Abstract increasingly competitive business environment, achieving this alignment

Abstract

Because
of the changing nature, uncertainties and complications of business world,
aligning information systems(IS) with corporate strategy has appeared to be a
concern for researchers and practitioners over the last decade; especially in recent
years, with the rapid development in technologies, the role of information
systems playing in the corporate strategy is getting more and more significant
and not ignorable; combined with the increasingly competitive business
environment,  achieving this alignment
becomes even more demanding and critical day after day. However, the challenge
is getting more and more severe at the same time. Therefore, in this paper, a
thorough analyse and discussion about the need of alignment between IS and
corporate strategies in IS planning phrase will
be made, then the paper reviewed and discussed one
alignment model to deliver a comprehensive understanding of the
alignment concept and various alignment in an organization, with the focus on
alignment between IS and corporate strategy; 
furthermore, based on the alignment model,
the paper summarized what top management or CIOs should do to make this
alignment better applied into the management concept, so that the IS can fully realize its
function in corporate strategy.

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Key
Words: Information System, IS planning, corporate strategy, alignment,
technology development, management

 

Introduction

In modern turbulent and competitive business environment, the
major challenge for an organization is no longer success, but survival; on the
one hand, corporate strategies have become the most vital one above all other
factors, which can save or either ruin an organization over night; on the other
hand, IS has developed to be not neglected for a business to survive and thrive;
moreover, the alignment of  are even more
requiring and essential if these two perspectives want to fully fulfil their
obligations and realize the expected value. 
  

This
paper starts with the important position of information systems in an organization,
then elaborated the definition of alignment, followed by deeply discussing the
necessity and significance of aligning IT with business objective corporate strategies;
afterwards, this paper reviewed an popular alignment model, proposed by Pijpers
V,  to help understand comprehensively
the alignment concept and various alignments in an organization, focusing on
alignment between IS and corporate strategy; 
furthermore, based on the alignment model, the paper summarized what top
management or CIOs should do to make this alignment better applied into the
management concept, so that the IS can fully realize its function in corporate
strategy.

Theoretical Foundations

Definition of Corporate
Strategy and Information Systems

Corporate strategy, as defined in business dictionary, is “the
overall scope and direction of a corporation and the way in which its various
business operations work together to achieve particular goals”, and Michael E.
Raynor ever explained corporate strategy with two parts (Raynor, 2007): (1) capturing
inter-divisional synergies, it means apprehend the synergistic effect among
diffident divisions and make the synergies best serve for business; and (2) how
corporates recognize, identify and cope with strategic uncertainties.

“Information systems, as Laudon
& Traver ever elaborated in the article, are technological components
in an organization, which are interconnected and work together to gather,
process, store, and disseminate information to support decision making,
coordination, control, analysis, and visualization in an organization.” (Laudon
& Traver, 2012)

These two seemingly unconnected terms have presented us
their tight relationship during last 2 decades in this agile business world,
people has become increasingly realized the significant function that IS plays
in corporate strategy and decision making; later in this paper, the link
between IS and corporate strategy will be explained and further studied to make
the connection massively contribute to business.

Definition of Alignment

Numerous definitions of alignment can be found in the
literature, and as early as in 1993, Henderson and Venkatraman were among the
first to introduce this term for business, and they (Henderson &
Venkatraman, 1993) described alignment as the degree of fit and
integration among the following four components: business and strategy,
business and IS infrastructure.

According to Ola (El-Telbanya & Elragalb, 2014),
the term alignment was defined as the extent to which information systems
support and have a positive relationship with the organization’s objectives and
strategies as defined in the business plan in an appropriate and timely way.

The following parts will explicate how the alignment between
IS and corporate strategies assist in the synergies between divisions, and how
the alignment can make both uttermost achieve their values.

