# Exploring the Cloud Computing Loop in the Strategic Alignment Model

Belitski Maksim, Fernandez Valerie, Khalil Sabine, Weizi Li, Kecheng Liu

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Belitski Maksim, Fernandez Valerie, Khalil Sabine, Weizi Li, Kecheng Liu. Exploring the Cloud Computing Loop in the Strategic Alignment Model. 18th International Conference on Informatics and Semiotics in Organisations (ICISO), Jul 2018, Reading, United Kingdom. pp.117-124, 10.1007/978-3-319-94541-5_12. hal-01920743

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# Exploring the Cloud Computing Loop in the Strategic Alignment Model

Belitski, Maksim<fnref n="1" />; Fernandez, Valerie<fnref n="2" />; Khalil, Sabine<fnref n="3" />; Li, Weizi<fnref n="1" /> and Liu, Kecheng<fnref n="1" />

**Abstract.** Since its emergence, Cloud Computing (CC) has revolutionized organization through offering them a large range of easily accessible, scalable, and non-expensive services. As CC has been gaining popularity, it has an impact on the strategic and operational level of every organization. Thus, wondering about its impact on the organizational strategic alignment is a must. This study develops the Cloud Computing framework of Strategic Alignment Model, where strategic fit between operational and strategic levels in organization is achieved through cloud-enabled multiple iterative processes. The study aims to understand whether cloud computing increases operational and strategic efficiencies of organization and if yes then how. After presenting the theoretical background, the hypotheses, and the built cloud framework, we discuss the way strategic alignment theory helps us to better understand how information flows within the strategic fit of business and IT and what is the role of CC in it. This study addresses the strategic alignment as well as the cloud computing literature.

**Keywords:** Cloud Computing, Strategic Alignment, Operational Management, Validation

## 1 Introduction

Although an intense research has been done about the strategic value of information technology adoption using resource-centered view [1] the contingency-based view [2-4], semiotic framework [5] and leadership and management view [6-8], there is a paucity of research assessing a value created by cloud computing technology (CC) [9] and the mechanism of CC adoption in organization [5]. Cloud computing, referring to information technologies enabling convenient, on-demand network access to a shared pool of configurable computing resources and has fundamentally changed the way companies operate and co-create value [10-13]. As a transformative technology, CC

<footnote n="1">¹ Henley Business School, University of Reading, Whiteknights campus, Reading, RG6 6UD, UK</footnote>

<footnote n="2">² Department of Economic and Social Sciences, Telecom ParisTech, 46 Rue Barrault, 75013 Paris, France</footnote>

<footnote n="3">³ ICD – International Business School, 12 rue Alexandre Parodi, 75010, Paris, France
m.belitski@reading.ac.uk, valerie.fernandez@telecom-paristech.fr, skhalil@groupe-igs.fr, weizi.li@henley.ac.uk, k.liu@henley.ac.uk</footnote>
has changed various aspects of business and social interactions in the way businesses
operate, exchange data and engage with customers [9]. To better understand a value
creation process enabled by CC, more theoretical underpinning and practical evidence
is required regarding the role that CC plays in improvement of the organization's oper-
ations, innovation, efficiencies as well as used to design a robust IT and business strat-
egy. It is important to operationalize previous findings and results that are focused on
issues associated with information technology adoption and a framework to analyze it
[4, 14].

CC continues revolutionizing the ways business collect, process, analyze, review and manage information [15-16] with a special attention on consistent measurements [17] of returns associated with CC by organization [18]. We use the term organization in this study to further emphasize the vast and far-reaching impact of cloud technology investments which goes beyond a separate business unit such as organization or busi-ness.

Although interest of IS scholars and practitioners on the cloud's impact on organi-
zational operations and performance has been growing, the prior research related to CC
and efficiencies has primarily focused on adoption or operations, cost reduction, ex-
ploiting the IT resource mobility offered by the CC as well as other supplementary
technologies. There has been little attention paid to CC as an asset but also a strategic
tool, creating more agile and flexible IT infrastructure, business operations, skills, ad-
ministrative infrastructure and IT architecture. CC is likely to result in changes in ad-
ministering and operations; higher rate of new product development, higher engage-
ment of executives in IT investment and management decision-making, business
growth, meticulous design of IT and business strategy within budget, time and scope.
These and other important issues related to CC have not been explicitly discussed
within the Strategic Alignment (SA) framework [14, 19, 20] with a lack of evidence on
how information flows to achieve strategic fit and integration [21]. Neither has been
investigated the interplay between CC, strategic operations and strategic performance
of organization with the published work being fragmented and incomplete [20].

