Bernard Williams - IT Research Blog

Introduction

It could be argued that since the first Information Technology (IT) departments started appearing in modern organizations, IT managers and the business managers they support have been struggling to find shared ground. IT managers have been chartered to add business value and support the organizational goals and objectives through the provision of technology-based products and services. Business managers, among other responsibilities, are tasked with growing the business and ensuring long-term viability by gaining and maintaining a competitive advantage over the competition. Recent surveys indicate that many CEO's investments in technology are aimed at gaining a competitive advantage. They also indicated that nearly a third of those investments were not profitable. (Kearns & Lederer, 2003)

Managers in today's organizations cannot wait for a natural equilibrium to occur between IT and Business leaders. Global competition and continued technological advancements change the business environment on a daily basis. As a result, managers must drive their organizations toward strategies to ensure alignment. According to Reich and Benbasat, the development of alignment between IT and organizational objectives is consistently reported as a major concern of IT managers. (Galliers & Leidner, 2003)

Unfortunately, alignment is often an illusive state to achieve for organizations. A casual review of IT Project literature will indicate the importance placed on ensuring IT Projects align with organizational goals and objectives. Luftman argues that organizations are often frustrated in their attempts to harness the power of information technology for long term organizational benefit. Even though IT clearly has the power to transform markets, organizations still struggle to make effective use of it. (Luftman & Brier, 1999)

This paper will first provide a brief description of Business-IT alignment from a high level perspective. Next the paper will identify the issues that either contribute to or inhibit the level of strategic alignment in an organization. Using the available literature, this paper will lastly propose a set of guidelines to be used by organizations seeking to improve their level of internal alignment.

Business – IT Alignment: A Description

As organizations world-wide work to capitalize on their investments in IT, a common theme for success presents itself. Those lucky, few organizations able to utilize IT to a competitive advantage in support of business strategy are typically considered to have achieved “alignment”. Reich and Benbasat provide a social definition of alignment between business strategy and information systems. In their view “alignment refers to the state in which business and IT executives understand and are committed to the business and IT mission, objectives and plans” (Galliers & Leidner, 2003)

There is a conversation that needs to occur between IT and Business management to facilitate alignment. This shared conversation should occur between key stake holders such as IT management, executive management, business management, and external vendors (Agarwal & Sambamurthy, 2002) Sambamurthy and Zmud identify three other sets of stake holders with differing degrees of decision making authority in IT Governance arrangements. They are corporate IT management, divisional IT management and line management. (Sambamurthy & Zmud, 1999) No matter which paradigm the stake holder participates from, they must engage in a shared conversation in order to facilitate alignment While the goal of IT and Business leaders is to achieve alignment, there are a great number of examples of misalignment.

An example of misalignment could be where a new IT system is introduced to facilitate increased worker productivity and staff reductions. If this is not explicitly addressed with the staff, quiet or open resistance may derail a project before it starts. (Middleton & Harper, 2004) Increases in productivity brought on by the introduction of a new system can represent a very real threat to current staff members concerned about their jobs. IT managers and business leaders should face this issue head on and develop communication plans and strategies to mitigate this situation.

A review of the literature in this area elucidates three high level factors that contribute to the importance of achieving and sustaining IT-Business alignment in modern organizations. Those factors are the current pace of technological change, the ability of IT-Business alignment to predict the level of profitability for a given IT investment, and lastly, IT-Business alignment is closely related to the organizations ability to assimilate technology.

It's important because of the current pace of technological change

There can be little argument against the fact that technology has drastically changed the business landscape over the past 30 to 40 years. An important factor in that change has been the pace at which it has been happening. The speed of the proliferation of Internet use is unparalleled. According to a 1999 article by Joanne Wojcik, it took radio 38 years to be used by 50 million people. In contrast, it only took 5 years after the introduction of the Web for 100 million people to start using it. (Wojcik, 1999) It's so ubiquitous, it is sometimes hard to think what life was like before it. Agarwal & Sambamurthy posit that today's pace of rapid technological change calls for organizations that are structured to take advantage of human capital and relationships with external vendors/consultants. (Agarwal & Sambamurthy, 2002) Luftman & Brier relate that business-IT alignment increases in its importance to organizations as they work continuously to link business and technology against a backdrop of dynamic business strategies and ever changing technologies. (Luftman & Brier, 1999)

It's important because it is a predictor of IT investment profitability

Kearns reports that IT alignment has been shown to be an indicator of expected return on investment (ROI) for investments in IT. Kearns further discusses how alignment processes that promote knowledge sharing are essential determinants for IT profitability. (Kearns & Lederer, 2003) It is evident that organizations that have solid, stable and effective alignment processes are more likely to be successful when implementing Information Technology projects. They will be able to reap the competitive advantages afforded by the specific technology sooner and more cost effectively than other organizations with a lesser degree of internal alignment.