 

Importance of IS in an Organization

With the rapid development of technologies, IS has developed
into powerful technological tools which can collect, process, store, and
disseminate information from a simply data depository in the very beginning; and
it has come to play a crucial role in supporting decision making, coordination,
control, analysis, and visualization in an organization, which largely affects the
sustainability and growth of organisations.

Information systems, as Arwa said in his article (Altameem, et al., 2014), have interposed into almost all
daily work: meeting, communication, information gathering, reporting etc, to
help corporate operate activities and functions properly, accurately,
effectively and timely in the means of software,  he also
said information systems have become a source of competitive advantage,  which is of great benefits in making right
decisions, improving productivity and performance, creating new ways of
managing and organizing, and developing new business,

Jos (Trienekens, et al., 2014) also expressed
the overwhelming importance of information system in an organization: IS has
become the backbone in almost every industry, for instance education, finance,
government, health care, manufacturing, and almost all large and small
businesses, organisations that have successfully applied IS and used them in
the right way outperform organisations without IS.

Ahmed ever stated in his article (Elmorshidy, 2013):
information systems, as an effective technological tool to implement
business goals, contribute positively to the creation of new business
strategies or better support existing business strategy.

As above, a lot articles have mentioned the vital role of
information system in an organization; however, seldom researchers talked about
information system without emphasizing the importance of alignment between the
information system and corporate objectives, requirements and strategies.

Arwa (Altameem, et al., 2014) emphasized
the alignment like this: the usage of modern information technologies in the
organization management will be successful only when information system
development is aligned with the organization system development strategy.

Jos (Trienekens,
et al., 2014) also highlighted that IT projects should be tightly
connected with business side to achieve organization goals and realize
corporate values, and the way to manage and improve the link is alignment of IS
and corporate strategies.

Business strategy and IS should work in uniformity for the
business user to understand the enterprises’ system alignment with business
information integration.  (Sarhandi, et al., 2011)

Over the last decade we have seen an increase in recognition
of IS and the more integrated role IS has begun to play in corporate strategies,
so that more and more researchers and practitioners are pursuing the effective
alignment between IS and corporate strategies.

 

Significance of Aligning IS with Corporate
Strategy

At the
end of 20th century, some people had already realized the importance
of aligning IS with corporate strategy, as early as in 1991, Das (Das, et al., 1991) ever stated in his article
that alignment is crucial because it assists organizations in ensuring that the
areas which are needed for improved organizational performance are targeted by
information systems 

Teo and
King (1997) also pointed that alignment makes IS planning and business planning
activities in sync with each other, to guarantee continuous integration so that
organizational goals and purposes can be achieved. (Teo & King, 1997)

After 2 decades practice, more and more people now are
getting realized the significance of aligning the IS and corporate strategies
in improving organization performance, accomplishing the business objectives
and corporate value.

David Cotgreave said when IS and business strategy are
aligned and interwoven, IS cannot only make great contribution in driving
growth, accelerating market share, improving productivity and efficiency; but
also help corporations reduce risks when facing turbulent and dynamic business
world; when IS and
strategy can really understand each other, the value it increases is way more
than any other department can bring. Corporates with the alignment give
the impression of dynamic, current and connected, those without proper alignment
are falling behind than others. (Cotgreave, 2017)

Trienekens expressed the same opinion in his article, the
proper alignment can make sure the return value from IT investment be
maximised, and it provide management the correct guidance and great flexibility
to react to changes, through this alignment, organization can gain a better
competitive position. (Trienekens, et al., 2014)

Aligning the two key perspectives in an organization provide
a chance for business management to better understand IS, so that CEOs can
apply the right system to organization, and make better use of these systems
when forecast trend and make decisions; and at the same time, alignment enhance
the understanding of business strategies and objectives by CIOs or IS managers,
in order that IT activities can work for business goals, and be powerful
support in making business strategies.  

