Jerry N. Luftman

Achieving and Sustaining Business-IT Alignment

This article identifies the major enablers and inhibitors in the achievement of business-Information Technology (IT) alignment. Alignment involves the activities that management performs to achieve cohesive goals across the IT and functional (e.g., finance, marketing, manufacturing) organizations. Therefore, alignment addresses both how IT is in harmony with the business, and how the business should or could be in harmony with IT. IT requires strong support from senior management, good working relationships, strong leadership, appropriate prioritization, trust, and effective communication, as well as a thorough understanding of the business environment. This article develops a methodology that leverages the most important enablers and inhibitors to business-IT alignment.

Assessing It/Business Alignment

Abstract Alignment is the perennial business chart-topper on top-ten lists of IT issues. What follows is a methodology developed by the author for assessing a companys alignment. Modeled after the Capability Maturity Model ® developed by Carnegie Mellons Software Engineering Institute, but focused on a more strategic set of business practices, this tool has been successfully tested at more than 50 Global 2000 companies and is currently the subject of a benchmarking study sponsored by the Society for Information Management and the Conference Board. the primary objective of the assessment is to identify specific recommendations for improving the alignment of IT and the business.

Key Information Technology and Management Issues 2012–2013: An International Study

The importance of the impact of IT for organizations around the world, especially in light of a very slow recovery from the global financial crisis, has amplified the need to provide a better understanding of the specific geographic similarities and differences in IT managerial and technical trends. Identifying these influential factors is one thing; the paper also looks at the challenges in addressing them, taking into account both local responsiveness and global pressures. By comparing and contrasting IT trends from different geographies, this paper presents important local and international factors, including management concerns, influential technologies, budgets/spending, and organizational considerations). In addition these trends help to prepare IT leaders for the challenges that await them. The IT trends also serve as an indicator as the respective geographies address their difficult economic environments. The research is based on data from four geographic regions, namely United States, Europe, Asia, and Latin America. The same questionnaire (albeit translated for the respective respondents), based on the lead authors well-respected and long-running Society for Information Management survey, was applied across the geographies. This paper presents the major findings based on survey responses from 787 organizations (195 U.S., 360 European, 55 Asian, 41 Australia, and 136 Latin) in 2012. The top five management concerns were: (1) Business productivity & cost reduction, (2) Business & IT alignment / integration / fusion, (3) Business agility & speed to market, (4) Business process management/reengineering, and (5) IT cost reduction.The five most influential technologies were: (1) Business intelligence, (2) Cloud computing, (3) Enterprise resource planning, (4) Apps developments, and (5) Customer relationship management. Overall, the paper finds that while the economic climate is improving at different rates around the globe – albeit at a slower pace than anticipated – ITs role continues to evolve as it provides organizations with a fundamental vehicle for reducing business expenses and new opportunities for increasing revenues.

CIO reporting structure, strategic positioning, and firm performance

Almost 30 years after the introduction of the CIO position, the ideal CIO reporting structure (whether the CIO should report to the CEO or the CFO) is yet to be identified. There is an intuitive assumption among some proponents of IT that the CIO should always report to the CEO to promote the importance of IT and the CIOs clout in the firm, while some adversaries of IT call for a CIO-CFO reporting structure to keep a tab on IT spending. However, we challenge these two ad hoc prescriptions by arguing that neither CIO reporting structure is necessarily optimal, and that the CIO reporting structure should not be used to gauge the strategic role of IT in the firm. First, extending the strategy-structure paradigm, we propose that a firms strategic positioning (differentiation or cost leadership) should be a primary determinant of its CIO reporting structure. We hypothesize that differentiators are more likely to have their CIO report to the CEO in order to pursue IT initiatives that help the firms differentiation strategy. We also hypothesize that cost leaders are more likely to have their CIO report to the CFO to lead IT initiatives to facilitate the firms cost leadership strategy. Second, extending the alignment if it view, we propose that firms that align their CIO reporting structure with their strategic positioning (specifically, differentiation with a CIO-CEO reporting structure and cost leadership with a CIO-CFO reporting structure) will have superior future performance. Longitudinal data from two periods (1990-1993 and 2006) support the proposed hypotheses, validating the relationship between a firms strategic positioning and its CIO reporting structure, and also the positive impact of their alignment on firm performance. These results challenge the ad hoc prescriptions about the CIO reporting structure, demonstrating that a CIO-CEO reporting structure is only superior for differentiators and a CIO-CFO reporting structure is superior only for cost leaders. The CIO reporting structure must, therefore, be designed to align with the firms strategic positioning, independent of whether IT plays a key strategic role in the firm.

IT-Business Strategic Alignment Maturity: A Case Study

Both information technology (IT) and business leaders are continually looking for management practices to help them align their IT and business strategies. Alignment seems to grow in importance as companies strive to link IT and business in light of dynamic business strategies and continuously evolving technologies. Importance aside, what is not clear is how to achieve and sustain harmony among business and IT, how to assess the maturity of alignment, and what the impact of misalignment might be on the firm. This case study describes the use of a management process and assessment tool that can help to promote long-term IT-business strategic alignment. The Strategic Alignment Maturity (SAM) assessment (Luftman, 2000) is used as a framework to demonstrate the evolution of an international specialty chemicals manufacturer’s IT-business alignment practices to enable the achievement of their corporate goals. Major insights from their experience and SAM best practices are highlighted.

