Deploying and managing business technology is often critical in establishing, or sustaining, a strategic position; not understanding the roles of business technology across a company’s product lines and markets can lead to inappropriate investment decisions.

Winning the 3-Legged Race: When Business and Technology Run Together, (Pearson Education, November 2005) shows how companies or networks of companies evolve their strategic positions. The book’s authors, Faisal Hoque, V. Sambamurthy, Robert Zmud, Tom Trainer and Carl Wilson, observed that two very different types of strategic actions are necessary: exploitative and exploratory behavior.

Building lean or agile organizations requires substantial investment and carries strategic risks. It is important to realize that while not all organizations need to be lean or agile, it is possible to exhibit both leanness and agility.

To explore these conclusions, the BTM Institute recently sat down with V. Sambamurthy, Eli Broad Professor of IT and executive director, Center for Leadership of the Digital Economy, Eli Broad Graduate School of Management, Michigan State University. Here's what he had to say:

Q. How integral is the role of an appropriate governance process in building an agile infrastructure within an organization?

An agile infrastructure has two parts at a minimum. First, there is a need to ensure that the enterprise architecture (including the process architecture) sustains the goal of enterprise agility. Second, the firm must ensure that its IT architecture (including the suite of enterprise systems and applications) sustains the goal of agility. In addition, the two architectures must be continually blended in order to identify digital opportunities for agile moves (e.g., launching new products, services, channels and markets). A governance process is very critical to the ability of developing agile infrastructures because business executives are the primary decision-makers in the domain of the enterprise architecture, whereas IS executives are the primary decision-makers in the IT infrastructure domain.

A well-developed governance process makes them aware of the decisions where they must take on authority and responsibility and decisions where they must collaborate with each other. A governance process ensures a process of lateral communication, collaboration and coordination across the two infrastructures. Since agility involves continual innovation with speed, surprise and success, a well-developed governance process ensures that the business and IS executives are able to make appropriate decisions in a rapid but accurate manner. A poor governance could result in business initiatives without adequate technology support, or technological initiatives not addressing a real business opportunity.

In order for an organization to be proactive vs. reactive, what processes must be in place to effectively sense and respond to situations that cannot be forecasted?

The key process to develop is intelligence capability that is both internally and externally oriented. A highly refined business-intelligence capability that enables a firm to analyze its transaction data and discover new market segments or product, services, pricing and channeling opportunities is needed. At the same time, firms must develop an external intelligence process whereby they can observe innovation opportunities among the emerging economic, technological, social and regulatory trends. Along with such a process, managerial foresight and the ability to ask the right questions as well as make sense of the intelligence analyses is critical.