REPORT SERIES/DSV
Model-driven Alignment:
Linking Business Strategy with Information Systems
DSV Report Series No. 14-008
Model-driven Alignment
Linking Business Strategy with Information Systems
Constantinos Giannoulis
c
Constantinos Giannoulis, Kista, Stockholm 2014
ISBN 1101-8526 ISBN 978-91-7447-891-4
Printed in Sweden by US-AB, May 2014
Distributor: Department of Computer & Systems Sciences , Stockholm University
dedicated to my parents, Georgios and Maria to my sister, Stella to my brother, Dimitrios αφιερωμένο στους γονείς μου, Γιώργο και Μαρία στην αδερφή μου, Στέλλα στον αδερφό μου, Δημήτρη
Abstract
Information technology (IT) is more pervasive than ever before, constituting a significant factor for performance and survival in the business arena. It is essential that IT within organizations understands what the Business needs in order to provide the necessary support and bring value, which is also true when IT is also the main value creator. Therefore, alignment between the Business and IT within organizations is an issue of great concern and it is still open for solvency both for business and IT executives and practitioners.
This work is scoped to the alignment linkage between business strategy and information systems (IS), where business strategy typically constitutes the pri- mary exponent of the Business and IS typically encapsulates the elements of IT sustaining an organization. Current approaches are either focused on detailed aspects of IS and treat business strategy abstractly or use distinct business strat- egy formulations (e.g. Value Chain) but deal with IS only partially. This is problematic because the abstract use of business strategy hinders traceability of strategic intentions and initiatives towards features/aspects of IS, which are aimed to actualize and support such intentions. Because approaches using dis- tinct business strategy formulations are not relevant to all organizations and are limited only to the IS aspects addressed.
Introducing a model-driven approach for the alignment linkage is aimed at addressing the outlined shortcomings. Following a design science research paradigm, the main artifact developed is the Unified Business Strategy Meta- Model (UBSMM), which is based on conceptualizing established business strategy formulations (e.g. Value Chain) and integrating them. UBSMM sup- ports mappings to IS models used in organizations, such as IS requirements, enterprise models and enterprise architecture, and provides unambiguous uti- lization of business strategy for the alignment linkage.
Contributions of this thesis are grounded both on the process of building UBSMM and mapping to IS models, as well as the artifact itself. Concep- tualizing and integrating business strategy formulations provides a less am- biguous and unified view of strategic concepts. This limits variations in inter- pretation and reinforces mappings to IS models, which are defined based on inter-schema properties across models. Therefore, UBSMM can link business strategy to IS models enhancing their communication in a traceable manner, ergo, support alignment.
Περίληψη
Η Τεχνολογία Πληροφοριών κι Επικοινωνίας (ΤΠΕ) είναι πιο διαδεδομένη από ποτέ άλλοτε, αποτελώντας σημαντικό παράγοντα παραγωγικότητας και επιχειρηματικής επιβίωσης. Είναι σημαντικό μέσα σε οργανισμούς ο τομέας ΤΠΕ να κατανοεί τι χρειάζεται η επιχείρηση προκειμένου να παράσχει την απαραίτητη υποστήριξη και να προσδώσει αξία. Αυτό ισχύει επίσης όταν η ΤΠΕ είναι ο κύριος δημιουργός αξίας της ίδιας της επιχείρησης. Ως εκ τούτου, η ευθυγράμμιση και ο συγχρονισμός μεταξύ του επιχειρησι- ακού τομέα και του τομέα ΤΠΕ στο εσωτερικό ενός οργανισμού είναι ένα ζήτημα μεγάλης ανησυχίας και εξακολουθεί να είναι ανοικτό για στελέχη επιχειρήσεων, στελέχη πληροφορικής καθώς και επαγγελματίες στον τομέα τεχνολογίας πληροφοριών.
Το πεδἰο έρευνας αυτής της διατριβής ορίζεται στο συντονισμό της επιχειρηματικής στρατηγικής και των πληροφοριακών συστημάτων, καθώς αφενός η επιχειρηματική στρατηγική είθισται να αποτελεί τον κύριο εκ- φραστή του σκοπού μιας επιχείρησης και του τρόπου επίτευξης του, ενώ αφετέρου τα πληροφοριακά συστήματα ενσωματώνουν τα στοιχεία της ΤΠΕ που απαρτίζουν και υποστηρίζουν τις λειτουργίες ενός οργανισμού. Οι υπ- άρχουσες προσεγγίσεις είτε επικεντρώνονται σε συγκεκριμένες πτυχές των πληροφοριακών συστημάτων και πραγματεύονται έννοιες επιχειρηματικής στρατηγικής αφηρημένα ή χρησιμοποιούν συγκεκριμένους σχηματισμούς επιχειρηματικής στρατηγικής (π.χ. Αλυσίδα Αξίας) αλλά πραγματεύονται τα πληροφοριακά συστήματα μερικώς ή επιδερμικά. Αυτή η αντιμετώπιση όμως είναι προβληματική γιατί η αφηρημένη χρήση εννοιών επιχειρηματικής στρατηγικής εμποδίζει την ανίχνευση στρατηγικών προθέσεων και πρω- τοβουλιών σε συγκεκριμένες πτυχές και χαρακτηριστικά των πληροφορι- ακών συστημάτων, τα οποία έχουν ως στόχο να πραγματώσουν και να υποστηρίξούν τέτοιες προθέσεις. Οι υπάρχουσες προσεγγίσεις που χρησι- μοποιούν συγκεκριμένους σχηματισμούς επιχειρηματικής στρατηγικής δεν μπορούν να συσχετιστούν με κάθε είδους οργανισμό και περιορίζονται στις πτυχές των πληροφοριακών συστημάτων των συγκεκριμένων οργανισμών που έχουν σχεδιαστεί να απευθύνουν.
Η εισαγωγή της εν λόγω, βασισμένης στην έννοια των μοντέλων, προσέγ- γισης για τη σύνδεση συντονισμού της επιχειρηματικής στρατηγικής και
πληροφοριακών συστημάτων αποσκοπεί στην αντιμετώπιση των ελλείψεων που προαναφέρθηκαν. Ακολουθώντας το ερευνητικό παράδειγμα Επιστήμης Σχεδιασμού, το κύριο προϊόν που αναπτύχθηκε είναι ένα Ενοποιημένο Μετα- Μοντέλο Επιχειρηματικής Στρατη-γικής (ΕΜΜΕΣ) που βασίζεται στη θεώ- ρηση καθιερωμένων σχηματισμών επιχει-ρηματικής στρατηγικής (π.χ. Αλυ- σίδα Αξίας) και την ενοποίηση τους. Το ΕΜΜΕΣ υποστηρίζει αντισ- τοιχίσεις με μοντέλα πληροφοριακών συστημάτων που χρησιμοποιούνται σε οργανισμούς, όπως είναι μοντέλα προαπαιτούμενων, επιχειρησιακά μον- τέλα και μοντέλα επιχειρησιακής αρχιτεκτονικής, και παρέχει μη αφηρημένη χρησιμοποίηση εννοιών επιχειρηματικής στρατηγικής για τη σύνδεση συν- τονισμού της επιχειρηματικής στρατηγικής και των πληροφοριακών συστη- μάτων.
