This paper discusses with in the context of strategic planning of information systems and Information technology the importance and role of IT/IS alignment. Accordingly the relevance for the organisation of the same in terms of resource based perspective in terms of strategic information management and alignment of both concepts has been discussed. Effective IS/IT alignment with in an organisation is indispensable to the emerging competitive business landscape much inundated by rapidly changing technology (Porter, 1980). Such management then plays a pivotal role in maintaining the relevance and quality of information by allowing the organisation to respond to the changes in a timely and strategic manner thus securing for it a certain competitive advantage (Porter, 1985). Furthermore the advent of information technology has now paved the way for better document management, process automation and digital asset management with in organisations (Prahad and Hamel, 1990). Strategic IT/IS alignment has only emerged as a potentially profit generating concept of strategic management and has evolved from being a tool for general management support for inventory keeping and financial reporting to the modern day decision-support systems (DSS), executive support systems (ESS) and enterprise resource planning softwares (Hamel and Prahalad, 1994). The main focus of this essay however remains the discussion of IS/IT alignment models and the effective use of many IT /IS frameworks which include the likes of ITIL, Val IT, COBIT, AS 8015, ISO, and Calder-Moir in modern business organizations. Such frameworks remain vital to IT governance. The need for proper and effective alignment between Information Systems and Information technology then forms the pith and substance of effective strategic management between the same.
Academic literature has spoken of the countless and blatant failures in IT strategy where there was a lack of proper alignment between the both and the theoretical and practical response to making amends to such a strategy has involved the use of several models like the Strategic Alignment Model (SAM), the Integrated Architecture Framework (IAF), the Social Dimension of Alignment Model, and The Knowledge-Based IT/IS Alignment (DeLone and McLean, 2003). It is worth noting that these frameworks are pivotal to the core competencies of an organisation and also that such models when utilized should ideally take into account the utilisation, scanning and assessment of company-critical resources, capabilities, and competencies separately (Prahalad and Hamel, 1990).
Alignment pertains to internal practices such as pay, promotion and employee retention and forms the backbone for good information systems (Earl, 1989). From an organisational perspective Middleton (2004, p-17) define alignment as: ‘The degree to which the interests and actions of each employee support the organization’s key goals’. Another academic view is that alignment pertains to the degree to which the information strategy, goals and plans of an organisation are supported by the organization’s business mission and action plans. This is the view taken by Tallon (2007) and Subramani et al. (1999) and it can be seen from their works that indeed a further intellectual dimension to the cause of alignment pertaining to planning methodologies and business structure is inter-related to the social aspect of the same. In this manner the IT/IS strategies operate in a harmonious way with business strategies needs and the organisational goals in an appropriate and timely way in harmony with business strategies, goals and needs. This definition can then be said to include the extent to which an organisations strategy enables, supports and stimulates information management through information technology.
It is possible to see that today IS/IT alignment is the core issue facing the business integrity of many organisations and it has been reiterated again and again in popular literature that a popular reason of organisational failure is the omission of the management to realize the potential value of IT is due partially to the absence of strategic alignment. This is indeed a matter for the to management of an organisation. Strategic alignment is also related to effective leadership strategies with in an organisation where as alignment was identified as a key to differentiation between run-of-the-mill organisational strategies and those of successful visionary companies. Company loyalty has also been reported as a key form of assuring effective alignment with in company interests, goals and motivations (Subramani and Walden, 2001).
Kearns et al (2006) further state that ‘IT has become an important aspect of everyday business. It is potentially a key element in competitive positioning’. A similar view has been taken by Michael Porter (1985,1980). However during the discussion of IT/IS strategic alignment it has to be noted quite clearly that such an alignment no longer plainly relates to the aspect of simple batching and effective accounting processes with in a firm (Grant et al, 2010). The advent of IT has no doubt revolutionized the way business is undertaken and managed and furthermore if there is a disharmony between the human resource departments and IT implementation such a misalignment can damage the long-term loyalty between the successful companies (Tallon, 2007).
