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.     

CEO/CIO mutual understanding,strategic alignment,and the contribution of IS to the organization

Mutual understanding between the CEO and CIO is thought to facilitate the alignment of an organization's IS with its business strategy, and thereby enhance the contribution of the IS to business performance. A survey of 202 pairs of CEOs and CIOs was taken to investigate the relationships between them. Mutual understanding was measured as the role of IS in the organization, using the perspectives of both executives. Strategic alignment was measured as the fit between the CEO's assessment of eight STROBE dimensions and the CIO's assessment of the analogous STROEPIS dimensions; both the CEO and CIO evaluated IS contribution. Mutual understanding of the role of IT led to seven alignment dimensions whereas six alignment dimensions led to IS contributions. Our study extended the theory of IT strategic alignment and provided direction for CEOs and CIOs interested in improving the IS contribution of their organization.     

A situational method for semi-automated Enterprise Architecture Documentation

The business capabilities of modern enterprises crucially rely on the enterprises’ information systems and underlying IT infrastructure. Hence, optimization of the business-IT alignment is a key objective of Enterprise Architecture Management (EAM). To achieve this objective, EAM creates, maintains and analyzes a model of the current state of the Enterprise Architecture. This model covers different concepts reflecting both the business and the IT perspective and has to be constantly maintained in response to ongoing transformations of the enterprise. In practice, EA models grow large and are difficult to maintain, since many stakeholders from various backgrounds have to contribute architecture-relevant information. EAM literature and two practitioner surveys conducted by the authors indicate that EA model maintenance, in particular the manual documentation activities, poses one of the biggest challenges to EAM in practice. Current research approaches target the automation of the EA documentation based on specific data sources. These approaches, as our systematic literature review showed, do not consider enterprise specificity of the documentation context or the variability of the data sources from organization to organization. The approach presented in this article specifically accounts for these factors and presents a situational method for EA documentation. It builds on four process-supported documentation techniques which can be selected, composed and applied to design an organization-specific documentation process. The techniques build on a meta-model for EA documentation, which is implemented in an EA-repository prototype that supports the configuration and execution of the documentation techniques. We applied our documentation method assembly process at a German insurance company and report the findings from this case study in particular regarding practical applicability and usability of our approach.     

Understanding the IT/business partnership: A business process perspective

From a business process perspective, the business value of information technologies (IT) stems from how they improve or enable business processes. At the same time, in the field of strategic IT/business alignment, the locus of discussion has been how IT/business partnerships enhance the value of IT. Despite this apparent relationship, the business process perspective has been absent from the IT/business alignment discussion. In this paper, we use the case of an industrial company to develop a model for understanding IT/business partnerships in business process terms. Based on our findings, we define these partnerships by allocating responsibilities between central IT and the local business during two stages of a process lifecycle: formation and standardization. The significance of the findings lies in how the model’s configuration leads to different types of IT units’ process centricity. This in turn affects the ability of the company as a whole to transform its operations with IT.     

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 alignment in small firms

This study focused on the alignment of business strategy and IT strategy among 256 small UK manufacturing firms. An instrument was developed and used to measure IT alignment in small firms. Evidence was gained of high IT alignment in some firms. The study also indicated that IT alignment was related to the firm's level of IT maturity and the level of the CEO's software knowledge, but did not seem to be linked to the CEO's involvement or the firm's sources of external IT expertise.     

Alignment within the software development unit: Assessing structural and relational dimensions between developers and testers

Just as business-IT alignment has received significant focus as a strategic concern in the IS literature, it is also important to consider internal alignment between the diverse subunits within the IT organization. This study investigates alignment between developers and testers in software development to understand alignment within the IT unit. Prior evidence of tension between these sub-groups (and others as well) suggests that all is not necessarily well within the IT organization. Misalignment within the IT unit can certainly make it difficult for the IT unit to add strategic value to the organization. This study is an important initial step in investigating IT subunit alignment which can inform future research focusing on the alignment of other IT subunits such as architecture, operations, and customer-support. Using theoretical concepts from strategic business-IT alignment, we test a research model through a survey of professional software developers and testers. Results suggest that relational but not structural dimensions influence IT subunit alignment.     

Alignment within the corporate IT unit: an analysis of software testing and development

Strategic alignment between an organization's business strategy/capabilities and those of its information technology (IT) unit is an extensively researched subject that addresses the issue of fit between business and technology strategies. A key gap in the literature is lack of recognition that underlying this macro level of alignment are other, more granular levels of alignment involving the interdependent subunits within the corporate IT unit. Given the critical interdependencies between development and testing subunits in software engineering, this paper focuses on an alignment model for ensuring that these two functions work together effectively. A development-testing alignment (DTA) model is described, and a case study investigating its value and application is presented. This DTA is decomposed into distinct components for the purposes of theoretical clarity and pragmatic application. The case study analysis uses the model to understand and interpret development-testing alignment in a Fortune 500 company. We found that the development and testing functions were significantly misaligned, and our model identified close to twenty specific aspects that needed to be considered to enhance alignment. These included changes in specificity of scope, governance, resource availability, competencies, and processes. Our analysis shows that the DTA model can be usefully applied for the purpose of understanding tactical alignment between subunits within a corporate IT unit. It also demonstrates that there is value in considering alignment as a dynamic, context-driven, social phenomenon as well as a useful interpretative lens for exploring organizational interactions and interdependencies.     