Η συνεισφορά της παρούσας διατριβής είναι βασισμένη στη διαδικασία της δημιουργίας του ΕΜΜΕΣ και την αντιστοίχιση του με μοντέλα πληρο- φοριακών συστημάτων, καθώς και στο ίδιο το μετα-μοντέλο. Η θεώρηση και η ενσωμάτωση σχηματισμών επιχειρηματικής στρατηγικής παρέχουν μια λιγότερο αμφίσημη και ενοποιημένη εικόνα στρατηγικών εννοιών. Αυτό πε- ριορίζει τις όποιες παρερμηνείες στη χρήση στρατηγικών εννοιών κι ενισχύει αντιστοιχίσεις προς τρίτα μοντέλα πληροφοριακών συστημάτων, τα οποία ορίζονται με βάση τις διασχηματικές ιδιότητες μεταξύ των μοντέλων. Ως εκ τούτου, το ΕΜΜΕΣ είναι σε θέση να συνδέσει την επιχειρηματική στρατηγική με μοντέλα πληροφοριακών συστημάτων ενισχύοντας την επικοιν- ωνία τους με επαληθεύσιμο τρόπο με συνέπεια να υποστηρίζει την ευθυ- γράμμιση τους.
Sammanfattning
Informationsteknik (IT) är mer genomgripande än någonsin tidigare och utgör en viktig faktor för prestanda och överlevnad i affärsvärlden. För att kunna ge det stöd som behövs för att skapa värde är det viktigt att IT inom organisationer förstår vad affärsverksamheten kräver, vilket också är fallet när IT är den hu- vudsakliga värdeskaparen. Därför är anpassningen mellan affärsverksamheten och IT inom organisationer en viktig och alltjämt öppen fråga för både affärs- och IT-chefer samt för utövare operativt ansvarig.
Det här arbetets omfattning avgränsas till integrationskopplingen (Align- ment Linkage) mellan affärsstrategi och informationssystem (IS), där affärs- strategin vanligtvis utgör den främsta exponenten av affärsverksamheten och IS normalt omfattar de delar av IT som upprätthåller organisationen. Nuvaran- de metoder är antingen inriktade på detaljerade aspekter av IS och behandlar affärsstrategin enbart på ett abstrakt sätt, eller på att använda specifika affärs- strategiformuleringar (t.ex. Värdekedjan), men behandlar då IS enbart delvis.
Detta är problematiskt eftersom den abstrakta användningen av affärsstrategin hindrar spårbarheten av strategiska avsikter och initiativ för särdrag/aspekter av IS, vilka är ämnade att aktualisera och stödja sådana intentioner. Detta be- ror på att tillvägagångssätt med olika affärsstrategiformuleringar inte är rele- vanta för alla organisationer och är begränsade enbart till de IS-aspekter som behandlas.
Införandet av en modelldriven strategi för integrationskopplingen syftar till att åtgärda de beskrivna bristerna. Den huvudsakliga artefakten, som har ut- vecklats enligt den designvetenskapliga forskningsparadigmen, är Unified Bu- siness Strategy Meta-Model (UBSMM), som bygger på en konceptualisering och integrering av etablerade affärsstrategiformuleringar (t.ex. Värdekedjan).
UBSMM stödjer mappningar till IS-modeller som används inom organisatio- ner, såsom IS-krav, företagsmodeller och företagsarkitekturer, samt möjliggör ett otvetydigt utnyttjande av affärsstrategier för integrationskopplingen.
Bidrag från denna avhandling är baserade både på utvecklingsarbetet med UBSMM och mappningen till IS-modeller, samt på själva artefakten. Koncep- tualisering och integrering av affärsstrategiformuleringar erbjuder en mindre tvetydig och enhetlig bild av strategiska koncept. Detta begränsar tolknings- variationer och förstärker mappningar till IS-modeller, vilka definieras utifrån inter-schemaegenskaper mellan modellerna. UBSMM kan därför knyta affärs-
strategin till IS-modeller och därmed förbättra deras kommunikation på ett spårbart sätt, följaktligen, stödja integrationskopplingen.
List of Publications
The following published articles are included in this thesis and are referred to in the text by their Roman numerals (e.g. in-text references to ”Article 1” are placed as ”Article I”).
I: Giannoulis, C., Petit, M., Zdravkovic, J. (2010)
Towards a Unified Business Strategy Language: A Meta-model of Strategy Maps. In: 3rd Working Conference on the Practice of Enter- prise Modeling (PoEM 2010),Springer, LNBIP, 68, p.205-216.
II: Giannoulis, C., Petit, M., Zdravkovic, J. (2011)
Modeling Business Strategy: A Meta-model of Strategy Maps and Balanced Scorecards. In: 5th IEEE International Conference on Re- search Challenges in Information Science (RCIS 2011),IEEE, p.1-6.
III: Giannoulis, C., Petit, M., Zdravkovic, J. (2011)
Modeling Competition-Driven Business Strategy for Business IT Align- ment. In: 6th International workshop on Business/IT Alignment and In- teroperability (BUSITAL 2011), part of Advanced Information Systems Engineering Workshops (CAiSE 2011),Springer, LNBIP, 83, p.16-28.
IV: Giannoulis, C., Zdravkovic, J., Petit, M. (2012)
Model-Driven Strategic Awareness: From a Unified Business Strat- egy Meta-Model (UBSMM) to Enterprise Architecture. In: 17th International conference on Exploring Modelling Methods for Systems Analysis and Design (EMMSAD 2012),Springer, LNBIP, 113, p.255- 269.
V: Giannoulis, C., Zdravkovic, J. (2012)
Linking Strategic Innovation to Requirements: a look into Blue Ocean Strategy. In: 5th Working Conference on the Practice of Enterprise Modeling (PoEM 2012),CEUR, 933, p.118-128.
VI: Giannoulis, C., Zdravkovic, J. (2011)
Modeling Strategy Maps and Balanced Scorecards using iStar. In:
5th International i* workshop (iStar 2011),CEUR, 766, p.90-95.
VII: Giannoulis, C., Svee, E., Zdravkovic, J. (2013)
Capturing Consumer Preference in System Requirements Through Business Strategy. In: International Journal of Information System Modeling and Design (IJISMD),IGI, 4, 4, p.1-26.
VIII: Giannoulis, C., Zikra, I., Bergholtz, M., Zdravkovic, J., Stirna, J., Johan- nesson, P. (2013)
A Comparative Analysis of Enterprise Modeling Approaches for Mod- eling Business Strategy. In: 6th Working Conference on the Practice of Enterprise Modeling (PoEM 2013),CEUR, 1023, p.193-204.
IX: Giannoulis, C., Zdravkovic, J., Petit, M. (2013)
Model-Centric Strategy-IT Alignment: An Empirical Study in Progress.
In: 8th International workshop on Business/IT Alignment and Interop- erability (BUSITAL 2013), part of Advanced Information Systems Engi- neering Workshops (CAiSE 2013),Springer, LNBIP, 148, p.146-155.
X: Giannoulis, C., Zdravkovic, J. (2014)
Model-centric Strategy2IS Linkage: An Empirical Study. In: 16th IEEE Conference on Business Informatics (CBI 2014), Submitted.
XI: Giannoulis, C., Zdravkovic, J. (2014)
A Design Science Perspective on Business Strategy Modeling. In:
19th International conference on Exploring Modelling Methods for Sys- tems Analysis and Design (EMMSAD 2014),Springer, LNBIP, 175, Ac- cepted, to appear.
Publications not included
This section includes a list of the author’s publications that have not been part of this thesis. They are grouped into publications of research work, which is related to the topic of this thesis and publications of project work the author has undertaken on Goal-driven Verification, Validation and Accreditation (VV&A) to support the acceptance of model, simulations and data.
