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IT Essential For Business To Survive And Prosper Commerce Essay

In today world, IT is essential for business to survive and prosper, but IT is a tool, if it hasn’t been used properly by business, it can not enable its competitive advantage for the business perhaps it might disable its current ability. Therefore people investigate how to use and control this two-edged sword. For past twenty years, IT alignment has consistently nominated as a top concern for IT practitioners and company executives (Luftman et al., 2007). And many researches have been done in this area in the previous years. In this article, we will look at the questions like why IT alignment is so important? What is business and IT alignment mean? And how could this be measure? In term to understand more about how IT alignment affect the contemporary business.

In early stage, when researchers realized the importance of the business and IT alignment, they just mainly focus on the connection between business plan and IT plan. Gradually, the conceptualizations have enlarged and start cover more points between business and IT like Alignment between business strategy and IT strategy, fit between business needs and information system priorities. During the case study in last ten years (e.g. Chan et al., 1997; de Leede et al., 2002; Irani, 2002; Kearns and Lederer, 2003), it has demonstrated the relationship between business performance and the level of business and IT alignment in an empirical way. Simply, it showed the businesses tend to perform better has successfully aligned their business strategy and their IT strategy. Therefore business and IT alignment become a one of key research area. For the reasons mention above, academics have been motivated to study IT alignment, however there are some arguments had been made to challenge the usefulness of business and IT alignment concept.

Ciborra (1997) suggests that the alignment literature is too theoretical; that it is generated by the scientific method applied to the design of human affairs and computer systems. He recommends a Mintzberg-like approach, where researchers go to the field for insights (Mintzberg, 1973). Critics of IT alignment research argue that in the world of work, alignment does not succeed because strategy is not a clear concept due to various turbulent, unpredictable circumstances that leave managers muddling through, betting, and tinkering with their corporate strategies (Vitale et al., 1986). If alignment is too tight, then the business will have difficulty to adapt the new environments especially for sudden change in environment.

Although there are two different points of views, the practitioner community has ranks it as a top priority consistently. The Society for Information Management conducts surveys to gauge the importance of various IT issues. In 2007, the number two management concern of all groups of respondents was alignment (Luftman et al., 2007). Alignment was also ranked as the top management concern in 2005, 2004 and 2003, whereas it was ranked 9th in 1994, 7th in 1990. It is clear that the issue of IT alignment has remained important over the past twenty years.

So what is business and IT alignment really mean?

Here is how Business and IT alignment defined in some academic literature:

Henderson and Venkatraman (1993) state that alignment is the degree of fit and integration among business strategy, IT strategy, business infrastructure and IT infrastructure. Reich and Benbasat (1996) define alignment as the degree to which the mission, objectives, and plans contained in the business strategy are shared and supported by the IT strategy. Alignment is defined as “the capacity to demonstrate a positive relationship between information systems and the accepted financial measures of performance” (Strassmann P A, 1998) Good alignment means that the organization is applying appropriate IT in given situations in a timely way, and that these actions stay congruent with the business strategy, goals, and needs (Luftman and Brier, 1999). McKeen and Smith (2003) argue that strategic alignment of IT exists when an organization’s goals and activities and the information systems that support them remain in harmony. Although the meaning of their definitions are very clear, but what do we need to do to achieve a good alignment? How can this be measure?

A measurement is important for alignment. If alignment can be measured, it can more readily be managed by practitioners. Reliable and valid measures are even more important in academics if alignment researches are to be rigorous. Henderson and Venkatraman (1992) introduced Strategic Alignment Model (SAM) to help organization to indicate business-IT alignment maturity which is perhaps the most widely cited of all alignment models. In the SAM model, consists of six components to measure the business and IT alignment maturity. Those six components are briefly explained below:

1. Communications – Measure the effectiveness of the exchange of idea, knowledge and information between IT and business, enabling them to understand the company’s strategies, plans, business and IT environment, risk priorities and how to achieve them.

2. Value – Uses balanced measurements to demonstrate the contributions of information technology and the IT organization to the business in terms that both the business and IT understand and accept.

3.Governance – Defines who has the authority to make IT decisions and what processes IT and business managers use at strategic, tactical and operational levels to set IT priorities to allocate IT resources.

4. Partnership – Gauges the relationship between a business and IT organization, including IT’s role in defining the business strategies, the degree of trust between the two organization, how each perceives the other’s contribution.

5. Scope and architecture – Measure IT’s provision of a flexible infrastructure, its evaluation and application of emerging technologies, its enabling or driving business process changes and its delivery of valuable customized solutions to internal business unit and external customers or partners.

6. Skills – Measures human resources practices such as hiring, retention, training performance feedback, encouraging innovation and career opportunities, and developing the skills of individuals. It also measures the organization’s readiness for change, capability for learning and ability to leverage new ideas.

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