Volume 1 Article 11
March 1999
 
STRATEGY

ENABLERS AND INHIBITORS OF BUSINESS-IT ALIGNMENT

Jerry N. Luftman
School of Management, Stevens Institute of Technology
jluftman@stevens-tech.edu
Raymond Papp
Department of MIS, Central Connecticut State University
pappr@ccsu.edu
Tom Brier
IBM Advanced Institute,
tombr@us.ibm.com


ABSTRACT


I. INTRODUCTION


ENABLERS INHIBITORS
Senior executive support for IT IT/business lack close relationships
IT involved in strategy development IT does not prioritize well
IT understands the business IT fails to meet its commitments
Business - IT partnership IT does not understand business
Well-prioritized IT projects Senior executives do not support IT
IT demonstrates leadership IT management lacks leadership

 
 I. BUSINESS STRATEGY

1. Business Scope – Includes the markets, products, services, groups of customers/clients, and locations where an enterprise competes as well as the competitors, suppliers and potential competitors that  affect the competitive business environment.

2. Distinctive Competencies – The critical success factors and core competencies that provide a firm with a potential competitive edge. This includes brand, research, manufacturing and product development, cost and pricing structure, and sales and distribution channels.

3.Business Governance – How companies set the relationship among  management stockholders and the board of directors. Also included are how the company is affected by government regulations, and how the firm manages its relationships and alliances with strategic partners.

 II. ORGANIZATION INFRASTRUCTURE & PROCESSES

4.Administrative Structure – The way the firm organizes its businesses. Examples include central, decentral, matrix, horizontal, vertical, geographic, federal, and functional.

 5.Processes - How the firm’s business activities (the work performed by employees) operate or flow. Major issues include value added activities and process improvement.

6.Skills – H/R considerations such as how to hire/fire, motivate, train/educate, and culture.

III. IT STRATEGY 

 7.Technology Scope - The important information applications and 
technologies. 

8.Systemic Competencies - Those capabilities (e.g., access to information that is important to the creation/achievement of a company’s strategies) that distinguishes the IT services.

 9.IT Governance - How the authority for resources, risk, and responsibility for IT is shared between business partners, IT management and service providers. Project selection and prioritization issues are included here (see Section IV).

IV. IT INFRASTRUCTURE AND PROCESSES 

10.Architecture -The technology priorities, policies, and choices that allow applications, software, networks, hardware, and data management to be integrated into a cohesive platform. 

11.Processes - Those practices and activities carried out to develop and maintain applications and manage IT infrastructure. 

12. Skills - IT human resource considerations such as how to hire/fire, motivate, train/educate, and culture.

Figure 1. The Twelve Components of Alignment (Luftman 1996)

II. STUDY DESIGN
Table1. Study Demographics
Industry Classification
Survey Percentage
Finance/Banking
8.5%
Health/Health Services
4.4%
Insurance/Real Estate
10.8%
Manufacturing
23.4%
Refining
1.6%
Pharmaceuticals
1.6%
Public Administration
8.5%
Educational Inst.
9.5%
Government/Defense
2.2%
Business/Consulting
3.5%
Agriculture/Forestry
1.3%
Utilities
6.0%
Transportation
3.8%
Commerce
5.7%
Misc. Services
9.2%

                           Table 2. Enabler Categories                         Table 3. Inhibitor Categories
Senior executive support IT/non-IT lack close relationship
IT involved in strategy development IT does not prioritize well
IT understands business IT fails to meet its commitments
IT, non-IT have close relationship IT does not understand business
IT shows strong leadership Senior executives do not support IT
IT efforts are well prioritized IT management lacks leadership
IT meets commitments IT fails to meet strategic goals
IT plans linked to business plans Budget and staffing problems
IT achieves its strategic goals Antiquated IT infrastructure
IT resources shared Goals/vision are vague
Goals/vision are defined IT does not communicate well
IT applied for competitive advantage Resistance from senior executives
Good IT/business communication IT, non-It plans are not linked
Partnerships/alliances Other 
Other   

 

III. STUDY RESULTS

IV. DISCUSSION and INSIGHTS
ENABLERS INHIBITORS
Senior executive support for IT IT/business lack close relationships
IT involved in strategy development IT does not prioritize well
IT understands the business IT fails to meet its commitments
Business - IT partnership IT does not understand business
Well-prioritized IT projects Senior executives do not support IT
IT demonstrates leadership IT management lacks leadership

 


REFERENCES

 APPENDIX A
T-TESTS AND ANOVA BY IT AND  NON-IT PARTICIPANTS
Table A-1. T-test for Enablers And Inhibitors By IT And Non-IT Participants


 
Business
IT
Mean
112
112.6428571
Variance
9683.407407
10891.34921
Observations
28
28
Pearson Correlation
0.962239975
 
Hypothesized Mean Difference
0
 
df
27
 
t Stat
-0.119445253
 
P(T<=t) one-tail
0.452903469
 
t Critical one-tail
1.703288035
 
P(T<=t) two-tail
0.905806938
 
t Critical two-tail
2.051829142
 
The t-test performs a paired two-sample t-test to determine whether a sample's means are distinct. This t-test form does not assume that the variances of both populations are equal.

