ALIGNMENT OF INFORMATION TECHNOLOGY STRATEGIZING PRACTICES AND ...

146 Pages·2015·2.46 MB·English

by  Sudesh Naidu

ALIGNMENT OF INFORMATION TECHNOLOGY STRATEGIZING
PRACTICES AND ORGANISATIONAL GOALS

by

SUDESH NAIDU

Submitted in partial fulfilment of the requirements for the degree of

PhD (Business Management)

in the
Faculty of Economic and Management Sciences

UNIVERSITY OF PRETORIA

STUDY LEADER: PROF. MARIUS PRETORIUS

July 2015

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ACKNOWLEDGEMENTS

I am immensely indebted to the following people:
 My supervisor, Prof. Marius Pretorius (UP), for his guidance, support and insight
 Rina Owen for her generosity of help in statistical analysis and interpretation
 Marion Marchand for editing services
 My wife, Subashini, for her support
 My daughters, Suhina and Jahnavhi, for the sacrifice of our family time

Above all I thank the almighty God for giving me the resolute strength to complete this
journey

Sudesh Naidu
Pretoria, South Africa
March 2014

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ABSTRACT

As the information age progresses, people and businesses alike have become accustomed
to the convenience that technology brings into our lives. However, in the business world,
high failure rates of projects to produce such technological systems have led to depleted
profits and are an embarrassment to managers. These pressures have created a cultural
gap between business and IT managers. It would benefit both business and IT managers to
align the outputs of the IT function with the goals of the organisation and reduce this gap.
However, the literature shows that, in the three to four decades that IT has been used in
business, managers have been having difficulty in implementing the alignment of business
and IT in practice. Therefore, the study began with the general purpose of determining why
implementation of alignment is so difficult, and to develop a framework to guide practitioners
towards successful implementation of alignment within their organisations. A review of the
field of business and IT alignment was done which revealed a rich theory base and that the
solution must lie in applying theory to the firm. The review also revealed a very well-
established model in business-IT alignment theory; the Strategic Alignment Model (SAM).
These findings shifted the main purpose of the study to focus the quest for a business and IT
alignment solution to the context of the organisation. In particular, to determine the
organisational attributes that could be used to provide a guiding framework for business and
IT managers that could lead them to one of the four perspectives of the SAM most suited to
their specific organisation. The academic importance of this study is the introduction of the
three antecedents of alignment, namely, the role of the IT function, the mode of operation of
the IT function and the sourcing option of the IT function. The methodology entails a web-
based survey of a case organisation to establish the preconditions or antecedents of
alignment. The study further shows how to extract viable focus areas to determine the goals
of alignment and how to establish matters of timing between business and the IT function. It
is hoped the framework developed, based on contextual information of the organisation, may
fill the gap of applying alignment theory to practice.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION ............................................................................................. 1
1.1. BACKGROUND .......................................................................................................... 2
1.2. PROBLEM STATEMENT ........................................................................................... 6
1.3. PURPOSE STATEMENT ........................................................................................... 6
1.4. RESEARCH OBJECTIVES......................................................................................... 6
1.5. THESIS STATEMENT (HYPOTHETICAL PROPOSITION) ........................................ 7
1.6. DELINEATIONS AND LIMITATIONS .......................................................................... 7
1.7. DEFINITION OF TERMS ............................................................................................ 8
1.8. ASSUMPTIONS ....................................................................................................... 10
1.9. SIGNIFICANCE OF THE STUDY ............................................................................. 10
1.10. BRIEF CHAPTER OVERVIEWS ............................................................................. 11
CHAPTER 2: METHOD ...................................................................................................... 13
2.1. INTRODUCTION ...................................................................................................... 14
2.2. RESEARCH DESIGN ............................................................................................... 14
2.2.1. Description of overall approach .......................................................................... 14
2.2.2. Strengths and weaknesses of the design ........................................................... 15
2.2.3. Alternative methods considered ......................................................................... 16
2.3. METHODOLOGY ..................................................................................................... 17
2.3.1. Research Instrument .......................................................................................... 17
2.3.2. Data ................................................................................................................... 20
2.3.3. Analysis ............................................................................................................. 21
2.3.4. Case organisation information relevant to the analysis ....................................... 22
2.4. LIMITATIONS ........................................................................................................... 23
2.5. ETHICAL CONSIDERATIONS ................................................................................. 23
2.5.1. Methodology ...................................................................................................... 23
2.5.2. Human respondents ........................................................................................... 24
