INFORMATION SYSTEMS-BUSINESS STRATEGY ALIGNMENT
Reich and Benbasat, 1996 defines alignment as the degree to which the IT mission,
objectives, and plans support and are supported by the business mission, objectives, and
plans.
The social dimension of alignment is defined as ‘the state in which business and IT
executives within an organizational unit understand and are committed to the business
and IT mission, objectives and plans’ (Reich and Benbasat, 1996).
The intellectual dimension of alignment is defined as ‘the state in which a high-quality
set of interrelated IT and business plans exists.’
According to (Jarvenpaa and Ives, 1993, Nadler and Tushman, 1980) alignment is the
extent to which two or more organizational dimensions meet theoretical norms of
mutual(common) coherence. Thompson (1967, P. 234) views alignment as ‘a moving
target’ at which organizations shoot. The suggestion by Jarvenpaa and Ives, 1993, p. 570,
is that alignment should be examined as ‘a developing process’.
In what ways does alignment evolve over time?
The following three ways have been observed in prior research to limit alignment in
strategic IS management:
1) It has primarily taken a cross-sectional view (Henderson and Venkatraman, 1992).
2) With rare exceptions (Brown, 1997), it has focused on two dimension such as
business and information systems strategies (e.g., Chan et al; 1997), or business and
Information systems structures (e.g. Fiedler et al, 1996).
3) Most prior studies like that one of Sabherwal and Kirs, 1994, empirically develop and
test the ‘ideal’ alignment patterns.
Theoretical Development
Alternative approaches for studying strategic Information Systems management as
given in this topic.
1. Universalistic Theories
These theories provide valuable insight by focusing on an IS management approach, its
contributions, and the ways in which it can be enhanced. For example Rackoffet al,
1985. Universalistic theories however view the same approach as useful in all situations,
rather than examining multiple approaches in alternative situations. The theories
therefore fail to provide sufficiently integrative view of the various aspects of
organization and may be more appropriate for relatively narrow domains.
2. Contingency Perspective Models
This examine the effects of environmental, organizational, and IS contexts on IS
management or the alignment between certain aspects of IS management and the
corresponding aspects of business management.
Various literature (King, 1978; Sambamurthy and Zmund, 1992 and Chan et al., 1997;
Sabherwal and Kirs, 1994)) argues and empirically shows that greater alignment among
dimensions from IS and/or business domains produces superior performance.
Contingency models recognize the importance of alternative perspectives and thus
provide a more integrative view of strategic IS management. They are however static in
nature, focusing on alignment at one point in time and its short-term performance
implications.
3. Life-cycle theories
Examples of these theories include; Nolan’s (1979) stage hypothesis, Galliers and
Sutherland, 1991; Hirschheimet al., 1988.The theories generally assume that:
a) The changes in all organizations take place along the same path/ the same stages.
b) The stages are in a ‘forward’ direction toward a desired ‘end goal’, such as the
maturity state in Nolan’s Model.
The theories fail to recognize the different settings as important in determining the
appropriateness of a particular model.
4. Punctuated Equilibrium Model (PEM)
The theory argues that periods of gradual evolution are punctuated by sudden
revolutionary periods of rapid change (Elderdgeand Gould, 1972; Van de Ven and Poole,
1995).
Contrast between Punctuated Equilibrium Modeland other theories
Universalistic theories focus on only one way of managing IS while the punctuated
equilibrium model is open to alternative ways of managing IS over time.
Moreover, contingency theories implicitly assume stability while the punctuated
equilibrium model recognizes that the long periods of stability are separated by short
periods of considerable instability.
Last but not least, the punctuated equilibrium model differs from life cycle theories as it
neither assumes that the same stages are universally followed nor implies a ‘forward’
direction of change toward a desired ‘end goal’.
Strategic information management profile
A company’s information management can be viewed using the strategic information
management profile, including Business and Information System strategies and Business
and Information Systems structures, as shown in the figure below:
Figure showing the Strategic information systems management profile
According to Venkatraman (1992) and Broadbent and Weill (1990), the alignment
between business and IS strategies is ‘Strategic alignment’.
Ein-Dor and Segev, 1982 describes alignment between business and IS structures as
‘Structural alignment’, that of strategy and structure as ‘business alignment’, while that
between IS strategy and structure is described as ‘IS alignment’.
Finally according to Henderson and Venkatraman, the alignment between (a) business
structure and IS strategy and (b) business strategy and IS structure is called ‘CrossDimensional alignment’.
The dimensions of strategic IS management profile
Business Strategy
According to Beard and Dess, 1981, different typologies for the corporate-level
strategy(which products and markets to compete in) and business-level strategy (how to
compete in a particular industry) can be used to exam business strategy.
The popular typology of Defender, Analyzers, and Prospectors according to Miles and
Snow, 1978; Miles et al., 1978, can be used to assess business strategy. This combines
elements of both corporate and business level strategies.
Business structure
This is examined in terms of the decision making being organic or mechanistic (Burns
and Stallar, 1961; Schoonhoven and Jelinek, 1990). Based on some later work (Jelinek
and Schoonhaven, 1990; Brown and Eisenhardt, 1997) an intermediate structure/semistructure was also included.
Semi-structures lie between the organic and mechanistic forms. Mechanistic and organic
decision-making process may be linked to centralized and decentralized processes
respectively (Brown and Marill, 1998).
Business structures can be; Mechanistic and centralized, semi-structured and hybrid or
organic and decentralized.
IS structure
According to Brown and Magil, 1994, Information Systems structure is examined using:
Centralized, shared, or decentralized management of Information Systems.