 

Table A-2. ANOVA of Business and IT Participants


Enabler
Count
Sum
Average
Variance
Senior executives support IT
2
648
324
722
IT involved in strategy development
2
508
254
1152
IT understands business
2
413
206.5
24.5
IT, non-IT have close relationship
2
366
183
98
IT shows strong leadership
2
272
136
2048
IT efforts are well prioritized
2
304
152
338
IT meets commitments
2
225
112.5
1404.5
Other
2
202
101
1922
IT plans linked to business plans
2
61
30.5
12.5
IT achieves its strategic goals
2
38
19
8
IT resources shared
2
22
11
72
Goals/vision are defined 
2
30
15
8
IT applied for competitive advantage
2
23
11.5
4.5
Good IT/Business communication
2
25
12.5
12.5
Inhibitor
 
 
 
 
IT, non-IT lack close relationship
2
621
310.5
1740.5
IT does not prioritize well
2
540
270
32
IT fails to meet its commitments
2
451
225.5
264.5
IT does not understand business
2
348
174
72
Senior execs. do not support IT
2
328
164
512
IT management lacks leadership
2
265
132.5
0.5
IT fails to achieve strategic goals
2
217
108.5
112.5
Other
2
111
55.5
4.5
Budget & staffing problems
2
88
44
128
Antiquated IT infrastructure
2
57
28.5
40.5
Goals and visions are vague
2
38
19
72
IT does not communicate well
2
35
17.5
84.5
Resistance from senior execs.
2
31
15.5
40.5
IT, non-IT plans are not linked
2
23
11.5
24.5
 
 
 
 
 
Business
28
3136
112
9683.407
IT
28
3154
112.6429
10891.35
   
 
 
 
 
 
Source of Variation
SS
df
MS
F
P-value
F crit
Rows
544569.2
27
20169.23
49.73592
7.7E-17
1.904823
Columns
5.785714
1
5.785714
0.014267
0.905807
4.210008
Error
10949.21
27
405.5265
 
 
 
   
 
 
 
 
 
Total
555524.2
55
 
 
 
 
The two-factor analysis of variance (ANOVA) does not include more than one sampling per group, testing the hypothesis that means from two or more samples are equal (drawn from populations with the same mean). This technique expands on tests for two means, such as the t-test.

Table A-3. ANOVA of Enablers and Inhibitors to Alignment


ENABLER
Count
Sum
Ave-rage
Variance
Senior executives support IT
2
648
324
722
IT involved in strategy develop.
2
508
254
1152
IT understands business
2
413
206.5
24.5
IT, non-IT have close relationship
2
366
183
98
IT shows strong leadership
2
272
136
2048
IT efforts are well prioritized
2
304
152
338
IT meets commitments
2
225
112.5
1404.5
Other
2
202
101
1922
IT plans linked to business plans
2
61
30.5
12.5
IT achieves its strategic goals
2
38
19
8
IT resources shared
2
22
11
72
Goals/vision are defined 
2
30
15
8
IT applied for competitive advantage
2
23
11.5
4.5
Good IT/Business communication
2
25
12.5
12.5
Inhibitor
 
 
 
 
IT, non-IT lack close relationship
2
621
310.5
1740.5
IT does not prioritize well
2
540
270
32
IT fails to meet its commitments
2
451
225.5
264.5
IT does not understand business
2
348
174
72
Senior execs. do not support IT
2
328
164
512
IT management lacks leadership
2
265
132.5
0.5
IT fails to achieve strategic goals
2
217
108.5
112.5
Other
2
111
55.5
4.5
Budget & staffing problems
2
88
44
128
Antiquated IT infrastructure
2
57
28.5
40.5
Goals and visions are vague
2
38
19
72
IT does not communicate well
2
35
17.5
84.5
Resistance from senior execs.
2
31
15.5
40.5
IT, non-IT plans are not linked
2
23
11.5
24.5
Source of Variation SS
f
MS
F
P-value
F crit
Between Groups
544569.2
27
20169.23
51.55075
1.49E-17
1.889426
Within Groups 10955
8
391.25
 
 
 
     
 
 
 
 
Total
555524.2
55
 
 
 
 
The analysis of variance (ANOVA) is used to test the hypothesis that means from two or more samples are equal (drawn from populations with the same mean). This technique expands on the tests for two means, such as the t-test.

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