CC can play a major role in SA in organization described in [14] as the difficulties
of achieving alignment for professional organizations; the limitations, organizations
have in being agile; the rationale for acquiring technology and determining IT skills;
the imperative meaning that CIOs attribute to IS alignment. To demonstrate the role
that CC plays in IS organization we build on Information Systems (IS) [4, 22],
Strategic Alignment [23-27] and organizational performance literature [28, 29].

This study makes the following contribution. We develop and test the “cloud-ena-
bled mechanism of validated learning” embedded into IS alignment model. More spe-
cifically we develop the Cloud Computing framework of SA, where strategic fit be-
tween operational and strategic levels in organization is achieved through cloud-ena-
bled multiple iterative process.

This study offers practical implications for managers to better understand the com-
plementary nature of new technologies and CC's embeddedness in Strategic Alignment
Model. Understanding how information is collected, assessed, distributed and analyzed
should enable decision-makers to design more effective and robust business and IT
strategy. We argue for the need to study the continuous organizational adaptation of
evolving CC because of the challenges such technologies pose for users, as well as the
operational capabilities and strategic skills they demand.
# 2 Theoretical Background and Hypotheses

## 2.1 Strategic Alignment Lens in Cloud Computing Framework

Cloud computing is as a strategic asset and tool rather than a service [9]. In order to assess the impact of CC, managers need to be aware that it has become another strategic asset embedded in strategic alignment of IT and business [5, 9, 19, 20, 23]. Being attributed to an improvement in data sharing, technology standardization and infrastructure, administering and operations, CC is further associated with the ability in delivering new projects and applications within budget, time and scope, changing strategy and engaging different stakeholders [9]. It changed the paradigm of IT investment moving from operational expenditure (OPEX) to capital expenditure (CAPEX) and decreased usage of hardware [12, 16, 31, 32, 33].

Furthermore, CC is related to greater scalability, flexibility and operation ability. This enables organizations to improve organizational infrastructure and business services [31, 32]. The ubiquitous nature of CC [31, 32, 34, 35] enables greater alignment of business and IT strategies, where different business units can integrate and use cloud solutions anywhere and anytime. On the one hand, CC is thought to be a reliable source when organizations acquire standardized solutions from trusted providers, therefore once adopted by organisational and IT infrastructure it affects strategic choices made by executives and related to investment in IT and business [31, 34].

To build our theoretical framework on the role of cloud technology adoption in organization we use Strategic Alignment lens [30, 36]. First, we conducted a detailed literature review to identify relevant theories of alignment and validated learning. Our extensive literature search failed to unearth theories addressing strategic alignment between strategy and technology with the important stage of validated learning. This is important when investigating the fit and integration between strategy and operations [21, 23, 30].

## 2.2 Stages of Theoretical Framework

Our theoretical framework consists of three stages associated with Apprehension of Information, Unitization of Information, and Validated Learning. All three stages rely on ‘continuous adaptation and change’ within SA model [23]. Our theoretical framework illustrates various steps in information gathering, conceptualization, optimization, implementation and validated learning.

At the first stage, apprehension of Information is done through generating insights, gathering information and a process of conceptualization. It is associated with people gaining knowledge and experience through using CC for operations and as a part of IT infrastructure development. Employees who access CC may not immediately understand CC solutions until they have experienced them. Apprehension of information
stage is about 'finding the answer' where 'finding' is something more than mere re-
trieval of information. It is about adoption and use of CC in daily processes. This
changes the cognition of users, focused on pure knowledge acquisition by experiencing
and absorbing it [28, 37]. In addition, it requires generating and conceptualizing. Gen-
erating involves getting CC in place for operational and IT infrastructure. Generative
thinking involves imagining possibilities where CC could be applied to automate pro-
cesses and increase efficiencies. It further requires, questioning, sensing new opportu-
nities and viewing IT and business processes from different perspectives and gathering
information through experience and validated learning from previous iterations. The
process of decision-making at this stage starts with exploring options (divergence), se-
lecting and continues with exploiting and applying solutions with conceptualizing (con-
vergence). The ambiguity of CC on alignment-operational should be pinned down.
Conceptualizing results in putting new ideas together on how to use CC more effi-
ciently.

At the second stage, Utilization of Information features the outcomes of cloud adop-
tion and performance. At this stage, IT and business strategy can be designed reflecting
on information received at stage one through optimizing and implementing strategy. It
demands decision makers to apply knowledge obtained at the first stage to design strat-
egy. They may either design a brand-new strategy, or update the existing strategy in
light of changes in business processes and IT infrastructure triggered by CC. At this
stage optimisation and implementation are required. Optimisation gains understanding
of CC for organizational and IT strategy. This results in developing practical solutions
and plans from abstract ideas, trends and insights. Given a well-defined solution, deci-
sion makers should be able to sort through large amounts of information to pinpoint the
critical factors and processes where cloud is required. They should be confident in their
ability to make a sound, logical evaluation of transformative impact of CC and integrate
those processes. Finally, implementation is execution of designed strategy. Implemen-
tation of strategy requires complete understanding of how business operations and IT
infrastructure are going to be affected by the CC. In case of strategy complete or partial
failure or as a result of changes in external environment (e.g. technology, institutions,
market competition, etc.), decision makers need to be agile and respond quickly. This
requires transition from the second to the third stage of "Validated Learning".