2.6. CONCLUSION.......................................................................................................... 24
CHAPTER 3: PAPER 1 - Alignment of business and Information Technology (IT): A review
of the field with a focus on its ability to sustain implementation of alignment ....................... 25
3.1. ABSTRACT .............................................................................................................. 26
3.2. INTRODUCTION ...................................................................................................... 27
3.3. RESEARCH METHOD ............................................................................................. 28
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3.4. THE BENEFITS OF BUSINESS AND IT ALIGNMENT ............................................. 28
3.5. CLASSIFICATION OF APPROACHES TO ALIGNMENT ......................................... 29
3.5.1. Intellectual versus Social Alignment ................................................................... 30
3.5.2. Sub-categories of intellectual alignment ............................................................. 31
3.6. MAIN FACTORS OF ALIGNMENT ........................................................................... 33
3.7. ANALYSIS OF BUSINESS-IT ALIGNMENT MODELS ............................................. 36
3.7.1. Models based on SAM ....................................................................................... 36
3.7.2. Models with performance as a dependent variable ............................................. 38
3.7.3. Factor Models .................................................................................................... 39
3.8. TIME TREND OF ALIGNMENT ................................................................................ 40
3.8.1. Changes to the goal of the alignment process .................................................... 40
3.8.2. Changes in the role of IT .................................................................................... 41
3.8.3. Alignment to fusion ............................................................................................. 41
3.9. DISCUSSION ........................................................................................................... 42
CHAPTER 4: PAPER 2 - Investigating the role of the Information Technology (IT) as an
antecedent to business and IT alignment ............................................................................ 44
4.1. ABSTRACT .............................................................................................................. 45
4.2. INTRODUCTION ...................................................................................................... 46
4.3. AN OVERVIEW OF BUSINESS AND IT ALIGNMENT THEORY .............................. 48
4.3.1. The need for business and IT alignment ............................................................ 48
4.3.2. Much research has been done but the problem persists .................................... 49
4.3.3. The maturity of the field of business and IT alignment ........................................ 49
4.4. CONTEXTUALIZING OF A PROBLEM DURING PROBLEM SOLVING ................... 50
4.4.1. Problem solving theory and the role of context in the problem solving process .. 50
4.5. THE ROLE OF THE IT FUNCTIONS IN ORGANISATIONS ..................................... 51
4.5.1. The role of the IT function as an antecedent ...................................................... 51
4.5.2. IT as a utility service provider ............................................................................. 51
4.5.3. IT as a strategic business partner ...................................................................... 52
4.5.4. Operationalizing the role of the IT function ......................................................... 53
4.5.5. Demographic variables influencing perspectives of alignment ............................ 53
4.6. RESEARCH AND DESIGN METHODOLOGY .......................................................... 54
4.6.1. Sampling ............................................................................................................ 56
4.6.2. Data Collection ................................................................................................... 56
4.6.3. Measures ........................................................................................................... 57
4.7. FINDINGS ................................................................................................................ 58
4.8. DISCUSSION ........................................................................................................... 60
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4.8.1. Summary of findings .......................................................................................... 60
4.8.2. Managerial implications ...................................................................................... 61
4.8.3. Study Limitations ................................................................................................ 63
4.8.4. Recommendations for future research ............................................................... 63
4.8.5. Conclusion ......................................................................................................... 64
CHAPTER 5: PAPER 3 - Antecedent relationships in business and Information Technology
(IT) alignment . ........................................................................................................... 65
5.1. ABSTRACT .............................................................................................................. 66
5.2. INTRODUCTION ...................................................................................................... 67
5.3. BUSINESS AND IT ALIGNMENT – AN ELUSIVE PROBLEM .................................. 69
5.4. CONTEXT – POSSIBLE KEY TO THE ALIGNMENT PROBLEM ............................. 69
5.5. ANTECEDENTS – THE IMPLEMENTATION OF CONTEXT .................................... 70
5.5.1. Mode of operation of the IT function ................................................................... 70
5.5.2. Sourcing option of IT .......................................................................................... 71
5.6. RESEARCH DESIGN AND METHODOLOGY .......................................................... 72
