Exploratory Study on Alignment Between IT and Business

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Gadjah Mada International Journal of Business - May-August, Vol. 14, No. 2, 2012

Exploratory Study on AlignmentBetween IT and Business Strategies

Wahyuni ReksoatmodjoFaculty of Engineering, Universitas Gadjah Mada, Yogyakarta, Indonesia

Jogiyanto HartonoFaculty of Economics & Business, Universitas Gadjah Mada, Yogyakarta, Indonesia

Achmad DjunaediFaculty of Engineering, Universitas Gadjah Mada, Yogyakarta, Indonesia

Hargo UtomoFaculty of Economics & Business, Universitas Gadjah Mada, Yogyakarta, Indonesia

Gadjah Mada International Journal of BusinessVol. 14, No. 2 (May - August 2012): 139 - 162

Corresponding authors. E-mail: [email protected]

ISSN: 1141-1128http://www.gamaijb.mmugm.ac.id/

Abstract: Interaction and linkages between business and information technology (IT) strategies remain aprimary concern among executives. This study aims to gain an in depth understanding of how companiesachieve alignment and the policy framework that underlies the efforts, particularly those that are as-sociated with the most dominant factor that contributes to the establishment of strategic alignment,namely IT infrastructure flexibility. For that purpose, the study explored four companies engaged in thefield of oil, electricity, and communication by adopting interpretive case study.

Data were gathered using triangulation methods via field interviews, artifacts, document analysis, as wellas direct observation. The textual data were elaborated by an intentional analysis in order to guide thestudy in exploring the phenomenon. The study identified elements that reflect IT infrastructure flexibilitiesnamely connectivity, compatibility, modularity, IT staff knowledge and skills, and integration. Those ele-ments cover both technical and behavioral dimensions of a company’s components that need to beincluded in the consideration during the planning phase

Abstrak: Keselarasan antara strategi bisnis dan strategi teknologi informasi (TI) tetap menjadi perhatianutama para eksekutif. Penelitian ini bertujuan untuk memperoleh pemahaman mendalam tentang bagaimanaperusahaan mencapai keselarasan dan kerangka kebijakan yang mendasari upaya, terutama yang berkaitandengan faktor yang paling dominan yang memberikan kontribusi terhadap terwujudnya keselarasan strategis,yaitu fleksibilitas infrastruktur TI. Untuk tujuan tersebut, penelitian ini meneliti empat perusahaan yangbergerak di bidang minyak, tenaga listrik, dan komunikasi dengan mengadopsi pendekatan studi-kasusinterpretatif.

Data dikumpulkan dengan menggunakan metode triangulasi melalui wawancara lapangan, artefak,dokumen analisis, serta pengamatan langsung. Data tekstual dijabarkan dengan mengadopsi pendekatananalisis intensional untuk memandu penelitian dalam mengeksplorasi fenomena keselarasan strategis dalamperusahaan. Studi ini mengidentifikasi unsur- unsur yang mencerminkan fleksibilitas infrastruktur TI yaitu

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konektivitas, kompatibilitas, modularitas, pengetahuan dan keterampilan staf TI, dan integrasi. Unsur-unsur tersebut memiliki dimensi baik teknis maupun sosial yang perlu dimasukkan dalam pertimbanganselama fase perencanaan strategi perusahaan.

Keywords: compatibility; connectivity; integration; IT infrastructure flexibility; knowledge andskills of IT staff; modularity; strategic alignment

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Introduction

Strategic alignment of informationtechnology (IT) and business strategy hasbeen the focus of attention by IT executives,and has always been the top concern of ITmanagers for almost 30 years; in the lastseven years it has been either the first or sec-ond most important topic (Luftman and Ben-Zvi 2010). Alignment of IT - business strat-egy (commonly abbreviated to alignment) isthe implementation of IT applications cor-rectly, timely, and in harmony with businessstrategies, goals and company needs (Luftman2003). Prior studies indicated that require-ments for alignment are a challenge becauseof the many perspectives and the require-ments that have emerged, depending on thebackground and purpose of each research.

Some statements concerning how align-ment is achieved are (a) IT functions are de-veloped according to business objectives(Mckaway et al. 2009); (b) business strate-gies are driven, supported, and enabled by theIT strategies (Broadbent and Weill 1997); (c)consistent business objectives and activitiesof IT-based companies (Woolfe 1993); and(d) company should give priority to IT projectsthat lead to conditions that allow contentsand IT planning process dimensions to be-come mutually complementary (Das et al.1991); and (e) IT is able to contribute to theachievement of company objectives at alllevels (Lederer and Mendelow 1989). Theimportance of alignment has been observedby several authors including Sambamurty andZmud (1999); Luftman (2000); and Chen andHuang (2010), while the positive effects ofalignment on a company’s performance was

summed up by, among others Tallon et al.(2000); Papp (2001); Cragg et al. (2002); andButchii and Steyn (2008). Nevertheless, inorder to achieve alignment, companies needto pursue a comprehensive and sustained ef-fort (Lederer and Mendelow 1989; Luftman2003; Chung et al. 2003; and Elhari andBounabat 2011), and also need to considerthe social and intellectual aspects of organi-zation (Reich and Benbassat 2000).

