STRATEGIC ALIGNMENT IN THE VIRTUAL ORGANISATION

1
STRATEGIC ALIGNMENT IN THE VIRTUAL ORGANISATION

Peter Gall , Janice Burn
Edith Cowan University




Abstract
This paper reviews the literature in relation to virtual E-business models and strategies.
From this the authors develop a framework to test two new strategic alignment
instruments designed to measure the espoused readiness of an organisation to
collaborate virtually and the actual preparedness to operate virtually. These instruments
will assist organisations in recognising and exploiting their degree of virtuality and can
assist organisations in developing new organisational forms that fully leverage the value
of their ICT assets.

Key Words:ICT, Strategic Alignment, Virtual Readiness, Virtual Preparedness

1.
INTRODUCTION

This paper endeavours to clarify some of the concepts related to the Virtual
Organisation (VO) and to augment the definition of a VO as one with few or no tangible
assets, existing in virtual space created through Information Communication
Technologies (Warner & Witzel, 2004). The authors focus on the concept of an
organisation which is virtually organised; employing ICT for the majority of its
communication, asset management, knowledge management and customer resource
management, across a network of customers, suppliers and employees (Venkatraman &
Henderson, 1998).
As organisations enter an era of information superhighways, expanded electronic
commerce, and ‘virtualness’ executives increasingly realise that in addition to business
strategy influencing IT, IT now influences business strategy (Rockart et al, 1996).
Hirschheim & Sabherwal, (2001) confirmed the validity of previous findings and
determined that it is important for organisations to understand the dynamic and
emergent nature of business-information systems alignment. Recent perspectives on
strategy argue that the basis for achieving competitive advantage, even short term
advantage, lies in the configuration of resources that enable value creation through a
sustained dynamic and continuous process of adaptation and change (Wheeler, 2002;
Zahra & George, 2002; Breu & Peppard, 2001). Alignment competencies are created by
leveraging the organisation’s specific resources and processes, structures and practices
(Cumps et al, 2006).
The framework introduced in this paper as Figure 1, draws from earlier work by
Henderson and Venkatraman (1993) and seeks to take the process further in relation to
the VO by providing a more comprehensive view of the strategic context of VO based
on two building blocks, strategic fit and operational integration. The study seeks to
address three research questions; firstly what we know about virtual organisational
Proceedings of European and Mediterranean Conference on Information Systems 2007 (EMCIS2007)
June 24-26 2007, Polytechnic University of Valencia, Spain www.emcis.org

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forms? Secondly, if we accept that there is such a form, can instruments be developed
that have the potential to assist organisations in identifying their internal preparedness to
operate more virtually and external readiness to collaborate more virtually? Thirdly can
a framework and in turn a methodology be developed that tests the validity of these
instruments?

ICT
Strategic Fit
Operational Integration
(Readiness)
(Preparedness)
External Domain
Internal Domain
Virtual Enterprise
Virtual Organising
(Alliance /
(Customer
Supplier focussed
focussed)
Value Chain Management
Knowledge Management
Outsourcing
Core Competencies
E Commerce
BPR
Networking
VO
Intra-Organisational Systems
Inter-Organisational Systems



Enterprise Resource Planning

Web Services

EDI

Groupware

Extranet

CRM

SCM

Internet / Intranet
E Business Strategy
E Business Model Alignment
VERI
VOPI


Figure 1. Strategic & Operational Context of VO

2.
THE VIRTUAL ORGANISATIONAL FORM

The literature provides numerous descriptions such as virtual (Webster's, 1998)
virtuality (Evaristo & Scudder, 2000) virtual organisation (Mowshowitz, 1986), virtual
organising (Venkatraman & Henderson, 1998), virtual team (Lipnack, 1997) virtual
enterprise (Davidrajuh, 2003; Hardwick, 1996), virtual communities (Camarinha-Matos
& Afsarmanesh, 2005), Collaborative Networked Organisation (Borrelli & Conte, 2006;
Sturm & Wolf, 2006), and Information Rich Commerce (Fichman & Cronin, 2003).
The virtual organisation of the future will be much more dynamic and sensitive to the
need for tuning operational parameters of the enterprise as a whole, optimising the
whole chain of value creation (Walters, 2004). Virtualisation is an approach to ICT that
lets businesses pool resources so utilisation is optimised and supply automatically meets
demand (Bittman, 2004). Based on literature spanning 20 years the authors have defined
VO as simply “an organisations ability to fully exploit ICT in prioritising their degree of
Proceedings of European and Mediterranean Conference on Information Systems 2007 (EMCIS2007)
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internal operational integration and external strategic fit, for sustainable competitive
advantage”.
The Readiness and Preparedness frameworks were developed to provide a clear
distinction between dimensions that constitute external readiness to collaborate virtually
and internal preparedness to operate more virtually. Two acronyms were adopted to
reinforce the distinction; the VOPI – Virtual Operations Preparedness Instrument and
the VERI – Virtual Enterprise Readiness Instrument.