Publications related to the research work of this thesis:
1. Zdravkovic, J., Svee., E., Giannoulis, C. (2013)
Capturing Consumer Preferences as Requirements for Software Product Lines. In: Requirements Engineering (RE) Journal, Springer London, p.1-20
2. Zdravkovic, J., Giannoulis, C., Svee., E. (2013)
Using i* to Capture Consumer Preferences as Requirements for Soft- ware Product Lines. In: 6th International i* workshop (iStar 2013), CEUR, 978: p.97-102
3. Svee., E., Giannoulis, C., Zdravkovic, J. (2012)
Towards Consumer Preference-Aware Requirements. In: 7th Interna- tional workshop on Business/IT Alignment and Interoperability (BUSI- TAL 2012), part of Advanced Information Systems Engineering Work- shops (CAiSE 2012), Springer, LNBIP, 112: p.531-542
4. Svee., E., Zdravkovic, J., Giannoulis, C. (2012)
Consumer Value-aware Enterprise Architecture. In: 3rd International conference on Software Business (ICSOB 2012), Springer, LNBIP, 114:
p.55-69
5. Svee., E., Giannoulis, C., Zdravkovic, J. (2011)
Modeling Business Strategy: A Consumer Value Perspective. In: 4th Working Conference on the Practice of Enterprise Modeling (PoEM 2011), Springer, LNBIP, 92: p.67-81
6. Shahzad, K. Giannoulis, C. (2011)
Towards a Goal-Driven Approach for Business Process Improvement Using Process-Oriented Data Warehouse. In: 14th International con- ference on Business Information Systems (BIS 2011), Springer, LNBIP, 87: p.111-122
7. Giannoulis, C., Zdravkovic, J. (2010)
Exploring Risk-Awareness in i* models. In: 4th International i* work- shop (iStar 2010), CEUR, 586: p.103-107.
Publications related to project work of the author on Goal-driven Verification, Validation and Accreditation (VV&A) inlcude:
1. Jonsson, F., Giannoulis, C., Roza, M., Adelantado, M., Igarza, J.L.
(2014)
GM-VV - An International Recommended Practice for Verification and Validation of Models, Simulations and Data. In the Modeling & Simu- lation Journal by the US Department of Defense (DoD) Modeling and Simulation Coordination Office (MSCO), Submitted
2. Giannoulis, C. (Drafting Group Assistant Editor) (2013)
Guide for Generic Methodology for Verification and Validation (GM- VV) to Support Acceptance of Models, Simulations, and Data. GM-VV Volume 3: Reference Manual. Published reference product (SISO-REF- 039-2013) by the Simulation Interoperability Standards Organization (SISO)
3. Giannoulis, C. (Drafting Group Assistant Editor) (2013)
Guide for Generic Methodology for Verification and Validation (GM- VV) to Support Acceptance of Models, Simulations, and Data. GM- VV Volume 2: Implementation Guide. Balloted and published guidance product (SISO-GUIDE-001.2-2013) by the Simulation Interoperability Standards Organization (SISO)
4. Giannoulis, C., Snygg, J., Strömback, P., Hellmans, R., Heden, H. (2013) Exercising GM-VV: Verification and Validation of a Missile Model. In:
Fall Simulation Interoperability Workshop (2013 Fall SIW), SISO web library
5. Giannoulis, C. (Drafting Group Assistant Editor) (2012)
Guide for Generic Methodology for Verification and Validation (GM- VV) to Support Acceptance of Models, Simulations, and Data. GM-VV Volume 1: Introduction and Overview. Balloted and published guidance product (SISO-GUIDE-001.1-2012) by the Simulation Interoperability Standards Organization (SISO)
6. Giannoulis, C., Kamrani, F., Tegner, J. (2012)
Förstudie införande av GM-VV i Försvarsmakten och stödmyndigheter.
Metod och teknikutveckling VV&A 2011. Technical Report for the Infor- mation Systems Department of the Swedish Defence Research Agency (FOI), FOI-R-3431-SE.
7. Roza, M., Voogd, J., Giannoulis, C. (2011)
The GM-VV: Its Relationship to the VV&A Overlay for the FEDEP. In:
Fall Simulation Interoperability Workshop (2011 Fall SIW), SISO web library
8. Masys, A., Roza, M., Giannoulis, C., Jaquart, R. (2008)
Verification, Validation and Accreditation (VV&A): The GM-VV Contri- bution and Roadmap. In: NATO RTO Modelling and Simulation Group Conference, NATO MSG-60
9. Roza, M., Voogd, J., Giannoulis, C. (2008)
Towards a Generic Data Information Model for VV&A. In: Spring Sim- ulation Interoperability Workshop (2008 Spring SIW), SISO web library 10. Giannoulis, C., Kabilan, V., Roza, M. (2008)
Verification, Validation and Accreditation of legacy simulations using Business Process Modeling Notation. In: Spring Simulation Interoper- ability Workshop (2008 Spring SIW), SISO web library
11. Giannoulis, C., Kabilan, V., Nillson, S.Å., Svan, P. (2007)
A Method for VVA Tailoring: The REVVA Generic Process Tailoring.
In: Fall Simulation Interoperability Workshop (2007 Fall SIW), SISO web library
Acknowledgements
First and foremost I must express my gratitude and deep appreciation to my su- pervisor, Jelena Zdravkovic, for guidance, support, and motivation over these years. I am also grateful to my co-supervisor Paul Johannesson whose wise advice and support have been key to my progress.
I am thankful to all my co-authors for the discussions, the debates, the critiques, and writing efforts: Thank you Michaël Petit at the University of Namur, Eric-Oluf Svee, Iyad Zikra, Maria Bergholtz, Janis Stirna, and Khur- ram Shahzad at the Department of Computer and Systems Sciences (DSV).
I am also grateful to the many colleagues, students, and teachers at DSV for the long talks, the support, the experiences exchanged, and the advice offered.
I am particularly grateful to Sumithra Velupillai for the support offered to each other during our parallel studies, and for together reviving the moribund PhD Student Board at DSV, which is active today and has a promising future.
I must acknowledge my master’s students who have worked hard to de- velop the tool implementations included in this thesis: Thank you David Lilje- gren, Julien Silverio, and Roozbeh Maadani.
My thanks must also go to Fredrik Jonsson and Håkan Lagerström at the Swedish Defense Materiel Administration for their trust, and for our long and fruitful collaboration. I will be eternally thankful to Sten-Åke Nilsson† who offered me the opportunity to embark upon this journey at the Swedish Defense Research Agency.
My thanks to Dimitris Karagiannis and his entire research group at the University of Vienna for the opportunity to work with them, as well as for their hospitality, during my research visit there.
I am thankful to all the people in my life, especially my Eva and my friends Georgios, Giorgos, Giannis, Mohammed, Nicolas, Stefano, and Themistocles whose friendship, patience, knowledge, care, and wisdom have supported, en- lightened, and entertained me over the years. They have consistently helped me maintain perspective on what is important in life and have shown me how to deal with reality.
Finally, I want to thank my parents, my sister, and my brother whose un- conditional support and care has always been an important constant in my life.
Thank you all from the bottom of my heart!