More recent studies indicated a shifttoward research themes showing the influenceof IT infrastructure flexibility on strategicalignment. To some point, previous studiesagreed that IT infrastructure flexibility is a keyto success of achieving alignment, as ex-pressed by Weill et al. (2002); Luftman (2003);and Chung et al. (2003); Butchii and Steyn(2008); Chen and Huang (2010); as well asElhari and Bounabat (2011). The concept ofIT infrastructure flexibility derives from a needto have IT infrastructure that are manage toface the rapidity of technology changes(Tallon and Kraemer 2003; Chen and Huang2010).

Following Duncan (1995), previousstudies indicated that IT infrastructure flexi-bility is determined by four characteristics,namely connectivity, compatibility, modu-larity of IT infrastructures, and the know-ledge and skills of IT staff. By adopting a casestudy as a research design this current researchfur ther investigated IT infrastructureflexibilities and their contribution to the de-velopment of alignment. Research by Luftmanand Ben-Zvi (2010) concluded that the align-ment has persisted as a topic of discussion bytop managers as presented in Table 1.

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Surveys carried out by Luftman et al.(2005), and Chan and Reich (2007) showedthat alignment remains an impor-tant issueover the past two decades. Therefore, it isthe duty of researchers to conduct explora-tion on the alignment as well as a variety ofperspectives that can be drawn from thealignment in order to reveal how to build andimplement the learning outcomes.

Research Objectives andBenefits of this Research

The purpose of this study is to developan in-depth understanding of company poli-cies in their attempt to achieve alignment.Confirmed by the conclusions of previousresearchers, it is now clear that the flexibilityof IT infrastructure have the strongest influ-ence on the alignment, therefore the effortof this study will be focused on the charac-teristics of flexible IT infrastructures. Ben-

efits that can be learned from this study in-clude,

a) a deep understanding of the phenomenonand a description of how companies de-veloped alignment,

b) lessons-learned can be used as a bench-mark for other companies to create align-ment, and

c) description of the property of IT infra-structures characteristics can be used asa consideration in a decision making pro-cess regarding national policy on IT, there-fore the public can also benefit and enjoythe good service of the companies thathave adopted alignment concept.

In contrast to the previous studies thatquestion the relationship between the com-ponents of the alignment of IT infrastruc-tures flexibility (Duncan 1995; Tallon et al.2000; Byrd and Turner 2000), this study isfocused on:

Table 1. Top ten IT Management Concerns (Luftman and Ben-Zvi 2010)

IT management concerns 2009 2008 2007 2006 2005 2004 2003

Business productivity and cost reduction 1 7 4

IT and business alignment 2 1 2 1 1 1 1

Business agility and speed to market 3 13 17 11 5 10 10

Business process re-engineering 4 18 15

IT cost reduction 5 7 4

IT reliability and efficiency 6

IT strategic planning 7 3 8 4 4 4 2

Revenue-generating IT innovation 8

Security and privacy 9 8 6 3 2 3 3

CIO leadership roles 10 16 10

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a) Alignment between IT strategy and busi-ness strategy and the company efforts toachieve the condition.

b) Characteristics of IT infrastructureflexibilities that are believed to enablealignment, and how the company devel-ops the infrastructures.

This study differs from previous stud-ies in that knowledge of why alignment isneeded in a company as observed by Tallonet al. (2000); Hussain et al. (2002); Tallon(2009), and Chan and Huang (2010) is notthe same as the knowledge of how a com-pany achieves alignment. This study also dif-fers from previous studies based on the factthat in previous studies, the presence or ab-sence of relationship between IT infrastruc-ture flexibility and IT alignment, as observedby Duncan (1995); Tallon et al. (2000)l; Byrdand Turner (2000); and Ness (2005), did notshow how flexibilities of IT infrastructurescontribute to the success of achieving align-ment.

Literature Review

Alignment Concept

Information obtained from literatureindicated the presence of several conceptsof alignment which, according to Knoll andJarvenpaa (1995), can be classified as havinga natural-selection, interactions, or mul-tivariate approach. Of the three categories,Knoll and Jarvenpaa (1995) stated that themultivariate approach is the most completeconcept. This approach embraces the conceptof equifinality - that there are many differentequally effective combinations of organiza-tional variables to achieve alignment. Amongthe most comprehensive works on the con-cept of multivariate approach are those of

Critical Success Factor (Rockart 1979), ValueChain Analysis (Porter 1985), and StrategicAlignment Model (Henderson andVenkatraman 1992). The concept of Strate-gic Alignment Model, or SAM) of Hendersonand Venkatraman (1992), has been viewedas the most widely accepted, most widelyimplemented in practice, and most widelyreferenced in many studies (e.g. Pant and Hsu1999; Tallon et al. 2000).

Strategic Alignment Model

The Strategic Alignment Model (SAM)can be defined as a business-IT managementframework to enable successful implementa-tion of business and IT, and their correspond-ing infrastructures components (Hendersonand Venkatraman 1992). The SAM model (il-lustrated in Figure 1), represents the dynamicalignment between the business strategic con-text and the IT strategic context and is de-fined in terms of four fundamental domainsof strategic choices that consist of: businessstrategy, IT strategy, organizational infra-structures and processes, and informationtechnology infrastructures and processes.

