The Current State of It-Business Alignment – Analysis and Global Benchmarking
Organizations can create value by constantly evaluating and aligning IT objectives with business objectives. IT-business alignment has been a persistent pervasive problem for more than three decades. Today top executives are recognizing the importance of aligning IT-business relationship.Despite lot of improving efforts, alignment of IT and/withbusiness ranks as the number 1 in the list of IT management concerns of organizationssince 2014 according to the IT trend survey conducted by Society of Information Management (SIM) in 2016.Achieving alignment requires IT staff to have sufficient business understanding of their core operations and business staff to have sufficient understanding of technical knowledge of IT solutions used in their organization (Kempaiah, 2011).
Today organizations depend more on IT services for day-to-day operations.Rapid changes in both business and IT innovations are putting lot of pressure especially on CIO’s in aligning IT goals to business strategy. Organizations fail with alignment because of different expectations from both IT and business units. Both IT and business departments have equal responsibility when it comes to alignment. It involves how IT should/could be aligned with business goals and how business should/could be aligned with IT goals (Kempaiah, 2017).Alignment requires effective communication, governance, partnerships, competency measurements, technical services and HR skills.
This article presents the analysis of IT- Business alignment from 27companies. Luftman’s survey was used to collect the data from the IT and business executives from 27 companies over the past 15 months(Financial companies – 13, Educational institutions – 2, Hospitals – 5, IT service companies – 7). We received154 responses.Elements from all the six components of maturity alignment (Communications, Value metrics, Governance, Partnership, Scope and Architecture, and HR Skills) are analyzed, and it isbenchmarked against Luftman’s data from 240 global 1,000 organizations. Analyzing the responses has provided lot of insightsabout the alignment maturity from thesecompanies.Over the years, we have found that there is no single solution to this alignment problem. In reality, companies need to address all the six maturity components.
Some of the insights include:
1. Most companies on a scale of 1-5 are between level 2 and level 3.
2. The perceptions of IT executives and Business executives are quite different.
3. The maturity alignment is slightly higher among the financial companies compared to other companies.
This article will leverage the concepts of Luftman’s strategic alignment maturity model (Luftman& Kempaiah2007, 2009) to assess whether IT enables or inhibits companies’ performance with respect to business transformation.
Luftman, J. and Kempaiah, R. (2007). An Update on Business-IT Alignment: “A Line” Has Been Drawn, MIS Quarterly Executive 6(3): 165-175.
Luftman, J. and Kempaiah, R. (2009). Key Issues for IT Executives, MIS Quarterly Executive Vol 8 No.3, September 2009
Kempaiah, R (2011). Global Analysis and Benchmarking SAM in IT Service Industry – 18th Annual South Dakota International Business Conference, Rapid City, SD. September 29- October 01, 2011.
Kempaiah, R. (2017). IT-business Alignment: Analysis of Service Industry and Global Benchmarking – ABR conference in New Orleans, LA, USA.Spring 2017.