This document presents research on modeling business strategy for business-IT alignment. The research aims to address the understanding gap between business and IT by formalizing prevalent business strategy formulations. The research goal is to develop meta-models and ontologies for strategy maps and balanced scorecards (SMBSC) and value configuration formulations. The methodology uses design science research to develop artifacts through literature analysis, meta-model development in UML, and ontology development in Telos and OWL. Evaluation is done through case studies and analysis of the artifacts. The contribution is novel formalization of business strategy formulations that can support business-IT alignment. Future work includes formalizing additional strategies and unifying them through a reference model to further enable alignment.

1. Modeling Business Strategy
For Business-IT Alignment
Presented by: Constantinos Giannoulis
Supervised by: Paul Johannesson and Jelena Zdravkovic
Stockholm University, Department of Computer and System Sciences (DSV)
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2. Overview
● Business-IT Alignment
● Problem, Goal
● Research Methodology
● Contribution
● Conclusions & Future Work
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3. Business-IT Alignment
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4. Business-IT Alignment
● Integration of business and IT
● Business strategy & IT strategy
● Fit between business needs and IT priorities
● Long time commitment & planning
with impact on IT planning
● Focused use of IT: improved performance
Communication of strategy is linked
to successful implementation
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5. “Great people want to
feel like impact players.
Put simply, great
people want to feel
like they're part of
something greater
than themselves” —
they want to become, to
use a favorite Jobs
phrase, "insanely great.“

6. Business-IT Alignment
● Early definitions call for IT Strategy
(Henderson & Venkatraman, 1989 & 1993)
● More recently, definitions call for IT in general; no IT Strategy
expected
(Luftman et al, 1999)
● Lately, goals were introduced;
● ”business and IT working together to reach a common goal”
(Campbell, 2005)
● Business goals and IT goals
(Abraham, 2006)(Singh & Woo, 2009)
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7. Business-IT Alignment
…”the linkage between the goals
of the business and the goals of IT.”
(Abraham, 2006)
• No IT strategy formulation required
• Goals focus on the Whys and the Hows
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8. Problem & Goal
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9. Problem Space
Business IT
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10. Problem Space
Business Alignment IT
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11. Problem Space
Business Alignment IT
GQM+Strategies Enterprise Models
• Process Models
• Requirements Models
INSTAL • ...
B-SCP
...
...
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12. Problem Space
● Shortcomings of existing alignment methods
– Most are rooted in IT and not Strategic Management
– Criticized of being unrealistic and mechanistic;
dynamic business vs. static IT
– Business insights not properly disseminated to IT and
business strategy formulations liberally used
● In specific domains, like Requirements Engineering
– Focus on a particular IT aspect missing business considerations
– Focus on managerial concerns not dealing with low level
requirements
– Only a few semi-formal 1..1 mappings exist
● Different communication means and formalisms used
– Business: natural language-based, schematic representations
– IT: clearly defined models with precise descriptions
Alignment is still an open problem
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13. Research Problem
Business strategy
● remains unknown to IT—an understanding gap
● changes are not traceable to IT
– thus alignment of business goals against IT actions
and results cannot be evaluated
● needs to provide insights to IT and relate to enterprise
models to trace decisions, actions, and artifacts
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14. Research Problem
Addressing the understanding gap relies on a *..*
relationship between business strategy and
enterprise models
– How is business strategy formulated?
– Which alignment method is chosen pointing
to distinct enterprise models?
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15. Research Problem
Business Alignment IT
Enterprise Models
Strategy Maps GQM
• Process Models
• Requirements Models
Value Chain INSTAL • ...
Blue Ocean Strategy B-SCP
...
... ...
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16. Research Problem
● From *..* to 1..*
– A common business strategy formulation interface
towards multiple enterprise models
● The understanding gap remains as different communication
means and formalisms used
– Business strategy: natural language-based, schematic
representations, lack precise descriptions, not
appropriate for mappings that enable for automatic or
semi-automatic traceability
– IT: clearly defined models with precise descriptions in the
forms of conceptual models, meta-models, ontology,
etc.