Each of the four domains has its ownunderlying dimensions that consist of threecomponents, yielding in all twelve compo-nents that further define business-IT strate-gic alignment. Each domain can be outlinedas follows:

1. Business strategy: involves all choices thatposition the company in the (global) mar-ket. It also defines the way in which thecompany realizes competitive advantage.

2. IT strategy: involves all choices that po-sition the firm in the (global) IT market.

3. Organizational infrastructures and pro-cess: Defined as the choices that deter-mine the internal arrangement of the firmin order to execute the business strategy.

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4. IT infrastructures and process: Definedas the choices that determine the arrange-ment of IT. It defines how the companyexecutes the IT strategy.

The strategic alignment model identi-fies two types of integration between Busi-ness and IT domains. The first integration iscalled strategic fit, the second is functionalintegration. According to Henderson andVenkatraman (1993), the former recognizesthe need for any strategy to address both ex-ternal and internal domains. The externaldomain is the business arena in which the firmcompetes and is concerned with decisionssuch as product-market offering and the dis-tinctive strategy attributes that differentiatethe firm from its competitor. In contrast, theinternal domain is concerned with choices per-taining to the logic of the administrativestructure (functional or divisional or matrix

organization) and the specific rationale for thedesign and redesign of critical business pro-cesses (Henderson and Venkatraman 1993).

Perspective of the SAM

Henderson and Venkatraman (1993),argued that the Business and IT strategy aresaid to be aligned, when a strategic fit hasbeen realized, and functional integration isreached. Furthermore, alignment requires abalance to be achieved across all four domains.To provide this balance, Henderson andVenkatraman presented four generic alignmentperspectives (illustrated in Figure 2).

Each perspective consists of three com-ponents, which show an interplay amongthree key domains shaping a form of a tri-angle.

Figure 1. Strategic Alignment Model (Henderson and Venkatraman 1992)

BusinessScope

DistinctiveCompetencies

BusinessGovernance

TechnologyScope

SystemizedCompetencies

ITGovernance

AdministrativeStructure

Process Skills

ITArchitecture

Process Skills

Business Strategy IT Strategy

Organizational Infrastructure IT & Process Infrastructure

B u s i n e s s

Inte

rna

l

I T

St

ra

te

gi

c

Fi

t

Ext

ern

al

Funct ional Integrat ion

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The components in the triangle are an-chor, pivot, and area of impact. The anchorrepresents the strongest area of the business.It directs the change that business goesthrough established alignment perspective.The pivot represents the weak area that issubjects to change through the realignment,whereas impact represents the area that willbe directly affected through the changes madein the pivot area through realignment.

Henderson and Venkatraman (1993) de-scribed the four alignment perspectives indetail as follows:

Technology potential focuses on assessmentof implementing the chosen business strat-egy through the appropriate IT strategy. Thisperspective seeks to identify the best possibleIT competences. Senior business managers de-vise the vision whilst the senior IT manage-

ment provides the technical architecture ser-vices.

Strategy execution, describes that the busi-ness strategy is the sole driver of all domains– adopting the more classical view of ITstrategy development. The strategy is formu-lated by senior business managers and imple-mented by IT senior management.

Competitive potential is concerned with theexploitation of IT to deliver strategic capa-bilities. It allows for the adaptation of thebusiness strategy through IT capabilities. Se-nior business managers devise the visionwhilst senior IT managers act as catalysts. Andservice level concentrated on how to build aworld class IT service organization. The lastperspective called business strategy is viewedas being indirect and is to stipulate customerdemand only. The role of senior business

Figure 2. Perspective of Strategic Alignment Model

BusinessStrategy

ITStrategy

BusinessStrategy

ITStrategy

OrganizationalInfrastructure

IT & ProcessInfrastructure



BusinessStrategy

ITStrategy

BusinessStrategy

ITStrategy





Technolog y Potent ia l Service Level

Strategy Execution Competitive Potential

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management is to prioritize whilst the seniorIT management is one of leadership.

It can be noticed that by adopting oneperspective involving cross-dimensionalalignment (triangles), both strategic fit andfunctional integration are included intocompany’s consideration (Henderson andVenkatraman 1992).

Factors that Influence andInhibit IT-Business Alignment

Literature on alignment also shows anagreement among researchers that the pri-mary function of IT within the company isno longer as a provider of automation, butrather functions to assist the company’s ef-forts to re-engineer the business process inorder to improve work performance and gain-ing the company competition. To achievethese objectives Sambamurty (2000) sug-gested that the company should adopt theconcept of alignment. Researchers who have

the same perception as Sambamurty (2000)are presented in Table 2.

Previous studies which examined theaffecting factors toward alignment conditioncan be grouped into two categories, the firstcategory examines the most important fac-tors that encouraged alignment (includingKnoll and Jarvenpaa 1995; Smith et al. 2007;these are presented in Table 3.

The second category scrutinizes the fac-tors that inhibit alignment. Lack of commu-nication between business and IT managersfor instance, can lead business managers tobelieve in their own ineptness in terms oftechnical activities, and IT managers assertthat it is natural if they do not have notionof business and investment planning. If thishappened then the company would sufferfrom an alignment gap, or differences be-tween the goals of developing applicationswith the management of IT operations.