Managing for Better Business-IT Alignment

Business-IT alignment is a complex and multidimensional problem that remains among the top-10 issues for many organizations. IT investment decisions usually fall to CIOs, and often the temptation is to base the decision to buy solely on superior technology. Clearly, organizations can gain a competitive advantage by such investments, but basing them only on the bells and whistles of a particular platform is foolhardy. Any competitive advantage would vanish as soon as the next platform enters the market, and the technological edge that the organization had briefly gained would evaporate. There are four themes in securing B-IT alignment: the role of IT, the business case, IT management intensity, and IT metrics, IT's role is important because not all organizations use IT in the same manner. The next three themes are natural intersections for business and IT investment. The business case is important because it determines how business and IT collaborate to justify the IT investment. The degree of IT management intensity both during and after the actual IT investment determines the organization's commitment to continuous process improvement. Finally, IT metrics are critical to demonstrate to business executives IT investment's value-generating potential     

From enterprise architecture to business models and back

In this study, we argue that important IT change processes affecting an organization’s enterprise architecture are also mirrored by a change in the organization’s business model. An analysis of the business model may establish whether the architecture change has value for the business. Therefore, in order to facilitate such analyses, we propose an approach to relate enterprise models specified in ArchiMate to business models, modeled using Osterwalder’s Business Model Canvas. Our approach is accompanied by a method that supports business model-driven migration from a baseline architecture to a target architecture and is demonstrated by means of a case study.     

基于战略对应的IT项目组合选择模型

把信息技术项目当作组合来管理可以通过平衡风险和收益来促进企业目标和IT应用的结合,但由于决策信息的不确定性和IT项目目标与企业战略的难以对应,企业面临IT项目组合选择的挑战。构建基于战略对应的IT项目组合选择模型,其中模糊集和模糊层次分析法用来刻画不确定信息和评估IT项目风险、成本及收益,关键成功因素法用来提高IT项目与企业战略的对应,并建立模糊0－1整数规划。利用定性可能性理论把模糊组合选择模型转化为一般可求解的整数规划形式,最后用一个案例说明模型的用法。     

Strategic IT alignment Projects. Towards Good Governance

The senior management of organisations frequently perceive IT Projects as merely technological in nature. They fail to realise that in reality, the mission of IT is to provide technology-based support to business processes that can be key to the organisation. This lack of understanding means that these IT projects are not aligned with the business objectives and that investments in resources and personnel are not adequately prioritised. This can lead to an opportunity loss: a mere computerising of the business is sought, and processes that could turn out to be transformative, generating added value, driving a true digital transformation of the business are overlooked. This article proposes a model for implementing and operating a portfolio of strategic IT projects. Based on Good Governance principles, these latter projects move strategic decision-making up to an organisation's senior management, succeeding in gradually implicating these managers into the IT strategy. But above all, the model succeeds in achieving the targeted strategic alignment of IT projects with the organisation's business objectives and interests. The model has already been implemented in fourteen medium and large size public universities. The follow-up through interviews of the nine longest-standing experiences—some are nearly a decade old—revealed that the portfolio implementation strategy had helped to markedly improve the following elements: the institutions’ state of maturity of Good Governance; senior management's involvement in IT projects; and the identification of the most interesting IT projects for the business. To conclude, based on our experience, we can affirm that the strategic IT alignment projects is an effective IT Governance tool and, by extension, an example of Good Governance practice.     

Reconciling user and project manager perceptions of IT project risk: a Delphi study1

Abstract. In an increasingly dynamic business environment characterized by fast cycle times, shifting markets and unstable technology, a business organization’s survival hinges on its ability to align IT capabilities with business goals. To facilitate the successful introduction of new IT applications, issues of project risk must be addressed, and the expectations of multiple stakeholders must be managed appropriately. To the extent that users and developers may harbour different perceptions regarding project risk, areas of conflict may arise. By understanding the differences in how users and project managers perceive the risks, insights can be gained that may help to ensure the successful delivery of systems. Prior research has focused on the project manager’s perspective of IT project risk. This paper explores the issue of IT project risk from the user perspective and compares it with risk perceptions of project managers. A Delphi study reveals that these two stakeholder groups have different perceptions of risk factors. Through comparison with a previous study on project manager risk perceptions, zones of concordance and discordance that must be reconciled are identified.     

Rapid business and IT change: drivers for strategic information systems planning?

