declarative policy that

specifies quality of service, availability, and other

attributes necessary to meet the overall business

process goal must be defined for each service.

Include all the services offered and consumed by the

business component. It must be defined

opportunities and gap analysis, migration plan

development, implementation of the plans and IS

Target formulation. It includes the practical aspects

of the relationship (e.g. level and methods of

information sharing, communication channels,

technology and knowledge exchange) (O’Brien et

al., 2005; Tohidi, 2011; Hachani et al., 2013)

Service Systemic Competencies: The all

capabilities that set the information technology

services apart from the rest. This involves how much

access the business services have to information that

is important to the business’s strategies. Each

service has a well-defined interface which lists the

operations it provides and the set of messages it

accepts and sends in response, the application of

resources for the benefit of another entity and the

self-contained, distributed component with a

published interface that supports interoperability. It

includes organizational innovation to select and

deploy incremental and innovative improvements

processes and technology. Interoperability and

Collaboration Technologies to standardize the usage

of a set of baseline tools, techniques and methods for

interoperability and collaboration must be defined.

(Vargo and Lush, 2004; Crawford et al., 2005)

IT Service Governance: Describes the makeup

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of the authority behind the information technology

and how the resources, risk and responsibility, are

distributed between the business partners,

information technology management, and the

service providers. It includes the selection and

prioritization of information technology projects, the

management mechanisms that the business

component needs for autonomous operations,

including metrics and procedures for motivation,

performance, and accountability, the SOA strategy,

aligning the organization, managing the service

portfolio, controlling the service lifecycle, enforcing

policies and managing service levels. It also requires

the involvement of business management and of

line-of-business employees. It must be defined the

actions related to the management decisions, IT

systems, training, methods and approaches that

make the network operational, the training and

competency development within the network

workforce, and risk analysis. (Schepers et al., 2008;

Joachim et al., 2013).

5 CONCLUSION

This proposal analyzes and gathers the requirements

and solutions to ensure the external alignment under

a service-oriented approach. It covers all the aspects

related to the external involved domains in the

strategic alignment. The elements to be incorporated

in each involved domain have been defined in the

proposal of the service-oriented strategic alignment

Model (SOSAM).

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