Understanding The Business And It Alignment Commerce Essay

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Due to the continues increased capabilities of the Information Technologies (IT) , organizations are always trying to be innovative in employing such capabilities to achieve their internal objectives and external strategic goals i.e. finding ways of aligning the offered IT capabilities to their internal business requirements (functional alignment) efficiently and to their external strategic goals ( strategic alignment) effectively.

For over twenty years, a number of researchers have emphasised the importance of Business and IT (BIT) alignment in organisations to achieve competitive advantage (Luftman and Ben-Zvi, 2010). They have tried to find an answer to the BIT alignment challenges i.e. how to successfully align business requirements and objectives to the IT capabilities efficiently and effectively.

Hundreds of BIT alignment scholarly research papers have been published trying to understand the BIT relationship in organizations(Coughlan et al., 2005), define the BIT alignment concept(Henderson and Venkatraman, 1993; Reich and Benbasat, 1996; Luftman and Brier, 1999; Earl, 1993), provide models(Luftman et al., 1993; Reich and Benbasat, 2000; Sabberwal and Chan, 2001; Avison et al., 2004), assess the different organisational alignment perspectives (Bergeronet et al., 2001; Chen et al., 2008), establish the BIT alignment success factors (Burn and Szeto, 2000; Gutierrez et al., 2009; Chan et al., 2006; Moreno et al., 2009)and assess the BIT alignment levels in organizations (Hussin et al., 2002; Sledgianowski et al., 2006).

In fact, a simple Google search for "Business/IT alignment" phrase resulted in over 89 thousands hits. However, in a recent survey by Axios Systems, 50% of large organisations within North America, Europe and Asia consider the BIT alignment as a major area of concern. Furthermore, BIT alignment is the second issue facing top enterprise managers according the Society for Information Management survey in 2010.(Luftman and Ben-Zvi, 2010)

This discussion brings us to the following main questions:

Why BIT alignment is not successful in a large percentage of organisations?

What are the BIT alignment Components?

Can we achieve a successful BIT alignment with the existing theoretical models and practical frameworks?

Do we need to rethink the BIT relationship?

Since the purpose of this assignment is to write a critical literature review that focuses on one of the areas of organization theory with relation to the BIT alignment, the scope of this research will be limited to answer the following exploratory conceptual questions:

What are the BIT alignment definitions and components?

What are the most cited BIT alignment models?

This will be achieved via conducting a systematic literature review to identify the BIT definitions and models.

The remainder of this report is as follows. Section 2 is designated to the literature review method. Section 3 reports on the literature review input criteria and the chosen models. Section 4 concerns the processing of the most cited models. Section 5 is about the output i.e. findings. Finally, section 6 includes conclusions.

Literature Review Method

The purpose of the literature review in this assignment is to have an in-depth understanding of the BIT alignment concept/dimensions and to identify the most cited models to provide a rigorous foundation for my main research.

A systematic literature review process is adopted which is very important for any credible academic research in any field, it is particularly crucial in the IS field due to its multidisciplinary. All relative sub disciplines should be considered to have a holistic understanding of the BIT alignment concept and to justify that the study's outcome will add something new to the field's Body of Knowledge.(Levy and Ellis, 2006)

This process follows three sequential stages: Inputs, Processing and Outputs.


An inductive approach is used initially to identify the relevant keywords via searching for the relevant keywords in the literature utilising credible multiple database vendors e.g. ABI, ACM, INFORM, IEEE, 360 Search, Science Direct, EBSCO and JSTOR. Using multiple database vendors produce an effective literature review as it overcomes the problem of a narrow literature background. In other words, the knowledge obtained is not limited to one vendor.(Levy and Ellis, 2006) This initial search produced the following keywords: IT and business alignment, business and IT alignment, strategic alignment, IT alignment, IT governance, business and IT relationship, IT and business fusion, alignment models, alignment measurement, business and IT planning, business and IT linkage, business and IT alignment dynamic process, business and IT alignment factors, business and IT alignment dimensions and contemporary organizations structure.