● Business strategy formulations need to be described in a
form similar to enterprise models.
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17. Research Problem & Research Goal
Research question:
How can business strategy formulations be formalized?
– Users? IT
– Purpose of use? Manual, semi-automatic, & automatic
Research goal:
To build both the meta-models of prevalent business
strategy formulations as well as their ontologies.
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18. Research Methodology
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19. Research Paradigm
● Business-IT Alignment lies within IS
● Within IS research:
Behavioral science vs Design science
(justified theory vs effective artifacts)
● Why Design Science?
– Problem Solving
No formalization of prevalent business strategy
formulations exist
– Building artifacts
Meta-models and reference ontology
– Artifacts include both formalizing business strategy (the
process) and the formalization itself (the design)
● Process: Design Science Research Framework
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20. Research Process: Awareness of Problem
Research question:
How can business strategy formulations be formalized?
– Users? IT
– Purpose of use? Manual, semi-automatic, & automatic
Research goal:
To build both the meta-models of prevalent business
strategy formulations as well as their ontologies.
– Appropriate formalizations
– Input relevance and coverage: prevalent business
strategy formulations
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21. Research Process: Awareness of Problem
● Why Meta-models? ● Why Ontology?
– Manual/semi-automated use – Allows fully-automated use
– Exist for most enterprise models – Can be derived from a meta-model
(mappings) also serving as a validation
– Support model integration, mechanism
– Can be tranformed into ontology, – Captures the business strategy
– Well established within IS formulation as a domain (reference
ontology)
● Why UML? ● Why Telos?
– Widely accepted for conceptualization – Simple and expressive syntax
of models and meta-models
– Tool support on model consistency
checking
● Why OWL?
– Tool support
– More widely accepted
– Standard tranformation rules from
UML exist
– Allows for advanced reasoning by
checking for ontology satisfiability
– Supports ontology integration
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22. Research Process: Awareness of Problem
Input relevance and coverage
Selection based on:
Business Strategy formulations: ● Relevance to alignment
● Applicability
● Miles & Snow Typology ● Strategic planning coverage
● The Value Chain – Resource-based view
– Industrial organization
● The Value Shop – Schumpeterian
● The Value Network ● Value Configuration
● Blue Ocean Strategy – Relevant within alignment
– Most influential work in
● Strategy Maps business strategy
● Balanced Scorecards ● SMBSC
– Relevant within alignment
– Covers strategic planning
– Widely accepted
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23. Research Process: Suggestion
● Requirements for the research goal’s achievement are
based on theoretical analysis because
– Artifacts are novel thus it is unclear how to use them
in practice making empirical studies not feasible
– It is not bounded by any single case or social context
● Artifact requirements
– Utility (if it works)
– Fidelity with real world phenomena
– Completeness (level of detail)
– Robustness
– Internal consistency
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24. Research Process: Development & Evaluation
SMBSC Value Configuration
● Literature (Formulation & ● Literature (Formulation &
Applications) Applications)
● Meta-model in UML ● Meta-model in UML
● Formalization in ● Formalization in
Telos & OWL Telos & OWL
● Evaluation using an ● Evaluation using an
industrial case scenario industrial case scenario
(ABB Printing Services) (Norwegian Police)
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25. Research Process: Development & Evaluation
SMBSC
Strategy Maps Balanced Scorecards
– Four organizational – Objectives
perspectives of Balanced
Scorecards (BSC) – Measures
• financial – Targets
• customer
– Actions
• internal
• learning and growth
– Both external & internal (all
business activities)
– Structure: Cause-effect
links/assumptions
– Build top-down (causality is
bottom-up)
– Communicate direction and
priorities
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26. Research Process: Development
SMBSC
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27. Research Process:
Development The SMBSC Meta-model
● Includes all elements of
SMBSC
● Generalizes some elements
for applicability (Groups)
● Introduces explicitly user
defined groups and
perspectives
● Separates classes and
instances (application)
● Includes constraints
expressed in a structured
manner
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28. Research Process: Development & Evaluation
SMBSC in OWL
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29. Research Process: Development & Evaluation
SMSBC in OWL
(ABB Printing Services)
