Aligning Strategy and Information Technology

Introduction

This review of the strategic alignment construct undertook a five-dimensional approach in terms of the literature selected to prepare the chapter. First, a sample of empirical IT management articles was selected. Second, the topical theme of strategic alignment enjoys good coverage from various organization and management studies (e.g. Harvard Business Review, California Management Review) and relevant articles were reviewed under this code. Third, in-keeping with the need to consider practical relevance as shared by IT practitioners, the view was taken that sound practitioner advice embedded with factual evidence will stand the chapter in good order. Fourth, additional insights were collected from sources such as the Center for Information Systems Research (CISR), and the Center for Digital Business, both located at the Massachusetts Institute of Technology (MIT) Sloan School of Management. Finally, central to the review were high-level conceptual articles contributed by well-established IT management scholars. The insights shared are largely based the on the collection and analysis of empirical data on aligning strategy and IT in small-medium enterprises (SMEs), multi-national corporations, and public administration organizations and agencies (federal, state, semi-state, local, not-for-profit etc.).

Strategic alignment continues to challenge many organizations and management teams today and can be described as a pervasive IT management challenge (Luftman & Derksen, 2012). It is considered to be a perennial concern given that it has proved to be a top management issue for more than three decades. Such long-standing management challenges are described to be as difficult as surveying sand dunes in the Sahara (Luftman, 2003) given the continuous and fast-paced nature of IT innovation matched by turbulent economic cycles and globalized business environments. Despite much greater time, energy, and resources afforded by Chief Information Officers (CIO) than ever before to aligning strategy and IT, few believe that their efforts are paying off i.e. below 20% (Lochan & Shah, 2010). Only 15% of large corporate organizations can describe the role of IT in support of the strategic agenda as being well-oiled leading to IT-enabled growth and / or performance benefits with the remaining 85% categorized as being either in the “maintenance zone” or “alignment trap” (Shpilberg, Berez, Puryear & Shah, 2007). Strategic alignment is about the IT function, and business lines and functions, and the respective management teams, working together to leverage identifiable opportunities to maximize and generate real business value from IT investments. However, demonstrable success is seldom evident or forthcoming for many organizations. One of the reasons for why it is difficult to demonstrate performance improvements is that IT-enabled benefits are of a tangible and intangible form and not always easy to measure.

A good deal of ambiguity exists about the meaning of strategic alignment and a concise definition of the construct is provided based on past empirical underpinnings. An overview of the background to the strategic alignment construct in terms of how it first emerged is presented. Strategic alignment forms a core part of the IT management domain whereby the focus is on the formation of strategy and aligning IT development with business goals and objectives (Avgerou, 2000). Strategic alignment is persistently ranked as the top key issue for IT management among senior IT executives and corporate business leaders. Reasons to explain the nature of the different but inherent challenges associated with its dynamic character are discussed.