Silliman University

Management Information System

Information Systems Strategic Plan

Measuring the Information

Systems - Business Strategy
Relationship:
Factors that influence the social dimension
of alignment between businesses and
information technology objectives

Submitted by:
Aurelio S. Lopez
MIS104 Student

Submitted to:
Dr. Dave Marcial
CCS Dean, MIS104 Instructor

January 09, 2015

The Research

The establishment of strong alignment between information technology (IT) and

organizational objectives has consistently been reported as one of the key concerns of information
systems managers. This presents findings from a study which investigated the influence of several
factors on the social dimension of alignment within ten business units in the Canadian life
insurance industry. The social dimension of alignment refers to the state in which business and IT
executives understand and are committed to the business and IT mission, objectives and plans.
The research model included four factors that would potentially influence alignment: (1)
shared domain knowledge between business and IT executives, (2) IT implementation success, (3)
communication between business and IT executives, and (4) connections between business and IT
planning processes.
The outcome, alignment, was operationalized in two ways: the degree of mutual
understanding of current objectives (short-term alignment) and the congruence of IT vision (longterm alignment) between business and IT executives.
A total of 57 semi-structured interviews were held with 45 informants. Written business
and IT strategic plans, minutes from IT steering committee meetings, and other strategy documents
were collected and analyzed from each of the ten business units.
All four factors in the model (shared domain knowledge, IT implementation success,
communication between business and IT executives, and connections between business and IT
planning) were found to influence short-term alignment. Only shared domain knowledge was
found to influence long-term alignment. A new factor, strategic business plans, was found to
influence both short- and long-term alignment.

Introduction

In the last decade, the alignment of information technology plans with organizational
objectives has consistently been among the top concerns reported in surveys of information
systems managers and business executives (Brancheau et al., 1996). Although there has been much
attention paid to alignment, no comprehensive model of this construct is commonly used. In this
study, we add to the body of knowledge by focusing on the antecedents that influence alignment.

In the broadest sense, information technology (IT) management can be conceptualized as

a problem of aligning the relationship between the business and IT infrastructure domain in order
to take advantage of IT opportunities and capabilities (Sambamurthy and Zmud, 1992).
In the research literature, there seem to be two approaches to the subject of alignment. The
first concentrates on examining the strategies, structure, and planning methodologies in
organizations. The second investigates the actors in organizations, examining their values,
communications with each other, and ultimately their understanding of each others domains
(Dougherty, 1992). Support for this duality of approach is found in Horovitz (1984), who
suggested that there were two dimensions to strategy creation: the intellectual dimension and the
social dimension. Research into the intellectual dimension is more likely to concentrate on the
content of plans and on planning methodologies. Research into the social dimension is more likely
to focus on the people involved in the creation of alignment.
Although it is believed that both dimensions are important to study and are necessary for
an organization to achieve high levels of alignment, the focus of the research reported here is solely
on understanding the social dimension of alignment and the factors that influence it. This
dimension of alignment has not been accorded the same degree of attention by IT researchers, even
though the creation and maintenance of organizational understanding and commitment may be
more problematic than developing IT and business plans in the first place.
There is support in the literature for studying the social dimension. For example, the
culture gap between IT and business people has been identified as a major cause of system
development failures. Mintzberg (1993) notes that formal planning is not the only way to create
strategy. He suggests that relying on the strategic vision and strategic learning approaches, the
latter based on integrating the views and visions of a number of actors, is a better means to cope
with uncertain environments. The current planning literature is based mainly on a rational model
of organizational decision making. They note, however, that other models such as the political
behavioral model or the resource dependency model also provide robust descriptions of the IT
planning processes.
The approach in those studies was to use statistical methods on a large sample in order to
measure relationships between independent variables and alignment. A more interpretive approach
is taken here to discover how certain critical factors interact to create conditions that enable or
inhibit alignment. While initially identifying a set of factors that have the potential to influence