The second stage is to conduct a systematic literature search to identify key BIT alignment authors and their research papers according the following search profile see Table1.

Table 1 Literature Search Profile




Time Span

Since the late of the 1980s

The IT impact era. Achieving a competitive advantage via aligning IT to the Business objectives debate escalated.(Grant, Hackney and Edgar, 2009)

Geographic Restrictions

No restrictions

BIT alignment is a universal concept.



It is a universal academic language.


Business and IT alignment, Business and IT alignment models, Business and IT alignment measurement, business and IT alignment factors and business and IT alignment dimensions.

The scope of this assignment is to identify the BIT alignment components and models.



Peer-reviewed Journal Articles in reputable business journals.

Conference proceedings that are referenced in quality articles

To produce quality input.

BIT alignment is a multidisciplinary area.(Levy and Ellis, 2006)

At this stage, it is vital to gather only quality papers, as they are the foundation to the study as in any system, a poor quality input results in an ineffective output. Conference proceedings will be used but it will be limited to those that are referenced in quality articles.

Over sixty quality papers identified, see appendix A for further details. However, due to the time and space limitations a non-probability criterion based sampling is used to select the research papers that will be reviewed as part of this assignment. The criteria are (1) most cited articles (2) have concrete models (3) published in peer-reviewed journals. Accordingly, the following research papers will be discussed in detail.

Strategic alignment: Leveraging information technology for transforming organizations ((Henderson and Venkatraman, 1993)

Assessing Business-IT Alignment Maturity. (Luftman, 2000)

Factors that Influence the Social Dimension of Alignment between Business and Information Technology Objectives. (Reich and Benbasat, 2000)


This stage involves comprehending the above articles to understand their underlying constructors through unpacking the models' components and their BIT alignment definitions.

Henderson and Venkatraman (1993) Model

It is the most cited model in the BIT alignment literature. (Grant et al., 2009; Google Scholar 2010). It is based on the MIT90s framework (Scott Morton, 1991) which defined strategy as both formulation and implementation, formulation includes decisions relating to the products/services market position and implementation includes design choices relating the organisational structure and capabilities to execute the formulation choices. Henderson and Venkatraman (1993) conceptualise alignment as the degree of fit and integration between four sub-domains: business strategy, IT strategy, business infrastructure, and Information Systems (IS) infrastructure. The four domains are within two main domains: external (business and IT strategies) and internal (business and IS infrastructures) and each domain has three components, see Figure1.

Figure 1: Strategic Alignment Model

Source: Henderson, J. C. and Venkatraman, N. (1993) 'Strategic alignment: Leveraging information technology for transforming organizations', IBM Systems Journal, 32 (1), pp. 4.

BIT Alignment Components

Business Strategy

Henderson and Venkatraman (1993) define business strategy as the market choices (external) in terms of the (1) scope of the product or service to be offered, (2) the distinctive competencies that distinguish the organisation from its competitors and (3) governance that addresses the organisation's relationship with the stakeholders, government regulations, senior management and strategic business partners.

Organisational Infrastructure

This domain includes: (1) administrative infrastructure, this component is concerned with the authority structure, responsibilities and roles within the organization (2) key business processes (3) skills with reference to human resources management including employees' hiring, training and motivation.

IT Strategy

Similar to the business strategy domain, the IT strategy domain includes (1) IT scope, (2) systemic IT competencies and (3) IT governance components, these components determine the organization position in the external IT market.

IS Infrastructure

Finally, the IS infrastructure domain defines (1) IT infrastructure (applications, hardware, databases, networks and data), (2) IS processes that develop, maintain the IT infrastructure and (3) skills that are required to develop the IS processes and maintain the IT infrastructure.

Strategic Fit

Henderson and Venkatraman (1993) noted that within the business domain, it is vital to fit the organizational infrastructure to the business strategy (business strategic fit) and vice versa to maximise economic performance and this fit is equally important in the IT domain. They stated that traditionally, IT strategies addressed the internal administrative functions choices and they argue that IT strategy should address the external choices that are linked to a competitive market positioning (IT strategic fit).