Table 2. Summary of the Effect of Alignment of the Company

Perception of Alignment in Companies Authors

Have a greater effect to increased the company’s Sambamurty (2000); Sabherwal andperformance work Chan (2001); Sabherwal and Kirs

(1994); Croteau et al. (2001)

Have a positive impact on the effectiveness of IT Chan and Huff (1993); Tallon et al.companies and lead to improved performance at work. (2000)

Is a better predictor of a company performance,and will be reflected in the company’s IT Chan et al. (1997)infrastructures.

Affects performance of companies that adopted Sabherwal and Chan (2001)prospector and analyzer type of strategy.

Is a positive and significant predictor to the potentialability of the company’s IT infrastructures, and has (Xia and King 2002).a direct impact on overall company performance

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Table 3. Factors Influencing IT-Business Alignment

Factors that Encourage Authors

IT is supported by Senior executive Luftman et al. (1999); Kim (2003)

Knoll and Jarvenpaa (1995); Duncan (1995);Luftman (1996); Chan et al. (1997); Byrd etal. (2000); Papp (1999); Bhatt and Grover

Flexibility of IT infrastructures (2005); Kanellis and Paul (2005); Chung et al.(2003); Gerbauer and Schober (2005);Overby et al. (2006); Bond et al. (2006);Chanopas et al. (2006); Smith et al. (2007).

High quality of information Kearns and Lederer (2001); Andersen (2001)

Historical of IT success Van der Zee and De Yong (1999); Reich andBenbasat (2000)

Equality between the business with IT Jahng and Rammamurty (1998); Luftman andBrier (1999)

Reich and Benbasat (2000), Van der Zee andDe Yong (1999); Luftman et al. (1999);

Communication/interaction among Luftman and Brier (1999); Reich andbusiness managers with IT Benbasat (2000); Kearns and Lederer (2001);

Andersen (2001); Kim (2003); Wagner et al.(2006)

The breadth of the IT opportunities to Van der Zee and De Yong (1999)participate in business planning

Priorities for IT infrastructures projectscompany provide channels for open Luftman and Brier (1999)communication between IT – businessdepartments

Wagner et al. (2006)IT understands the business needs Reich and Benbasat (2000); Reich andKnowledges accessibility Benbasat (1996); Andersen (2001); Kim (2003)

Information System Planning based on IT Kearns and Lederer (1997)

Luftman and Brier (1999); Luftman et al.High competence of IT department staff (1999); Jahng and Rammamurty (1998);

Wagner et al. (2006)

Effort to periodically reevaluate priorities Jahng and Rammamurty (1998); Smith et al. (2007).

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The concept of alignment gap hasemerged due to the fact that there are twoseparate organizational units in any organi-zation, normally the IT department, which isresponsible for IT activities and the businessdepartment, that has led to the appearanceof the gap between IT functions and busi-ness activities.

IT function generally refers to the indi-viduals who provide IT services to the com-

pany. These individuals are usually highlyskilled IT professionals, who have a certainamount of knowledge and experience in soft-ware engineering and technical aspects ofcomputer hardware and software systems, andwho carry out a variety of tasks to deal withthe IT requirements of the firm. A few ofthe functions of the IT professionals may in-clude design, implementation, and mainte-nance of the software programs, including

Table 4. Factors that Inhibiting Alignment and Lead to Alignment Gap

Inhibiting Factors Authors

IT department doesn’t have staff andleadership that is able to communicate and Norton (2002); Luftman et al. (2002)share knowledge with other departments

IT is too complex and costly to be adopted Luftman et al. (1999); Broadbent (2004);Wagner et al. (2006)

IT priorities are not aligned with business Norton (2002); Chase (2002); Rathnam etpriorities al. (2005); Luftman et al. (1999)

Lack of communication between the IT – Wagner et al. (2006); Banham (2002);business department Rathnam et al. (2005); Luftman et al. (1999)

Limited attention from the department of Broadbent (2004); Wagner et al. (2006);IT in business strategy development process Rathnam et al. (2005)

No senior executive support for IT Luftman et al. (1999)

Staff and managers of the company have only Majali and Dahlin (2010); Rathnam et al.a limited perspective toward the corporation (2005); Broadbent (2004)

IT is not involved in the development of Chase (2002); Banham (2002); Luftmancorporate strategy et al. (1999)

The absence of share meanings of key wordsand terms to establish the concept of Rathnam et al. (2005); Norton (2002)business -IT strategy

The staff and employees do not understand Luftman et al. (1999); Majali and Dahlinthat information technology has a much better (2010); Luftman et al. (2002); Norton (2002)potential than simply reducing costs

There is no accepted business strategy Rathnam et al. (2005); Norton (2002)framework

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data processing (Luftman et al. 1993). Thegap started to occur when these two groupswere involved in discussing problems and so-lutions using their exclusive terms and jar-gons.

Tallon and Kraemer (2002) warn thatalignment gaps can still occur even thoughthe company had already done the inte-gration between IT strategies and businessstrategies, but because the business is con-ducted without the adequate articulation orclarification of the characteristics of the align-ment, the alignment gap is not resolved. Re-search and discussions about factors that in-hibit alignment and why an alignment gappersists (including Norton 2002; Banham2002; Chase 2002; Broadbent 2004; Majaliand Dahlin 2010) and the summary is shownin Table 4.