The IS Organization of the Future: The IT Talent Challenge

ABSTRACT Current projections are that the demands for IS workers in the U.S. are on the verge of exceeding the supply, and IS managers are reporting increased concerns for the recruitment and retention of IT staff. The authors argue that industry and universities need to take actions today to address the projected shortfalls, and offer some guidelines for recruiting and retaining IT professionals.

IT Governance: An Alignment Maturity Perspective

Aligning Information Technology (IT) and business has been a persistent and pervasive problem for over three decades. Studies show that one of the essential components for organizations seeking to improve their alignment maturity is IT Governance. This paper demonstrates the relationship between IT Governance and business performance. The Strategic Alignment Maturity Assessment (SAM) framework is applied as the foundation for relating IT Governance to company performance and to overall alignment maturity. Based on this research model, IT strategic planning, IT budgeting, and IT reaction capacity demonstrate strong contribution to the overall IT Governance maturity score. Furthermore, IT Governance has a significant impact on company performance. Although these results underscore the importance of IT Governance in alignment maturity, there is no silver bullet and the other five SAM components (Communications, Value, Partnership, Technology Scope, and Skills) must also be addressed.

Enhancing the measurement of information technology (IT) business alignment and its influence on company performance

Studies for over 30 years have consistently indicated that enterprise-level Business-Information Technology (IT) alignment is a pervasive problem. While significant progress has been made to understand alignment, research on IT alignment is still plagued by several problems. First, most alignment models approach alignment as a static relationship in contrast to analyzing the scope and variance of activities through which the alignment is (or can be) attained. Second, most alignment models are not founded on strong theoretical foundations. Third, because of their static view, these models do not guide how organizations can improve alignment. This study addresses these weaknesses using a capability-based lens. It formulates and operationalizes a formative construct rooted in the theory of dynamic capabilities and defines the scope and nature of activities that contribute to alignment. The construct identifies six dimensions promoting alignment: (1) IT-Business Communications; (2) Use of Value Analytics; (3) Approaches to Collaborative Governance; (4) Nature of the affiliation/partnership; (5) Scope of IT initiatives; and (6) Development of IT Skills. The construct measures are validated in terms of their dimensionality, item pool sampling, and the nomological and predictive validity. The research uses Partial Least Squares (PLS) to statistically validate the construct using a dataset covering over 3000 global participants including nearly 400 Fortune 1000 companies. All construct dimensions contribute significantly to the level of alignment and the construct shows strong nomological and predictive validity by demonstrating a statistically significant impact on firm performance. Scholars can leverage this research to explore additional activity-based constructs of IT-business alignment.

Influential it Management Trends: An International Study

This paper is based on data collected as part of an 11-year authors’ survey research on IT trends in different geographic regions, including North America, Europe, Asia, Australia, Africa, and Latin America. This study focuses on global similarities and differences in technology trends (e.g., management concerns, influential technologies, budgets/spending, organizational considerations) among geographies to gain insight into the challenges that IT and non-IT executives face today as well as provide an understanding of the impact these technologies have on the organization’s long-term plans and investments. The results for the 11-year period show that the top five management concerns are: (i) IT-business alignment; (ii) business agility; (iii) business cost reduction/controls; (iv) business productivity; and (v) security/privacy. The five most influential technologies are: (i) analytics/business intelligence; (ii) cloud computing; (iii) ERP systems; (iv) CRM systems; and (v) security technologies. Taken together, these findings suggest that the alignment of IT and the business and leveraging IT to reduce business expenses and generate revenue are and will remain essential. The results also suggest that the role of the CIO is evolving and offshore outsourcing is on the rise. Budgets, hiring, and salaries are also increasing, albeit cautiously. This research provides important implications for IT managers to benchmark considerations such as organizational, sourcing, spending, issues/concerns, and technologies across geographies, and sheds light on a perspective on leveraging important IT trends to make thoughtful decisions about them over the coming years, and address current business challenges.

Key Issues in Information Systems Management: An Empirical Investigation from a Developing Country's Perspective

There have been periodical studies on key IS management issues facing the IT industry in North America; however, an empirical investigation on key IS management issues in developing countries has been largely ad hoc and inadequate. This paper identifies and analyzes important issues faced by CIOs in the developing country of China. The results of this study are based on two national wide CIO surveys in China, where the first was conducted in 2004 and followed by a more recent survey in 2008. The authors provide insight for both IS practitioners and researchers who have interests in developing countries. Data analysis indentified key IS management issues and demonstrated similarities as well as differences between the two rounds of surveys. Although some strategic IS issues were still within the top 10 on both the 2004 and 2008 lists, their importance ratings were different. Implications of the findings are also discussed.