The Importance of IT/IS alignment was not apparent until the early nineties when businesses actually began to perceive information as a weapon of competitive strategy itself. It is possible to see that some of the first businesses to benefit from integrated and IT based information systems were the airlines. It is possible to see the strategic advantages the APOLLO system brought in for the US Airlines when a dramatic increase in consumer loyalty and retention was experienced with in a few years of the implementation of the same (Kearns et al, 2006).
Porter’s Value Chain model (Porter, 1985) has identified a value chain model to bring about an identification of the gaps in an organisational context where information systems can be of the greatest use. Furthermore the potential of information systems remains immense, as it can be developed not only to defeat rivals business strategies but also to cater to an increasingly demanding consumer base. However it must be remembered as it will be seen through the Intel Case Study (Phan, 2003) that IT/IS alignment with in the utilisation of information systems pertains to “strategic” and timely use of information. Information on its own can never is a value-creating ingredient with in Porter’s model (Porter, 1985). The gathering of information must be followed in all respects by the effective utilisation of the same pertaining to proper gathering, processing and dissemination of the same to use it for gaining strategic and competitive advantage with in an organisation (Earl, 1989).
Consequences of IT Misalignment
The consequences of business misalignment are also well documented with in the literature .The popular view (see for example Porter, 1985). Information Technology on its own is of no use in creating and capturing value for a business unless there is careful planning between IT and IS strategies to achieve harmonization between the two (Earl, 1996). IT and Human Resource departments can often suffer from a failure to communication. Some of the major failures of the same have arisen as the lack of planning and implementation with in IT strategy
Planning and implementation are indeed some of the most complex stages when any IT/IS strategy. Many authors have cited Tesco’s success with in its TIES ERP system as well as its loyalty card scheme data base as a sparkling example of IT/IS strategy where as the internal management has not only forged a clear pathway for managing internal strategies with in the management but also brought consumer relation management in a proper sort of alignment with in its marketing and information management strategies (Rowley, 2005).
The example of Intel (Phan, 2003)
As evident from the case study example Phan (2003) discussed below of various IS/IT alignment models it will be possible to observe and discern the fact that all has never been well for companies who have blindly and hastily jumped the IT bandwagon without making an effort to ensure that there is a reasonable harmony between the two. One basic reason for misalignment stems from the issue of costs whereas an effort is being made to save costs while at the same time ignoring the effective need for staff training for organisational change (Palmer, 2002). Another lesson well learnt from the implementation and post implementation phases of IT for the purpose of information management is that any such change will inevitable be cost and time intensive and a lot of pre-implementation evaluation and research will be required to make such strategies a success (Luftman, 2003). Furthermore it is possible to see that once it is realized that IT/IS alignment is more of a matter of the core competency of an organisation before such strategies are implemented (Grant et al, 2010)
This analysis is an examination of various examples of IT frameworks and will demonstrate these well learnt lessons as having been the lack of proper personnel training, as well as having an employee resource base which incompatible and unprepared for technological change (Kim and Ramkaran, 2004).
It is possible to discern from the case study by Phan (2003) Intel’s phenomenal success in being able to take new orders and bring in better distribution techniques for its consumer base was its improved IS/IT strategy 1998 onwards which allowed it to utilize the Internet and the electronic commerce strategy to contact and create a consumer base worldwide. It was also possible through better alignment to gain a better competitive advantage amongst its rival companies consumer base where as it was able to harmonise its customer services department with the IT strategy of providing a 24 hour careline.
Phan (2003) believes that not only did a change in Intel’s approach to better IS/IT alignment bring about a better competitive advantage for it but also allowed it to build, strengthen and continue their market positioning in terms of better product design and unique product designing to demand a premium reward for their product lines. This was mainly through forging better partnerships and relations with the market in terms of demanding a premium price for its Pentium products in terms of business-to-business services with in the horizontal value chain. Such successful alignment has also been a result of conducting the E-business strategy in a way, which would essentially complement rather than completely blackout traditional modes of market rivalry. This is a mistake many businesses make when they tend to rely solely on E-strategy as a means to an end of profit making success.