It's important because it is related to the organizations ability to assimilate technology

When strong partnerships exist between senior IT managers and senior business managers, firms assimilate advances in Information Technology more effectively. Some researchers point out that organizational success in IT projects is largely a reflection of the relationship between IT managers and business executives. (Armstrong & Sambamurthy, 1999) In their paper on the topic of Organizational Alignment, Middleton and Harper (2004) posit that the most important element of being creative and innovative is the ability to achieve alignment between Information Technology managers and other parts of the organization.

Contributing Factors

The body of knowledge surrounding IT-Business alignment points out several factors that influence the level of alignment within an organization. Those factors range from structural issues such as proper planning and organizational structure to general management issues such as outdated management methodologies and effective communications. These factors are outlined below.

Luftman and Brier – Enablers & Inhibitors

Research conducted by Luftman & Brier surfaced the set of enablers and inhibitors listed in the table below. (Luftman & Brier, 1999)

Reich and Benbasat – Influential Factors

Research conducted by Reich and Benbasat categorized four influential factors that could potentially influence alignment. In their model, these independent variables exerted influence on the dependent variable, alignment. The factors were:
1. Shared domain knowledge between business and IT executives
2. IT Implementation success
3. Communication between business and IT executives
4. Connections between business and IT planning processes
(Galliers & Leidner, 2003)

Proper Planning

It is common knowledge that proper planning can mean the difference between success or failure in any endeavor. This is especially true when it comes to planning Information Technology systems. Properly implemented, strategic information systems planning can bring IT users and IT professionals together in a shared conversation about the value of IT and its use within the business. (Hartono, Lederer, Sethi, & Zhuang, 2003) Failure to plan appropriately for an IT project is foolhardy at best and unfortunately, the first fatal flaw in many subsequent IT project failures.

Effective Communications

In a 2001 research study, IT Managers indicated effective communication as the primary factor influencing project success. The study, which surveyed IT managers from various industries showed that companies that were generally successful with their IT project implementations followed nine general guidelines. Of the nine guidelines, two were consistently pointed out by IT managers as having the most impact on IT project success. Those guidelines were: First, the results or success of the change were widely published and second, the affected staff should be well informed about what was expected of them in the new system. (McNish, 2002)

The ability to effectively communicate is absolutely vital to the IT-business alignment effort and the subsequent success of IT projects. Managers tasked with bringing the two sides of the business together should be adept communicators with a sincere desire to make things work. They should check their egos and preconceptions at the door for the sake of the business. Studies of other companies show that satisfaction with the planning process is closely related to the relationship between IT and business managers. “The most commonly stated attribute contributing to a good relationship and to successful planning, is constant communication between the IT manager, the business manager, and their respective staffs. Mutual trust is mandatory.” (Kanter, 2003)

Inhibitors to Alignment

The importance of alignment to an organizations ability to capitalize on strategic IT investments and gain the maximum competitive advantage from them cannot be overstated. The literature is rife with numerous instances where alignment was not present and IT projects met with cost overruns, schedule overruns or a general failure to meet end user expectations. The factors that inhibit IT-business alignment can be categorized into the following areas: Organizational culture and structural issues, and management methodologies.

Organizational Culture & Structure

Over the past several decades, three prevalent governance models have emerged. They are centralized, decentralized, and the federalized modes. (Sambamurthy & Zmud, 1999) Certain modes of IT governance contribute to misalignment and foster an “us vs them” mentality in IT organizations. The centralized mode of IT governance where all decisions are made by a central IT authority and business units battle for attention and a voice is giving way in favor of a de-centralized approach. IT governance models typically model the governance model used by the organization overall. If the organization is managed using a centralized model, then the IT governance model will tend to be centralized as well. (Sambamurthy & Zmud, 1999)

During the 1990's businesses moved towards a federalized model which pushed control and authority for corporate IT decisions to business units rather than maintaining control in the corporate IT department. Corporate IT remained responsible for infrastructure while business units picked up the task/authority of promoting the strategic use of IT. (Agarwal & Sambamurthy, 2002) It is possible that this shift will work to improve the level of alignment in today's organizations.

Outdated management methodologies

The traditional methods employed by organizations implementing IT projects do not take full advantage of Information technology. Instead, organizations tend to view IT as a cost center or an expense line item rather than a driver of business value. (Luftman & Brier, 1999) When organizations look at the IT shop as a cost center, the effort will inevitably turn to reducing costs rather than increasing value. In doing so, business and IT managers will focus on lowering the costs of IT investments rather than ensuring the investments secure a competitive advantage for the organization and that the IT investments made are in alignment with corporate goals and objectives.

Poor communication is also a precursor to misalignment and subsequent project failure. McNish found that the disinclination to communicate to effected users during IT projects leaves personnel demotivated and confused about how they should relate to the changes. When this occurs, project failure is not far behind. (McNish, 2002) Most people like to be kept informed about changes that affect them and their work environment. When management fails to ensure that end-users are kept abreast of upcoming changes to the systems they utilize to complete their day to day tasks, they have the unwittingly assembled the ingredients for discontent, disillusionment and IT project disaster.