List of Abbreviations
BMO Business Model Ontology
BOS Blue Ocean Strategy
BOS-MM Blue Ocean Strategy Meta-model
BSC Balanced Scorecards
DSM Design Science Method
DSR Design Science Research
EA Enterprise Architecture
EKD Enterprise Knowledge Development
EM Enterprise Modeling
GORE Goal-oriented Requirements Engineering
IS Information Systems
IT Information Technology
MDD Model-driven Development
RE Requirements Engineering
SAM Strategic Alignment Model
SMBSC Strategy Maps & Balanced Scorecards
SMBSC-MM Strategy Maps & Balanced Scorecards meta-model SWOT Strengths, Weaknesses, Opportunities, Threats UBSMM Unified Business Strategy Meta-model
UML Unified Modeling Language
VC Value Configuration
VC-MM Value Configuration Meta-model
Contents
Abstract vii
Περίληψη ix
Sammanfattning xi
List of Publications xiii
Acknowledgements xix
List of Abbreviations xxi
List of Figures xxvii
List of Tables xxix
1 Introduction 1
1.1 Research Problem . . . 2 1.2 Research Question . . . 4 1.3 Research Goals . . . 5 1.4 Key Concepts . . . 6 1.5 Disposition . . . 8
2 Extended Background 9
2.1 Business Strategy . . . 9 2.2 Business Strategy Formulations . . . 11 2.2.1 The Value Chain . . . 12 2.2.2 The Value Shop and The Value Network . . . 14 2.2.3 Strategy Maps and Balanced Scorecards . . . 14 2.2.4 Blue Ocean Strategy . . . 16 2.3 Alignment . . . 17 2.4 IS Models . . . 18
3 Research Methodology 21 3.1 Research Paradigm . . . 22 3.1.1 Philosophical Assumptions . . . 22 3.1.2 A Pluralistic Research Paradigm . . . 24 3.2 Research Process using the Design Science Method . . . 26 3.3 Methodological Choices . . . 27 3.3.1 Explicate Problem . . . 27 3.3.2 Outline Artifact and Define Requirements . . . 28 3.3.3 Design and Develop Artifact . . . 28 3.3.4 Demonstrate Artifact . . . 28 3.3.5 Evaluate Artifact . . . 29 4 Problem Explication
and Artifact Requirements 31
4.1 Explicate the Problem . . . 31 4.2 Artifact Requirements . . . 34 4.2.1 Artifact Outline . . . 35 4.2.2 Requirements . . . 36 5 Artifact Design
and Development 39
5.1 Artifact Design . . . 39 5.2 Development Process . . . 40 5.3 UBSMM: Classes & Constraints . . . 41 5.4 UBSMM Specializations . . . 52 5.4.1 UBSMM.SMBSC . . . 52 5.4.2 UBSMM.VC . . . 57 5.4.3 UBSMM.BOS . . . 64
6 Artifact Demonstration & Evaluation 67
6.1 Demonstration . . . 67 6.2 Evaluation . . . 68 6.3 Design Science Research — General Criteria . . . 70
7 Discussion 73
7.1 Construction . . . 73 7.2 Function . . . 74 7.3 Usability . . . 77 7.4 Effects . . . 77
8 Concluding Remarks 79 8.1 Concluding Summary . . . 79 8.2 Methodological Rigor & Contribution . . . 81 8.2.1 Rigor . . . 81 8.2.2 Contribution . . . 82 8.3 Limitations . . . 84 8.4 Directions for Future Research . . . 85
Bibliography 87
Appendix 97
A UBSMM Implementation in ADOxx . . . 97 B UBSMM Mobile Implementation . . . 109
Articles 115
Article I. . . 117 Article II. . . 131 Article III. . . 139 Article IV. . . 155 Article V. . . 173 Article VI. . . 187 Article VII. . . 195 Article VIII. . . 223 Article IX. . . 237 Article X. . . 249 Article XI. . . 259
List of Figures
1.1 Linkage for alignment between strategy and IS. . . 3 2.1 Commonly used SWOT analysis adapted from [6]. . . 10 2.2 The Value Configuration. . . 13 2.3 The Strategy Map template (taken from [78]). . . 15 2.4 The Strategy Canvas capturing a Blue Ocean Strategy (taken
from [84]). . . 16 2.5 The Strategic Alignment Model (SAM) taken from [61]. . . . 17 3.1 The Design Science Method (taken from [72]). . . 27 4.1 Screenshots from the online questionnaire where the upper
part introduces the study’s objectives and the lower part asks about the use of business strategy formulations (Articles IX and X). . . 32 4.2 Screenshots from the online questionnaire where the upper
part asks about model types used and the lower part includes a Likert scale on the use of models for alignment (Articles IX and X). . . 33 5.1 The Unified Business Strategy Meta-Model (UBSMM). . . 42 7.1 An overview of UBSMM as a class aggregation of business
strategy formulations. . . 74 7.2 A screenshot from the ADOxx meta-modeling environment
for SMBSC. . . 78 A.1 UBSMM class hierarchy implemented in ADOxx. . . 98 A.2 UBSMM.SMBSC Perspectives implemented in ADOxx. . . . 99 A.3 UBSMM constraints sample implemented in ADOxx. . . 100 A.4 Simplified Strategy Map and Balanced Scorecards of a regional
airline (taken from https://balancedscorecard.org/Portals/
0/PDF/Regional_Airline.pdf). . . 103
A.5 The Strategy Map and Balanced Scorecards of a regional air- line (Figure A.4) modeled in i* based on the mappings of Table A.1 using the Modeling Toolkit of ADOxx. . . 104 A.6 The Value Chain of IKEA (Table A.4) modeled in i* based
on the mappings of Table A.2 using the Modeling Toolkit of ADOxx. . . 106 A.7 The Strategy Canvas for Red One (taken from: http://www.
innovationmanagement.se/2013/10/04/red-one-a-blue-ocean-in- the-cinematographic-camera-industry). . . 107 A.8 The Strategy Canvas for Red One (Figure A.7) modeled in
i* based on the mappings of Table A.3 using the Modeling Toolkit of ADOxx. . . 108 B.1 Code snippet showing part of the generic intentional element
specification. . . 110 B.2 Code snippet showing part of the rules engine that includes the
mean-ends and parts of the decomposition rules. . . 111 B.3 The Financial and Customer perspectives of the Strategy Map
and Balanced Scorecards of a regional airline (based on Figure A.4) modeled in i* based on the mappings of Table A.1 using the mobile application running on an iPad 2. . . 112 B.4 The Internal and Learning & Growth perspectives of the Strat-
egy Map and Balanced Scorecards of a regional airline (based on Figure A.4) modeled in i* based on the mappings of Table A.1 using the mobile application running on an iPad 2. . . 113
List of Tables
3.1 Philosophical assumptions for Design Science Research in this thesis. . . 25 3.2 Research activities per DSM activity. . . 29 4.1 Artifact requirements for UBSMM. . . 36 A.1 Mappings between SMBSC and i*. . . 101 A.2 Mappings between VC and i*. . . 101 A.3 Mappings between BOS and i*. . . 101 A.4 Sample from the Value Chain of IKEA (adapted from: http://research-
methodology.net/ikea-value-chain-analysis). . . 105
1. Introduction
Organizations typically strive to attain some long-term goal (vision) with a defined purpose (mission) following a general plan, which is commonly ex- pressed through strategy. Strategy or business strategy is defined as the deter- mination of long-term goals and courses of action using resources to achieve them, thus enabling organizations to enact it [37]. Attaining a long-term busi- ness vision and all related objectives makes strategy prone to a changing envi- ronment, varying due to external opportunities and threats as well as internal strengths and weaknesses.
Information technology (IT) pervades all sectors of today’s organizations, regardless whether they are consuming IT means, developing IT means or both. The continuous emergence of technological advancements constitutes IT increasingly significant for the business of any organization, which makes the utilization of novel IT means necessary. Therefore, IT constitutes an im- pact factor for the success of strategy.