At the third stage, Validated Learning measures the strategic efficiencies on both sides of IT and business. At this stage the performance is assessed and the application of CC is redesigned adjusting to environmental changes or addressing gaps in performance outcomes. Validated learning offers two choices: first, either retaining IT and business strategy or revising the way CC is implemented. At this stage the use of CC will be reshaped and redesigned to feedback to management in order to improve the efficiency of the next round of iteration of the cloud-enabled loop.

3 The Model

When an organization learns through development, implementation, measurement and
feedback, the impact of CC could become more pronounced and ubiquitous [9]. This
permits us to measure its value more distinctively. In particular, we can measure the
transformative impact of CC by analysing its relation to innovation, strategy, develop-
ment of new products and services, standardizing and sharing data, management oper-
ations, changes in processes.

Fig. 1 illustrates the place of CC within SA model which can be considered in terms of three interdependent dimensions of cloud-enabled validated learning loop. The first stage in a loop represents the Apprehension of Information through cloud adoption to improve organisational and IT infrastructure and processes. The second stage repre-sents the Utilization of Information received from operations. Both stages are precon-ditioners to the third stage of Validated Learning which enables the assessment of CC efficiencies and advises action.

The theoretical framework supports the interplay between operations, strategic effi-
ciencies and use of CC. The mechanism is iterative and can be described in stages as
adopt – measure – learn – rebuild. The loop changes the way SA works, Strategic align-
ment is seen a process of continuous adaptation and change which could be achieved
both through iterations and technology-enabled experimental learning [14, 23].

4 Discussion and Conclusion

Cloud computing marks a paradigm shift in the way business is done and is greatly
associated with delivering high quality and timely service to customers.

The major benefits of CC found in this study are as follows. First, investing in CC enables rapidly easing the administering and operating processes within the organization and with external partners; second, it reduces cost of network maintenance, information exchange; third, CC decreases time solution and new products are developed; fourth, it improves security and compliance; and finally, it enables global deployments of solutions and faster decision making.

Building on the extent literature [4, 13, 23, 27] this study develops the Cloud Com-
puting Framework of Strategic Alignment Theory by theoretically discussing and em-
pirically validating the cloud-enabled mechanism embedded into business and IT align-
ment within SA model of organization [23]. More specifically, we established and de-
scribed three distinctive stages of cloud’s transformative impact on organizations: first,
Apprehension of Information through cloud adoption to improve organisational and IT
infrastructure and processes; second, Utilization of Information received from opera-
tions and deciding on business and IT strategy; third, Validated Learning which enables
to assess the role that CC plays in operations and strategic fit and advise changes. When
an organization learns through generalization, development, optimisation implementa-
tion and validated learning, the impact of CC could become more pronounced and ubiq-
uitous facilitating both operational and strategic levels of organization.

Our contribution in the scholarship of IS and SA is as follows. First, we applied Strategic Alignment lens to demonstrate how each of three stages of cloud-enabled validated learning process contribute to business operations and IT infrastructure, business and IT strategy. Each of three stages forms a cloud-enabled loop of validated learning used by organizations as part of their “adopt – measure – learn – rebuild” strategy. Second, our methodological contribution is in applying a multi-level mixed method and used various sources of data to test our theoretical framework.
The future research will need to focus on evaluating to what extent CC changes strategic integration between IT infrastructure and business operations as well as between IT and business governance. Scholars would also like to know how investment in CC will affect strategic fit between IT and business of economic agents when their performance and operations are interconnected, such as digital ecosystems. It may appear that strategic alignment of organization is not any more dominant unit of analysis, and strategic alignment of an ecosystem could be viewed as an alternative unit of analysis. In a new digitized economy, when operations and efficiencies of ecosystem players are complementary, CC is likely to benefit the entire ecosystem of inter-connected organizations, rather than a focal organization. This is because CC makes access, processing, sharing and transforming data faster, easier and more secure. Future research needs to offer theory and implications on how CC will support operations and efficiencies of inter-connected organizations.
<figure><img src="image_2.png" /><figcaption>Fig. 1. Theoretical Framework of Cloud enabled Validated Learning in Strategic</figcaption></figure>
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