IT Infrastructures andCharacteristics of Flexibilities

It can be inferred from Table 3 that theflexibility of IT infrastructures is the mostimportant factor that encouraged alignmentproposed by the researchers, therefore furtherdiscussion will focus on these factor. Byadopting the definition developed by Byrd andTurner (2000), that IT infrastructures is a dis-tributed component that consists of physicalfacilities such as hardware, software, commu-nications technology, data, major applica-tions, as well as components of personal skillsand knowledge combined to develop IT ser-vices that are generally unique to the com-pany, this study conducts a further explora-tion of the characteristics of the elements offlexibility, its functionalities, role towardalignment, and the considerations for its de-velopment.

Previous studies indicated that IT in-frastructures flexibility is determined by four

characteristics, namely connectivity, compat-ibility, modularity of IT infrastructures, andthe knowledge and skills of IT staff. Con-nectivity links the various components of thecompany, thus allowing the information tobe accessed from various locations. Com-patibility creates the company’s ability to har-ness together all forms of internal data andinformation, making it accessible to all par-ties regardless of their geographical location.Modularity means that the IT infrastructuresis built on several components that interactwith each other. Knowledge and skills of ITstaff, reflects the knowledge and skills of staffwho are able to utilize various forms of tech-nology, are experienced in management andbusiness, and are able to work cooperativelywith everybody and from all departments ofthe company.

Based on these studies, a research ques-tion concerning how companies achieve andmaintain alignment, and how IT infrastruc-tures play a role in realizing alignment can beproposed. Implied in these questions are thewhy questions, leading to the following re-search question: How do characteristics ofconnectivity, compatibility, modularity of ITinfrastructures, as well as knowledge andskills of IT staff contribute in achieving thecompany’s strategic alignment.

Research Methods and DataAnalysis

Research Methods

Observing the history of research in thefield of information systems, Mingers (2002)noted that prior to the 1980s quantitative-positivist paradigm dominated the articlesthat reported the results of the author’s study.But after the 1980s, there emerged a group

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of studies based on different paradigms, someof which implement a qualitative-interpretiveparadigm. The argument was based on thefact that the paradigm has a high sensitivityand appropriate for an in-depth examinationof decision making toward the phenomenaencountered in the study. In its application,it offers some research procedures which pro-duce descriptive data in a form of words bothwritten and oral from various sources ob-served. These data, according to Denzin andLincoln (2000), should arrive from observa-tion of a phenomenon “in a natural setting”with the intend to “make reasoning or inter-pretations of the phenomenon with the ter-minology that has meaning/purpose in accor-dance with what is desired by the perpetratorin the phenomenon.”

From the stand point of epistemology,Chua (1986) developed an epistemology clas-sification by mentioning three approaches,namely positivist, interpretive and criticalapproach, and all are valid to be adopted inqualitative research. In the interpretive re-search, researchers combined the results oftheir own subjective opinion, considering thereality as a social product that can not beunderstood independently of social actors(including researchers), who are also “build-ers” and who influenced the design of thesubject of studies (Myers 1997).

A research method is a road map to getan answer that begins with the basic philo-sophical assumptions to the study design anddata collection (Myers 1997). And there areseveral methods of research that can be usedin interpretive research (Brechin and Sidell2000) including case-study, action-research,and ethnography. This study was limited byspace and time therefore an ethnography ap-proach or method which requires researchersto assimilate into the firms studied for a rela-tively long time was impossible. This study

was also not intended to give a treatment tothe observed companies, therefore an action-research was not the right choice. Instead, theaim of this study is to develop an in-depthunderstanding of contemporary issue, basedon “how” and “why” question, and conductedat the company’s natural setting for explor-ing a phenomenon under study, therefore casestudy as a research design (Yin 2003) was ap-propriate to be adopted. Components of casestudy (Yin 2003) are presented in Table 6.

Data Analysis

There are various approaches to quali-tative data analysis, with some being moresuited to certain situations than others (Lacityand Janson 1994). Lacity and Janson (1994)cited some general approaches to text analy-sis with each being dependent on assump-tions, to include the role of the researcher.Alternatives available to conduct an analysisof interpretive research data is hermeneuticand intentional analysis (Lacity and Janson1994). Hermeneutic presumed that the inter-preter had come from a different era with theauthor therefore is not appropriate for a con-temporary text data. Instead, this study ap-plied intentional procedures to analyze thedata.

Intentional analysis is appropriate forunderstanding the intentions of participantsobserved during interviews, especially whenresearchers have some traits in common withthe participants, such as age, live in the sameculture, or speak the same language. The in-tentional analysis was done in four steps: (1)parsing, filtering, editing, and summarizingdata, (2) interpretation and tabulation of datawhich made data easily combined/compared,(3) identification of themes for the develop-ment of interpretation, and (4) abstractionof the essence of the text.

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The results of the intentional phase thenunderwent some subsequence interpretationto arrive at the conclusion of the study. Par-allel with intentional steps is an attempt to(1) determine the categories, definitions, andthe level of abstraction of all policies, (2)formulate inductive research facts into cate-

gories according to the definition of catego-ries and abstraction, which is done step-by-step, and (3) classify the existing category orestablish new categories (Lacity and Janson1994). All of the analysis stages were per-formed in the context of “within-case analy-sis” and “cross-case analysis.”

Table 5. Case Study Components

Components Descriptions

Context: Information Systems

Research Questions How can strategic alignment be achieved. This answer will be an-swered by examining how the various characteristics of IT infra-structures flexibility components contribute to the strategic align-ment.