Alignment between the business and IT has been long-time discussed and acknowledged to impact the success of the business. As early as in 1961, orga- nizational performance has been attributed to coherence between factors like strategy, structure, and technology, aiming at aligning an organization with its environment and internal resources to support this alignment [28]. Since then alignment between business strategy and IT has been acknowledged as a criti- cal factor. Particularly, strategy influences IT planning, which leads to focused use of IT, and thus improves organizational performance [36]. Consequently, strategy dissemination across an organization is enhanced, which ensures that IT means are defined, designed and utilized in accordance to strategic needs.
Organizations aligning their business strategy to IT outperform those that do not [34; 83; 94] and increase their performance and profits [40; 139].
Stakeholders from each domain involved have acknowledged alignment as an open issue: top management from the Strategic Management domain [99];
IT executives from IT [154]. It is a multifaceted and complex issue with several dimensions and levels [36], which consequently can be addressed holistically or partially in different ways and from various perspectives [35].
In one direction, business strategy encapsulates a general undetailed plan of action. It encompasses a certain and typically long period of time to achieve some vision. Therefore, for an enterprise to define the means required for
its successful execution, also making clear for IT what business stakeholders need, business strategy should be understood and communicated. This is ex- pressed through business strategy formulations (e.g. the value chain [133]) that combine natural-language and often diagrammatic representations to shape and communicate business strategy. From the other direction, IT comprise the essential information needed to build the information systems (IS) that exe- cute, support and facilitate business operations intended at delivering offerings to customers.
Therefore, alignment spans across business strategy, expressing the busi- ness, and IS, expressing IT while supporting and adding value to the business.
The linkage between business strategy and IS aims to coordinate strategic ini- tiatives and plans with IS, to setup the infrastructure, design the processes and define the capabilities required to support business operations and thus, real- ize strategic initiatives [139]. These are typically represented through various models used in IS (e.g. process models, goal models, requirements models, value models, etc.), which altogether can be referred to as IS models.
1.1 Research Problem
Many approaches exist for shaping and defining business strategy, as well as various IS models (Figure 1.1). This creates a many-to-many relationship be- tween business strategy formulations employed and IS models used. While this linkage has not been put forward widely as a distinctive perspective of alignment [35], substantial work has been done on linking business strategy with IS models. However, current proposals addressing this linkage are either focusing on IS models and consider strategy abstractly or they are considering a particular business strategy formulation and are thus, bounded to the speci- ficities of the business strategy formulation used.
Proposals that focus on IS models, such as enterprise modeling (EM) and enterprise architecture (EA), deal with strategy in an abstract way and do not consider particular business strategy formulations. Examples include, but are not limited to, the following: the works of [120] putting forward a map-driven process modeling approach based on intentions and strategies capable of ab- stracting organizational goals and their achievement from detailed business processes; the 3g framework for business-IT alignment proposed by Singh and Woo [146], which is based on multidisciplinary goal concepts and focuses on linking task goals to strategic business goals; GQM+Strategies [18], which ex- tends the original GQM method for validation of system properties through goal-driven metrics [17]; the Enterprise modeling approach [33], CREWS- L’Ecritoire [138]; the model-supported IS alignment of IS architecture [122];
the GRAAL framework for architecture alignment [167], the e3value to i* ap- proach [51]; the INSTAL method [73].
Figure 1.1: Linkage for alignment between strategy and IS.
Moreover, while EA proposals include some business elements or layers that affect IS, there exists no linkage to distinct business strategy formulations [92]. Examples of such EA proposals include, but are not limited to, the fol- lowing: TOGAF [56]; the Zachman Framework[170]; ARIS [141]; GERAM [20]; as well as the ISO/IEC/IEEE 42010 on Architecture Description[70].
Proposals that consider a particular business strategy formulation are lim- ited because their linkage to IS remains relevant only to the business strategy formulation employed. In this way, other business strategy formulations are not applicable and relationships to other enterprise models that provide ad- ditional perspectives for IS are also not applicable. Such proposals typically combine business strategy formulations from strategic management (e.g. the value chain [133], balanced scorecards [74], strategy maps [81]) with various IS models typically used for system requirements, where these models aim at making clear to practitioners (i.e. developers, system engineers, etc.) what users need with respect to a system. More specifically, approaches within goal- oriented requirements engineering (GORE) [162], such as i* [168], GRL [96],
Tropos [23], the Business Motivation Model (BMM) [24], etc. aim at link- ing stakeholders’ objectives with IS. Examples include, but are not limited to, the following: the work of [11] with direct informal mappings of i*[168] to strategy maps[81]; the proposal of [21] relating principles for competition and effective business performance with the goal-oriented requirements language (GRL)[96]; the combination of goal analysis with the balanced scorecards[74]
proposed by [145]; and the combination of enterprise modeling through EKD [26; 97] with balanced scorecards [74] proposed by [117].
For the first group of proposals, the problem is that business strategy is considered abstractly overlooking concrete strategic notions that can be found in formulations such as the value chain [133], balanced scorecards [74] and strategy maps [81]. This hinders tracing IS requirements to strategic notions and consequently hinders their alignment, which in turn hinders the evaluation of IS requirements with respect to strategy. The second group of proposals overcomes the aforementioned problem as strategy is not addressed abstractly.
However, they are only relevant to the strategy formulation and the IS models employed. Should there be any change in any of the two sides of the linkage, alignment would be compromised.
1.2 Research Question
From a strategic perspective, alignment is a core concern and top issue for executives [98]. From an IS perspective, alignment is also a core concern and top issue [154] with strategy dissemination and understanding within organiza- tions often proclaimed to be problematic — even unknown — to practitioners [29], and even if strategy is clear enough it often results in solutions imple- mented on different technologies for every strategic initiative [139].
Therefore, there is a need to address the linkage between strategy and IS independently of business strategy formulations employed and IS models used.
This requires a solution that can be widely applicable, and thus, frames the re- search question of this thesis to address the aforementioned problem:
How can business strategy formulations be conceptualized to establish a model- based linkage between strategy and IS in organizations?
The purpose for addressing this question can be found in the practical benefits of stakeholders for both domains: IS practitioners as well as both IT and busi- ness executives. For IS practitioners, answering the question would provide a way to introduce and integrate strategic intent (objectives, initiatives, etc.) in their work, and consequently frame and scope IS development. This means that IS will become more associated to strategy giving purpose and ways to
assess contribution and performance with respect to strategic intent. For busi- ness executives, answering the question would allow for improved utilization of IS making more explicit the purpose it serves, the impact it has on strategic planning, and the value it brings to the business.
Additionally, the research question is particularly scoped to the linkage be- tween business strategy and IS. In the greater context of alignment, addressing this problem would complement efforts entailing this linkage. An example of such approach is the Strategic Alignment Model (SAM) that includes a linkage between Business Strategy and I/S Infrastructure & Processes [61; 63]. More- over, addrssing this problem would also complement proposals focusing on other IS models than IS requirements as well as on other alignment perspec- tives.
1.3 Research Goals
Addressing the research question involves two domains: Strategic Manage- ment and Information Systems. This suggests relating approaches and meth- ods across domains and constitutes the solution scope of the research question that can be achieved with the following goals:
Goal 1. Build a unified business strategy meta-model to link business strategy with IS.
Goal 2. Link business strategy formulations to IS through mappings of the Unified Business Strategy Meta-Model to IS models.
The solution is aimed at addressing the aforementioned shortcomings of existing proposals: abstract use of business strategy in IS, EM and EA, and limited direct informal mappings. It entails the introduction and implemen- tation of modeling principles in the context of the linkage between business strategy and IS. Particularly the development of a unified business strategy meta-model integrating prevalent business strategy formulations that can be linked to IS (Goal 1). Such a meta-model can then be related to IS models through mappings (Goal 2) establishing the alignment linkage between busi- ness strategy and IS, and consequently reinforcing traceability and assessment of IS with respect to strategic intent and initiatives.
