THE VALUE VIEWPOINT

The transition to the mature system will be enabled only when the IT function is viewed as a supply function that adds value to the organization's business. Porter (2004) developed the concept of the value chain, which describes the relationship between the activities that contribute to organizational products and services. Porter presented a typical value system as comprising primary activities (that provide a sequential end-to-end process to create the product from inbound logistics to service provision) and support activities (various enterprise-wide functions such as infrastructure, development, procurement and human resource support). The essence of the value chain approach is that the relationship between parts of the organization (as well as external suppliers) are seen in terms of supply and demand, with contributing services adding value to the overall process. Each activity combines purchased inputs, information, resources and technology to perform its function, and may be considered in terms of the value of its services and associated margin (value less collective costs; Porter, 2004).

If the organization provides a diverse range of services or products, then the IT function may need to support multiple value chains, as shown at Figure 8, and thus itself needs to be differentiated commensurate with the support required by the business units. If we consider the IS services to the organization to be IS(i), where n is the number of unique support relationships, then the IS-business relationship will become complex as n increases and as the nature of the support and variance of these relationships increase, especially if the feedback to the business is not coupled loosely. The nature of the support relates to the work associated with (and value contributed to) individual business units. The variance in IT support relationships with the organization's businesses represents the requirement for differentiated alignment. In a diverse organization, these differences need to be addressed not only at the strategic level, but also with the use of operational alignment mechanisms. Such mechanisms consider business requirements for variations from the standard architecture or from standard service provision.