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This article explains Business IT Alignment in a practical way. After reading you will understand the basics of this powerful management and strategy tool.
Harmony between Business and IT
Business IT Alignment is about using information technology (IT) effectively to achieve the desired situation of an organization. It can be used to achieve objectives, for instance to improve financial performance or market position. Some definitions of Business IT Alignment focus on the results of an organization and on the harmony between IT and business decision-makers within the organizations, which demonstrates the positive relationship between information technology and financial measures. This is in contrast with the powers within organizations in which IT and business professionals are unable to bridge the gap between them. This gap often arises because of different ideas and objectives, mindset and mutual lack of understanding. As a consequence of this gap, expensive IT systems do not provide sufficient return on investment. That is why Business IT Alignment can improve the value of new IT investments.
Business IT Alignment is about cooperation
Lack of mutual understanding between business and IT professionals and the failure to produce results, lead to mutual blaming in problematic situations and they lead to mistrust. Therefore it is good to control such conflicts. By searching for the right Business IT Alignment, mutual trust between these two groups will be established as well as a mechanism for consensus decision making.
To achieve Business IT Alignment organizations must make decisions that take into account both the organizational objectives and the IT disciplines. The term governance means that procedures for decision-making and control are established in which both the business and IT professionals are involved. This is why Business IT Alignment becomes part of information technology governance.
IT-governance itself is the responsibility of the board of directors and executive management. That is why it becomes an integral part of the corporate strategy. It consists of organizational structures and processes that ensure that the IT organization continues to exist in conformity with the organization’s strategies and accompanying objectives.
Business IT Alignment and change management
The way in which IT tools are used in an organization can indicate whether they can recoup their value. Therefore, the scope of Business IT alignment is important in organizational change. The fact is that new IT can make a contribution to a more efficient realization of such reorganization. Because of this, implementing IT can achieve its full potential for business value. As a result it is not just a technical component but it is also part of organizational change management.
Business IT Alignment framework
In the Risk3 model of the founders of Business IT alignment, John C. Henderson and N. Venkat Venkatraman, the objectives of business / IT are connected with three separate risks that associated with the management of IT projects:
- technical risks – will the IT system function properly?
- organizational risks – will employees use the system properly?
- business risks – will the implementation and adoption of the IT system translate into value?
Only when all three risks are prevented and managed successfully, there is a chance of success and the investment in IT will repay itself many times over.
It’s Your Turn
What do you think? How important is Business IT Alignment in today’s modern Internet economy? Do you recognize the practical explanation or do you have more additions? What are your success factors for good Business IT Alignment?
Share your experience and knowledge in the comments box below.
- Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & N. Venkat Venkatraman (2013). Digital Business Strategy: Toward a Next Generation of Insights. MIS Quarterly, 37(2), 471-482.
- Dyche, J. (2015). The New IT: How Technology Leaders are Enabling Business Strategy in the Digital Age. McGraw-Hill Education.
- N. Venkat Venkatraman (1998). IT agenda 2000: Not fixing technical bugs but creating business value. European Management Journal, 16(5), 573-585.
- Henderson, J. C. and N. Venkat Venkatraman (1993). Strategic Alignment: Leveraging Information Technology for Transforming Organizations, IBM Systems Journal, 32 (1), 4-16.
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