3.
DEVELOPMENT OF THE INSTRUMENTS: VOPI

Three existing models have been used to develop the VOPI instrument. The
Venkatraman & Henderson (1998) model focuses on Strategic Planning. The Guha et
al., (1997) model explores the concept of e-business Operational Management and the
Zigurs & Kozar (2006) model looks at Strategic Process Management in a networked
world. All three of these strategic change theories focus on conceptualising
organisational preparedness.


Strategic Planning



Virtual

Organisation
(Venkatraman & Henderson,

Operational Management
Preparedness
1998)


Instrument
(Guha, Grover, Kettinger, &

Teng, 1997)


(Zigurs & Kozar, 2006)
Strategic Process Management



Figure 2. Virtual Operations Preparedness Instrument
3.1
Virtual Organising

Venkatraman and Henderson (1998) spent two years undertaking a systematic study to
conceptualise the architecture of virtual organising. Each organisation has its core of
experts. In virtual organising, companies are increasingly leveraging the expertise in the
extended network (suppliers, customers, partners, and alliances). Key dimensions were
identified and used to construct the first component of the VOPI model: Customer
Interaction, Asset Configuration, Knowledge Leverage and Work Unit Expertise.

3.2
Operational Management

Guha et al., (1997) argue that traditional models of hierarchy and control have been
described as pathological, appropriate for an erstwhile era of stability but inappropriate
for today’s dynamic business world. Although the study related to business process
change, it is also useful in identifying internal enablers for virtual organisations. Key
dimensions were identified and used to construct the second component of the VOPI
model: Relationship Balance, IT Leverage, Cultural Readiness and Learning
Capabilities.

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3.3
Process Management

The Zigurs and Kozar (2006) Project Management Dimensions model identifies project
management dimensions identified by CeTIM and are an attempt to understand the
concept of VO. Coordination, Knowledge and Process are internal to the way in which
an organisation seeks to become more virtual and external in the way in which
organisations seek to collaborate more virtually. The dimensions are addressed from
both a traditional perspective and a refined virtual perspective. Key dimensions were
identified and used to construct the third component of the VOPI model: Coordination,
Knowledge, Innovation and Process Management.
Table 1 pinpoints the key elements of each of the four dimensions identified in each of
the models. Column 1 of Appendix 1 extrapolates out the commonalities and develops
an all encompassing set of six new dimensions, which are the foundation of the VOPI.

Table 1
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Strategic Planning
Operational Management
Strategic
Process
(Venkatraman
& (Guha et al., 1997)
Management
Henderson, 1998)
(Zigurs et al, 2006)

Customer Interaction
Relationship Balance
Coordination



Multi
stage
Dialectic of cooperation
Trust
distribution
Dialectic of competition
Competence Based
Efficiency
Cooperative behaviour
Experts
Linear value chain
Conflict level
Liaisons
Innovation
Inter
organisational
Customisation
linkage
Communities
Cross
functional
cooperation

Asset Configuration
IT Leverage
Knowledge



Sourcing
Information
Attributions
Integration
Imperatives
Non Linear
Dynamic Portfolios
Bidirectional relationships
Complex
Relationships
Socio/technical
Intelligence Repositories
Co-ordination
relationships

Coordinated interaction

Knowledge Leverage
Cultural Readiness
Innovation



Source diversity
Change agents
Dynamics
Value Creation
Leadership
Web Networked
Organisational
Shared
organisational
Diverse Culture
efficiency
goals
Adaptive Interfaces

Trust / Cooperation /
Coordination
Exchange relationships
Risk Aversion
Open Communications

Work Unit Expertise
Learning Capabilities
Process Management



Distributed tasks
Positive outcomes
Emergent Tasks
Decomposition
Adaptation
to
Non Linear
Effectiveness
environmental change
Ubiquitous
Knowledge capture
Cross functional entities
Self Organising Systems
Knowledge sharing
Core competencies
System Re-organisation
Process driven
Technical gatekeepers