5.6.1. Sampling AND DATA COLLECTION .................................................................. 74
5.6.2. Measures ........................................................................................................... 74
5.7. FINDINGS ................................................................................................................ 75
5.7.1. Current and ideal modes of operation ................................................................ 75
5.7.2. Current mode of operation across position and division ..................................... 78
5.7.3. Sourcing of core services: outsource or in-house ............................................... 78
5.7.4. Sourcing of core services across position and division ....................................... 79
5.8. DISCUSSION ........................................................................................................... 81
5.8.1. Summary of findings .......................................................................................... 81
5.8.2. Managerial implications ...................................................................................... 82
5.8.3. Limitations .......................................................................................................... 84
5.8.4. Recommendations for future research ............................................................... 84
5.8.5. Conclusion ......................................................................................................... 85
CHAPTER 6: PAPER 4 - A framework for developing a firm-specific business and
Information Technology (IT) alignment strategy .................................................................. 86
6.1. ABSTRACT .............................................................................................................. 87
6.2. INTRODUCTION ...................................................................................................... 88
6.3. BUSINESS AND IT ALIGNMENT ............................................................................. 89
6.3.1. Alignment - elusive but desired .......................................................................... 89
6.3.2. Context and the path to antecedents .................................................................. 90
6.4. The antecedents of alignment ................................................................................... 90
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6.5. Alignment strategy components ................................................................................ 91
6.5.1. Strategic focus areas ......................................................................................... 91
6.5.2. Alignment leader and the follower-leader conundrum ......................................... 92
6.6. EXTENDING THE STRATEGIC ALIGNMENT MODEL (SAM) ................................. 93
6.6.1. Perspective one: Strategy Execution .................................................................. 95
6.6.2. Perspective two: Technology Potential ............................................................... 95
6.6.3. Perspective three: Competitive Potential ............................................................ 96
6.6.4. Perspective four: Service Level .......................................................................... 96
6.7. RESEARCH DESIGN AND METHODOLOGY .......................................................... 96
6.7.1. Considerations specific to the measurement of the four attributes ...................... 98
6.7.2. Methodology implemented in the case organisation ........................................... 99
6.8. FINDINGS ................................................................................................................ 99
6.8.1. Role of the IT function ........................................................................................ 99
6.8.2. Mode of operation of the IT function ................................................................. 100
6.8.3. Strategic Focus Areas ...................................................................................... 100
6.8.4. Leader of alignment strategy ............................................................................ 101
6.9. DISCUSSION ......................................................................................................... 102
6.9.1. Summary of findings of the case organisation .................................................. 102
6.9.2. The framework linking alignment attributes to SAM perspective ....................... 103
6.9.3. Limitations ........................................................................................................ 107
6.9.4. Recommendations for future research ............................................................. 107
6.9.5. Conclusion ....................................................................................................... 107
CHAPTER 7: CONCLUSION ............................................................................................ 108
7.1. SUMMARY OF FINDINGS ..................................................................................... 109
7.2. CONCLUSIONS ..................................................................................................... 110
7.2.1. The role of the IT function ................................................................................ 110
7.2.2. The mode of operation of the IT function .......................................................... 111
7.2.3. The sourcing option of the IT function .............................................................. 112
7.2.4. Strategic focus areas ....................................................................................... 113
7.2.5. Leader of Alignment strategy............................................................................ 114
7.2.6. The framework ................................................................................................. 115
7.3. SUMMARY OF THE CONTRIBUTIONS OF THIS STUDY ..................................... 118
7.4. SUGGESTIONS FOR FUTURE RESEARCH ......................................................... 119
LIST OF REFERENCES ................................................................................................... 121
ANNEXURE A . ...................................................................................................... 130