Boundary of the study Characteristics of IT infrastructures, the elements of the character-istics, descriptions about elements and various features as an alter-native to develop each element. Based on literature review, thesecharacteristics will include (but not limited to), connectivity, com-patibility, modularity, knowledge and skills of IT staff.

Unit analysis Strategic alignment (holistic)

Type of the case study Multi-case

Number of cases Four cases: 1. PLN Kantor Distribusi Jawa Tengah and DIY, locatedat Semarang as a pilot (Disjateng).

2. PLN Kantor Distribusi Jawa Timur, Surabaya(Disjatim).

3. PT Indosat Tbk, Jakarta (Indosat).4. PT Pertamina, Jakarta (Pertamina).

Case selection criterias: With the literal replication as a consideration, each case is choosenbased on the following reasons:1. Willing to be accessed with Strategic-Alignment tools of mea-

surements2. Implementing or in the proccess of developing IT Master Plan.In order to achieve richness of data to be collected and analyzed,each case is chosen based on the following criterias:

1. First case: a company that is still struggling to consolidate andintegrate its IT systems and applications.

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The result of the preliminary analysisindicates the fact that all cases achieved align-ment by providing flexible IT infrastructure,and the decisions taken by the companies canbe grouped into four categories that focus onfour characteristics of IT infrastructures flex-ibility. However, further analysis showedsome indications that a new category, calledintegration, can be derived from two charac-teristics namely connectivity and compatibil-ity. Thus, after all the evidence was analyzed,the study revealed the existence of the fourcharacteristics of a flexible IT infrastructure,that have been indicated by previous litera-ture, namely connectivity, compatibility,modularity, and the knowledge and skills ofIT staff. Furthermore, this study proposes anadditional characteristic, namely the integra-tion of IT infrastructure to enhance the prop-erty of IT infrastructures characteristics.

Result Findings andDiscussion

The findings of this study can be illus-trated in the form of a fishbone diagram (pre-sented in Figure 3). As illustrated in Figure3, there are five main bones that representthe five components of characteristics of ITinfrastructures flexibilities: connectivity, com-patibility, modularity, integration, and theknowledge and skills of IT staff, and all to-gether boils down to provide the characteris-tics of flexible IT infrastructures. The infra-structures then drain its potential to supportalignment.

Each component is built by a numberof capabilities that side-by-side will build thecharacter of a flexible IT infrastructures.Connectivity is supported by the capabilitiesof linking all components, providing acces-

Components Descriptions

2. Second case: a company that won the annual award of the bestIT implementor and in the middle of expanding its IT systems.

3. Third case: a big company with communications as the main com-modity.

4. Fourth case: a big oil company

Data analysis: Intentional analysis

Interpretation of the Besides providing contextual information, a number of criterias forfindings: IT infrastructures flexibility from previous studies also assisted the

interpretation of the findings

Data collection Data collection was conducted by means of:strategies: Structured and semi-structured interview, documentations,

Direct/indirect observations, physical artefact observation.

Table 5 (Continued)

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sibility, serving multiplatform, and distributeinformation with a wide range. Compatibil-ity is supported by the capabilities of sharedresources, provide ready-made information,expanding organizational boundaries, andtransporting data. Modularity gives support ina form of the ability to easily and quickly con-structed/reconfigured. Integration charac-teristic has the capabilities in a form of pro-cess integration and data integration. Further-more, the IT staff contribution is in a formof knowledge and skills concerning informa-tion technology, technology management,business and interpersonal relationships.

As mentioned earlier, flexibility of ITinfrastructures has a dominant share in real-izing, improving, and maintaining alignment

because alignment requires compatibility andharmonious relationship between businessstrategies and IT strategies. This means thatwhen business strategies have to be alteredby the demands of corporate environments,the IT strategies have the capabilities to bepromptly compensated, a condition that willonly happen if the IT strategies are supportedby a flexible IT infrastructure.

The lessons learn from the case studyare in line with statements expressed by Weillet al. (2002) as well as Chung et al. (2003)that IT strategies have the ability to changeeasily and quickly only when IT infrastruc-ture is flexible, and that the flexibility of theIT infrastructure is one of the most impor-tant components of alignment due to a flexi-

Figure 3. Flexible IT infrastructures and Strategic Alignment

Flexible IT

InfrastructuresStrategicAlignment

Fast & easydevelopment

Low-coupledmodules

Componentsbasedsystem

Modularity

IntegrationCompany’sBusiness

Fast & easyrecognition

Highly ITliterate

Interpersonalskills

Technologymanagement

Processintegration

Dataintegration

Con

nect

ivity

Com

patib

ility

Multiplatforms

Highaccesibilities

ConnectingIT components

High speedtransferabilities

Informationreadiness

Resourcesharing

Bordelessorganization

Datatransferabilities

Widecoverage

Know

ledges & skills

of IT staffs

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ble IT infrastructure, the implementation ofthe various types of applications in the en-terprise can be built and modified quickly andeasily.

Likewise Tallon and Kraemer (2003) intheir article, drew two main conclusions fromtheir observations, that a company with highflexibility IT infrastructure realized thesustainability of alignment, and the companycan use the flexibility to achieve a higher de-gree of alignment.