Functional Integration

Henderson and Venkatraman (1993) model address the functional integration between the business and IT strategies (strategic integration) in terms of linking the domains choices i.e. this integration allows IT capabilities to shape and support the business strategy. Furthermore, the model addresses the two-way relationship between the organizational infrastructure and the IS infrastructure (operational integration) that align the IS delivery capabilities with the organisational requirements.

BIT Alignment Perspectives

This is the cross-domains relationships; the model depicts four different perspectives of business-IT alignment: (1) the strategy execution perspective in which the business strategy is the driver for both organisational and IS infrastructures design choices. It adopts a hierarchical management view where the top managers are the strategy formulators. This perspective is important as it helps IS managers to design and implement the required IS infrastructure efficiently and effectively in line with the business strategy to achieve its goals. (2) the technology transformation perspective, which highlights the impact of the business strategy on the IT governance and the systemic competencies and subsequently on the IS infrastructure and processes, this perspective does not constrain the IS infrastructure design by the current organisation design as it tries to identify the best IS infrastructure design choice in the IT marketplace. (3) The competitive potential perspective, which highlights the exploitation of emerging IT potential to influence the business scope, distinctive competencies, and business governance. (4) service level perspective which focuses on designing and providing excellent IT services to the organization. The internal design of the IT infrastructure and processes is driven by the IT strategy to meet the internal organisational requirements, see Figure 2.

Figure 2 Alignment Perspectives

Adapted from Henderson, J. C. and Venkatraman, N. (1993) 'Strategic alignment: Leveraging information technology for transforming organizations', IBM Systems Journal, 32 (1), pp. 4.


The Henderson, Venkatraman (1993) model has the potential to shape, enhance and support the business strategy by having a clear distinction between the IT strategy's external and internal potential capabilities as the IT strategy provides choices of the external emerging IT capabilities to impact new products/services as well as it shapes the IS infrastructure and subsequently determine the IT service level internally. Therefore, this conceptual model differs form the traditional models of the BIT alignment as it calls for the IT strategy to shift from an internal fit orientation to a more strategic fit The model address the dynamic capabilities of strategy and recommend continues assessment of the trends across its four domains to reposition the organisation in the external dynamic environment. This can be achieved by adopting the appropriate perspective (strategy execution, technology transformation and service level perspectives) according to the changes in the business environment.(Henderson and Venkatraman, 1993)

The model failed to address the importance of information management and the growing need to share information within the organisation and with external entities such as customers, suppliers. Furthermore, it is a theoretical model that does not provide a practical solution for mangers to coordinate the BIT alignment.(Grant et al., 2009)

Luftman (2000) Model

This model is an extension of Luftman's previous strategic alignment work (Luftman, et al., 1993; Luftman and Brier, 1999). It assesses the BIT alignment maturity levels in organisations with reference to six assessment criteria namely communication, competency value measurement, governance, scope, architecture and partnerships, see Figure 3.

The five maturity levels are a reflection of the management commitment level to the BIT alignment process as follows:

Initial/Ad Hoc Process

Committed Process

Established Focused Process

Improved/Managed Process

Optimized Process

Figure 3 Luftman's BIT alignment Maturity Assessment Criteria

Source: Luftman, J. (2000) 'Assessing business-IT alignment maturity', Communications of the Association for Information Systems, 4 (14), pp. 1-50.

Each criterion and its attributes is assessed in terms of its maturity level (5 correspond to optimised process and 1 correspond to Ad-Hoc process), see Table2. This assessment starts by assembling a team of IT and business representatives in the organisation to assess each criterion and its attributes individually to have an overall assessment level of the BIT alignment in the organisation, the team size depends on the organisation size. The overall score can be used as a benchmark for the next assessment as BIT alignment is a continuous improvement process and not an event. (Luftman, 2000)

