The alignment of the information technology and information systems (IT/IS) portfolio with business strategy is a recurring activity for modern enterprises. As Luftman (2003) states, “Alignment is the perennial business chart-topper on top-ten lists of IT issues” (Luftman, 2003, p. 9). Ward and Peppard (2002) provide additional detail regarding the drivers behind alignment’s “chart-topping” status,
The necessity to improve return on investments, coupled with the high risk potential of investing very substantial sums unwisely, have long been key objectives for developing a strategy for IS/IT. (Ward & Peppard, 2002, p. 131 – 132)
Luftman develops a maturity model for assessing IT/IS strategic alignment that is based on the Capability Maturity ModelÒ (Luftman, 2003). Luftman’s model measures business alignment by evaluating 38 strategic criteria on a scale of one to five (1 = No Alignment, 5 = Complete Alignment) across six categories (Luftman, 2003). While a full evaluation of a business using Luftman’s model provides an important assessment of the maturity of a firm’s strategic alignment, an abbreviated examination of a business’ alignment across the six major categories of Luftman’s model enables a preliminary understanding of major alignment issues. By evaluating the maturity of the aerospace and defense company Raytheon’s strategic alignment using the Luftman model’s major criteria, the major alignment issues the business faces can be better understood.
The first category in the Luftman model is communications maturity. The communications maturity category measures the degree to which knowledge sharing is valued and performed across the organization (Luftman, 2003). Raytheon has an over-arching strategic alignment initiative known as oneRTN. The oneRTN initiative emphasizes that business units and individuals within the company should work and operate as a single organization instead of islands or silos. A key component of the oneRTN effort is an internal company web portal that acts as a central point of communications. The portal is the homepage for employee’s web browsers, the dissemination point for company news, and the gateway to company-wide services such as document management, timekeeping, and electronic mail, et al. With the deployment of the portal, business units eliminated custom web pages and servers and centralized these functions. However, each business unit continues to maintain separate content and services, with a large amount of redundancy between these silos. Due to the continued business unit silos despite the centralized communications platform, Raytheon is evaluated as Level 2: Beginning Process for communications maturity.
The second category in the Luftman model is competency/value measurements maturity. The competency/value measurements maturity category measures the degree to which IT/IS measures performance and relates the measures to business value (Luftman, 2003). At Raytheon, the company as a whole measures and evaluates project performance using a combination of cost (CPI), schedule (SPI), and earned value metrics. In addition, efforts must demonstrate a return on investments (ROI) that exceeds a minimum internal rate of return that varies slightly based on function. However, corporate and business unit IT departments are not adhering to the company-wide practices. Project performance measures vary from department to department. And, across all of the IT departments, there is no measurement of ROI after implementation. Due to the disorganized and ineffective performance measurements within IT at Raytheon, the competency/value measurement maturity is evaluated as Level 1: No Alignment.
The third category in the Luftman model is governance maturity. Luftman describes the governance maturity category as including, “how the authority for resources, risk, conflict resolution, and responsibility for IT is shared among business partners, IT management, and service providers” (Luftman, 2003, p. 12). Raytheon IT defines a business process liaison (BPL) role to act as a facilitator between IT and other business functions. The BPL represents the sole opportunity for business partners and service providers to participate and communicate with IT. Other than the BPL’s, the only conduit between IT and the business is the organizational hierarchy, where the chief information officer interacts with executive peers and directs the IT organization based upon those interactions. The BPL role and associated interactions with business partners provide an opportunity to improve IT governance. However, the new-ness of the BPL role and currently limited interaction afforded to business partners results in an evaluation of the governance maturity for Raytheon as Level 2: Beginning Process.
The fourth category in the Luftman model is partnership maturity. The partnership maturity category measures the degree to which IT’s relationships with the rest of the business enables or inhibits IT as a strategic partner with influence into the business strategy (Luftman, 2003). Raytheon has limited integration between IT and the rest of the business. The BPL roles were established in recognition of the need to build and develop IT relationships and to leverage those relationships to provide improved alignment between IT and the business. Therefore, Raytheon is evaluated to be at Level 2: Beginning Process for the partnership maturity category.
The fifth category in the Luftman model is technology scope maturity, which measures IT’s ability to efficiently and effectively apply technology to solve customer problems and drive the business strategy forward (Luftman, 2003). From a technology perspective, Raytheon IT has been highly effective at lowering costs, deploying new solutions, and driving capabilities into the business-computing environment. In 2009, Raytheon signed an outsourcing agreement with Computer Sciences Corporation (CSC) to deliver company-wide standard services at a significantly lower cost than previously provided. In addition to outsourcing for cost-savings, Raytheon established enterprise architecture and standards efforts and advanced IT functions to drive the efficient adoption of emerging technologies and to improve management of legacy solutions. The effective and efficient application of technology to business problems results in an evaluation of Level 4: Improved Process for Raytheon’s technology maturity.
The sixth and final category of the Luftman model is skills maturity. Skills maturity measures the IT human resources factors, including hiring processes, training, and performance management (Luftman, 2003). At Raytheon, common company-wide processes are used for the management of hiring, firing, employee performance, salary, merit increases, etc. The company culture stresses the importance of diversity, lifelong learning, and safety. The benefits package includes tuition reimbursement and training for employees. The human resources factors are consistent between IT and the other business functions and encourage career development and growth. HR monitors and tracks each employee’s skills and competencies and aligns training plans with career goals and assessments of current capability. For these reasons, the skills maturity is evaluated to be Level 5: Optimal Process.
Evaluating Raytheon’s IT alignment maturity using an abbreviated, categorical version of Luftman’s model results in an aggregate score of 16 or an average of 2.67, placing Raytheon IT’s overall maturity between Level 2: Beginning Process and Level 3: Establishing Process. Raytheon’s greatest alignment and strength lies with technology and skills. Raytheon’s weakest alignment pertains to business performance and governance. The categorical assessment is akin to a self-assessment. Next steps for Raytheon should include an examination of the factors preventing the adoption of Raytheon’s performance measurement tools and techniques within IT and a more complete evaluation of the IT alignment maturity, perhaps using the full Luftman model, that includes input from business partners.
Luftman, J. (2003). Assessing IT/business alignment. Information Systems Management, 20(4), 9-15. Retrieved from http://ezproxy.library.capella.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=11015687&site=ehost-live&scope=site
Ward, J., & Peppard, J. (2002). Strategic planning for information systems (Third Edition ed.) John Wiley & Sons.