Abstract
Most organizations have multiple levels of strategic plans (de Kluyver & Pearce, 2006), one of which is the Information Technology (IT) strategic plan. The alignment of an organization’s business strategy with its IT strategy has been a concern of CIOs (Benson & Standing, 2008; Croteau & Bergeron, 2001; Johnston, Muganda, & Theys, 2007; Luftman Kempaiah, & Nash, 2006), CEOs (Armstrong, Chamberlain, Moore, & Hart, 2002; O’Brien & Marakas, 2006), academic researchers (Henderson & Venkatraman, 1999; Kangas, 2003; Pearlson & Saunders, 2004; Reich & Benbasat, 2000), and research companies (Broadbent, 2000; Croteau & Bergeron, 2001; Meta Group, 2001) since the age of vacuum tubes. The Society for Information Management (SIM) studies reveal that ‘IT and Business Alignment’ was the number one management concern in 2003, 2004 and 2005, and has been one of the top 10 concerns since 1983(Luftman et al., 2006). IT and business strategies should not be separate or aligned; organizations should simply have one business strategy: one organization, one strategy.
TopBackground
Organizations need to recognize changing business climates, fluctuating resources, and the need to expand or grow (Bocij, Chaffey, Greasley, & Hickie, 2006). Organizations that plan, and then move in the right direction at the right time, survive. “Strategic planning enables a company to focus on what is important” (Benson & Standing, 2008, p. 207). All factors including IT must be considered and taken into account holistically to create value (de Kluyver & Pearce, 2006).
Key tasks of most managers within an organization are to acquire, develop, and allocate the organization’s resources, and to develop and exploit the organization’s capacity for innovation (Burgleman, Maidique, & Wheelwright, 2001). The acquisition, development, allocation, and exploitation of IT should be part of any business strategy. Many new products/services and ideas like e-commerce and BPR have been based on IT (Benson & Standing, 2008).
IT can contribute to the overall performance of the organization in many ways, including making/saving money, quality improvements, productivity gains, and providing new services/functions (McKeen & Smith, 2004). Strategic, management, operational, and functional support benefits can and do arise from the IT contribution (Ward & Daniel, 2006). It is unlikely that these contributions and possible innovations will occur by chance; they need to be planned.
O’Brien and Marakas (2007, p. 42) state that IT is more than a support for business, and that IT is “no longer an afterthought in forming business strategy.” Linear planning is useless; organizations must plan holistically (Hartman, Sifonis, & Kador, 2000) or harmoniously in order to survive. Organizations should have a single strategic plan.
TopWhere, Why, What, How?
Strategy is about creating options; strategic thinking focuses on taking different approaches, on choosing different sets of activities, on choosing a unique competitive position (de Kluyver & Pearce, 2006). Strategy is about choice, change and conclusions, where to do business (location and industry), why (reasons), what to do/offer, what not to do/offer, and how to do it.
Key Terms in this Chapter
Business Process: A collection of business activities that take several inputs and create one or more outputs.
Business Strategy: A description of the plans, actions, or steps an organization intends to take in order to strengthen and grow itself.
CIO (Chief Information Officer): The head of the IS department in an organization.
Strategy: Plans to create and manage change, and exploit opportunities.
Alignment: The arrangement or position of different, separate elements (strategies) in relation to each other.
IT (Information Technology): A collection of all systems in an organization.