IS now is a source of competitive
advantage, and the alignment can largely enhance the strategic role of IS, so
this expanding role has forced strategic systems planners and IS planners to
change the scope, objectives, style and sources of expertise in planning. (Altameem, et al., 2014) Thus
it is important to take into consideration of this tight linking during IS
planning phases, so that the alignment can be sustained during the whole
lifecycle.  Many researchers have studied
the alignment and worked out models for people to better understand and apply
the alignment in practice.

 

Alignment model and framework

One model introduced by V. Pijipers is selected for us to
better understand the concept and learn how to align the IS with corporate
strategies. (Pijpers, et al., 2008)

           

                             Alignment model by Pijpers, V; Gordijn, J;
Akkermans, H

In V. Pijipers’s model, there are four different perspective,
which are all essential for an organization: (1) the corporate Strategy perspective, (2) the Value
Creation perspective, (3) the Processes perspective, (4) the IS perspective. The framework of alignments
presents us a comprehensive vision of the alignments among the four
perspectives, which could help management level understand the holistic
situation, and then know what to do from strategic level. As known that in a
system each perspective should be properly aligned with
the others, but two perspectives were of most interest and considered
most relevant: the business strategy perspective and the IS perspective, since the stakeholders sought an
IS design which “matched” their business strategy. So, the focus of this part
is aligning the organization’s strategy and IS.

As many business ideas stem from technological innovations,
so the development of information system serves as the starting point of this
frame; however before actually implementing information systems it must be
understood – on a high level – what the system will do and how this will impact
the organization. and to do this managers or CIOs should have a clear
understanding of corporate strategies, according to the model, information
systems lay the foundation of business, and IT serves as the source of
strategies; thus, this is
vital, because any mistake made in the early phases of information system
design can have large consequences later, Therefore,
it should be the biggest concern of top management and managers how to align
the IS and corporate strategies in IS planning phase.

As seen from the model, corporate strategies and strategic
positions can be affected by other organizations or outer environment, so it
decides the success of the organization; the interactions between strategies
and inter environment will determine whether the organization is in the right
way. Information system, as the source of competitive ideas and a bond between
different divisions, interact actively with all other perspectives, so it is vital
for IS to deliver to other environments the correct and valuable strategic information.
Therefore, in a complicated environment, the alignment of IS and corporate strategies
is proper applied or not can determine the fatal of the organization.

 

What management and CIOs should do to
contribute to this alignment

It has been widely realized the overwhelming position of IS
and the strategic function of alignment between IS and business strategies in an
organization; as a manager or CIO, they should understand the significant role of
IS and the alignment,  IS leaders must
have the ability to work with other functions units in the business to make the
alignment a reality(CIO Executive Council, 2009);
and to fully
understand information systems, a managers must understand the broader
organisation, management, information systems dimensions of systems and their
power to provide solutions to challenges and problems in the business environment (Issa-Salwe, 2011), which also can be seen
form the above model.

In a more detailed way, CIOs must make sure that every IT
activity, project, or service play a part in realizing business goals, and IT
agenda work towards achieving business-related and not IT-related metrics in
order to improve alignment; and on the other hand, businesses should be aware
of their IT resources, which is something they often neglect to do, because
their business’ competitiveness depends a lot on the quality of their
technology resources and whether these resources nimble or efficient enough to
meet changing market needs, as top management, they are responsible for this
point.

Growthwave expressed the same opinion in: the key success
factor for aligning IT spending and efforts with business needs is mutual
leadership and accountability. Business leaders must lead IT and CIOs must
become business leaders. CIOs certainly need to increase their own
accountability for IT results, but they must also help hold the business
accountable for IT as well.
(Growthwave, 2010)

According to a survey of more than 500 senior executives (Lochan
& Shah, 2010), it was found
that despite massive resources and energy devoting in aligning information
systems with corporate strategy and business requirements, fewer than one in
five felt their efforts were achieving good results. Trouble typically starts
when business units hand off their strategy to IT at too high a level, the broad goals are not concrete
enough to be converted into well-informed IT decisions. In response, the
proposals IT develops are defined at too low a level—often as a one-year
operating plan rather than a comprehensive program to reach a strategic
destination.