As discussed earlier, there are five maincomponents of IT infrastructures flexibilitycharacteristics, with one of them, namely in-tegration, are the findings of this study. Theother four components are the connectivity,compatibility, modularity, knowledge andskills of IT staff. All components contributeto the flexibility of IT infrastructures in aholistic manner, which then drain its powerto realize the strategic alignment. Table 6 pre-sents characteristics of the flexibility IT in-

Table 6. Flexibility Characteristics of IT components Infrastructures

Components

(1)

Connectivity

Compatibility

Modularity

Main Functions/Features

(2)

1. Enable connection of all ITcomponents

2. High accessabilities3. Wide coverage4. Multiplatform operations5. High speed information

transferabilities

1. Enable provision of resourcessharing

2. Provide borderless organization3. Provide readyness information4. Enable transformation of data

1. Components based IT infra-structures

2. Low-coupled interelationbetween components

3. Quick and easy to be developed4. Quick and easy to be

reconfigured

Effort to be Taken

(3)

1. Developing internet andmultiplatform architecture based ITinfrastructures

2. Implementing web-based applica-tion systems

3. Developing centralized managementand maximizing standardization

4. Consolidating server/storage

1. Adopting middleware technologies(XML, DDP, and GML forgeospacial data)

2. Implementing standardized-XMLand web-based EDI

3. Encouraging open-standard4. Encouraging consolidation5. Implementing real-time, online,

multi-user database

1. Implementing software engineeringconcept such as formal methods,object-oriented, and softwareconfiguration management todevelop and maintain softwareapplications

.2. Developing client-server databasearchitectures

3. Adopting data-independencyconcepts

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frastructures components (shown in column1), functions/features as the principal com-ponents that emerged from the data collec-tion process are shown in colomn 2. Whereasdecisions made by the companies to achievethe presence of the function/characteristicsare presented in column 3 (Table 6).

Conclusion and Implications

This study aimed to build an in-depthunderstanding of strategic alignment, an im-portant organizational aspect in the contextof Information Systems field of study, byapplying the qualitative-interpretive casestudy approach. Data was analyzed by adopt-ing texts analysis by means of intentionalanalysis. Besides providing contextual infor-mation, a number of criterias for IT infra-

structures flexibility from previous studiesalso assisted the interpretation of the find-ings.

Conclusion

The main conclusion of this study is thatirrespective of the company’s perspectives ofalignment and their business typicality, allcases have the same indication of policy toachieve alignment, which is to provide flex-ible IT infrastructures. Perspective of the caseis “a fusion of infrastructures” for Disjateng,“competitive potential” for Disjatim andIndosat, and “technological potential” forPertamina. Disjatim and Disjateng are com-panies that provide services in the fields ofelectrical energy, while Indosat and Pertaminaare in the field of communications and oilrespectively. In terms of IT utilization,

Components

(1)

Integration

Knowledges and skills

Table 6 (Continued)

Main Functions/Features

(2)

1. Enable data integration2. Enable process integration

1. Provided with knowledges andskills to manage IT as a system

2. Provided with interpersonalknowledges and skills

3. Provided with knowledges andskills to insight company’sbusiness

4. Highly IT literat

Effort to be Taken

(3)

1. Developing high accessability andwide range IT infrastructuresnetworks to provide data/audio aswell as multi-media communicationchannel

2. Implementing real-time, online, andweb-based application systemssupporting with centralized andstandardized database architecture

1. Providing and encouraging staff toconduct self-exploring

2. Encouraging staff to pursue highereducation

3. Creating interdepartemental andsustainable training projects

4. Encouraging staffs involvement in anIT decision making process

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Disjateng are in the process of consolidationand integration work, while three other casesalready at the stage of expansion.

IT infrastructures flexibilites developedby each case were constructed by five com-ponents characteristics of flexibility, and theresults of this exploratory research is also leadto conclusion that strategic alignment requiresthe synergy of all these characteristics simul-taneously. These are conditions where a com-pany provides IT infrastructure with somecrucial capabilities such as easily expandedor reconfigured according to the changing ofbusiness strategies quickly and effortlessly.Analyzing the case indicated that the charac-teristics of IT infrastructures flexibility thatcould encourage companies in developing andmaintaining alignment have the followingdescriptions:

1. Connectivity. Connectivity of IT infra-structures is the infrastructures capabilityto meet the demand of connections be-tween staffs, functional areas, or applica-tions, covering both inside and outside thecompany, and that each entity can makesome interactions with each other. As aresult, cross-communi-cation can be pro-vided and that user can utilize and shareinformation regardless of organizationalboundaries. These conditions allow re-sponses to changes from within and out-side company be obtained rapidly.

2. Compatibility. Compatibility of IT infra-structures is the ability of company toshare all components of IT infrastructuresby all entities within the company with-out having to own the technology (plat-forms and/or equipment access) that areexactly equal to the one operate by thecompany. Compatibility creates more em-powered employees, and provides all dataand information used as a basis for deci-

sion making be prepared quickly and ac-curately.

3. Modularity. Modularity is the ability of theIT infrastructures components to be de-veloped or modified into new forms orconfigurations in order to meet require-ments initiated by the business. IT infra-structures with a high level of modularityis the IT infrastructures that requires lessertime and efforts to respond to any changesin business strategies.