Causation
Adaptability

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4.
DEVELOPMENT OF THE INSTRUMENTS: VERI

Traditional thinking about the management of innovation focuses almost exclusively on
internal factors; the capabilities and processes within companies for creating and
commercialising technology. Although the importance of these factors is undeniable,
the external environment for innovation is at least as important (Porter, 2001). Due to
the nature of the new ICT enabled economy, those nations and businesses that can adapt
quickly to new technology, seize new opportunities and take strategic risks, will prosper.
A common aspect of the majority of these new organisational forms is that they are
partially structured as collaborative networks (Lemken et al, 1998). The network model,
bringing people together to collaborate across organisational and geographical distances,
needs to be applied at all levels to promote global e-readiness (McConnell, 2000).
While a number of different instruments exist to evaluate the readiness of economies
and organisations to utilise ICT effectively and participate in the global market through
e-business initiatives; only three were judged to be specific enough to enable
organisations to identify their degree of readiness to ‘collaborate virtually’. The three
models are introduced in Figure 3 as they meet each of the dimensions. Commonalities
between all three will be used to create an extended instrument; Virtual Enterprise
Readiness Instrument; VERI.

Strategic VO Context



Virtual

Enterprise
Strategic Fit
(McConnell, 2000)
(Bauer & Koszegi., 2003)

Readiness
(Impact, 1998)

Instrument


Strategic Measurement


Figure 3. VERI

4.1
Strategic VO Context

An effective E-readiness assessment should introduce clear indicators to measure
capacity and benchmark progress in Connectivity, E-Leadership, Human Capital, and E-
Business Climate. McConnell examines 42 critical economies for their E-readiness. E-
readiness measures the capacity of nations to participate in the digital economy
(McConnell, 2000). The model has been developed as an instrument that recognises the
recent economic expansion that has enabled exponential growth in the value that comes
from connecting more people and organisations to a global network.

4.2
Strategic Fit

(Bauer & Koszegi., 2003) provide dimensions to identify the progress of an organisation
in moving from a traditional viewpoint a virtually ready structure. This model uses
structural dimensions; modularity and heterogeneity (differentiation), configuration
(temporary and loose-coupled networks), integration, and technology to measure the
DV (Degree of Virtualisation) of 116 Austrian and German consulting firms in 10
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European countries. The authors have identified key concepts and used them to
construct the second component of the VERI model.

4.3
Strategic Measurement

Impact (1998) takes the process a step further by providing a tool for measuring
organisational readiness using a sample consisting of the managers of 32 companies in
10 European countries. This model also uses four structural dimensions; dispersion,
empowerment, interdependence and restlessness. The report outlines best practice in
tackling these issues, which makes it the logical third model selected. Virtuality is of
course not an end in itself. It is an important ingredient of business strategy, and the
overall business strategy must dictate the approach to virtuality, not vice versa (Impact,
1998).
Table 2 pinpoints the key elements of each of the four dimensions identified in each of
the models. Column 2 of Appendix 1 extrapolates out the commonalities and develops
an all encompassing set of six new dimensions, which are the foundation of the VERI.




Strategic VO Context
Strategic Fit
Strategic Measurement
(McConnell, 2000)
(Bauer & Koszegi., 2003)
(Impact, 1998)

Connectivity
Technology
Dispersion




ICT as enabler
Number
of
physical
Communications access
Coordination of activities
locations
Network access
Process value adding
Number
of
personal
Power supplies – supply Virtual corporation
workplaces
chains
Temporary
Technology
facilitated

Loosely coupled network
mobility

Combining core competencies
Reach: ease of access to

Mutual trust
customers, suppliers

Coordination of production
Economic / political support

Visibility to customer

E-Leadership
Configuration
Interdependence



VO promotion
Independent configuration
Number of formal /
Automation processes
of networked companies
informal
relationships
Alliances / Partnerships
Uniting collaborators
(Int & Ext)
Universal access
Exploiting opportunities
Level
of
external
Standing network pool
influence
Historically motivated
Staff / Line function
Structural
cultural
Parallel line functions
assimilation,
loose
Product collaborations
coupling
Cross-functional teams
Stability – change enabled
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Human Capital
Integration
Empowerment



Qualifications
Heterogeneity (hesitation)
Defined accountabilities
Cadre of skilled partners
Dynamical configuration of Decision levels
Knowledge
network core competencies
Complexity, magnitude and
population
Shared organisational goals
scope of decision making
Educational
systems Trust
/
Cooperation
/ Levels of repeat business
participation
Coordination
Acceptance
of
Creativity & information Exchange relationships
empowerment and risk
sharing
High uncertainty
Workforce skills investment
Workforce
skills
& High interdependence
efficiencies
Shared output and process
Intellectual capital
controls
Understanding knowledge


