Aligning IT with Business Objectives
Companies of all sizes and types are faced with the challenges that are involved in optimizing the use of their information technology (IT) resources by aligning these assets with their business objectives, but many companies are finding the process more challenging than was first believed. In some cases, the business objectives are too nebulous to develop appropriate IT support, while in other cases, top management may step in and change the organization's response in ways that preclude a firm alignment between IT assets and business objectives. Absent a careful and thoughtful alignment between IT assets and business objectives, companies run the risk of lost productivity, increased costs and diminished profitability. This study provides a review of the relevant peer-reviewed and scholarly literature concerning the need to align IT assets with business objectives, including a background and overview as well as steps that companies can take to improve the alignment between their IT resources and their business objectives. Finally, a summary of the research and important findings concerning these issues are presented in the study's conclusion.
Memorandum
July 23, 2014
Chief executive officer, XYZ Corporation, LLC
Chief information officer, YXZ Corporation, LLC
Subject:
Aligning IT with XYZ's Business Objectives
Background and Overview
In many organizations, there is a dramatic disconnect between business objectives and their information technology (IT) assets. On the one hand, most business leaders are familiar with their business objectives. For instance, according to Bland (2007), "For any manager, general business objectives are pretty much a no-brainer: profitability (or sustainability), customer satisfaction, staff satisfaction, manageable growth, perhaps community or charity involvement, and saleability" (p. 55). On the other hand, there remains far less knowledge and expertise concerning how best to align an organization's IT assets with their business objectives. In this regard, Bland (2007) emphasizes that, "It's in the attempt to achieve these goals that information technology grabs the spotlight; harnessed in the right place and at the right time, significant business goals can be realized through IT" (p. 55).
In reality, most companies today already have the IT infrastructure and business planning resources in place to effect meaningful alignment between IT assets and business objectives. For instance, Rand (2003) reports that, "While most associations today have either a strategic or operating plan that identifies business objectives, many of these plans are still missing a few key components: the enabling technologies that are required to support each of these initiatives, established performance metrics, and the built-in business intelligence to track performance" (p. 5). These shortcomings are not necessarily the fault of the IT department, but rather reflect a lack of top management coordination with these providers. In this regard, Rand (2003) points out that, "The lack of these elements doesn't mean that the IT department is not doing its job and doesn't have a strategy to implement its technology initiatives. What this scenario really indicates is that the overall strategic plan and the IT strategic plan are not aligned" (p. 5).
Despite these constraints, information technology is widely recognized as an essential asset, and that the effective management of IT resources is increasingly important to businesses today (Karrukh & Fraser, 2009). For example, Rang (2003) reports that, "With the importance that technology plays in helping organizations meet their objectives, it makes sense for the information technology (IT) plan and the overall strategic plan to be in alignment" (p. 1). In many cases, though, IT assets and business objectives remain disconnected (Rang, 2003). The implications of this disconnect between IT assets and business objectives is profound, and include diminished productivity, fragmented work, and redundant efforts (Rang, 2003).
As applied to information technology, the term "alignment" is relatively recent in origin; however, the notion of aligning strategic business objectives with other business operations has a long history (Hartung & Reich, 2008). For instance, Hartung and Reich (2008) report that, "Business executives are familiar with the idea that alignment should exist between objectives and other functions such as marketing and finance" (p. 285). According to Osborn (2012), aligning IT assets with business objectives involves "creating and managing a business driven IT organization for which the primary focus is implementing information oriented solutions that are most important to meeting the business objectives of the enterprise" (para. 2).
However it is defined, aligning IT with business objectives is an essential element in developing and sustaining a competitive advantage today (Benko & McFarlan, 2009). In this regard, Benko and McFarland emphasize that, "Objectives include developing mind-sets necessary to prosper on the information frontier. It is crucial to focus on optimizing the business, in large part by better harnessing the power of the business technology...
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