Case study: Volkswagen Alignment of IT strategy with the organization's business strategy is a fundamental principle advocated for over a decade (Luftman 2000). From 1930s the first Volkswagen automobiles was designed to 2008, Volkswagen had become one of the biggest vehicle industries in the world and experienced both the sales peak and “Valley of Despair”. It has developed its pattern to face the upcoming difficulties. But according to the article, there were still some issues need to be resolved or improved such as the unsatisfied IT-­‐business alignment maturity. And this case study would focus on what kind of roles IS should play and how to achieve IT-­‐business alignment at Volkswagen.

From this article we can see, Volkswagen had developed several strengths like brand grouping, Next Round Growth initiatives, pursued ecommerce, etc. After around 1993, its sales had been growing evidently. But at the same time, the weakness of Volkswagen was also apparent. From the beginning of reducing the IT costs and outsourcing most of its IT service, to the new CIO took office, a CIO who didn’t had IT background. Even if Volkswagen had already realized the importance of how IT could significantly improve the sales and other parts like making the information exchange within the whole enterprise smoother, and tasted the consequence of lack IT knowledge. It still treated the IT more like a business supporter or process enabler rather than a partner who should has a seat around the meeting table. If we estimate Volkswagen’s IT-­‐business alignment maturity, it may only return the result around level 2 or level 2+. Theoretically, this result might be enough for many industries, but as a worldwide vehicle enterprise, it might not be passable.

Actually, although the new process of choosing the right projects to fund turned out to be having several problems that caused the follow-­‐up IT fund allocation dilemma; it definitely had some benefits. Compared with the old process, the new process was well structured and organized, aligning the goals of each business units with the goals of enterprise. And the importance of IS was well recognized than before, such as the establishment of the Digital Business Council. But as I mentioned above, it was still not enough. We can easy to see from the article, the group of Volkswagen treated IT separately. They only started to do the speculation of IT budget at the end of phase three rather than permitting IT group participating into the process from the very beginning. In this case, if IT group joined the meeting from phase one, adding IT budget as a consideration factor to regroup each business unit’s top three goals and do alignment with enterprise goals, the result might be better.

About how to enhance IT-­‐business maturity in Volkswagen, several recommendations could be made. Based on this case, since CIO did not have appropriate background and experience of IT, hiring a professional IT assistant

for CIO might be a good option. If possible, this assistant should better have some knowledge or experience in controlling budgets and understand organizational process management. This assistant could help CIO do process design or re-­‐engineering from a perspective of IT engineer. And if there are any potential defects in the new designed system, having an IT assistant could also increase the possibility to find it.

Then, each business might be better to have one or more than one IT assistant, too. These assistants could help each business unit’s executive gets a approximate estimation about the budget of their request before starting meeting. And when these executives have any opposing views about the determination from DBC, having such (a) assistant(s) could help them re-­‐explain their consideration from a view of IT and defend their requests. Or after negotiation, these assistants could translate opinions from DBC to persuade executives to accept the final determination. To make this simple, IT assistants should play the role that becomes a negotiation bridge between DBC and ELT.

These two recommendations above could be the first step to enhance the IT-­‐business alignment maturity, but might be still not enough because Information flowing among CIO, DBC and ELT via assistants might sometimes generate some kind of misinterpreting. So learning IT could also be a good way to improve IT-­‐business alignment. Of course, learning IT does not mean CIO, ELT and others, like senior managers, have to know how to implement IT or have IT knowledge at same or similar level with IT personnel. They could start from trying to have a good comprehension of IT, understanding how IT services and technologies can contribute to business objectives. If best, develop informal communication lines with IT personnel. It is not an easy task. Volkswagen had been lack of IT knowledge and underestimating the importance of internal IT structure for a long time. Achieving this goal might need IT personnel be exposed into the needs and strategy of the organization through their inclusion in meetings, workshops and in partnerships with business members on projects. And it might be a long journey.

Further, the CIO working with these executives as part of the Executive Leadership Team might be a reasonable choice. On the one hand he could consider the relationship, but there does not seem to be any reasonable basis for giving certain colleagues special treatment outside of the new priority management system, because if one of the executives is treated differently, other executives may claim to have same treatment. Finally as the result, the new process will lose its strength of being structured and organized.

Finally, IT department should have its own budget, which is different from the IT portfolios. On the one hand, the IT department budget could help CEO and financial department control expenses of IT sector, on the other hand, it be useful

to help IT department control it own expenditure. As we know, IT investment costs are different from IT department costs.

In conclusion, outsourcing a part of IT needs might have some benefits in cutting down IT expenditure. But as a huge international enterprise, having a professional IT team and making efforts to enhance IT-­‐business maturity might gain much more benefits. Volkswagen had already realized the importance of IT, but there was still much spaces for improve. And it would be a long-­‐term task since alignment is not a state, but a journey – one that is not always predictable, rational, or tightly planned (Ciborra 1991). This would need continuous adjustment by using feedback process and other information resources, which also rely heavily on IS.

REFERENCES Luftman, J 2000 ‘Assessing Business-­‐IT Alignment Maturity’, Communications of the Association for Information Systems, volume 4, article 14.

Ciborra, C. ‘From Thinking to Tinkering: The Grassroots of Strategic Information Systems’, in the Proceedings of the Twelfth International Conference on Information Systems, New York (December 1991), pp. 283-­‐291.