Aligning the IT portfolio with business strategy: Evidence for complementarity of corporate and business unit alignment

Research on alignment between business strategy and information technology (IT) strategy has generated extensive insights over the last three decades. That research has focused primarily on the fit between business and IT strategies, while cross-domain alignment, i.e., alignment between business strategy and IT infrastructure components, has received far less attention. Further, previous studies have focused on the implications of alignment for firm performance while the effects of cross-domain alignment on business unit performance in multi-business organizations (MBOs) are yet to be examined. This issue is important as IT infrastructures are evolving rapidly. Specifically, MBOs are increasingly turning to corporate IT platforms to support a common set of shared IT needs, while still allowing individual business units to manage unique aspects of their own IT needs through local IT applications. Extending prior research, this study proposes that performance of business units in MBOs is influenced by two complementary forms of cross-domain alignment, viz., alignment between the corporate IT platform and the corporate business strategy, and alignment between the business unit’s portfolio of IT applications and its business strategy. Using data from a global survey of 120 organizations, we find evidence that complementarity between these two forms of cross-domain alignment creates a joint positive effect on business unit performance. We also find that this effect varies with the extent of process digitization within business units. Implications for theory and practice are discussed.     

IT leadership from a problem solving perspective

Information Technology (IT) leadership is a domain in need of investigation and development. Here, we present a general model for problem solving leadership and describe our application of that model to IT organizations, with special attention to the role of the Chief Information Officer (CIO). We tested the real-world value of this model through intensive interviews with 26 senior IT executives of major organizations, from which we identified four key leadership challenges facing CIOs today: (1) bridging cognitive gaps; (2) building and managing problem solving diversity; (3) shifting focus to process; and (4) solving problems and managing change. Integrating problem solving concepts with insights gained from the interviews, we offer practical approaches for aligning IT with business objectives, transforming the image of IT, and managing change, among other recommendations.     

IT Governance of Dutch Municipalities and Digital Information Management

Digitalization of information management has changed the archives sector in a short period of time and has significant implications for information processes within governmental organizations. In this article, the governance of such organizations is looked at from a business information technology (IT) alignment driven perspective, based on a case study conducted within two Dutch municipalities. The study shows that mature IT governance can have positive effects on digital document information management, because it leads to “desirable behavior in the use of IT.” Comparing the two municipalities, several findings become apparent. These concern effective management of input, for example through successful cooperation, and effective management of output of IT, for example by providing the needed digital services to citizens. Findings also are presented regarding the conjoint development of strategies by business and IT, mainly concerning the involvement of IT in decision making. Finally, findings surface concerning the positioning of decision-making authority, and whether that is clear to the personnel.     

Do you see what I see? The search for consensus among executives’ perceptions of IT business value

Since firms rarely collect data on the precise economic or financial impacts of information technology (IT), perceptions play a key role in assessing IT impacts. To the extent that executives in the same firm evaluate IT impacts similarly, it can be easier to approve future IT investments or to initiate corrective action for failing IT investments. In this study, we use distributed sensemaking theory to investigate the conditions under which executives will reach a consensus as to the extent and locus of firm and process-level IT impacts in their firm. Using data from surveys of 133 top-level business executives in 13 firms, we show that consensus is a function of CIO-led sensegiving in the form of IT promotion, CIO leadership, information systems (IS) engagement with end users, and IS-business communications. The absence of consensus – discord – suggests IS disengagement, a lack of effective CIO leadership, weak IT-business communications, and ineffective promotion of the role of IT. Sensegiving does not mean telling executives what to think about IT but rather how to think about IT and its impacts at various points within the firm. Whether IT impacts are rated high or low, efforts to create increased consensus among executives can greatly enhance value from IT.     

An empirical examination of a process-oriented IT business success model

The value of information technology (IT) to modern organizations is almost undeniable. However, the determination of that value has been elusive in research and practice. We used a process-oriented research model developed using two streams of IT research to examine the value of IT in business organizations. One stream is characterized by examining how IT and non-IT variables affect other so-called IT success variables. The second stream is commonly referred to as IT business value, defined as the contribution of IT to firm performance. The resulting research model is referred to in our paper as the IT business success model. Data was collected from 225 top IS executives in fairly large organizations to empirically examine several hypotheses derived from theory concerning the causal nature of the IT business success model. A set of measures for the IT business success model was developed through an intense investigation of the IT literature. The measures were tested for validity and reliability using confirmatory factor analysis. The hypotheses that resulted from past research and conceptually illustrated in the research model were assessed using structural equation analysis. The implications of these findings and the limitations of the study are discussed in an effort to contribute to building a process-oriented theory base for IT business success at the organizational level of analysis.     

