In the present business scenario, those organizations which have been able to integrate their business strategies with advanced information technology or information system have benefitted significantly in terms of business returns. Implementation of information technology in the functioning of the company acts as a driver of business strategies in different functional areas such as competitive differentiation, customization, process automation and improvement,
Most of the top level managers of different organizations believe that, to remain competitive and to get edge over others, it is very important to align information technology with business technology. Information technology services and solution providers are acting as a change agent and are adding value to the firms by enhancing their efficiency and effectiveness. Studies by many scholars on information technology and business strategy alignment have concluded that there exists relationship among information technology, competitive strategy and performance (Smaczny, 2001).
ALIGNING INFORMATION TECHNOLOGY WITH THE BUSINESS STRATEGY
The main reason behind aligning business strategies and information technology is to take benefits from the features of information technology that contributes towards the successful operations of the enterprise. An organization is considered to be successfully aligned its business strategies with the information technology when:
- The company has proper understanding of how the application of information system or information technology and services can help significantly in attaining the present and future; short term and long term aims of the business.
- Complete understanding of how to use the scare resources such as money and time; and different tradeoff which the organization is ready to experiment.
- To have a trustworthy working relationship between the information technology service provider and the entire organization, this can be evidence by responsive problem management, reliable daily operations and innovative solution delivery (Kajalo, Rajala and Westerlund, 2007).
In order to achieve alignment of information technology and business strategies, it is very important that organizations must insure the completion of four basic steps. These four steps are:
- Define circumstances so as to attain successful alignment
- Have a complete scanning of all the available technology so as to choose the best among them
- To determine the essential information technology value that it must provide
- To properly define the vision and mission statement related to implementation of information technology
Once the organization has successfully aligned information technology with the business strategies, it will enable the organization in the following ways:
- Aligning information technology will enable key executives of the company to participate in the development of the information technology strategies (Lee and et. al., 2008).
- It will help organizations to determine the how emerging technologies, trends, applications, etc. can or will affect the working of the business.
- The management will be able to recognize how alignment of information technology with business strategies will help the company in attaining its objectives and business goals.
- Enable the management to address the needs of the company
- Organization will become more aware that how alignment of information technology with business can contribute in value addition.
- The company will be able to develop customer focused culture at the workplace (Papp, 1999).
Thus, in the present business environment it is very important for the organizations to attain alignment if information technology with business strategies. The companies can achieve this by understanding the importance of the alignment of information technology with business strategies and partnering with some information technology service provider. Further, it must start giving some control regarding information system to the business. Moreover, implementing information technology related decisions will also make organizations to understand its necessity. Further, in order to achieve appropriate alignment, the firm must need to create an effective process that will enable the business to maintain alignment with the information technology and the business will have to align its style, structure, skills, staffing, etc with the information technology so as to match the organization’s requirement (Haes and Grembergen, 2009).
INFORMATION TECHNOLOGY ALIGNMENT STRATEGY
Aligning information technology with business strategies enables the organization to maintain proper balance between the capabilities of the organization and the scare resources available to it. Further, it also helps the organizations to analyze the opportunities and risks present in the environment and thus, guide it to reach to its goals. It enables the organization to match what it can do with what it might do (Gregor, Hart and Martin, 2007)
NEEDS AND BENEFITS OF ALIGNING INFORMATION TECHNOLOGY WITH BUSINESS STRATEGIES
This section of the report will focus on highlighting the needs and possible uses & benefits of alignment information technology with the business strategies. According to the positivism views of majority of the users, here are some of the major benefits that aliment can deliver to the company:
- The alignment will enable the company to become proactive, rather than to remain reactive. Properly configuring the information system in the operation will make sure that the company is among the first few players who bring the change in the environment rather that accommodating itself according to the changing environment.
- The organization can predict the future trends that can significantly affect its functioning. Thus, the company will have enough time to formulate its strategies accordingly so that it can nullify the impact of change. The firm will be able to study the lead indicators well in advance and thus can come out with appropriate solution before the problem becomes unmanageable (Chao and Chandra, 2012).
- Alignment of information technology with business strategies will tremendously help the organization to reduce the risk that future events can cause to the organization. Since, the company can effectively predict the future; it can develop its business strategies in such a manner that it can face any situation without any difficulty.
- Further, company can implement information technology system in its various functional departments. For example, organization can study the market effectively and thus can improve its market share, revenue and growth rate. Further, it will also help the company to understand what its customers want and therefore, can provide more customer satisfaction by catering their needs. Further, the company can scan the environment so that it can easily adapt itself to the changing environment. Apart from this, it helps firms in enhancing their productivity, skills, quality and achieving economies of scale that is, reducing the cost of service or business (Schwalbe, 2010).