Proper advertising and using the technology with in the e-business system to strengthen the market position of the product acquire this. Intel was better able to compete with the low cost category of computer goods with its Celeron range of products. Phan (2003) goes on to state that, “by continuing to maintain innovation and tight supply chain relationships with value chain partners, Intel strengthened its strategic market position.”
Furthermore due to the co-operation of the IT and Top management executives all Intel e-business teams were able to produce better quality of service.
Following the reflective dimension, the author of this paper has been able to discern from the Intel Case study (Phan, 2003) that IT/IS alignment is not only pivotal to bringing about good market positioning for a company but also that it needs considerable internal co-operation and management. Intel was able to bring about this dimension through improved internal system integrity controls. This section will seek to explain Intel’s success through the IT/IS frameworks, which have been discussed in literature.
Intel was able to change its IT and internal structure through a dynamic process of communication and planning. It is possible to see that the success factors of Intel essentially involved four main factors of alignment in the following ways:
- There was an increasing trend of shared domain knowledge between the marketing and human resources department and the IT department
- Successful IT implementation success and post implementation evaluation of success factors
- Better communication between business and IT executives in terms of implementation of change
- The harmony and concurrence between Intel’s business and IT planning processes.
It is also possible to see from the Intel example the significant factors, which form the basis and enabling factors of IT/IS alignment. Luftman (2003) suggests that one of these factors is the decision-making act of the senior management and the quality of leadership and dynamics of the organisation in bringing about an IT development strategy. Secondly the role of the IT department in bringing about the conception, development and execution of the IT strategy. Thirdly the role and collaboration of the IT department with the senior management in the development of an over all business and IT strategy. Fourthly Luftman (2003) also suggests that an organisation like Intel could well benefit from better leadership with in the IT department. Last but not the least Intel did not only gain information from its IT strategy but also utilized it in a timely fashion to gain benefits from the market.
Gartlan and Shanks (2007) identify some of common factors of promotion with in the IT /IS alignment. Applying these factors to the Intel case study by Phan (2003) it was possible to see that Intel found its success through an over all firm wide active involvement and a long term focus on its goals. It was possible to see that the IT and Human Resource departments in their collaboration demonstrated a clear meeting of the minds internally with in the organisation. Furthermore other alignment facilitating processes included a clear meeting of the minds and management skill and capability with in the internal Intel management (Middleton, 2004). Finally the same was demonstrated by the organisational structure, culture and communication with in the Intel Corporation. All these factors have been aimed at bringing about successful, tangible and focused business results. If we apply a more knowledge-based view to the situation rather than a resource based view it is possible to see in the context of planning behaviors and contexts with in the IS strategy that the top managers knowledge of Information Technology itself plays a substantial role with in the organisation (Middleton, 2004).
In conclusion it has been seen in the essay that the better half of the IT/IS alignment models pertains to the realization that better decision-making based on the quality of information gained through an information system is the second tier of business success. A proper perusal of such information might signal to the top management the need to re-invent and to re-evaluate the organisational roles and structures. Static information at this point is being replaced by some newfound information in motion. Furthermore it has also been observed that despite the recent tendency of top companies to jump the IT bandwagon many problems can come to fore in the implementation stage itself. It this regard Earl (1996:18) comments that,” Business strategies often prove to be a weak foundation upon which to build IS plans, planning methodologies turn out to be too complex or time-consuming or the official IS strategies are not implemented.” This can only be countered if the business strategy of an organisation is not ambiguous in itself and the proper identification of gaps with in the same are observed and remedied by the top management of an organisation, The will save the organisation’s time and resources and allow the top management to better utilize for the sake of IT/IS alignment the organisation’s resources and finances.
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