An it Architecture for Nimble Organizations: Managing Access from Cyberspace

In today's world of “co-opetition” among organizations, where one organization competes and cooperates simultaneously with business partners, all organizations must have IT architectures that are nimble and flexible. This article takes a look at one important aspect in achieving a flexible IT architecture: access management of information resources over the Web. It describes an access management architecture that can change as business does and recommends how best to implement this nimble architecture.     

The Turnover and Retention of it Managers in Rapidly Changing Organizations

The explosion of information technology (IT) during the 1990s created tremendous opportunities and challenges for IT professionals. As organizations expanded and integrated their information technology into their business functions and made greater use of the Internet as a business tool and marketing channel, the demand for IT managers to guide these efforts created unprecedented career opportunities. Industry sources suggest that even amid the peaks and valleys of turbulent IT business cycles, there is a chronic shortage of top-quality IT managers in North America and that this situation will persist well into the foreseeable future. These supply-and-demand dynamics make it imperative for organizations to know why IT managers leave their positions and, using this knowledge, formulate effective retention strategies.     

Information technology,the organizational capability of proactive corporate environmental strategy and firm performance: a resource-based analysis

The study of the relationships between information technology (IT), environmental organizational issues and firm performance is a cutting-edge research topic for the information systems (IS) community. However, at present we know very little about these relationships. Drawing on the perspective of IT-enabled organizational capabilities and the literature on organizations and the natural environment, our study introduces conceptually the construct organizational capability of proactive corporate environmental strategy to the IS field. We propose that IT capability may enable the implementation of a proactive environmental strategy and that this strategy could play a significant role in determining the business value of IT. Using structural equations modeling with data collected from 63 firms, we find that IT capability is an enabler of proactive environmental strategy and that this strategy plays a significant role in mediating the effects of IT on firm performance. Our study provides initial evidence on the role of IT in the implementation of proactive environmental practices. Our results suggest to IT executives that their decisions matter in shaping environmental sustainability, which in turn will generate business value from IT.     

An examination of the antecedents and consequences of organizational IT innovation in hospitals

The healthcare industry is widely recognized as information-intensive and IT is considered to be an intrinsic component of the success of healthcare organizations such as hospitals. While both researchers and practitioners have argued that hospitals should aspire to be IT innovators, most tend to be IT laggards. An understanding of the factors that drive hospitals to become IT innovators remains an important phenomenon of interest. However, there is a lack of theory-driven empirical research that systematically investigates the factors that influence a hospital’s strategic choice to be an IT innovator and the influence of IT innovation on hospital performance. This study bridges the extant gaps in the literature by developing and testing an integrated model that seeks to understand why certain hospitals are IT innovators. Using IT innovation theory as our theoretical foundation, we examine three antecedents, including the chief information officer (CIO) strategic leadership, the top management team’s (TMT) attitude toward IT, and the hospital’s climate. Further, we examine the influence of IT innovation on the impact of IT within the hospital and the influence of IT impact on the hospital’s financial performance. The research model was tested using both survey and archival data from 70 matched pairs of hospital CIOs and executives. The quantitative analysis is supplemented with by interviews with 10 participating CIOs to further examine the relationship of the CIO to hospital IT innovation. The results suggest that the CIO strategic leadership and the TMT’s attitude toward IT are key factors that influence IT innovation; however, the influence of a hospital’s climate on organizational IT innovation is contingent upon the CIO’s level of strategic leadership. The results also suggest that hospitals that are IT innovators can generate greater impact from IT, which in turn results in greater performance for the hospital. Theoretical and practical implications as well as future research directions are discussed.     

A survey on CIO concerns-do enterprise architecture frameworks support them?

The challenge of IT management is today considerable. In industry, the organizational role of the Chief Information Officer (CIO) has been promoted as the owner of these challenges. In spite of a general acceptance of the problems associated with the responsibilities of the CIO, very little academic research has been conducted on the issues and constraints of this role. In order to address these shortcomings, this article presents the results of a survey in which Swedish CIOs have prioritized their most important concerns. In academia, a response to the IT system management challenges has presented itself in the discipline of Enterprise Architecture. The article argues that the CIO role is the primary stakeholder of Enterprise Architecture, so his/her need for decision support should guide Enterprise Architecture research and framework development. Therefore, the article presents a brief review over how well two existing Enterprise Architecture frameworks address the surveyed concerns of the CIO. Results from the survey indicate that the three highest prioritized concerns of CIOs are to decrease the cost related to the business organization, to improve the quality of the interplay between the IT organization and the business organization and to provide new computer-aided support to the business organization. The comparison between the CIOs' prioritization and the foci of the frameworks shows some discrepancies. The largest disharmony lies in the lack of decision support for issues related to the IT organization. Furthermore, support for explicitly estimating and managing costs is lacking within the frameworks.     