E Business Climate
Modularity and heterogeneity
Restlessness



Regulatory policies
Satisfier modules
New products / services
Standards & Rules
Specific
requirements
core New markets entered
Institutional arrangements
competence
New / changed processes
Premiums for risk
Flexible
&
dynamic New / changed job profiles
Effective competition
combination
New / interdependencies
Transparency
& Unique value chains
Response time
predictability
of Competitive advantage
Levels of stress
implementation
Virtually increasing resources
Openness to change
Financial
stability
& Increases in capacity
Change appraisal criteria
soundness
Quality, flexibility, timing
Level of staff education
Electronic
transaction Synergistic
cooperating
support
partners
Table 2.

5.
METHODOLOGY – CASE STUDY

The organisation chosen for the initial case study was a GDE (Geographically Dispersed
Entity) providing essential services to a division of the Department of Defence. The
organisational structure consisted of 15 group managers and a staff of 150. The authors
identified the 15 group managers on the basis that they represented all the groups within
the organisation charged with responsibility for critical and essential services. The
research was conducted using the VERI and the VOPI instruments through four phases
within this organisation. Phase 1 was to conduct pre-interview audits, posing 30
questions each with the 15 group managers focussing on identifying how Important (I)
the groupings and dimensions and questions were to the case study organisation. The
initial questions were devised from the elements identified in each dimension for each
instrument. Phase 2 was one-on-one interviews conducted with the 15 group managers
to confirm the validity of the groupings and the questions posed and make any revisions
recommended. In Phase 3 the revised instruments were tested again on the same 15
group managers posing the same 30 questions for each instrument but focussing on
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whether the organisation felt that they were actually Doing (D) the things that the
previous pre-interview audit had identified as important. Phase 4 was devoted to
undertaking an empirical analysis of the results.
In this paper only the results of applying the process to the VERI are provided. It is
important to point out however that similar findings were achieved in applying the
process to the VOPI. Figure 4 shows an example of the total responses for the VERI
instrument in the pre-audit stage phase 1 with answers shown against SA-strongly
agree; A – Agree; D-Disagree; SD- Strongly disagree and DK – Don’t know. These
figures relate to how important respondents believed these issues were for the
organisation. Figure 5 shows the same total of responses but in relation to whether or
not the organisation felt they were actually doing the things they regarded as important.
The responses were largely in SA and A for importance but in A and D for doing,
suggesting a considerable gap between the intended strategy and actual implementation.
Similar results were found when applying the VOPI instrument.

12
10
8
6
4
2
0
SA
A
D
SD
DK
Figure 4. Phase 1 (Important)
14
12
10
8
6
4
2
0
SA
A
D
SD
DK
Figure 5. Phase 3 (Doing)


6.
OUTCOMES

Even at this early stage of the data analysis of the case study, two significant outcomes
were achieved. The Phase 1 chart demonstrates that in terms of importance the case
study organisation agreed that the dimensions created were of value to their organisation.
This is substantiated by the invaluable feedback provided in Phase 2, the one-on-one
interviews. This feedback included recommendations on how the groupings, dimensions
and questions could be improved. The Phase 3 chart demonstrates that the group
managers felt that there were a number of areas that need improvement. Further analysis
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of the individual data will enable the authors to identify which dimensions require
urgent attention and recommend ICT solutions to resolve the problems. Appendix 2
reflects Phase 4 of the process and provides empirical analysis of the key findings in
terms of how the case study sponsor responded to a series of questions posed.

7.
CONCLUSIONS

Existing models and frameworks for measuring virtuality appear to provide a sound
basis for developing more integrated instruments; the VERI and VOPI models. The next
stage of this research study will be to validate the extended VERI & VOPI models using
a number of secondary case studies as the basis of the validation. Additional verification
of the validity of the VERI and VOPI instruments in measuring internal as well as
external virtuality will also be undertaken. The VERI and VOPI models have the
potential to become the template for exploitation not only of organisational virtuality,
but also become the enabler for ICT convergent organisations to use virtual strategic
alignment instruments to create more sustainable competitive advantage.

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Proceedings of European and Mediterranean Conference on Information Systems 2007 (EMCIS2007)
June 24-26 2007, Polytechnic University of Valencia, Spain www.emcis.org

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