Today's organizations increasingly plan new information systems (IS) to better compete. Through such planning, they attempt to align their IS strategy and their business strategy. This study tested the impact of business and information technology (IT) change on strategic information systems planning (SISP) horizon, of horizon on the planning itself, and of the planning on the alignment of IS strategy and business strategy. A questionnaire defined business change, IT change, and alignment as multi-item scaled questions, and planning horizon as a single, nonscaled one. It defined a multi-item scaled SISP measure as both a second-order construct and as single-order constructs for its individual phases. A postal survey collected data from 161 IS executives. Constructs were extensively validated. The analysis used structural equation modeling, and surprisingly found that business change predicted longer SISP horizons, but IT change predicted neither longer nor shorter ones. Planning horizon predicted SISP itself (as a second-order construct and as all of its phases), and such planning (as a second-order construct, and as strategic awareness and strategy conception phases) predicted alignment of IS strategy and business strategy. These findings suggest that practitioners more carefully assess their own degree of caution in setting planning horizons in response to business and IT change. In fact, the findings suggest it may not be necessary for practitioners to shorten planning horizons in a rapidly changing environment.     

The procurement alignment framework construction and application

Procurement has become increasingly important for organizations acting in dynamic supply chains and competitive markets. In practice however, companies struggle with adapting and improving their procurement business function. In line with the general trend in management and organization studies, both scholars and practitioners aim to define an integrated procurement policy that is truly aligned on all organizational and IT aspects. The central aim of this paper is to present a framework that supports the definition and application of such an integrative procurement approach. The framework is developed upon insights from IT business alignment (more specifically IT Procurement alignment), procurement maturity measurement and segmentation. It facilitates organizations in monitoring the maturity and alignment of their procurement on five different business/IT perspectives. In addition, the framework enables specific procurement improvements by taking the situational aspect of procurement segmentation into account. The framework was validated twice: through interview expert consulting and through a questionnaire using scale analysis. In a case study it was found suitable for assessing procurement maturity and identifying concrete procurement improvements.     

The moderating role of IT-business alignment in the relationship between IT governance,IT competence,and innovation

Results from a survey of senior executives/officers in charge of IT suggest that while greater IT governance triggers more innovation, IT-business alignment does not moderate this relationship. Executive management IT competence has a direct and positive impact on innovation, and this relationship is stronger when moderated by IT-business alignment. However, regardless of IT-business alignment, innovation is not significantly affected by the board’s IT competence but is positively impacted by IT intensity. This study extends the IS literature on the role of IT in innovation and contributes to the IT governance literature.     

No time to waste: the role of timing and complementarity of alignment practices in creating business value in IT projects

Despite significant research progress, alignment-related issues are among the top concerns of executives. Previous studies mostly focus on a company-wide strategic level of alignment; while this ‘top-down’ view has benefits, it largely ignores the operational practices that help achieve alignment in IT projects as well as the impact that timing and complementarity of practices have on achieving alignment. In our research we apply four alignment practices – communication, shared understanding, management commitment and IT investment evaluation – to individual IT projects rather than at a company level; specifically, we look at the role of timing and complementarity for these alignment practices throughout different project phases. A detailed analysis of six IT projects carried out at three companies in the telecommunications industry reveals that IT projects creating higher business value employ all four alignment practices immediately from the start. No project was able to recover from failing to establish these four alignment practices in the first phase. While supporting the importance of complementarity of alignment practices, our findings also add the importance of the earliness of this complementarity.     

CHOOSE: Towards a metamodel for enterprise architecture in small and medium-sized enterprises

Enterprise architecture (EA) is a coherent whole of principles, methods, and models that are used in the design and realization of an enterprise’s organizational structure, business processes, information systems, and IT infrastructure. Recent research indicates the need for EA in small and medium-sized enterprises (SMEs), important drivers of the economy, as they struggle with problems related to a lack of structure and overview of their business. However, existing EA frameworks are perceived as too complex and, to date, none of the EA approaches are sufficiently adapted to the SME context. Therefore, this paper presents the CHOOSE metamodel for EA in SMEs that was developed and evaluated through action research in an SME and further refined and validated through case study research in five other SMEs. This metamodel is based on the essential dimensions of EA frameworks and is kept simple so that it may be applied in an SME context. The final CHOOSE metamodel includes only four essential concepts (i.e. goal, actor, operation, object), one for each most frequently used EA focus. As an example, an extract is included from the specific model that was created for the SME used in our action research. Finally, the CHOOSE metamodel is evaluated according to the dimensions essential in EA and the requirements for EA in an SME context.     

Mixed results in strategic IT alignment research: a synthesis and empirical study

The alignment of business strategy and IT has been a top managerial concern for decades. Yet despite much investigation, the effect of strategic IT alignment on organizational performance remains unclear, with mixed results reported in the literature. The purpose of this paper is to advance our understanding of mixed findings in IT alignment research. We first examine inconsistent findings reported in two streams of alignment research: the traditional firm-level IT alignment literature and the emerging literature into process-level IT alignment. We then empirically investigate whether firm- and process-level conceptualizations of IT alignment lead to different conclusions about the effect of alignment on performance. Using data from a survey of 120 firms, we show that firm-level IT alignment and process-level IT alignment yield different conclusions when testing the same theory under the same conditions. We also show that differences in firms’ strategic orientations can help explain these results. This research provides evidence that firm- and process-level conceptualizations of IT alignment are not interchangeable and that the choice of conceptualization can mean the difference between accepting and rejecting a theory.