Strategic roles of IT modernization and cloud migration in reducing cybersecurity risks of organizations: The case of U.S. federal government

Many organizations run their core business operations on decades-old legacy IT systems. Some security professionals argue that legacy IT systems significantly increase security risks because they are not designed to address contemporary cybersecurity risks. Others counter that the legacy systems might be “secure by antiquity” and argue that due to lack of adequate documentation on the systems, it is very difficult for potential attackers to discover and exploit security vulnerabilities. There is a shortage of empirical evidence on either argument. Routine activity theory (RAT) argues that an organization’s guardianship is critical for reducing security incidents. However, RAT does not well explain how organizations might guard against security risks of legacy IT systems. We theorize that organizations can enhance their guardianship by either modernizing their legacy IT systems in-house or by outsourcing them to cloud vendors. With datasets from the U.S. federal agencies, we find that agencies that have more legacy IT systems experience more frequent security incidents than others with more modern IT systems. A 1%-point increase in the proportion of IT budgets spent on IT modernization is associated with a 5.6% decrease in the number of security incidents. Furthermore, migration of the legacy systems to the cloud is negatively associated with the number of security incidents. The findings advance the literature on strategic information systems by extending RAT to explain why the “security by antiquity” argument is not valid and how organizations can reduce the security risks of legacy IT systems through modernization and migration to the cloud.     

Technology executives in the changing accounting information environment: Impact of IFRS adoption on CIO compensation

Accounting regulatory changes that affect the information technology (IT) infrastructure of firms have prompted Chief Information Officers (CIOs) to take the lead in aligning IT changes with new reporting requirements. This study investigates the associations between the mandatory adoption of International Financial Reporting Standards (IFRS) and CIO compensation. We find a significant increase in CIO compensation in the post-IFRS period, which is higher in non-IT firms than in IT firms. Moreover, pay is at a premium for CIOs equipped with more educational background in business. We discuss the implications of our study and offer suggestions for future research.     

The Impact of Communication between CEOs and CIOs on their Shared Views of the Current and Future Role of IT

This research compares the views of CEOs and CIOs in the same organizations about the relative richness of four communications media (face-to-face, e-mail, business memo, telephone), and the current and future roles of IT in their organizations. Overall, CEOs are found to be more optimistic about the expected impacts of future IT projects. Organizations in which there was greater shared vision about the future role of IT also reported more frequent CEO/CIO communications utilizing communications channels perceived to be richer: face-to-face and e-mail.     

Die Bedeutung des Alignment von IT und Fachressourcen in Finanzprozessen Eine empirische Untersuchung

Importance of the Alignment of IT and Business Resources in Financial Processes — An Empirical Study How do firms realize business value from deploying IT in business processes? Based on the Resource-based View and insights from recent literature on IT/business alignment, we argue that actual usage and the alignment of IT and business units are important prerequisites for a superior performance of IT-intensive business processes. In this paper, a causal model on the joint impact of IT usage, IT/business alignment and business resources on business process performance is proposed and empirically validated using data from Germany’s 1.000 largest banks. It turns out that the perceived performance of the focal business process, as predicted in the theoretical model, strongly depends on IT/business alignment. The empirical analysis also shows that business resources have a large impact and that even a superior IT cannot compensate business resource deficiencies. The results thereby provide support for important propositions of the literature on alignment from a process perspective and contribute to common knowledge that the business value of IT should not be assessed without evaluating and controlling for business resources as a complementary factor.     

IT capability and organizational performance: the roles of business process agility and environmental factors

The business value of information technology (IT) has been one of the top concerns of both practitioners and scholars for decades. Numerous studies have documented the positive effects of IT capability on organizational performance but our knowledge of the processes through which such gains are achieved remains limited due to a lack of focus on the business environment. Such a linkage therefore remains the subject of debate in the information systems literature. In this study, we fill this gap by investigating the mediating role of business process agility and the moderating roles of environmental factors. On the basis of matched survey data obtained from 214 IT and business executives from manufacturing firms in China, our analyses show that even though firm-wide IT capability presents the characteristics of rarity, appropriability, non-reproducibility, and non-substitutability, its impact on organizational performance is fully mediated by business process agility. Our results also show that the impact of the environment is multifaceted and nuanced. In particular, environmental hostility weakens the effect of IT capability on business process agility, while environmental complexity strengthens it. The theoretical and practical implications of this study, and its limitations, are also discussed.     