The proposal leverages characteristics from Model-driven Development [8] such as traceability and automation. Traceability across notions in strat- egy models and notions in IS models allows for strategic intent and initiatives to be linked with related IS aspects. For example, particular IS features can be traced onto a particular strategic goal influencing its achievement. This allows
for propagation and assessment of features and/or changes from business strat- egy such as strategic goals, targets, and objectives, which makes changes less likely to creating problems. Additionally, traceability makes IS adapTable and maintainable to strategy because any modifications due to business/strategic decisions can be directly associated to relevant aspects of IS and thus mak- ing their impact assessable (e.g. system disruptions and conflicts). Based on traceability, the proposal also enables different levels of automation. The con- ceptual mappings between strategic notions and IS models can be implemented into tools to operationalize the proposal either through manual, semi-automatic or automatic operations. Practitioners benefit from traceability and automation because these MDD characteristics enhance the IS synchronicity with business strategy and response to strategic changes.
1.4 Key Concepts
Business Strategy
Strategic planning refers to the determination of typically long term-goals and courses of actions using resources required to achieve them, which con- sequently sets up the organizational structure to enact it [37]. In Strategic Management literature the term corporate strategy is used for the overarching strategy of organizations with different business units, and business strategy refers to the strategy of such business units [6; 7]. Moreover, different types of strategy may also exist in different areas of focus within an organization; e.g.
financial strategy to govern fiscal policy, customer strategy to govern how cus- tomers are handled, etc. In this thesis, business strategy defines the way for an organization to actualize their goal (vision) and fulfill their purpose (mission), and therefore, encompasses strategy for an organization regardless of units and areas of focus.
Business Strategy Formulation
A concretization of the way for an organization to actualize their goal (vi- sion) and fulfill their purpose (mission) is required for the operationalization of business strategy, which allows for business strategy to be conveyed as an executable plan across an organization and successfully implemented [150]. A business strategy formualtion is the outcome of concretizing business strategy into an executable plan. Approaches and methods guiding this concretiza- tion of business strategy include, but are not limited to, the following: the Five Forces of Michael Porter [132], the universal strategy formulation model [156], etc. which all provide a guiding template for strategy. The outcome of these
is business strategy formulations that represent and operationalize the busi- ness strategy of an organization. In this thesis, business strategy formulation refers to established diagrammatic and natural language-based representations of approaches within the discipline of strategic management used to formulate business strategy.
Information Systems (IS)
The study of information technology (IT) deployment in organizations [64]
is concerned with both the technological and social systems together, as well as by phenomena emerging upon their interaction [93]. With respect to gen- eral systems definition [9], IS encompasses the interaction of technological elements and people use to collect, filter, process, create, and distribute data.
Models, Meta-Models, and IS Models
A model is an abstraction of reality; a meta-model is an abstraction of a model capturing notions and rules about the model itself [159]. Within a particular domain of interest, a meta-model captures the design foundations and con- stitutes an explicit model of the concepts and rules required to build models [8; 160]. More generally, a meta-model defines the conceptual elements of a language as well as their possible interrelations [58], and therefore, it is an explicit model of the concepts and rules required to build models.
The Unified Business Strategy Meta-Model (UBSMM) constitutes the uni- fication of business strategy concepts based upon which conceptualizations of business strategy formulations can be created and thereafter instantiated (rel- evant to Goal 1 of the thesis). In accordance to both the OMG modeling in- frastructure as discussed in [8] and the modeling hierarchy in [82] UBSMM constitutes an explicit model of the conceptual elements, their relationships, and constraints required to build the conceptualization of a business strategy formulation. It provides the building blocks needed to model a business strat- egy formulation allowing to be used within the scope of work of this thesis, either manually or in a semi-automatically. Conceptualizations built in the scope of this thesis, are represented in the form of UML conceptual models, because UML is widely accepted as a standard approach for developing con- ceptual models[148].
An IS model denotes a model describing some aspect of IS (relevant to Goal 1 of the thesis). Examples include process models, goal models, data models, requirements models, business models, etc. Additionally, this also includes enterprise modeling (EM), which models organization design [57;
97], as well as enterprise architecture (EA), which includes architecture models of an organization [92].
Linkage
Linkage has been used as a synonym of alignment [61], similarly to fit, har- mony and integration [10]. In this thesis, linkage refers to the connection be- tween business strategy and IS, where one affects the other, and is the context of the problem addressed: the shortcomings of existing proposals linking busi- ness strategy with IS. Moreover, the term linkage is used in the same manner as in the SAM [61; 63], which is the most cited work in alignment and con- stitutes an essential point of reference (more than 2800 citations on Google scholar on 2014.01.27). In the SAM, the linkage indicates a cross-domain link that captures the bidirectional connection between Business Strategy and I/S infrastructure & processes. This entails the implications of a business strategy in terms of organizational and management processes as well as the impact on requirements for IS. Additionally, this linkage reinforces the utilization of IS in the execution of business strategy, and also through IS requirements pro- vides assessment of I/S infrastructure & processes, implications on IT strategic choices as well as their impact on business strategy [61]. Also, it is through this linkage that how IS impacts business strategy becomes clear; by specify- ing processes, roles, architectures, and all other IS aspects required. Therefore, establishing this linkage requires business strategy to be analyzed and decom- posed to become compatible with IS.
1.5 Disposition
The remainder of this thesis is structured with Chapter 2 presenting an ex- tended background on business strategy and elaborating on alignment as well as on IS models. Chapter 3 discusses research methodology and presents the research process followed. Chapters 4, 5, and 6 are respectively presenting the research process followed from problem explication and requirements set, to design and development, as well as to demonstration and evaluation. Chapter 7 holds a discussion around UBSMM. Chapter 8 presents concluding remarks and sets directions for further research. The Appendix presents prototype tool implementations related to UBSMM. An implementation of UBSMM in a desktop modeling and development environment generating business strategy models, and an early version of implementation for UBSMM in a mobile tool.
Finally, the Articles Section includes the complete articles accompanying this thesis.
2. Extended Background
Addressing particular business strategy formulations and motivating compre- hensive coverage for the purpose of building UBSMM requires an exploration of the notion of business strategy from the discipline of Strategic Management, from which it stems. Therefore, background on strategy is presented to pro- vide justification for the selection of the business strategy formulations used for UBSMM. This chapter, also includes a section discussing alignment to po- sition this work, as well as a section elaborating on IS models and how they are used in the context of the alignment linkage and UBSMM.
2.1 Business Strategy
Strategic planning is the process during which a strategy is defined by ana- lyzing the current status of the enterprise and the competitive environment in which it resides. Business strategy is the determination of typically long term- goals and courses of actions using resources required to achieve them, which consequently sets up the organizational structure to enact it [37]. Business strategy defines the way for an organization to actualize their goal (vision) and fulfill their purpose (mission).
Attaining long-term goals makes business strategy prone to change, thus, formulating strategy entails providing ways to change strategic thrusts and change strategic capabilities accordingly [7]. Particularly, it is the changing environment that affects strategy formulation and consequently implementa- tion due to internal or external developments[6]. The former refers to leverag- ing internal strengths and avoiding internal weaknesses, while the latter refers to leveraging external opportunities and foreseeing external threats. Upon this idea the SWOT analysis has been introduced (Figure 2.1), a method still widely used today and whose origins has been attributed to many [6; 126].