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30. Research Process: Development & Evaluation
SMBSC in Telos
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31. Research Process: Development & Evaluation
SMSBC in Telos
(ABB Printing Services)
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32. Research Process: Evaluation
Based on the artifact requirements:
● For utility and fidelity, the descriptive evaluation method of the
”informed argument” was used by demonstrating applicability
through artifact instantiations using real published cases
● For completeness, the artifacts’ level of detail were evaluated
against the knowledgebase including the original authors’
specifications and additional published applications
● For robustness and internal consistency, established transformation
rules of UML to OWL were employed, similarly, clearly defined
rules for Telos; also ontologies in OWL were checked for
internal consistensy using reasoning tools
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33. Research Process: Conclusion
The results of the iterative development and evaluation
phases of the research process were disseminated in
the following communities
● 3rd Working Conference on the Practice of Enterprise
Modeling (PoEM 2010)
● 5th IEEE International Conference on Research
Challenges in Information Science (RCIS 2011)
● 6th International Workshop on BUSiness/IT Alignment
and Interoperability (BUSITAL 2011)
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34. Contribution
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35. Contribution
Novelty in the process and the product
● Formalizing SMBSC and Value Configuration (the process)
– raised questions not otherwised asked
– discovery of constraints and properties for the meta-models
● Build their meta-model in UML and their reference ontologies in
Telos & OWL (the products)
– Clear and unambiguous abstract syntax of the business strategy
formulations was built
– Expression and analysis of the formulations is supported by the
tools that equip the languages used
– Other operations usefull within the scope of the work can now
be supported
– Diffusion and reusability of the meta-models are enhanced
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36. Contribution levels in Design Science
● Level 1—Specific artifact instantiations
– Instantiations of the SMBSC and Value Configuration meta-
models, as well as instantiations of their reference ontologies
● Level 2— Design principles (e.g. models and methods)
– The process followed to formalize SMBSC and Value
Configuration can be used as an example method to be
followed for other business strategy formulations
– The products (SMBSC and Value Configuration meta-models
and their ontologies) allow for:
• Mappings to enterprise models
• Complementing existing alignment methods substituting the
liberal use of business strategy or even enriching the
ambiguous use of SMBSC and Value Configuration
• The progressive unification of business strategy
formulations
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37. Conclusions & Future Work
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38. Conclusions
Research question:
How can business strategy formulations be formalized?
Research goal:
To build both the meta-models of prevalent business
strategy formulations as well as their ontologies.
02/12/2011 © Giannoulis

39. Conclusions
Formalization of: ● Consistency between sources and
artifacts
● SMBSC
● Correct artifact instantiation
– Into a meta-model in UML
– Into reference ontology in ● Unseen questions were raised,
OWL & Telos properties & constraints
● Value Configuration were discovered
– Into a meta-model in UML ● Clear & unambiguous artifact syntax
– Into reference ontology in
● Additional operations (model
OWL & Telos
integration, mappings, etc.)
● Address the understanding gap
● Complement alignment methods
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40. Future work
● Formalize and integrate more business strategy
formulations
● Unify business strategy formulations (UBSMM)
– Validate UBSMM with cases
– Map and evaluate how UBSMM can
support/complement alignment methods
● Map to business process models, and other enterprise
models
– For RE, map and evaluate how goal modeling
languages (i*, KAOS, BMM, etc.) can express
business strategy using UBSMM
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41. Research Problem
● Analogy in basketball
– 1 coach: strategist, overall decision maker
– 5 players: different roles, concerns, perspectives,
operational decision makers
– Must speak the same ”basketball language”
– Must be aligned
– Understanding gap = failure!
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42. Research Problem & Research Goal
Coach Basketball
Players (IT)
(Business) Alignment
Off-court offensive In-game offensive
strategy Model driven
systems
Off-court defensive
strategy In-game defensive
Oral instructions
Referee handling systems
strategy
... ... ...
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44. Questions
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