Innovative IT climates: CIO perspectives

In many organizations the CIO is a key driver of business innovation. This research investigates innovative CIOs in the context of their organizational climate theory. We explore the concept of innovative IT climates through qualitative analyses of interviews with 36 innovative CIO's. We identify and characterize four dimensions of innovative IT climates using a theoretical model based on the climate literature. Inductive grounded-theoretic methods are then utilized to develop two additional dimensions of innovative IT climates - reality-checking and promoting credibility. Findings expand our theoretical and empirical understanding of innovative IT climates and provide practitioners with specific examples of how CIO's are actively working to create innovative IT climates.     

Cios' Perspectives on Competitive Intelligence

Competitive intelligence (CI) has become an important source of information for business planning and other activities because it provides information about the present and future behavior of competitors, suppliers, customers, technologies, acquisitions, markets, and the general business environment. This article discusses the results of a recent survey of CIOs and CEOs about competitive intelligence practices in their firms. the authors anticipate an increase in competitive intelligence activities that will require the increased use of IT and suggest a heightened awareness that this spiraling situation is likely to place increasing demand on the IT function and the CIO.     

Toward a theory of managing creativity-intensive processes: a creative industries study

This paper reports the results of an exploratory, theory-building study on the impact of creativity on business processes, their management, and the use of information technology (IT) in particular. The empirical evidence was derived from organizations within the creative industries, specifically film and visual effects (VFX) production. An adapted grounded theory approach was employed in order to analyze the data. The study identifies the dynamics of business processes that can be described as highly dependent on creativity, intensively involving the client, complex, and interdependent. It explains the processes’ organizational context as well as strategies and IT systems that organizations use in order to manage these processes. The study suggests that creativity-intensive processes are characterized by high levels of uncertainty with regard to outcome, process structure, and required resources. Creative organizations pursue both creative and operational process performance while simultaneously mitigating creative and operational risk.     

Strategic information systems planning: A case study from the financial services industry

Strategic Information Systems Planning (SISP) is an important topic for managers and researchers alike. However, there is evidence of a gap between SISP research and practice. Taking this situation as a motivation, we conducted an in depth case study on SISP to investigate this gap. The study was carried out in a German financial services company (FSC) over a period of five months in summer 2003. During this time, the enterprise situation and the information system (IS) practices situation of FSC were studied with respect to the SISP approach in place. Our findings confirm the hypothesis that practitioners largely ignore academic literature and do not use it in support of their SISP endeavours. This is all the more striking since FSC extensively used guidance from IS research in other fields such as systems analysis and software development. Our case study examines in detail two possible explanations for the gap: firstly a lacking transfer of academic knowledge to practice, and secondly deficiencies in the academic knowledge base itself. In fact, our observations highlight a disconnect between academic discussion and practical conduct. However, we found that the ignorance of academic literature on SISP is not primarily caused by a constrained knowledge transfer. In order to exclude communication barriers, we filtered the academic discussion according to the specific situation and the needs of FSC and translated it into practical recommendations. Nevertheless, the academic arguments we put forward hardly had any impact, either on IT managers’ thinking or on SISP practice at FSC. Though academic literature was partly perceived as inspiring, it was not regarded as a touchstone for SISP practice. Academia, in the eyes of FSC’s practitioners, ignores the “real problems” and thus is not accredited as a relevant source of advice. Moreover, in a final discussion with FSC’s senior IT executives we got the impression that the professional identity of FSC’s IT management – and more specifically the CIO’s role – was different from interpretations prevalent in academia. The academic discussion assumes the CIO to be an initiator of organisational innovations and driver of business strategy on the board. In contrast, we found that FSC’s CIO basically perceives her role as that of a service provider to business. While the different perceptions might be due to idiosyncrasies of FSC, related research provided additional empirical support for the conjecture of misleading academic assumptions about the role of IT management in practice.     

Creating business value with process mining

Information systems research has a long-standing interest in how organizations gain value through information technology. In this article, we investigate a business process intelligence (BPI) technology that is receiving increasing interest in research and practice: process mining. Process mining uses digital trace data to visualize and measure the performance of business processes in order to inform managerial actions. While process mining has received tremendous uptake in practice, it is unknown how organizations use it to generate business value. We present the results of a multiple case study with key stakeholders from eight internationally operating companies. We identify key features of process mining – data & connectivity, process visualization, and process analytics – and show how they translate into a set of affordances that enable value creation. Specifically, process mining affords (1) perceiving end-to-end process visualizations and performance indicators, (2) sense-making of process-related information, (3) data-driven decision making, and (4) implementing interventions. Value is realized, in turn, in the form of process efficiency, monetary gains, and non-monetary gains, such as customer satisfaction. Our findings have implications for the discourse on IT value creation as we show how process mining constitutes a new class of business intelligence & analytics (BI&A) technology, that enables behavioral visibility and allows organizations to make evidence-based decisions about their business processes.