From a different standpoint, Henry Mintzberg defined strategy in five com- plementary ways: as a plan, as a plot, as a pattern, as a position, and as a perspective (the Five Ps)[112], He too agreed on the importance of communi- cating and coordinating strategy across the organization. What he referred to as strategy programming and entails three steps [110]; (i) codifying, clarify- ing and expressing strategy sufficiently clear to render it formally operational,
Figure 2.1: Commonly used SWOT analysis adapted from [6].
(ii) elaboration, breaking down strategy into sub-strategies and action plans to realize them, and (iii) conversion, considering the effect of changes in the organization’s operations, thus restating objectives, reworking budgets, etc.
Barney [15] identified three types of strategy-shaping logic upon the con- cept of competition in microeconomics. He suggested that the following three types are complementary to each other [15], and thus, strategy that considers all of them increases the likelihood of sustainability and prosperity:
• The “Industrial organization” type, based on [12; 13; 104], suggests that the competitive advantage is a result of a firm’s clear positioning with respect to its environment, which is described by the structure of the industrial setting. This entails entry barriers to the industry, like the number of competitors and their size, the degree of product or service differentiation among them, and the demand for the industry.
• The “Chamberlinian" or "resource-based” type, based on [32; 166], suggests that the competitive advantage of a firm depends mainly on the firm’s unique capabilities provided by its resources and know how allowing a firm to exploit its individuality and uniqueness.
• The “Schumpeterian" type, based on [143; 144], suggests that unanticipated and radical innovations are capable of disrupting the industrial environ- ment in which a firm operates, thereby giving opportunities to take an advantage over companies whose capability to innovate is lower.
An example of the complementary nature of strategy-shaping logic can be identified in the Dynamic Capabilities [155] approach to strategy, which sug- gests a combination of the resource-based and the Schumpeterian views. A
firm’s competitive advantage is based on its capability to establish and main- tain such flexible competencies and structures both internally and externally that will allow rapid response to product innovations by transforming and re- configuring itself.
Similarly to the definitional variation of strategy, more groupings of strategy- shaping logic exist, such as Mintzberg’s Ten School of Thought [111], synthe- sized by defining strategy with the five Ps and using other base disciplines (i.e.
psychology, political sociology, anthropology, etc.).
2.2 Business Strategy Formulations
Adopting a certain logic for shaping business strategy is a crucial step. How- ever, successful business strategy implementation relies on communication across an organization to provide visibility, understanding, and purpose of the strategic intent as well as both the vision and the mission [110; 150]. There- fore, formulating strategy to address such changes becomes more complex.
Moreover, communicating strategy entails linking those defining it (strategy), such as decision makers and executives, with those upon whom its (strategy’s) execution relies, such as practitioners and employees. Along with people, com- munication of business strategy requires linking, products and services with processes, activities, and tasks allocated to them [80]. This paints a rather com- plex picture for business strategy formulations as they need to be expressed in a concise way that reflects the logic shaping business strategy while simulta- neously enhancing its dissemination across an organization.
The selection of candidate business strategy formulations for UBSMM is based on Barney’s three complementary types [15]. Claiming complete cover- age would suggest that all existing formulations for each type are used, which is not practical and almost impossible. Therefore, for comprehensive coverage of strategy notions, a single strategy formulation from each type is selected.
As strategic management evolves, new formulations may emerge that could challenge any claim of coverage. Additionally, exclusiveness should also be stressed, which suggests that the formulations selected are not excluding oth- ers from being used. Another aspect of the selection entails the alignment proposals discussed in Chapter 1, with business strategy formulations used in these proposals being natural candidates for UBSMM. This will allow these proposals to leverage UBSMM.
The business strategy formulations included in alignment proposals dis- cussed in Chapter 1 are Strategy Maps and Balanced Scorecards [81] used in [11], and the Value Chain [133] used in [21]. The former belongs to the
"resource-based" type and the latter is the most exemplary of the "industrial organization" type. Moreover, results from an empirical study reported in this
thesis indicate that both the Value Chain, and Strategy Maps and Balanced Scorecards are business strategy formulations widely used (articles IX and X). Respondents identified these formulations in their company’s strategy by 52.2% 26.1% and 30.4% respectively (Strategy Maps and Balanced Scorecards have been presented separately as they have been developed separately[74;
81]).
For the "Schumpeterian" type, no alignment effort is identified using a business strategy formulation of such strategy-shaping logic. Blue Ocean Strat- egy [84] has been selected as a candidate formulation for this type of strategy logic. The core contention of Blue Ocean Strategy is value innovation: pro- vide a new offering beyond the structure and boundaries of existing industries making current markets and competitors irrelevant and obsolete. Blue Ocean’s strategy-shaping logic is aligned with the "Schumpeterian" type of unantic- ipated innovations that displace competitors from an industry. Blue Ocean Strategy has been attracting a great deal of attention recently, and in the afore- mentioned study it was identified by 8.7% of respondents in their company’s strategy (articles IX and X).
These business strategy formulations are further elaborated in the remain- der of this chapter as they are used for building UBSMM along with the addi- tion of the Value Shop and the Value Network, which constitute evolutionary additions on the Value Chain that altogether constitute the Value Configura- tion. The formulations selected for UBSMM are accompanied with tools and methods beyond the SWOT analysis and other generic ones i.e. the 5 Forces framework [132] for the Value Chain, and the Four-Action Framework [84] for Blue Ocean Strategy. However, focus is put on capturing the strategic notions of the business strategy formulations to be integrated into UBSMM. Examples of more candidate formulations include, but are not limited to, the following:
the Miles & Snow Typology [45; 107], Six Sigma [59; 127], and the Delta model [60].
2.2.1 The Value Chain
Michael Porter’s work is focused on competition, arguing there are two options for success in a competitive environment: differentiation and low cost [133].
Accompanied by a company’s desired targeted market segment they result in three generic strategies: cost leadership; differentiation; and focus.
Porter’s value chain highlights a company’s strategy and strategy imple- mentation depending on how the activities are carried out (Figure 2.2a). It consists of value activities and margin. Value activities are all the activities a company performs to create value for its buyers, divided into primary and support, while margin is the difference between the total value and the total
cost of performing the value activities.
From a competitive advantage perspective and across primary and support activities, activities are further grouped into three types: direct (activities that create value), indirect (activities that allow the direct one to be performed), and quality assurance, (ensuring the quality of direct and indirect activities).
(a) The Value Chain (taken from [133]).
(b) The Value Shop (taken
from [151]). (c) The Value Network (taken
from [151]).
Figure 2.2: The Value Configuration.
Each activity is classified based on its contribution to a firm’s competitive advantage, primarily from an economic view: those that have high impact of differentiation and those that have a considerable proportion of cost. Value activities interact with each other within the value chain via linkages, which are relationships between the way a value activity is performed and the cost of another (e.g. the dotted lines in Figure 2.2a). They support optimization and coordination among value activities — thus competitive advantage and may exist between multiple value chains. Porter identifies ten generic drivers for cost and value, which shape the competitive position of the firm: scale, capacity, utilization, linkages, interrelationships, vertical integration, location timing, learning, policy decisions, and government regulations. Value chains
are linked sequentially (suppliers, producers, and distributors) by adding value to what the preceding activity has produced, whereas the value creation logic is focused on cost, towards a desirable margin.