Table 2 Strategic Alignment Levels







Initial/Ad-Hoc process

Committed process

Established focused process

Improved/ managed process

Optimised process


Business/IT lack understanding

Limited business/IT understanding

Good understanding; Emerging relaxed

Bonding, unified

Informal, pervasive


Value Measurement

Some technical measurements

Functional cost efficiency

Some cost effectiveness; Dashboard established

Cost effective; Some partner value; Dashboard managed

Extended to external partners


No formal process, cost centre, reactive priorities

Functional level, occasional responsive

Relevant process across the organisation

Managed across the organization

Integrated across the org & partners


Conflict; IT is a cost of doing business

IT emerging as an asset; Process enabler

seen as an asset; Process driver

enables/drives business strategy

IT-business co-adaptive

Scope and Architecture

Traditional (e.g., email)

Transaction (e.g., ESS, DSS)

Integrated across the organization

Integrated with partners

Evolve with partners


IT takes risk, little reward; Technical training

Differs across functional organisations

Emerging value service provider

Shared risk & rewards

Education/careers/rewards across the organisation

Adapted from Luftman, J. (2000) 'Assessing business-IT alignment maturity', Communications of the Association for Information Systems, 4 (14), pp. 1-50.


Luftman's model is comprehensive compared to the Henderson and Venkatraman (1993) model as it addresses important factors such as change management, social interaction, knowledge sharing, business/IT metrics and social interaction in organisations; it provides a practical method for assessing the maturity level of the BIT alignment process i.e. it can be used as toolkit for practitioners to evaluate the organisation's position in terms of identifying the necessary actions to ensure that IT is used as a business strategy enabler to enhance the organisation's market position. (Luftman, 2000) However, all the attributes of the six criteria (factors) have the same weight; this is a flaw in the design as surely the Business strategic Planning attribute (Governance) contributes more to the BIT alignment maturity than the Career crossover opportunities attribute (Skills), see Figure 3. Furthermore, the model's organisational benefits have not been determined as it needs to be empirically assessed via longitudinal case studies. (Grant et al., 2009)

Although the author suggested that a team of IT and business representatives in the organisation undertake the initial assessment, the BIT alignment accountability factor is not covered by this model i.e. who is accountable for achieving and sustaining the alignment? What is the improvement process?

Reich and Benbasat (2000) Model

This is the third most cited model and it is based on the authors' earlier definition of the BIT alignment intellectual and social dimensions as follows: the Intellectual dimension is "the state in which a high quality set of interrelated IT and business plans exists" and the social dimension is "the state in which business and IT executives within an organisational unit understand and are committed to the business and IT mission, objectives and plans". Reich and Benbasat, (2000, p.82) They noted that although both dimensions are important for organisations to achieve high levels of alignment, the focus of the current model is on understanding the social dimension as it has not been given enough attention in the literature compared to the intellectual dimension. Furthermore, by reviewing the literature, the authors identified several factors that have a potential influence on the social dimension of the BIT alignment i.e. external influences, IT characteristic (the level of IT adoption in organisations), connections between BIT planning, communications between BIT executives and IT implementation history but they decided to exclude external influences and IT characteristics factors as those factors were controlled in their study. Therefore, the proposed model contains three levels and five constructs. Shared Domain Knowledge between BIT executives and Successful IT history are antecedents and influence the current practices in organisations namely the communication between BIT executives and the connections between BIT planning, which consequently influence the social dimension of the BIT alignment, see Figure 4.(Reich and Benbasat, 2000)

Figure 4 BIT Alignment: The Social Dimension

Source: Reich and Benbasat (2000) Factors that influence the social dimension of alignment between business and information technology objectives, MIS Quarterly, 24 (1) p 85.

Reich and Benbasat (2000) measured qualitatively the influence of the four constructs (Shared Domain Knowledge between BIT executives, Successful IT history, communication between BIT executives and the connections between BIT planning) on the social dimension of BIT alignment in terms of two aspects: (1) short-term alignment which refers to shared understanding of short term goals (2) long-term alignment which is the shared understanding of IT vision. The model's propositions and the findings are summarised in Table 3.