alignment, we are aware that there is no well accepted theory of the social aspects of alignment.
Therefore, the research was exploratory. The approach to data collection and interpretation was
open to revealing new factors and processes that might emerge as influential in affecting
alignment. The units in the sample were examined in a holistic fashion, focusing on more than just
the variables initially identified from previous literature, in order to understand the full context
within which the various outcomes emerged. The overall research goal was to (1) define the
alignment construct, (2) develop measures for alignment, and (3) investigate the organizational
factors and events that influence alignment.
A review of prior research (reported in Reich and Benbasat 1994) did not find a commonly
accepted model to investigate the social dimension of alignment. Several categories of factors were
identified that, according to the theoretical and empirical literatures, have the potential to influence
alignment: external influences, IT characteristics, connections between IT and business planning
systems, communication between IT and business executives, and implementation of previous IT
plans. For the purposes of this research, to the extent possible, external influences were controlled
by collecting data from organizations in the same industry (life and health insurance). IT
characteristics were controlled by sampling from companies in which IT was accorded high
strategic value, as measured by the IT budget and the proximity of the CIO to the CEO.
In addition, the concept of one of the sub factors, called IT-knowledgeable line managers,
was expanded and made a factor. The result was a factor called shared domain knowledge, which
refers both to IT-knowledgeable business managers and business-knowledgeable IT managers.
Using relationships reported in prior literature, factors were organized into the research model
shown in Figure 1, which contains five constructs at three levels. Shared domain knowledge and
IT implementation success are expected to affect both the communication between IT and business
executives and the connections between business and IT planning, which in turn will influence
(the social dimension of) alignment. In theory, the model in Figure 1, should be valid for any
organizational unit in which the IT and business executives have the autonomy to develop their
own strategic plans.

Figure 1: Research Model and Propositions

Evaluation and Discussion

These studies differ from the current one in that their focus is mainly on the relationship
between alignment and IT performance or between shared knowledge and IT performance (Nelson
and Cooprider, 1996). In contrast, the main interest of the current study is on identifying the factors
that create or inhibit alignment. Another difference is that Nelson and Cooprider investigate the
factors (mutual trust and interest) that lead to shared knowledge, whereas the current model does
not investigate the antecedents of shared knowledge.

Communication between business and IT executives

There is ample evidence in the literature that communication leads to mutual understanding or
alignment suggest that the effective application of IT depends on the interactions and exchanges
that bind IT and line managers. The participants create and share information with each other to
reach a mutual understanding. Such information sharing over time leads the individuals to
converge or diverge from each other in their mutual understanding of a certain topic. Clark and

Fujimoto (1987) note that successful linking depends on direct personal contacts across functions,
liaison roles at each unit, cross-functional task forces, [and] cross-functional protect teams. As
communication increases it is more likely that group members will share common ideas. That
communication ensures that business and IT capabilities are integrated into the business
effectively.

Proposition 1: The level of communication between business and IT executives

will positively influence the level of alignment.

Connections between business and IT planning much of the literature on alignment implicitly or
explicitly assumes that the IT planning process is the crucial time during which alignment is
forged. Partial support for this hypothesis was reported in a study showing that IT executives who
participate more in business planning believe they have a better understanding of top
managements objectives than those who participate less. Support for the importance of
connections in planning is also found in Zmud (1988), who argues that structural mechanisms
(e.g., steering committees, technology transfer groups) associated with communications and
management systems (e.g., planning and control mechanisms) are needed to build IT-line
partnerships for the successful introduction of new technologies.

Proposition 2: The level of connection between business and IT planning

processes will positively influence the level of alignment.

Shared domain knowledge between business and IT executives

Shared domain knowledge is defined here as the ability of IT and business executives, at a deep
level, to understand and be able to participate in the others key processes and to respect each
others unique contribution and challenges. Nelson and Coopriders (1996, p. 411) shared
knowledge construct, developed concurrently, (i.e., an understanding and appreciation among IT
and line managers for the technologies and processes that affect their mutual performance) is very
similar, although their operationalization differed.

There is evidence in the organizational behavior literature about the importance of shared
knowledge. Cohen and Levinthal (1990) note that common knowledge improves communication.
Dougherty (1992) posited a relationship between shared understanding and innovation. The
shared domain knowledge construct has also been of interest to IT academics for more than a
decade. The ways to develop IT knowledgeable line managers. There is empirical evidence on the
importance of shared knowledge for IT-line partnerships for IT performance and for IT use
indicate that increased business knowledge influences (and is influenced by) IT/business executive
relationships.

Proposition 3: The level of shared domain knowledge within a business unit will positively
influence communication between business and IT executives and connections between
business and IT planning processes.

