Volume 14 Number 2 June 2007
THE ALIGNMENT OF BUSINESS AND INFORMATION TECHNOLOGY STRATEGY IN AUSTRALIA
Strategy & Operations Deloitte Touche Tohmatsu, Australia Email: firstname.lastname@example.org
Department of Information Systems, The University of Melbourne Email: email@example.com
ABSTRACT The alignmentof business and information technology strategy has long been recognised as a key issue for managers and has grown in importance as IT has become strategically significant. Previous studies have noted the elusiveness of alignment of business and information technology strategy and identified a number of factors that promote alignment. This study builds on previous work and categorises the factorsas either people, process or organisational. A cross industry survey of Australian organisations is then used to determine the perceived benefits of alignment and the perceived importance of each factor and how successful it was in promoting alignment. The findings of the study show that Australian organisations perceive that alignment is important and can bring considerable benefits. Furthermorethe study highlights the relative importance of the factors and indicates where organisations should focus their attention in order to successfully achieve alignment.
INTRODUCTION Achieving alignment between business and information technology (IT) strategies has long been a crucial issue for many organisations. There was much interest in strategic alignment in the early 1990s as IT becameseen to be an integral component of organisations (Broadbent and Weill 1993, Henderson and Venkatraman 1993. Keen (1991) notes that “IT has become an important aspect of everyday business. It is potentially a key element in competitive positioning”. IT had moved from being an operational function to being a critical strategic organisationsal tool or resource that should be shaped to deliver businessneeds. The alignment between business and IT strategies again rose to prominence in the early 2000s with the rise of eBusiness (Choe 2003, Pollalis 2003). In a 2004 US
Australasian Journal of Information Systems
Volume 14 Number 2 June 2007
Society of Information Management survey, the number one concern for executives was the alignment of business and IT (Luftmann 2005). Despitethis interest, Luftman, Papp and Brier (1999) found that 42% of executives of Fortune 500 companies in the USA stated that their business and IT strategies were not aligned. Very few studies of the alignment between business and IT strategies have been conducted in Australia. The most significant Australian study was Broadbent and Weill (1993) which focused on the banking sector. Given the renewedinterest in and importance of the alignment between business and IT strategies and the lack of Australian studies, we undertook a survey in 2005 that explored the alignment between business and IT strategies in Australian organisations and this paper reports the outcomes. This paper is structured as follows. The next section reviews key research in business strategy, IT strategy and alignmentbetween business and IT strategies and provides definitions of key concepts. A set of factors that promote alignment between business and IT strategies is discussed. The third section describes the research design and explains how the survey instrument was developed and how data was collected and analysed. The next section presents the results of the survey and discusses their implications. The finalsection concludes the paper and presents some suggestions for future work.
ALIGNMENT OF BUSINESS AND INFORMATION TECHNOLOGY STRATEGY
Business Strategy There are many views on what constitutes “business strategy”. Definitions for business strategy and its features include the following. A business strategy … • • should encapsulate a statement of an organisation’s mission or vision so that...