Strategic Alignment Between Business and Information Technology

Strategic Alignment Between Business and Information Technology

Fernando Jose Barbin Laurindo (University of Sao Paulo, Brazil), Marly Monteiro de Carvalho (University of Sao Paulo, Brazil) and Tamio Shimizu (University of Sao Paulo, Brazil)
DOI: 10.4018/978-1-60566-677-8.ch002
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Abstract

Information technology (IT) has assumed an important position in the strategic function of the leading companies in the competitive markets (Porter, 2001). Particularly, ecommerce and e-business have been highlighted among IT applications (Porter, 2001). Two basic points of view can be used for understanding IT’s role: the acquisition of a competitive advantage at the value chain, and the creation and enhancement of core competencies (Porter & Millar, 1985; Duhan, Levy, & Powell, 2001). Several problems have been discussed concerned with IT project results in effectiveness of their management. Effectiveness, in the context of this article, is the measurement of the capacity of the outputs of an information system or of an IT application to fulfill the requirements of the company and to achieve its goals, making this company more competitive (Shimizu, Carvalho, & Laurindo, 2006). There is a general consensus about the difficulty of finding evidence of returns over the investments in IT (the “productivity paradox”), even though this problem can be satisfactorily explained (Farrell, 2003). Carr (2005) defends the idea that IT in itself has no more strategic value, since it is so widely disseminated that it could not be a source of strategic differentiation anymore. In order to better use these investments, organizations should evaluate IT effectiveness, which allows the strategic alignment of objectives of implemented IT applications and their results with the company business vision (Shpilberg, Berez, Puryear, & Shah, 2007; Laurindo & Moraes, 2006). Besides, it must be highlighted that if IT applications are associated with changes in business processes, it is possible to notice greater impacts in business performance (Farrell, 2003). According to Benko and McFarlan (2003), three aspects must be taken into account about IT strategic alignment: IT projects portfolio, business objectives, and the constantly changing situation of business environment. Thus, the comparison and evaluation of business and IT strategies and between business and IT structures must be a continuous process, since the company situation is constantly changing to meet market realities and dynamics.

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