- It helps in justifying the goals set by the firm and provide significant support in achieving those goals.
- One of the most important advantages of this alignment is that it enables organizations to optimally utilize its limited skills and resources, and thus, enhance their efficiency significantly.
- Alignment of information technology with business strategies helps in benchmarking the performance. Through this, the organization can measure the performance of its internal projects and can decide whether the company is performing as per the standards or not. It anything is going off the track, management can take measures to bring it back on the track (Mahr, 2010).
- It helps the organization in practicing best activities so that companies can benchmark their performance against their competitors. Thus, it provides edge to the organization over their industry peers and make sure that it continuously deliver best services.
- It helps in visualizing common goals of all the entities involved in the functioning of the firm and thus can trace how each group is contributing in the working of the organization.
- Further, it also assists the organizations in creating a stakeholder culture in the company at the grassroots level.
- Finally, it significantly helps in quick and accurate decision making process and thus enhancing the image of the management (Hammett, 2008).
So, from the above discussion it is clear that the scope of alignment of information technology with business strategies is very wide in any organizations and provides tremendous edge to the company over its competitors. Contradictory to the above discussion, some of people feel that alignment of IT with business strategies do not provide any advantage to the company.
According to them, this alignment requires lot of time and money, and instead spending time and money on this, companies must try to focus on customer satisfaction. Moreover, many of the big corporation keeps on adding or changing their business model, so it becomes necessary for them to every time change the IT architecture, which is not easy for some of the companies. In addition to this, skilled force is required to successfully integrate the IT with the business, and thus further add to the cost. So they feel, in the time of cost cutting, it is not necessary for the businesses to integrate IT with Business (Schwalbe, 2010).
Considering both the positive and negative arguments about the alignment of IT with business strategies clarifies that, in the present technological era, it is essential for the companies to align information with business strategies, as in comparison to its drawbacks, its benefits adds more value to the firm. Further, it also enables the company optimal utilization of limited skills and scare resources.
BUSINESS VALUE FROM INFORMATION TECHNOLOGY INVESTMENT
Earlier, management does not use to provide proper attention on the implementation of information technology in the firm as they were considered as supportive activities. But, with the passage of time, management of almost all the firms have significantly changed their opinion about the aligning information technology with the business strategies. Earlier, when the management does not have idea about the benefits the information system can provide to their organization, they considered it as an unnecessary expense and believed that it is not necessary for the company to invest in such technologies as they do not provide value for money benefits. But, later on their perception changed about the alignment of information system with business strategies and they considered it as a business driver (Papp, 2001). The below shown information technology and business alignment matrix will further cement the fact that alignment of information technology results in value addition to the company.
CONSEQUENCES OF NOT MANAGING INFORMATION TECHNOLOGY
Any organization which fails to strategically align information technology with its business strategies has to face consequences related to losing opportunity and financial cost. Apart from this, it will have to face many other misshapes also such as:
- The company is not able to attract and retain talented pool of applicants and other resources
- Not able to measure the contribution made by the information technology in the business
- Organization will be unable to draft effective strategies related to funding and investment
- Will become reactive rather than proactive
- Its credibility will get affected significantly
- Will not be able to properly communicate all the strategies to the workers
- This shows that improper or inefficient alignment of information technology may results in poor performance of an organization (Kangas, 2003).
After discussing the topic ‘alignment of information technology with business strategies’ it can be concluded that to manage the limited skills and scare resources, it is very important for an organization to integrate and align information technology with its business strategies. It will enable the company to recognize lead indicators and the firm will become proactive rather than reactive.
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- Gutierrez, A. Orozco, J. and Serrano, A. 2009. Factors affecting IT and business alignment: a comparative study in SMEs and large organizations. Journal of Enterprise Information Management. 22(2). pp.197-211.
- Haes, D. S. and Grembergen, V. W. 2009. Exploring the relationship between IT governance practices and business/IT alignment through extreme case analysis in Belgian mid-to-large size financial enterprises. Journal of Enterprise Information Management. 22(5). pp.615-637.
- Hammett, M. B. 2008. Corporate Strategy and Technology Alignment Factors that Contribute to Strategy and Technology Alignment. ProQuest.
- Kajalo, S. Rajala, R. and Westerlund, M. 2007. Approaches to strategic alignment of business and information systems: A study on application service acquisitions. Journal of Systems and Information Technology. 9(2). pp.155-166.