A Path to Alignment

There are strategies that can make alignment a reality. A best practice and a strategy that should remain at the top of the list is to ensure CEO involvement. Successful alignment depends on the involvement of top management. Their participation is vital to the competitive use of IT and the success of IT based projects in the organization. (Kearns & Lederer, 2003)

The ability for an organization to attain and maintain IT-business alignment is a function of how well the members of the two teams can get along. Good relationships are at the heart of any successful IT-business alignment strategy. Research has shown that satisfaction with the IT strategy process is closely related to the relationship between IT and the business managers. “Good relationships flow from a sense of being on the same team, a sense of sharing not only in the problems but in the success.” (Kanter, 2003)

Future Directions

Information Technology is like New England weather: If you don't like it, wait a short while and it will change. The fast pace of technological change coupled with an intense push for globalization means that alignment strategies will also have to change and adapt as well. Today's push by business executives is for simple business-IT alignment. Enlightened business executives are already pushing for co-evolution rather than alignment.

Co-evolution will be tomorrow's model. Co-evolution is an organizational state in which the IT capabilities and the rest of the business develop iteratively and reciprocally over time. “In the past IT executives have focused on aligning their function with the business. But alignment can be too static for today's fast pace. A better goal is co-evolution” (Agarwal & Sambamurthy, 2002)

The industrial age brought with it the rise of the bureaucracy. Bureaucratic organizational structures are vertical, and strongly entrenched in some large companies. Technology, specifically computer networking has facilitated the rise of the adhocracy. Adhocracies are fostered by networks involving computers and communications devices, and they overcome many of the limitations of organizational hierarchies. (Lucas & Baroudi, 1994) The proliferation of adhocracies in today's organizations can support, encourage and extend the shared conversation between IT and business management. Cross functional teams in matrix organizations can work together electronically to solve strategic business problems rather than IT being left to their own devices.

Conclusion

If organizations are going to improve the level of alignment between IT and business leaders, managers must be execution oriented. Its one thing to plan to do a thing, it is another thing to do it. IT managers seeking to capitalize on planning sessions between IT and business leaders should identify the resources and actions needed to implement new applications development and maintenance tools, identify the IT organizations' actions necessary to expedite adoption of the plan, and prepare and execute a plan to migrate to the new application environment. (Hartono, Lederer, Sethi, & Zhuang, 2003) Successful leaders will have a bias towards action.

Earlier in the discussion, this paper identified that the success of any alignment effort hinged on the level of involvement of top management. Simply put, success depends on CEO participation. Research indicated that if the effort is unable to garner the interest of the organizations chief executive, it's chances of success are largely diminished. The participation of top level management in the alignment process is vital to the competitive use of IT. (Kearns & Lederer, 2003)

The extent to which any IT project is successful is probably most affected by the quality of communication between the stakeholders. (McNish, 2002) This basic fact is often overlooked by business leaders. In the final analysis, our endeavors towards alignment could be considered a social effort whose success is largely attributable to the individual stake holder's ability to get along.

References

• Agarwal, R., & Sambamurthy, V. (2002). Principles and models for organizing the it function. MIS Quarterly, 1(1), 1.
• Armstrong, C. P., & Sambamurthy, V. (1999). Information Technology Assimilation in Firms: The Influence of Senior Leadership and IT... Information Systems Research, 10(4), 304.
• Galliers, R. D., & Leidner, D. E. (Eds.). (2003). Strategic Information Management: Challenges and Strategies in Managing Information Systems (3rd ed.). Boston: Butterworth Heinmann.
• Hartono, E., Lederer, A. L., Sethi, V., & Zhuang, Y. (2003). Key Predictors of the Implementation of Strategic Information Systems Plans. The Data Base for Advances in Information Systems, 34(3), 41-53.
• Kanter, J. (2003). Ten Hot Information Technology (IT) Issues and What Makes Them Hot. Information Strategy: The Executive's Journal, 19(3), 23.
• Kearns, G. S., & Lederer, A. L. (2003). A Resource-Based View of Strategic IT Alignment: How Knowledge Sharing Creates Competitive Advantage. Decision Sciences, 34(1), 1.
• Lucas, H. C., & Baroudi, J. (1994). The Role of Information Technology In Organizational Design. Journal of Managemnt Information Systems, 10(4), 9-23.
• Luftman, J., & Brier, T. (1999). Achieving and Sustaining Business-IT Alignment. California Management Review, 42(1), 109.
• McNish, M. (2002). Guidelines for Managing Change: A study of their effects on the implementation of new information technology projects in organisations. Journal of Change Managment, 2(3), 201.
• Middleton, P., & Harper, K. (2004). Organizational alignment: a precondition for information systems success? Journal of Change Management, 4(4), 327-338.
• Sambamurthy, V., & Zmud, R. W. (1999). Arrangements for information technology governance: A theory of multiple contingencies. MIS Quarterly, 23(2), 261.
• Wojcik, J. (1999). E-commerce brings risks: Speakers. Business Insurance, 33(17), 6.