Effective alignment can occur only when IT and business
strategy are fastened in clearly articulated business capabilities, while this
can be ensured during IS planning phase, in the model, it is also highlighted
the significance of the proper IS planning before implementation about proper
alignment of IS and corporate strategies during planning phase.

Another point that shouldn’t be neglected by management and
CIOs is continuous
communication and close partnerships between IS and business managers, because
this can make sure that the parties understand each other’s goals and
objectives, and can recognize challenges in each other’s field of expertise;
and to guarantee the communication, they can establish formal communication
structures that are created and maintained between the business and the IS
units; through this continuous effort, it can make sure the corporate strategy are
carried out by IS throughout their lifecycle, can find any mistake  to change accordingly in a timely way. (Kekwaletswe & Mathebula, 2014)

 

 

conclusion

Technologies development has made information systems a must
in an organization, they are no longer just tools that can collect, process,
store, and disseminate information, IS are playing unneglected role in the
process of business planning, design, analysis, operation management and
strategic decision making. Alignment of IS and corporate strategy make sure that
the application of information systems is in harmony with business objectives,
strategies and requirements, in order to massively realize the function and
effect of IS, and to make IS better work for business.

IS and corporate strategic alignment has been one of the
most popular modern management concepts in business and IT management
particularly in academia and industry, any alignment model or strategy must
ultimately pursue one goal—continually optimize returns to the business from IT
investments, including investments in projects, capital, service, support,
maintenance, and any other IT effort or expenditure. The main factor for the
success of the alignment, except the information system itself, is the people:
how the practitioner views the situation, whether they have the vision and
knowledge to manage the alignment, and how they show the leadership and accountability;
the people should not only be executives, but also CIOs and managers.

This paper elaborated the importance of information system
in organization, and then re-emphasized the significance of aligning IS and
corporate strategies in IS planning, followed by the study of one alignment
framework proposed by V. Pijipers to assist management understand the necessity
of this alignment and gain some ideas on how to obtain the alignment; then
suggestions were made on what management and CIOs should do to pursue the
alignment between IS and corporate strategy and potentially maximize the
benefits of this alignment.

 

References

Altameem, A. A., Aldrees, A. I. & A, A. N., 2014. Strategic
Information Systems Planning (SISP). San Francisco, World Congress on
Engineering and Computer Science.

Anon., n.d. Online
Available at: http://www.businessdictionary.com/definition/corporate-strategy.html

CIO Executive Council, 2009. How to Make
IT-Business Alignment a Reality. Online
Available at: https://www.cio.com/article/2425265/business-alignment/how-to-make-it-business-alignment-a-reality.html
Accessed 29 12 2017.

Cotgreave, D., 2017. Align your IT and business
strategy…or else?. Online
Available at: https://www.cio.com/article/3238844/it-strategy/align-your-it-and-business-strategy-or-else.html

Accessed 01 01 2018.

Das, S., Zahra, S. & Warkentin, M., 1991.
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Elmorshidy, A., 2013. Aligning IT With Business
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El-Telbanya, O. & Elragalb, A., 2014. CENTERIS
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Growthwave, 2010. Business-IT alignment: A model
for success model. Online
Available at: GrowthWave White Paper, www.growthwave.com
Accessed 24 12 2017.

Henderson, J. & Venkatraman, N., 1993.
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Issa-Salwe, A. M., 2011. Organizational Planning
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Kekwaletswe, R. M. & Mathebula, P. C., 2014. Aligning
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Laudon, K. C. & Traver, C. G., 2012. Management
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Lochan, D. & Shah, S., 2010. “How to bridge the
IT alignment gap?, s.l.: Financial Times.

Pijpers, V., Gordijn, J. & Akkermans, H., 2008.
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Raynor, M. E., 2007. WHAT IS CORPORATE STRATEGY,
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Teo, T. & King, W., 1997. Integration between
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