IT implementation success

There is evidence to indicate that past failures reduce the credibility of IT departments and the
confidence line managers have in the competence of IT departments (Lucas, 1975). Failures also
pose a threat to the working relationships between IT and business executives by lowering trust,
cooperation, and support from users and management .On the other hand, a successful history of
IT contribution is expected to increase the interest of business executives to communicate with IT
executives and to have IT considered more fully and carefully in business planning because of the
high value expected from IT utilization. That a successful IT track record improves business
relationships at all levels.

Proposition 4: The level of IT implementation success will positively influence the level of
communication between business and IT executives and the connections between business
and IT planning processes.

Measurement of constructs
An earlier measurement paper (Reich and Benbasat, 1996) identified two aspects of the social
dimension of alignment, namely short-term and long-term alignment. While short-term
alignment refers to shared understanding of short-term goals, long-term alignment refers to shared
understanding of IT vision. These two dimensions were found to be distinct because some
organizations had achieved high levels of one while rating low on the other.

Short-term alignment is defined as the state in which business and IT executives understand and
are committed to each others short-term (one to two year) plans and objectives. This aspect was
operationalized by interviewing senior business and IT executives, asking them to identify both
current business and IT objectives/plans, and measuring the level of understanding that IT
executives have of current business plans and business executives have of current IT plans.

Long-term alignment is defined as the state in which business and IT executives share a common
vision of the way(s) in which IT will contribute to the success of the business unit. This aspect of
alignment was operationalized by asking business and IT executives to articulate their visions for
IT and the authors measured the degree of congruence between these visions.

Measuring communication between business and IT executives

Typology of seven techniques, thought to increase communication between two separate units, can
be used to capture many of the ways in which IT and business executives interact. The six most
pertinent techniques are listed below, in order of the degree (according to Galbraith) to which they
contribute to connecting the objectives of two organizations:

1. Direct communication (e.g., communication between business and IT executives, such as

regular or ad hoc meetings, electronic mail or written memos).
2. Liaison roles (e.g., a named person as liaison between IT and a line function).
3. Temporary task forces (e.g., IT project team, new product development team).
4. Permanent teams/committees (e.g., IT steering committee)

5. Integrating roles (e.g., IT person leads the business quality team).

6. Managerial linking roles (e.g., product management role).

The typology was used in this study to formulate interview questions identifying the type and
number of these techniques employed in any one business unit. Data were collected from
individuals in interviews and corroborated with written documents (e.g., minutes from meetings).
These strategies allowed identification of much of the recurring business communication between
business and IT executives. These data were used to identify business units with low, moderate
or high levels of communication between business and IT executives.

Measuring the connections between business and IT planning

Several descriptive and prescriptive typologies have converged on five generic types of IT
planning. From these, a five-level scale of planning styles (shown in Table 1.0) was developed
based on the degree of connection between business and IT planning processes. Each level is
progressively higher in its level of connection between business and IT objectives and its
potential to create alignment.
Each informant in the business unit was asked to describe the steps in the most recent IT
and business planning processes. Using their descriptions, we classified the connection between
business and IT planning processes, based on the typology shown in Table 1.0 Level 1 was
characterized as being low, levels 2 and 3 as being moderate, and levels 4 and 5 as being high
levels of connection.

Measuring shared domain knowledge

Shared domain knowledge was operationalized as work experience and measured by

assessing the actual amount of IT experience among the business executives and the actual amount
of business experience among the IT executives. Business knowledge was conceptualized as the
aggregate of two dimensions: (1) experience in the insurance industry and (2) experience as a line
supervisor or manager. It was felt that both dimensions were important to ones ability to
participate in strategic decisions within a line insurance unit. IT knowledge was also
conceptualized as having two core dimensions: (1) familiarity with new technology and (2)
experience in implementing IT projects. If a line manager possessed both of these dimensions, the
feeling was that he/she could identify opportunities for the utilization of new IT and could
implement agreed-upon projects within the business unit.

Each interviewees entire education and work history was elicited and shared knowledge
was rated using the scales shown in Table 2.0 The years used to separate the rating categories had
been reviewed and validated by a focus group of IT executives. The first two variables were
aggregated to indicate the level of business knowledge of each IT executive, and the last two,
taken together, indicated the level of IT knowledge of the business executive. Because the
objective was to represent the entire business unit executive group with this rating, interviewees
were asked their opinions of other executives who were not interviewed. Then, an aggregate rating
of high, moderate, or low was assigned to the business unit which represented the level of
shared domain knowledge among the executives. If both business and IT executives rated highly,
the business unit would rate high. If neither rated highly, the business unit was rated low. If
there were mixed levels of knowledge, the unit was rated moderate.