4. Knowledge and skills of IT staff. Know-ledge and skills that contribute to the flexi-ble IT infrastructures is related to theability of the staff to work cooperativelyin a group of cross-sections, using vari-ous technologies thereby expanding its or-ganizational boundaries, and to help com-panies in dealing with changes, whetherfrom internal or external companies.

5. Integration. Flexible IT infrastructure ca-pable of integrating important data andprocesses in supporting the availability ofinformation that is ready to be exploitedin order to speed up decision making andtransfer of information from one locationto another. Integration in this study canbe viewed as the synergy of connectivityand compatibility capabilities.

Research Weakness andLimitations

As with all academic work, this studyhas limitations which can be avoided in fur-ther studies. First of all, this study didn’t showthe process that brought the case to the policy-making related to building and maintainingcompany’s flexible IT infrastructures. Second,the study didn’t elaborate the acquisition ofIT infrastructures flexibility to support theirinvolvement in achieving strategic alignment.Another limitation has something to do with

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the method choosen to conduct the study.This study adopted a case study on four com-panies only. This short list of involved com-panies may not reflect the actual situation forother Indonesian companies. Four companieswere only chosen due to the time and accesslimitations. However, the chosen companiesrepresent three different industries. Lastly,although it can be considered to be a specificlimitation, when the results of research thatadopts a case study, it is necessary to be pru-dent if one intends apply it to other compa-nies with different conditions and typicality.

Contributions of the Study

This study identifies flexible IT infra-structure as dominant factors that contrib-ute to achieving strategic alignment. In addi-tion, this study also described the character-istics of five components of IT flexible in-frastructures including integration –a charac-teristic proposed by this research. Integrationcan be exploited in the future study as researchconstruct in a sense that it could eliminateanother characteristics (eg, connectivity andcompatibility).

The analysis indicates that companieswith flexible IT infrastructures are likely tohave centralized IT decision-making in na-ture. Centralzation was imposed both for de-cisions related to IT strategy and infra-structure’s policies. Based on the implicationsof strategic alignment to the company (suchas improving performance and competitiveadvantage), the world required more exten-sive research in the areas of strategic align-ment and the conditions that support or in-hibit the alignment. Some research topics thatcan be further explored, among other thingsare:

1. Theory testing. It is worthwhile to exam-ine the relationship between strategic align-ment with the implementation of IT ap-plications and infrastructures flexibility.How could the implementation of theapplication and the five components ofIT infrastructures flexibility contributes tostrategic alignment be tested?

2. Theory modification. Technology changesvery quickly, and it is possible for one ofthe IT infrastructures components or char-acteristics that were explored in this studyhad a different emphasis in the future.Such research needs to be done because itallows the emergence of a new character-istic components of IT infrastructuresflexibility or new policy implications thatlead to the management of IT infrastruc-tures in more effective/efficient and increating and maintaining strategic align-ment.

3. Extending the case. Another area of re-search that can be selected by the research-ers to deepen the understanding of strate-gic alignment is to determine differentcomponents of the case study and exam-ine whether there is a common factor inthe case being studied. Furthermore, theselection of cases can also be determinedbased on the same industry, similar govern-ment agencies, or companies with a cate-gory of small/medium size to observe howcompanies, organizations, or institutionspursuing strategic alignment.

4. Alignment gap identification. Alignmentgaps can be the next alternative of researchtopics that need to be focused on in orderto gain an understanding of strategicalignment. The prior studies had indicatedthe existence of alignment gaps and tried

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to resolve the problems. However, due tothe dynamic progress in terms of techno-logical and environmental conditions, it isnecessary to identify whether these obser-vations are still appropriate.

Management Implications

Managers can utilize the research resultsto develop a more comprehensive action planto achieve or enhance strategic alignment,and also to translate the alignment in orderto increase the role of IT in business perfor-mance. One alternative is, that companiesneed to position their strategic IT functionswithin the organizational structure of thecompany, meaning that IT executives have adirect access to business executives. With thisposition it is expected that any IT acquisi-tion and procurement of new technology isalways done on purpose to give support tothe business strategy.

The study also placed alignment as atopic that has the context of InformationSystems, a multidimensional science that in-volves both social and technical dimensions.Therefore, executives from both IT and busi-ness need to consider the managerial and or-ganizational dimensions of the wider infor-mation systems to understand the current is-sues on IT investment.

Macro Policy Implications

The ability of the IT department andthe business department to collaborate mustbe at the forefront in terms of strategic vi-sion of IT and the understanding of techni-cal issues that can lead to the developmentof a simple but efficient architectural design.An architect plays a very important role indetermining whether an IT strategy can eas-ily and quickly respond to dynamic changesboth coming from inside or from outside thecompany. This study expands this idea byshowing how flexible IT infrastructures ca-pabilities achieve alignment. Therefore, fromthe macro side, policy makers (in this casethe government) can use this research to mo-tivate the provision of communication infra-structure (internet and telecommunications)that is cheap and that can be safely accessedby the public. Likewise, both technical andprocedural standardization for businessthrough the means of communication shouldbe developed to foster a safe and positiveatmosphere for the public in conducting elec-tronic transactions. Last but not least, thecompany should establish rules and regula-tions that are able to create a stable marketenvironment, and IT-oriented education thatleads to the improvement of IT.

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Exploratory Study on Alignment Between IT and Business