Business-IT Alignment

Introduction:

As business and technology have become increasingly intertwined, the strategic alignment of the two has emerged as a major corporate issue. But the emergence of IT from the back room to the forefront of e-business brings the alignment issue under the spotlight like never before (Buxbaum, 2001).

Cooperation is becoming increasingly important in modern business environment. The resulting emergence of new forms of relationships is challenging managers to understand fundamental dynamics of cooperation in order to evaluate and restructure their industrial relationships. IT can play an important role in the process of industrial restructuring by altering the balance between the benefits and the costs or risks of cooperation. IT has the capability to increase integration without necessarily increasing transaction risks, by reducing required sunk capital and reducing monitoring costs (Clemons & Row, 1992).

Enablers and Inhibitors to Information Technology (IT) Alignment:

According to a study conducted by IBM’s Advanced Business Institute:

The key enablers to alignment included:

The key inhibitors to alignment included:

Business-IT alignment is rarely achieved:

These are a few important reasons why we think strong business / IT alignment is rarely achieved in most organizations:

Political Reasons:

Historically, the “traditional” managers and leaders have been from non-IT fields. However, of late, a lot of importance has been attached to those in the IT field, and it is understandable that this has made the “traditional” business functions’ managers uncomfortable. As is true during any phase of change, there are many political reasons for the non-alignment between business and IT.

Success / Failure:

The economic slowdown and the dot-com bust have affected the process of Business / IT alignment in contrasting ways. While it has exposed the perils of allowing IT to define the strategic business goals and modifying business processes to suit IT needs, it has also widened the psychological gap between the IT and Business executives. Since the business executives are more involved in the day-to-day operations of the organization, success seems to be more a direct result of their efforts and dividing credit amongst the larger team is discomforting.

Not A Continual Process:

With short term survival a challenge for many organizations, IT spending has taken the backseat. Besides, IT is still not been seen as a continual development process. With this mindset, it is not uncommon that on the first opportunity in the form of financial difficulties, the IT people are the first ones to be eased out.

Historic Organizational Set-Up:

The upper management and most of the middle level management are usually composed of executives from fields other than IT. In most organizations today, IT is still not a part of the day-to-day operations or decisions, besides not being a part of the long term strategic decisions. The immediate effect is to give the IT dept and the executives involved a sense of alienation from the rest of the organization, lowering their morale, ability and inclination to contribute.

Conclusion:

There is a need for the mindset of the executives to change. There needs to be an understanding that though business will always lead the decisions, IT can do more than just enabling the attainment of set goals or simple computerizing the company needs. While the IT executives need to learn that their language needs to be couched in the language of business, the business executives too have to realize the untapped potential of IT in their organizations and use it to their advantage.

To transform your organization into one you envision takes more than great strategy and implementation; you also need to make the strategy an integral part of your operation (Bradford, 2002). This statement, made in reference with business strategy and ground-level operations, is also true of business strategy and IT initiatives.