Measuring IT implementation success

To assess the previous IT implementation success, each interviewee was asked several
questions about IT activities during the last two years, including. 1 Name the major projects started
in the past two years. 2 How successful were each of the major projects? 3 Overall, how well were
the IT plans implemented? In addition, open ended questions about the general IT history within
the business unit were asked. Major IT decisions were discussed to determine whether they were
characterized as successes or failures. These questions resulted in a rich understanding of the
details of past projects and the various opinions about IT implementation success up to a decade
before the interviews. The remarks of the interviewees in each business unit were analyzed and
aggregated, and the overall level of success in IT implementation was assigned a high, moderate
or low rating.

Summary of results regarding short- and long-term alignment

In general, it was relatively easy to discover the influence of constructs on the creation of shortterm alignment. Organizational stories, minutes from meetings, respondents explanations, and the
researchers interpretations often converged to create plausible causal explanations. The origin of
the short-term business or IT objectives could be traced and the meetings at which they were
discussed by IT and business executive identified. How the level of shared domain knowledge had
influenced communication and the understanding that IT and business executives displayed toward
each others objectives, could also be explained. Such linkages were not apparent when it came to
explaining the presence or absence of long-term alignment. The one construct that seemed to
predict long-term alignment was shared domain knowledge, but a causal explanation for its
influence was not found. One significant issue was that how or when IT visions were created could
not be found. Actions by individuals seemed to strongly influence the creation and dissemination
of vision, and vision itself was difficult for respondents to articulate, and difficult to measure.
Apart from measurement problems, it is possible that creation of a shared, long-term vision for IT
would be better explained with process analysis rather than factor models. The suspicion is that
there are several paths to a shared IT vision and that a longitudinal, ethnographic study is required
to illuminate the antecedents of this construct.

Apart from the prerequisite factor of a short-term business direction, the biggest distinction
found between business units with high and low levels of short-term alignment was the frequency
of structured and unstructured communication between IT and line executives. The conclusion was
that, over time, executives in a business unit create the kind of communications environment that
is comfortable for them. Those who are respected are able to get involved in activities that are well
outside their sphere of influence. Those who are not respected tend to get left out, either by not
being invited onto senior committees or by not being involved in discussions about important
business issues.
Having both a high level of IT implementation success and a high level of shared domain
knowledge may not be necessary for high levels of communication. It seems that high levels of
either can result in high levels of communication, and through this mechanism, lead to high levels
of short-term alignment. Further, it seems that very high levels of shared domain knowledge can
compensate for the expected influence of a low level of IT implementation success. The
connections in the planning construct had a moderate influence on short-term alignment, but no
strong evidence could be found that planning practices were influenced by shared domain
knowledge or IT implementation success. Contrary to communication patterns, which resulted
from a mix of organizational and individual preferences, connections in planning seemed to reflect
only organizational practices. In other words, if a shared planning process existed between IT and
the line, one would also expect to find shared planning between most other units in the
organization. If no planning process was found in IT, most likely there would be little planning
done in the business units. The problems encountered in measuring and gauging the influence of
this construct will be further discussed in the long-term alignment section.

Conclusions

One observation was that IT implementation success cannot be used to predict the level of
communication or connections in planning without taking into account the level of shared domain
knowledge. A high level of shared domain knowledge may moderate the expected negative
influence of a low level of IT implementation success on the other two factors. In simpler language,
managers within a business unit with high levels of shared domain knowledge understand and
respect each others contribution and trust that each is giving their best effort. Even in the presence

of a seriously derailed major IT project, these units may exhibit high levels of communication and
short-term alignment. In units without high levels of shared domain knowledge, failed or failing
IT projects result in finger-pointing, reduced levels of communication, and low levels of shortterm alignment.
Another conclusion was that planning practices are not predicted by intra unit factors, such
as shared domain knowledge or IT implementation success. They seem to be influenced by macro
organizational level policies and, in some cases by senior individuals within business units.
Business and IT planning processes seem to be events at which business direction is set, IT plans
are discussed, and budgets are ratified. While these events influence short-term alignment by
getting the short-term objectives understood by all, and funded, they do not seem to play a role in
the creation of an IT vision. Although a high level of shared domain knowledge in organizations
with long-term alignment was expected, there may be other, as yet unknown, factors that influence
this outcome. When we as researchers understand more clearly how IT visions are created, these
other factors could likely be identified.

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