IS strategy
Rachoffet al., 1985 identified that Information Systems is accessed by examining the
ways in which Information Systems is being sought to impact the organization. This is
done using the five strategic thrusts i.e. low cost, differentiation, growth, alliance and
innovation. The sixth category ‘nonstrategic’ was included after recognizing that a firm
may not consider IS to be strategic (Brown and Magill, 1998).
Theoretical patterns of alignment
Three of four dimensions are assessed using 3 types of alignment i.e. Business strategy
(defender,
analyzer,
prospector);
business
structure
(organic,
semi-structured,
mechanistic) and IS Structure (decentralized, shared, centralized).
The typology for the fourth dimension, IS strategy, includes six types. However,
differentiation, growth, alliance, and innovation do not differ from each other in terms of
alignment with the other dimensions.
The six types can consequently be combined into four:
(a) Non-strategic IS
(b) Low-cost IS strategy
(c) Differentiation, growth, innovation, or alliance IS strategy
(d) Combination of low-cost and differentiation/growth/innovation/alliance IS
strategy.
A nonstrategic IS is considered to have low alignment with all the business strategies
and structures, while the other three IS strategies can be aligned with the three types
in each of the other dimensions (Brown and Marill, 1998).
Table showing various alignments
Table 11.1 Theory-Based Ideal Alignment Patterns
Type of alignment
Business
alignment
Strategic
alignment
Structural
alignment
Dimension 1
Dimension 2
Supporting references
#1
#2
#3
Business strategy
Defender
Analyzer
Prospector
Business structure
Mechanistic, centralized
Mechanistic, centralized semi-structured,
Hybrid decentralized
Organic,
Miles et al. (1978), Miles and Snow (1978,
1996), Jellnek and Sch´oonhoven (1990), Das
et (1991)
al.
#1
#2
Business strategy
Defender
Analyzer
#3
Prospector
IS strategy
Low cost
Low cost AND
differentiation/growth/
alliance/innovation
Differentiation/growth/alliance/innovation
#1
#2
#3
Business structure
Mechanistic, centralized
Semistructured, hybrid
Organic, decentralized
IS structure
Centralized
Shared
Decentralized
#1
#2
IS structure
Centralized
Shared
#3
Decentralized
IS alignment
Crossdimensional
alignment 1
#1
#2
Business structure
Mechanistic, centralized
Semistructured, hybrid
Organic, decentralized
#3
Crossdimensional
alignment 2
#1
#2
#3
Business strategy
Defender
Analyzer
Prospector
Camillus and Lederer (1985), Segev (1989)
Ein-Dor and Segev (1982), Jelinek and
Schoonhoven (1990), Brown (1997)
IS strategy
Low cost, nonstrategicb
Low cost AND
differentiation/growth/alliance/innovation
Differentiation/growth/alliance/Innovation
IS strategyc
Low cost
Low cost AND
differentiation/growth/
alliance/innovation
Differentiation/growth/alliance/innovation
Camillus and Lederer (1985), Jelinek and
Schoonhoven (1990), Brown (1997)
Camillus and Lederer (1985), Brown
(1997), Brown and Magill (1998)
IS structure
Centralized
Shared
Decentralized
Camillus and Lederer (1985), Tavakolian
(1989), Das et al. (1991)
The dynamics of alignment
An organization’s environment continues to change slowly or rapidly even after it has
achieved alignment.However; organizations may not be able to adjust their alignment
patterns to accommodate environmental changes due to the following:
1. Extra weight on alignment could narrow the organization’s outlook, hindering the
recognition of alternative views and reducing the ability to ‘recognize and
respond to the need for change’ (Miller, 1996, p.510).
2. Satisfaction and inaction. Alignment facilitates short-term success, which leads to
inaction, and the inaction in turn leads to failure when the market conditions shift
suddenly (Tushman and O’Reilly, 1996).
Organizations with high level of alignment may find it necessary to make revolutionary
changes when they face sudden changes in industry conditions (Greenwood and Hinings,
1996).
The punctuated equilibrium model is seen as a potentially useful way of examining the
dynamics of alignment.
A deep structure is one key component of the punctuated equilibrium model. The
punctuated equilibrium’s deep structure is made of: the basic parts into which the units
will be organized and the basic activity patterns that will maintain its existence (Gersick,
1991, p. 14).Other key components of the punctuated equilibrium model are;
evolutionary periods during which the deep structures undergo little change, and
revolutionary periods during which the deep structures are completely transformed.
Based on the punctuated equilibrium model, evolutionary changes would not have much
effect on the strategic IS profile. A high level of alignment may lead to inertia,
necessitating revolutions, involving complete transformation of the strategic IS profile.
The two long-term possibilities identified by Gresov (1989) may be used to understand
evolutionary and revolutionary changes. In the context of the strategic IS management
profile, the conflict implied by low alignment may be resolved in the long run either by
redesign or without redesign.
Resolution by redesign- The contingency factors is changed significantly to reduce the
conflict among them.
Resolution without redesign- Actors reinterpret the contingency factors such that conflict
disappears.
Revolutionary change in the strategic IS management profile was considered to be one
involving a categorical change in three or more dimensions.
The distinction between complete revolutions (all four dimensions of the profile where
changed in the same period) and incomplete revolutions (only three dimensions were
changed concurrently).
Evolutionary changes only involve minor modifications i.e. not representing a shift to
another type, e.g. continuing to pursue a prospector business strategy but doing so in a
different fashion.
Post-revolutionary changes. These involves categorical changes in one of the four
dimensions of the strategic IS management profile.
SUMMARY
This topic draws upon the punctuated equilibrium model, uses an organization’s strategic
IS profile as the deep structure that undergoes changes over time. Consequently, changes
occur in 6 types of alignment that together reflect overall alignment. The topic also
examines whether these changes occur over time in an alternately evolutionary and
revolutionary fashion as suggested by the punctuated equilibrium model.