How successful firms go beyond aligning their IT strategy with business objectives

Abstract

Information technology (IT) is vital to growth of all organizations. But getting value out of IT has been challenging. The companies, which fail to align their IT strategy with business objectives struggle with low or mediocre return on their IT investment. On the other hand, the companies that achieve strategic alignment realize higher economic benefits. Successful companies go one step further and use IT to enable business. They differentiate themselves from their competitors using IT and forge alliances. But is there any formula for achieving strategic alignment? The research of past decade seem to suggest that there indeed is a trend among companies, who manage to achieve strategic alignment. The successful companies recognize IT's unique value and ensure that it generates value like other assets do. IT is not a mere support function in such organizations. IT not only serves the internal businesses of the company but it acts like a business in dealing with suppliers. The framework of Strategic Alignment Model (SAM) identifies this as the balance of internal and external domain. The model asserts that IT should be judged both in terms of external domain, which determines how the firm as whole is positioned in the market place and internal domain, which constitutes IT's internal policies and structures. In the internal domain, the emphasis is more on technology than on business, management or organizational issue. The effective utilization of IT requires alignment of IT strategy with business objectives. This assertion is validated by a case study of a three companies, who successfully achieved strategic alignment.