Strategic alignment

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Chapter 1: Introduction 12

Chapter One

Introduction

1.1 Overview

This chapter introduces the research background and context for this investigation. An introduction to strategic alignment is presented with the aim of establishing the context of this research, followed by an explanation of the importance of business strategy and Information Technology (IT) and the uniqueness of organizational culture in the Kingdom of Saudi Arabia (KSA). In addition, the knowledge gap and research methodology were explained. In light of these arguments the aims and objectives are presented together with an outline of the thesis structure.

1.2 Research Background

For the last two decades the relevance of alignment between business and IT strategies has continuously grown and remains a top priority for academics and practitioners. Research suggests that aligning business and IT strategies has a positive effect on organisational performance (Teo and King, 1996; Reich and Benbasat, 2000; Chan et al., 2006).

The annual survey on top management concerns by the Society for Information Management (www.simnet.org) however ranked ‘IT and Business alignment' as the No. 1 concern for four years in a row (Society of Information Management, 2003, 2004, 2005, 2006). In last year's survey, alignment lost its doubtful honor as the ‘top concern' to drop to only the second place on the list (Society of Information Management, 2007).

But it came back in 2008 and regained the No.1 spot as the top concern.

Moreover, the value of IT has been related to strategic alignment (Tallon and Kraemer, 2003). They found that organisations with strategic goals for IT showed higher levels of strategic alignment and, as a consequence, the perception of IT business value was higher. However, organisations that have developed IT strategies often fail to deliver IT business value, despite having integrated their business and IT strategies. This suggests business-IT strategy is necessary but not sufficient to deliver business value from IT investments (Peppard et al., 2000; Benbya and McKelvey, 2006).

Strategic alignment research has extensively discussed the coordination between business and IT strategy (Henderson and Venkatraman, 1993; Reich and Benbasat, 2000; Kearns and Sabherwal, 2007). As strategic alignment has become embedded in the strategic management process, a closer relationship between IT and business managers is required to establish a two-way commitment that enables managers in both IT and business domains to prioritise IT projects that will support the business strategy (Luftman et al., 1999).

Figure (1) summarizes the Information System/Business relationship which can be described as ‘Interdependent'; where any changes in the IS (Software, Hardware, Database and Telecommunication devices will have an impact on the Business and vice versa; any change in the business (Strategy, Rules and Procedures) will have its impact on the Information Systems function of the organization [2].

Figure 1: The interdependence between organizations and information systems

(Laudon &Laudon, 2006)

This commitment, however, has been difficult to achieve at strategic level in organisations and consequently difficult to transmit to lower levels within organisations (Lycett et al., 2004; Srivannaboom, 2006). Additionally, the frequent failure of IT projects has reduced the trust of senior managers in IT investments and their business value (Peppard et al., 2000; Taylor, 2000; Hartman and Ashrafi, 2004). When an IT strategy is conceived at strategic level, it may be aligned with company goals; however, as it moves down through the lower levels of an organisation to be implemented, the original objectives for which the strategy was conceived can be lost. Relationships between business and IT implementers are not always close and IT staff tends to be more concerned with technical issues. Business and IT also need a close relationship at implementation level to ensure the project goals are well communicated and understood (Lederer and Salmela, 1996; Campbell et al., 2005).

The interaction between information technology and organizations is influenced by many mediating factors, including the organization's structure, standard operating procedures, politics, culture, surrounding environment, and management decisions as shown in figure (2). and information Technology (Laudon & Laudon, 2006)

Therefore the motivation behind this research is to develop a model that depicts the dynamic interrelationships between the factors affecting strategic alignment taking into consideration the organizational culture (OC) in Saudi organisations.

OC and strategy

Connie Curran, (2002) a researcher and practitioner in the healthcare sector, wrote “Culture eats strategy for lunch every time”. In this simple statement she has eloquently summarized one of the strongest themes in the literature on strategy implementation, which is that it doesn't matter how wonderful your organization's strategy is, if its culture does not support it, the strategy will not be realized - even if the goals and infrastructure are aligned.

Aligning organizational culture to strategy accelerates strategy execution. Organizational culture includes the highly influential sets of norms, values, assumptions, beliefs and behaviors which influence the selection, design and implementation of strategic initiatives, impacting growth and operational strategies. Misaligned cultures create drag that impairs the performance of the organization's ‘engines' for growth, hobbling strategies from being achieving to their full potential.

OC and IT

It is a common statement that we are now living in an era of rapid technology development. The adoption and implementation of new technologies, in many cases, is imperative not only to improve productivity, efficiency or to cater to new demand and requirements but also to ensure the survival of the business itself. ‘The introduction of any new technology into an occupation, organisation, or society can be seen as a cultural change problem' (Schein 1989).

The success or failure of integrating a new technology in an organisation is, to a large degree, dependent on its ability to adjust or change its culture. The creation and/or existence of a certain cultural environment may be essential to ensure the successful implementation of a new technology. The new technology once has been put in use in an organisation, in turn, will dictate further changes in the organisation's culture. Many current examples can be found in relation to the areas of automation and information technology.