Table 3 Reich and Benbasat (2000) Model's Propositions and Findings


Short-Term Alignment

Long-Term Alignment

The level of communication between BIT executives influence the level of alignment


Not supported

The level of connection between BIT planning processes will influence the level of alignment


Not supported

The level of shared domain knowledge will influence the level of communication between BIT executives

Weak Support

Not supported

The level of shared domain knowledge will influence the level of connections between business and IT planning processes

Not supported

Not supported

Successful IT implementation will influence communications between BIT executives

Generally supported

Not supported

Success in IT implementation will directly influence connection between BIT planning process

Not supported

Not supported

Adapted from Reich and Benbasat (2000) Factors that influence the social dimension of alignment between business and information technology objectives, MIS Quarterly, 24 (1) pp. 81-113.


This study has contributed to the BIT alignment's knowledge domain by emphasising the positive influence of the regular communications between BIT executives on the social dimension of the BIT alignment in organisations as Reich and Benbasat (2000) found that the higher levels of communication between BIT executives results in shared domain knowledge which consequently enhance the short-term BIT alignment,. However, this model is not applicable to long-term BIT alignment which is important with reference to the strategic competitive advantages achieved by the exploitation of the emerging IT capabilities to enhance the business' strategic position in the marketplace. (Henderson and Venkatraman, 1993)

Furthermore, the study did not investigate the alignment between corporate IT and business executives (strategic level management) since the participant were IT groups within the business units (tactical level management) and business units executives.


BIT alignment has been defined academically in different ways. Henderson & Venkatraman (1993) defined it as the degree of fit and integration between four organizational domains: business strategy, IT strategy, business infrastructure, and IT infrastructure. Luftman (2000) argued that BIT alignment is an evolutionary and dynamic process, which includes various management activities to achieve unified goals across the IT and other functional areas in organizations i.e. it is the application of IT in an appropriate and timely way, in harmony with business strategies, goals and needs. Avison et al., (2004) stated that BIT alignment concerns the integration of the business, Information Systems and IT strategies in organisations. Chan (2002) noted that BIT alignment has two components: (1) strategic alignment, which focuses on the fit between the priorities and activities of the IS function and those of the business. (2) structural alignment which is the degree of structural fit between IS and the business. Reich and Benbasat (1996) defined BIT alignment is the two way support (linkage) between the organisation's IT strategy (mission, objectives and plans) and the business strategy (mission, objectives and plans). Furthermore, they identified and defined the social and intellectual dimensions of this linkage. Lee et al., (2008) noted that business-IT alignment is a multidimensional concept that includes strategic, integrated, technical and social dimensions.

The three identified models are categorised according to their underlying constructors. This categorisation allowed us to identify the literature's BIT alignment definitions, approach, dimensions, methodologies used to study it and the outcome of the studies and consequently identify the BIT alignment literature gaps, see Table 4.

Table 4 BIT Alignment Articles Categorisation

Study's Underlying Constructor


Henderson & Venkatraman (1993)

Luftman ( 2000)

Reich & Benbasat (2000)

Alignment Definition




Alignment Planning

Alignment as a State


Alignment as a Dynamic Process



Alignment Dimensions











Alignment Levels







Data Collection Method

Structured Interviews


Focused Group


Unstructured Interviews




Data Analysis Method

Validating a Model



Analysis of the Alignment Perspectives


Scoring the Importance of Alignment's Mediating Factors


New Alignment Definition




Alignment Understanding



Measurement Tool



Theoretical Model



Considering the definitions found in the literature and the discussions of the above three models, we define the BIT alignment as a multidimensional continuous and dynamic process of establishing and maintaining a two-way sustainable working relationship between the Business and IT domains in organisations to increase their internal efficiency and subsequently achieve a sustainable external competitive advantage.

Figure 5 BIT Alignment Components

The following factors that influence the alignment of the business/IT domains in organisations have been identified: communications, knowledge management, planning partnership, IT governance, IT value measurement, skills, IT characteristics and organisational culture, see Figure 5.

However, accountability is not mentioned in the literature as a factor that influence BIT alignment i.e. who is responsible for the BIT alignment management? Establishing and marinating the alignment is a lengthy and complex process that needs continuance management therefore accountability is added to the above proposed model.