Volkswagen a Case Study

1.0.Introduction Alignment of an enterprise’s goals with its IT1 and IS1 systems has been a challenge ever since IT became a business enabler. Proposing an IT alignment requires a thorough understanding of the business goals of the enterprise and the knowledge that alignment is an iterative process which requires constant measurement and honing (Chan, 2002). Enterprises often face the problem of balance of priorities between IT and Business objectives. This report deals with one such case that faced alignment and prioritization hardships resulting in an unclear approach to achieve a corporate strategy. 2.0.The internal crisis at VWoA

Volkswagen, one of the world’s largest automobile manufacturers had been facing a constant problem of uneven sales figures irrespective of their repeated investments in IT and IS. They faced problems in project dependencies and approval even though they prioritized their projects they were faced with an abyss created between enterprise priorities and functional projects approval. The process of efficient (doing things right) prioritizing and IT alignment seemed to elude the enterprise (Austin, 2007). 3.0.Strengths of VWoA – A radical transformation

Luftman (2000) stresses that alignment of IT and business within an organization is paramount for the effective and efficient functioning of an organization. VWoA2 began to realize its strengths in 2002 after a structural alignment with the formation of the BPTO3 (Chan, 2002) and started response time to changes and demands decreased. They prioritized business goals and started doing things right (efficiency) (Luftman, 2000). Then they turned to effectiveness by choosing the right projects to do with respect to the business goals. This was the first sign of strategic IT alignment in the company (Luftman, 2000; Chan, 2002). 4.0.The complex role of IT and IS

Though IT alignment started, they did not invest on IT systems as they were unclear of its potential. After implementing eBusiness teams within the organization, was IS realized, although only to an extent. In accordance with Chan’s (2002) views, there was no structural alignment in the process as the responsibility of managing IT was shared resulting in a tiny business growth.

After forming the BPTO and undergoing strategy change, the company came up with roles for IS as a strategic alignment (Chan, 2002) by categorizing them and relating them to business goals. This comparison articulated the priorities of a 1The acronyms IT for Information technology and IS for Information Systems and their full forms have been used interchangeably. 2VWoA is the acronym for Volkswagen of America.

3Business Process, technology and Organization. technology project. The BPTO produced weekly status reports and monthly budget reviews helping the company gauge where it was heading towards. Thus the alignment started advancing (Austin, 2007). 5.0.Alignment Maturity at VWoA and Challenges

Eventhough there was significant improvement after strategy changes; business was not what it was when VWoA started up. Despite constant changes, business never reached its peak due to improper alignment. From Luftman’s (2000) alignment levels, table 5.1 measures the degree of IT and Business alignment of VWoA against the levels of standard alignment maturity during that period. Maturity FactorLevelChallenge Assessment

Communication2+VWoA had limited IT and Business correlation understanding. During the initial period they hired IT personnel as a response to their needs because the concept of alignment was oblivious to the senior management till they formed the BPTO and started prioritizing business goals with IT projects complementing them both functional and enterprise wide. Competency and Value Measurement2+VWoA’s projects were proposed at a functional level (NRG) which aimed to satisfy enterprise goals.

Their project assessment was response based on how the project was going to solve certain problems that the company was facing. There was no link between business and IT metrics. Governance2The company charted out plans that would result in the growth of the NRG (Next Round of Growth) thereby predicting the enterprise to grow.

But new projects proposed were reviewed at a functional level. Projects of paramount importance from VWAG, for example the supply chain project, were missed. Strategic alignment is at a minimal level in the company Partnership1+Initially IT was viewed as a cost to business. Only after establishing the BPTO projects followed particular standards and started being delivered on time and budget.

But even after establishing the NRG there was conflict as to whether IT had a higher priority when compared to the other business projects. Scope and Architecture1+Though the processes followed standards, there was increased rigidity. The goals were enterprise wide but the project approval and value analysis processes were not. Enterprise-wide integration was from Nil to minimum. There was a single point of governance and knowledge base for IT rather than a distribution. Skills3VWoA encouraged new ideas, projects and was change-ready but not at the cost of risk. Any new idea was measured based only on the results and response it promised. Table 5.1 Alignment Maturity at VWoA

Even with established standards and processes, VWoA falls short of a matured alignment which directly impacts their business. With occasional business improvements occurring due to strategy changes, the company faces a serious change in culture with employees depending on changes to experience business growth rather than contribute to a better strategy resulting in stable business growth over a period of time. Structural alignment needs to be advanced as the ELTs require the company to follow vintage methods of company hierarchy which may curb innovation and entrepreneurship. 6.0.Moving towards better Alignment and Levels

From the challenges described by Austin (2007), better alignment is necessary to obliterate the pandemonium at VWoA. An enterprise-wide integration at least for project prioritization is necessary. This can be achieved by establishing NRGs across various locations and then convening NRG representatives at VWAG to gauge their approved projects against enterprise projects and goals (Communication- Level 4; Governance- Level 4).

By this, important enterprise projects are not missed. At a functional level, prioritization can be done by the weight of the link between a functional level goal and an enterprise level goal (Scope & Architecture- Level 3) so VWoA knows what’s important and urgent for VWAG. Rather than visualizing IT projects as a separate cost factor, its contribution towards revenues against investments made is to be measured on a regular basis (Partnership- Level 3). Projects can be approved based on metric systsms and a long term value (Competency and Value- Level 3+). Here an IS would play a paramount role by comparing business goals enterprise-wide, thereby enabling informed decisions. 7.0.Future Role of IS

IS can play a phenomenal role at VWoA with websites maintaining vehicle portfolios and enabling digital exploration of vehicle interiors. It can include dealer and service centre locators, best deal offers, customer feedback and making customer feedback available to potential customers, scheduling testdrives and arranging for loans if necessary. By this the company can gain a holistic view of the demands in the market and first hand customer feedback thereby dynamically prioritizing their business goals while attracting more customers. 8.0.Conclusion

Though alignment is necessary for a company to perform harmoniously, it need not necessarily be at level 5. Adequate levels of alignment on a continuous review basis with viable scope for projects towards business goals would more likely turn the tables towards business success. 9.0.References

[Austin, 2007] Austin, Robert D., 2007. Volkswagen of America: Managing IT priorities, June 14, 2007 [Chan, 2002] Chan, Yoland E., 2002. Why Haven’t We Mastered Alignment? The Importance of the Informal Organization Structure, MIS Quarterly Executive Vol. 1 No. 2, June 2002

[Luftman, 2000] Luftman, Jerry, 2000. Assessing Business-It Alignment Maturity, Communications of AIS, Volume 4, Article 14, December 2000 10.0.Website References Volkswagen of America: