What is IT Alignment?


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What is IT Alignment?

  1. 1. IT Alignment 1 What is IT Alignment? Edgardo DonovanITM 604 – Dr. Indira Guzman Module 2 – Case Analysis Monday, April 3, 2010
  2. 2. IT Alignment 2 What is IT Alignment? Companies align a portion of their processes with technologies they feel will rendertheir operations more efficient. There is always the potential that new aligned practices willsynchronize with traditional operations thereby carving out a niche as one of the multipleoperational tools. The potential for ultimate convergence with standard practices is the goal. ISliterature repeatedly outlines the fundamental importance of alignment for organizationaleffectiveness. Strategic alignment provides a logical framework for analyzing strategic choices inenough detail to ensure successful implementation of business, technology, and infrastructuredirection (Luftman 205). In 1997 Yolanda Chan provided a theoretical model on howorganizations can align their IT strategies to better achieve organizational goals. Despite thearguably nebulous definition of what information systems strategic alignment universally means,Chan defines it as the fit between business strategic orientation and information systems (IS)strategic orientation (Chan 125). She provides greater detail in stating that information systemsand technologies are used to leverage unique business competences, merge companies,restructure industries, and facilitate global competition. The relation of information systems (IS)to company strategy and the attainment of competitive advantage has been the focus of muchdiscussion (Chan 125). Studies have also demonstrated that IS alignment and performance are correlated. Twowell received views are that IS alignment is “the degree to which the information technologymission, objectives, and plans support and are supported by the business mission, objectives, andplans,” and that IS alignment involves “fit” and “integration” among business strategy, IT
  3. 3. IT Alignment 3strategy, business infrastructure, and IT infrastructure (Chan 98). At one end of the spectrum isthe perspective that organizations are rigid corporate entities devoid of personality that can beengineered. At the other end of the spectrum is the view that organizations are primarily socialsystems of interrelated elements where a change in one element affects all others. Oneprecondition for successful alignment of the informal structure may be a positive companyculture (Chan 108). Therefore, studies involving IT alignment should center on organizationalculture dynamics and whether an organization has the ability to foster a dynamic symbiosisbetween IT processes and evolving organizational strategy. Many have criticized the validity of Chans theoretical model by pointing to large numberof organizations with deep disconnects between the executive staff and IT processes. Chandefends her model by stating that firms continue to demonstrate limited alignment and that hersis indeed a theoretical model that does not take into account the importance of the informalorganization structure of an organization (Chan 97). In order to be successful, managers must"mesh things right from the start" and intertwine technology and business processes. These arepotentially daunting tasks (Chan 98). Some of Chan’s critics who cite the limitations of her work from the practitionerperspective have offered theoretical alternatives cloaked in hard to operationalize variablesinvolving different levels of organizational “maturity” (Luftman 3). Others affirm that hermodel is very hard to apply as a universal practitioner oriented corporate managementmethodology. However, a large consensus argues that it is one of the best theoretical frameworks forassessing organizational dynamics of formal IT strategy so far. Since its inception, it has been
  4. 4. IT Alignment 4used within organizations to examine existing company information systems in terms of thesupport they provide for business strategy, and to provide a measure of the alignment of ISstrategy with business strategy (Chan 126). The need to link business strategies with ITstrategies consistently ranks among the top two objectives of senior executives within theinformation technology function (Luftman 205). One of the many industries that greatly benefitfrom being able to scientifically measure the IT strategy alignment dynamics within differentorganizations are venture capital firms given that they manage portfolios comprised of a diversearray of investment companies. Additionally, large organizations may also find it useful to adoptChan’s model to measure potential value creating synergistic merger opportunities. Alignmentseems to grow in importance as companies strive to link technology and business in light ofdynamic business strategies and continuously evolving technologies (Luftman 5). Achieving alignment is evolutionary and dynamic. It requires strong support from seniormanagement, good working relationships, strong leadership, appropriate prioritization, trust, andeffective communication, as well as a thorough understanding of the business and technicalenvironments (Luftman 2). Although the interaction dynamics are different in everyorganization, five antecedents of alignment may be centralization, formalization, shared domainknowledge, successful IT history and relationship management (Ali 2). Despite the importance and potential benefits of alignment, the number of organizationsthat successfully align their IT strategy with business strategy is shown to be considerably low. Astudy by Rosa (1998) has revealed that only eight percent of IT and business managers viewedthemselves very effective in aligning IS and corporate goals (Ali 3). The studies that attempt toexplain this apparent lack of success are few. There are those who propose that corporate
  5. 5. IT Alignment 5strategy is either unknown or unadaptable once it is fixed. They argue that ex post IS alignmentwill seldom be a success. The proposed approach is based on the current theoretical concepts ininformation management, linking them in a framework and integrating the process of corporatestrategy definition with the process of IS strategy definition (Baets 205). Although I strongly disagree with Baets theory, I do believe that organizations shouldstrive to achieve "staggered alignment" between their overall strategy and IT processes.Synchronous IT structural alignment with evolving organizational strategy is not possible giventhe time involved in creating new processes and structures. However, an organization canattempt to nimbly change its IT processes following the evolving organizational strategy as closeas possible. Most organizations build processes and systems around achieving a particular goal.This typically involves analyzing needs, designing systems/upgrades, implementing changes, andtracking results. Many minds come and go and constantly revise the organizational agenda overtime. Mostly in larger organizations, statistics are run to see if particular goals are being met ornot. Consequently, policies are changed in an attempt to generate different numbers until theassessments from future statistics are available to validate or invalidate policy modifications.Information quality and system quality are not the primary drivers but merely one of the manyvariables that organizational executives are forced to manage.
  6. 6. IT Alignment 6 Figure 1. Systems Development Cycle Figure 2. Multiple Sequential Overlapping IT Systems Development Cycles Over a IT 10-30 Year Period Conducting a study regarding "staggered alignment" would involve measuring the lapseof time between IT strategy formulation and related system process implementations It is implementations.surmised that shorter cycles would be more common in smaller organizations and vice vice-versa.The study would attempt to measure the staggered alignment cycle time by surveying IT and alignment
  7. 7. IT Alignment 7executive management professionals in a variety of organizations. The study would attempt tocorrelate average cycle time to organization size ratios with different levels of overallorganizational success. Companies align a portion of their processes with technologies they feel will render theiroperations more efficient. There is always the potential that new aligned practices willsynchronize with traditional operations thereby carving out a niche as one of the multipleoperational tools. The potential for ultimate convergence with standard practices is the goal. ISliterature repeatedly outlines the fundamental importance of alignment for organizationaleffectiveness.
  8. 8. IT Alignment 8 BibliographyBaets, W. (1992). Aligning information systems with business strategy, IS and businessstrategy alignment 1(4): 205–213.Chan, Yolande E., Sid L. Huff, Donald W. Barclay, and Duncan G. Copeland. (1997)Business strategic orientation, information systems strategic orientation, and strategicalignment. Information Systems Research 8, no. 2: 125-150.Chan, Yolande E. (2002) Why haven’t we mastered alignment? The importance of theinformal organization structure. MIS Quarterly Executive 1, no. 2: 97-112.Chan, Yolande E., and Blaize H. Reich. (2007). IT alignment: What have we learned?Journal of Information Technology 22, no. 4: 297-315.Chan, Yolande E., Rajiv Sabherwal, and Jason Thatcher. (2006). Antecedents of strategicIS alignment: an empirical investigation. IEEE Transactions on EngineeringManagement 53, no. 1 (February 2006): 27- 47.Chan, Yolande E., and Blaize H. Reich. (2007). IT alignment: an annotated bibliography.Journal of Information Technology 22, no. 4 (December 2007): 316-396.Donovan, Edgardo. (2006). The relationship between business strategy and informationtechnology strategy.http://www.eddiedonovan.com/publications/ITM503MOD2CASE.pdf
  9. 9. IT Alignment 9Luftman, J. (2000). Assessing business-it alignment maturity. Communications ofAssociation for Information Systems, 4(14).Luftman, J. N., Lewis, P. R., and Oldach, S. H. (1993). Transforming the enterprise: Thealignment of business and information technology strategies. IBM Systems Journal,32(1), 198-221.Luftman, J., Kempaiah, R. (2007). An update on business-IT alignment: A line has beendrawn. MIS Quarterly Executive, 6(2), 165-177.