1.6 Kingdom of Saudi Arabia (KSA)

The culture of Saudi Arabia is a rich one that has been shaped by its Islamic heritage, its historical role as an ancient trade center, and its Bedouin traditions. Saudi Arabia is considered a very high context culture, which means that the message people are trying to convey often relies heavily on other communicative cues such as body language and eye-contact rather than direct words. Saudi traditions are rooted in Islamic teachings and Arab customs, which Saudis learn about at an early age from their families and in schools. Arab traditions also play an important role in Saudi life. These age-old traditions have evolved over the millennia and are highly regarded. They include generosity and hospitality, which every Saudi family offers to strangers, friends, and family [50].

One of the most important features of the Saudi culture is the segregation of the sexes. Segregation, which means not permit women to mix with unrelated men. Also Shyness is another important characteristic that people should uphold. The other important feature in the Saudi culture is family ties, where Muslim is expected to keep contact with his relatives [51].

Respect and friendship are values that are held very highly by the Saudi people, business setting, favors based on mutual benefit and trust are ways of enhancing these cultural values. Due to the personal nature of business in Saudi Arabia, family influence and personal connections often take precedence over other governing factors [52].

Saudi Arabia is behind in the area of IT, which could be contributed to several factors including Computer illiteracy, lack of government incentives to attract businesses, the absence of adequate infrastructure to support industry, poor enforcement of intellectual property and copy right laws, and lack of resources [53].

1.7 Knowledge Gap

Based on the above, and through screening some of the existing strategic alignment models in the literature review, the researcher figured out that to achieve such an alignment there is a need to consider and integrate the following points:

  1. Most of staff, if not all, is unaware of business goals and objectives, especially in the environment of Saudi Arabia.
  2. Important technical investments decisions are made by the IT manager alone.
  3. No relationship exists (Gap) between Business strategy and IT strategy.
  4. A lot of factors are not taken into consideration when forming strategic alignment, such as Structure, Culture, politics, and others.
  5. Strategic alignment models discussed only top management level and discarded other levels.
  6. Previous strategic alignment models are hard to be understood and implemented in reality.

The models discussed in the literature review may have achieved one or two of the above six points, however, there is no existing model that has achieved the above six points altogether.

Based on the above, the researcher has selected Strategic Alignment as a starting and a centre area of research that he is building on to fulfill the other points mentioned. The model that the researcher is aiming to establish differs from the existing ones in that it will meet the requirements and challenges of the Saudi environment taking into consideration the 6 above points.

1.8 Research Aims & Significance

  • To bridge the gap between Business Strategy and Information Technology Strategy through developing and designing a simple Strategic Alignment Model, that includes the essence of the major research works in addition to other strategic alignment theories available
  • To highlight the role of socio-cultural aspects as a critical success factor for successful IT implementation, which were not taken into consideration in the past
  • To measure the contribution of such a model to business performance.
  • To encourage Saudi Firms to use such a model to gain competitive competition.
  • To reduce the associated costs of implementing Information Systems in Organization

1.9 Research methods

The researcher has used the mixed research methodology. Mixed research involves the mixing of quantitative and qualitative methods or paradigm characteristics within a stage of the study or across two of the stages of the research process. It collects data either sequentially of simultaneously to best understand research problems [16].

Advantages of using mixed research includes: the major goal for researcher who design and conduct mixed research is to follow the fundamental principle of mixed research, in other words, the researcher should mix quantitative and qualitative research methods, procedures, and paradigm characteristics in a way that the resulting mixture or combination has complementary strengths and non-overlapping weaknesses. When different approaches are used to focus on the same phenomenon, while providing the same result, is a strong evidence for the result. Other important reason for doing mixed research are to complement one set of results with another, to expand a set of results, or to discover something that would have been missed if only a quantitative or a qualitative approach had been used[17].

1.9.1 Quantitative Method

One of the most widely used research techniques can be defined as collecting data through written questions [17]. There are a number of different ways in which questionnaires can be administered; for example: posted to the intended respondents or administered over the telephone or face-to-face. A questionnaire design provides a quantitative description of trends, attitudes, or opinions of a population by studying a sample of that population. From sample results, the researcher generalizes or makes claims about a population [18].

1.9.2 Qualitative Method

Interviews are considered to be the main tool of the qualitative researcher for data collection [18]. Additionally, since the interpretive stance is also being followed, interviews are viewed to be the main and appropriate source from where data has been collected. According to Walsham, interviews allow the best access to the interpretations

that the participants have regarding the actions and events, which have or are taking place and the views and aspirations of themselves and other participants. An added benefit is that it allows researchers to step back and examine the interpretations of their fellow participants in some detail, and this is an advantage that other methods may not allow [18].

There are several types of interviews possible for use, structured, semi-structured and unstructured interviews. In this study the semi-structured interview type was used due to different reasons. The semi-structured interview lies somewhere in between the other two types. It allows the interviewer to explore, probe and ask questions within a subject area less freely than the unstructured interview and with more freedom in sequencing of questions and timing for each question than the structured type. It allows the interviewer to explore more ideas and make use of unexpected and unforeseen information as it revealed. In addition, this study is a limited time study and since the timing required in conducting semi-structured interview is less than that required from the unstructured type, this type was chosen.

To make the interview proceed smoothly, an Interview Guide was designed. A participation information sheet was also designed to familiarise the participants with the research purpose and to assure them of anonymity and confidentiality. Before conducting the semi-structured interview, each participant was asked to fill and sign a consent form with a copy kept with him/her. See Appendix F and G for the (Interview Guide, Invitation letter, Participation Information Sheet, and Consent Form). 24 interviews were conducted within the four organizations.

The collected data from the interviews were converted into a quantitative format (frequencies) using content analysis method, where the collected data were summarized on a summary sheet. Then it was categorized to meet the research objectives, which was then displayed on a table. Rating for the results was calculated using Microsoft office Excel spreadsheet.

1.9.3 Secondary Data

In order to gain a richer picture of Strategic Alignment concepts, a literature survey was conducted from published books, articles, journals, etc. All data from the primary case study (questionnaires and interviews), secondary case studies and documents were combined and linked together to give the base for designing the Strategic Alignment Model.

1.9.4 Data analysis

Data gathered was analyzed through frequency distributions. These have given way to reviewing the data categories and the number of referrals in each category. With relation to data analysis, the indicators that were used in evaluating the study include the age of the respondent; the social status; the educational attainment of the respondents; the occupation of the respondents and their length of stay in the company they belong to [19].

The research has involved 4 large organizations, SABB (Saudi British Bank), Saudi Airlines, AL-Marai, and AlTawniah, where interviews have been conducted with business managers to have a clear idea about the company's business strategy. Also, other interviews took place with IT directors to investigate about the IT strategy and its relationship with the business strategy. In addition,2 sets of questionnaires were distributed among different levels of the organizations to come up with the types of organizational culture and the use of Information technology in those organizations. At the end, data were collected and analyzed through using SPSS software and content analysis. Figure -----depicts the various steps that compromised the research framework

1.10 Expected Research Outcomes

The results from this research are anticipated to be of great help to top managers, strategic planners, IT managers, and other work force in Saudi environment, and will contribute to the following factors:

  • Increasing the awareness of Strategic Alignment Concept and its importance.
  • Showing the importance of the use of Information Technology in organizations
  • Identifying the organizational culture as a major factor of achieving strategic alignment.
  • Encouraging decision makers and top management to apply and implement strategic alignment throughout the organization.
  • Highlighting the weaknesses of previous strategic alignment models and the lessons learned, which would help other researchers for future work

1.11 Indicative Thesis Structure

The thesis will contain nine chapters:

Chapter 1: Introduction:

Presents an overview about the research subject. It shows the importance of strategic alignment in all sectors, followed by bridging the gap between business strategy and IT strategy, and the factors that affect strategic alignment, including the organizational culture in Saudi Arabia. The research aims and significance then was explained followed by a brief discussion of the research methodology, research framework, then prospected research contribution was mentioned.

Chapter 2: Literature Review:

Provides the literature review for this research. It begins with explaining Business strategy, Business planning and its tools, followed by a discussion of IT strategy, IT planning, and its tools. Then a discussion of strategic alignment was presented. And ended with an overview of previous strategic alignment models.

Chapter 3: Research design and methodology:

The chapter details the research process adopted and continues with an explanation of the data collection and data analysis methods employed by the researcher including justification for the approach and methods. The detailed questionnaire and interviews preparation and use process is described, followed by the reliability and validity tests. There is reasoning provided in this chapter for the use of data interpretation techniques and software's like the SPSS & Content analysis.

Chapter 4: Selection of Strategic Alignment Model Parameters:

Presents the organizational culture parameters selected by the researcher, the validity of this selection, and their relationship with the two main components of strategic alignment (Business strategy & IT strategy)

Chapter 5: Information Technology Use Questionnaires Analysis:

This chapter introduces findings from a survey of 62 Information Technology (IT) managers to establish general perceptions of added value(s) of IT investments in Saudi organizations.

Chapter 6: Organizational Culture Impact Questionnaires Analysis:

Discusses and examines the data collected through the questionnaires from 400 staff in the selected Saudi firms, to identify the importance of organizational culture in strategic alignment.

Chapter 7: Interviews Analysis:

Talks about and analyses the data collected through the interviews in the 4 Saudi firms where 12 Business managers and 12 IT managers were approached. The chapter ended with an interview's summary and conclusions.

Chapter 8: Hypothesis Formulating:

Chapter 8 presents and discusses the research hypotheses. Dependent and independent variables were discussed in details. The chapter ended with a detail visual model showing the predicted relationship between dependent and independent variables

Chapter 9: Conclusion and Recommendations:

Proposes the new strategic alignment model, and concludes the study and gives recommendations and future directions.

The Effect of OC on Strategic alignment in Saudi Firms Hatem Tamimi

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