2.2.2 The Value Shop and The Value Network
Stabell and Fjeldstad [151] introduced the idea of a Value Configuration (VC) extending the Value Chain by introducing the Value Shop (Figure 2.2b) and the Value Network (Figure 2.2c). In the former, the value creation logic focuses on value: it is created by using resources and activities to resolve a customer problem and is structured spirally, interchanging problem-solving and imple- mentation activities. In the latter, the value creation logic focuses on balancing cost and value: value is created by facilitating relationships among a network of enterprises and their customers via a mediating technology, and is struc- tured by simultaneously and in parallel forming horizontally interconnected activities.
2.2.3 Strategy Maps and Balanced Scorecards
Strategy maps and balanced scorecards (SMBSC) have been proposed by Ka- plan and Norton to represent, communicate and monitor business strategy as well as strategic objectives.
A strategy map serves as a mediator between the mission, core values, the vision, and the strategy of an enterprise to the work performed. Kaplan and Norton have proposed a template for strategy maps (Figure 2.3) representing how an organization can create value [78; 81] that places the framework as one of the few providing means for visual representation of strategy. The recom- mended way to build a strategy map is to follow a top-down manner beginning from a mission statement and core values to develop a strategic vision, which should project the organization’s overall goal [77].
Scorecards consist of strategic objectives and related measures, which in- clude concrete targets and initiatives towards their achievement [74]. Score- cards are structured with cause-effect links/assumptions and their monitoring and assessment is essential for identifying interdependencies across an organi- zation. Balanced scorecards (BSC) present an organization’s business activi- ties through a number of measures typically from four organizational perspec- tives — financial, customer, internal, learning and growth — and provides a language to communicate priorities within an enterprise [121]. A scorecard is considered balanced (BSC) due to the four perspectives that provide cov- erage of business processes, while the time aspect is addressed indirectly via short-term targets set and also via the bottom up view of the four perspectives.
Figure 2.3: The Strategy Map template (taken from [78]).
Additionally a scorecard is also considered balanced because it covers both the internal as well as the external aspects of an enterprise.
A strategy map is a general representation of the four organizational per- spectives of the BSC [74] in a cause-effect manner and facilitates the commu- nication of direction and priorities across the enterprise and according to [78;
81]. It is based on five principles:
• Strategy balances long-term financial commitments aiming at profitable rev- enue growth and short-term financial commitments aiming at cost reduc- tions and productivity improvements (financial perspective).
• Strategy is based on differentiated and clearly articulated customer value proposition (customer perspective).
• Value is created through focused, effective and aligned internal business pro- cesses in four groups: operations management; customer management;
innovation; and regulatory and social (internal perspective).
• Strategic alignment determines the value and role of intangible assets: hu- mans, information, and organization (learning and growth perspective).
• Strategy consists of simultaneous, complementary themes highlighting the most critical processes supporting the customer value proposition.
2.2.4 Blue Ocean Strategy
The Blue Ocean Strategy approach [84; 85] focuses on unknown market space and thus aims at competing where there are no competitors. Industry’s struc- tural conditions are not considered fixed and therefore, the objective is neither differentiation nor low cost. The goal is to break existing rules and create new ones as illustrated through the strategy canvas (Figure 2.4).
Figure 2.4: The Strategy Canvas capturing a Blue Ocean Strategy (taken from [84]).
The strategy canvas offers a graphical representation of the current state in known markets by identifying the range of factors an industry competes on and invests in (horizontal axis in Figure 2.4) along with the offering level to buyers for each factor (vertical axis in Figure 2.4). A basic component of the strategy canvas is the value curve capturing a company’s relative performance across the aforementioned competition factors of any given market.
Blue Ocean Strategy is equipped with a set of tools/techniques to analyze and assess an industry’s market space, focusing on value innovation and there- after to derive the strategy canvas. A core tool/technique is the Four-Action Framework, which challenges current strategic logic and drives change. Elim- inating and reducing focuses on dropping the current cost structure, whereas, creating and rising strive for how-to in terms of lifting buyer value and creating new demand. With the assistance of the eliminate-reduce-raise-create grid, the Four-Action Framework goes beyond analysis by pushing for action and thus creates a new value curve.
2.3 Alignment
Alignment scopes the context of this thesis and the research problem is posi- tioned in this linkage between business strategy and IS. As pointed out in [10], alignment has carried different aliases: it has been termed as linkage or fit in Henderson and [62], fit in [134], as harmony in [101]. However, alignment has been consistently defined as the integration of business strategy and IT, where early definitions call for IT strategy [63], and more recent ones refer to IT in general [100]. McKeen and Smith suggest that alignment exists when goals and actions of the business are in harmony with the IS supporting them [106].
Abraham [1] defined alignment as the linkage between the goals of the busi- ness, which quantify the progress of the strategy implementation, and the goals of each of the key contributors, such as IT. Alignment allows for strategy to uti- lize the capabilities of IT to enhance a decision maker’s perception of business performance [140]. The Strategic Alignment Model (SAM) [61; 63] summa- rizes alignment with domains, fundamental dimensions and relationships (rep- resented as boxes and bi-directional arrows respectively — Figure 2.5) and is one of the most cited works in alignment constituting an essential point of reference (more than 2800 citations on Google scholar on 2014.01.20).
Figure 2.5: The Strategic Alignment Model (SAM) taken from [61].
The SAM portrays a generic map for alignment in an organization with two fundamental dimensions. Strategic integration refers to the fit between external and internal domains — strategy and infrastructure respectively — for both business and IT indicated through the perpendicular bi-directional ar- rows; business strategy should be aligned with internal structures and business functions, and similarly, IT structures and operations should be aligned with
the IT strategy they are meant to facilitate. Functional integration refers to the fit between business and IT both for strategy as well as internal structure, which is indicated by the horizontal bi-directional arrows. Business strategy should be aligned with IT strategy for realizing value from IT investments. Similarly, internal structures and business operations should be aligned with IS structures and operations. Two additional types of relationships can be identified in the SAM, which are together referred to as cross-domain alignment, and are pre- sented through the diagonal bi-directional arrows. Linkage refers to analyzing business strategy to define requirements for IS structures and processes, while Automation refers to the potential of IT to shape or change the internal struc- ture and business operations.
The research problem addressed in this thesis is positioned in the center of the Strategic Alignment Model (SAM) [61; 63] and particularly at the linkage between Business Strategy and I/S Infrastructure and Processes (Figure 2.5).
Cross-domain alignment such as the one denoted by this linkage requires the specification of IS components and structures such as inputs, processes, out- puts, actors, and rules to relate how IS impacts business strategy [61]. There- fore, business strategy needs to be understood and analyzed for requirements on IS to be defined, which can be achieved by establishing a model-based link- age between business strategy and IS. Establishing such a model-based linkage entails IS models laying on one side while the UBSMM lays on the other with mappings between them.
This approach is based on ideas developed in the Unified Enterprise Mod- eling Language (UEML) whose objective has been to create a framework for interoperability of enterprise modeling languages by defining a core language for enterprise and IS modeling [4]. The UEML approach analyzed a number of existing modeling languages by mapping their constructs onto a common and well-defined ontological base. By doing so, the understanding of concepts of existing languages was improved and it was possible to progressively grow a larger ontology containing well connected concepts by extending the ontolog- ical base. A similar approach is applied for UBSMM with the aim to define a core meta-model for business strategy modeling by analyzing business strategy formulations and mapping them onto model types used in IS, aka establishing a model-based linkage between business strategy and IS.
2.4 IS Models
Models have always been fundamental when it comes to IS development, de- scribing the domain, data and data operations [27]. Systems modeling entails the use of models to conceptualize and build IS. The term "IS models" is used to distinguish the use of the term "model" from other disciplines such as man-