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LIST OF TABLES

Table 3.1: Classification of alignment approaches .............................................................. 30
Table 4.1: Research design for investigating business and IT alignment............................. 54
Table 4.2: Current perception of the role of the IT function .................................................. 58
Table 4.3: Ideal perception of the role of the IT function ...................................................... 58
Table 4.4: Analysis of variance for the current role of the IT function (DV) - position and
division (Factors) ................................................................................................................. 59
Table 4.5: Analysis of variance for the ideal role of the IT function (DV) - position and division
(factors)............................................................................................................................... 59
Table 4.6: Summary of implications of the Role of an IT function with respect to three
aspects of the IT function .................................................................................................... 62
Table 5.3 - Mode of Operation: Maintaining systems .......................................................... 76
Table 5.4 - Mode of operation of the IT function: Enhancing systems ................................. 77
Table 5.5 - Mode of operation of the IT function: Procurement of systems .......................... 77
Table 5.6: ANOVA – Current mode of operation of the IT function (DV) - Position and
division (Factors) ................................................................................................................. 78
Table 5.7 - Resources of IT: Preference of sourcing options ............................................... 79
Table 5.8: ANOVA – Resources of IT (DV) - Position and division (Factors) ....................... 79
Table 5.9: ANOVA of resource pairs ................................................................................... 79
Table 5.10: Means of Resources of IT per Division ............................................................. 80
Table 6.2: The role of the IT function ................................................................................... 99
Table 6.3: Mode of operation of the IT function ................................................................. 100
Table 6.4: Source of finding focus areas ........................................................................... 100
Table 6.5: Alignment leadership with respect to components of the strategy construct ..... 101
Table 6.6: Summary of findings for the case organisation ................................................. 102
Table 6.7: Link between the four alignment attributes and strategy perspectives of SAM .. 106
Table 7.1: Summary of findings of antecedent and strategic alignment variables .............. 109

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LIST OF FIGURES

Figure 1.1 Positioning of this study relative to the field of business-IT alignment ................... 7
Figure 3.1: Alignment as a process [own compilation] ......................................................... 33
Figure 3.2: The Strategic Alignment Model (SAM) (Henderson & Venkatraman, 1989:14) .. 37
Figure 5.1: Example of Likert scale measuring proclivity towards a reactive or proactive
mode of operation ............................................................................................................... 75
Figure 5.2: The Role of the IT function versus Mode of Operation of the IT function [own
compilation] ......................................................................................................................... 82
Figure 6.1: The Strategic Alignment Model (SAM) (Henderson & Venkatraman, 1989:14) .. 94
Figure 6.2: The four perspectives of SAM (Venkatraman et al., 1993:143) .......................... 95
Figure 6.3: Framework for contextualising the Strategic Alignment Model (SAM) [Own
compilation] ....................................................................................................................... 103
Figure 6.4: The four perspectives of SAM with the four alignment attributes superimposed
......................................................................................................................................... 104
Figure 7.1: Role versus Mode of Operation ....................................................................... 116
Figure 7.2: Strategic Focus Area versus Leader of Alignment Strategy ............................. 117
Figure 7.3: The four perspectives of SAM linked to Table 6.7 ........................................... 118

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NOTICE

This thesis is presented in the format known as “Publication Based Thesis” (PBT) also
known as “PhD by publication”.
The reader can expect some overlap between the different papers for the design elements.
Each paper was submitted to a different journal (ISI or IBSS) and is at some stage of the
review process – thus no reviewer feedback has been included in the thesis that is
presented for examination.

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