This paper examines the critical challenge organizations face in aligning their information technology (IT) assets with broader business objectives. Drawing on peer-reviewed and scholarly literature, the paper provides background on the disconnect that commonly exists between IT departments and organizational strategy, outlines the consequences of poor alignment — including diminished productivity and lost competitive advantage — and presents actionable steps for improvement. The Balanced Scorecard Model is highlighted as a particularly useful framework for translating strategic objectives into measurable IT priorities. The paper concludes with concrete recommendations for formalizing business objectives, applying performance measurement models, and establishing ongoing review processes to sustain effective IT-business alignment.
The paper effectively synthesizes multiple sources to build a coherent argument rather than simply summarizing each source in isolation. By weaving together authors such as Bland, Rand, Hartung and Reich, and Osborn, the writer demonstrates how different scholars converge on a shared conclusion — that IT-business alignment is both strategically essential and practically achievable — while also acknowledging real obstacles such as vague objectives and top-management interference.
The paper opens with an executive summary framed as a memorandum, establishing audience and purpose. The body is divided into a background section covering the nature and consequences of misalignment, followed by a solutions-focused section centered on the Balanced Scorecard Model and enumerated IT asset categories. Organizational style changes are presented in tabular form before the conclusion synthesizes findings and offers three numbered recommendations, making the paper both analytically rigorous and practically oriented.
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 its 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 the effective management of IT resources is increasingly important to businesses today (Farrukh & 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 are 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 McFarlan 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 investment" (p. 59). Despite the importance of this alignment, there are far too many companies that have failed to optimize their IT assets by aligning them with their business objectives for a number of reasons, including the following:
Notwithstanding the challenges involved, there are a number of desirable outcomes that can be achieved by aligning IT resources and business objectives, including the following:
Hartung and Reich (2008) underscore the need for carefully and thoughtfully aligning IT with business objectives: "The IT direction within an organization must be aligned with the overall business direction. If the IT department is allowed to set its own direction and develop or purchase technology without reference to the overall business plan, a high likelihood exists for the wasting of resources, and the loss of any strategic advantage" (p. 286). In other words, even the most well-intentioned and up-to-date IT department will be unable to support the organization's objectives unless it knows what those objectives are and how best to provide the IT support required to achieve them. Farrukh and Fraser (2009) reinforce this point, reporting that, "The lack of a systematic approach to managing technology hampers many companies in their drive for improved organizational effectiveness" (p. 39). The research consistently confirms that aligning the IT function with business objectives represents a high priority for management at companies of all sizes and types (Hartung & Reich, 2008).
Given the enormous resources invested in IT systems over the years, it is vitally important that organizations optimize their use in achieving business objectives. Many companies have failed to realize the full potential of their IT resources because of faulty planning and implementation. In this regard, Kavanagh and Suppert (2007) report that, "In many instances the failure lies not with the technologies themselves, but rather with the implementation of these technologies. The successful implementation of an IT solution depends not only on the technical installation, but also on the successful integration of that technology with business processes and the behaviors of employees" (p. 25).
Larger organizations in particular face challenges in aligning business objectives with IT resources, because these resources are frequently diverse and fragmented across the overall enterprise (Farrukh & Fraser, 2009). In many cases, IT requirements are channeled according to existing arrangements with little or no thought for how resources should be organized and directed in the future to support the organization's objectives (Farrukh & Fraser, 2009). An IT initiative at Glaxo Pharmaceuticals that helped to align business objectives with IT resources to facilitate new product development was guided by the following principles:
Beyond this initiative, other companies have also realized significant success in aligning their information technology with their business objectives. In this context, business strategies can be defined as "plans of action carried out tactically to achieve a business objective," and "business objectives" can be defined as "a desired result" while strategy is "a plan for getting there" (McGinn & Kudyba, 2002, p. 106). According to Rand (2003), "Business objectives translate strategic themes into operational terms and initiatives that have clearly defined measurements for success. By defining business objectives and measures, organizations create a basis for testing the effectiveness of their strategies" (p. 2). In addition, Osborn (2012) reports that, "An alignment strategy matches what an organization 'can do' versus what it 'might do'" (para. 6).
Some recent trends with respect to IT assets and business objectives include the following:
Given the complexity of most IT systems, especially in larger organizations, it is essential that IT assets be aligned with business objectives in order to move a company from where it is to where it wants to be. Kavanagh and Suppert (2007) note that, "Successful planning and evaluation of IT projects, as well as effective management of IT assets, is key to realizing value from the dollars invested in technology" (p. 25). In some cases, companies even go overboard by strategizing the alignment of their IT assets with future business objectives that may or may not materialize. According to Bland (2007):
"Many businesses attempt to build a 'bulletproof' IT infrastructure to cover future IT needs, but if the new infrastructure does not support business objectives, it is future-proofing for its own sake. These problems commonly result from a lack of meaningful engagement between the IT vendor and the business and an inability to inter-translate IT and business concepts." (p. 55)
In yet other cases, companies' business objectives are too vague or diffuse to develop corresponding strategies to align IT assets appropriately (Bloomfield & Coombs, 2008). There is also always the possibility that top management will deviate from the best strategy for aligning IT assets with organizational objectives (Bloomfield & Coombs, 2008). In this regard, Bloomfield and Coombs (2008) emphasize that, "Regardless of written plans, senior management maintains their freedom to react to events as they occur. The discrepancy between the explicit and implicit strategies leads to confusion for IT planners" (p. 27).
One approach that has been used to good effect in helping companies develop timely business strategies to achieve organizational goals — and identify requisite IT resources to facilitate the process — is the use of the Balanced Scorecard Model (McGinn & Kudyba, 2002). According to McGinn and Kudyba (2002), the Balanced Scorecard Model is "a conceptual framework for translating an organization's strategic objectives into a set of performance indicators distributed among four perspectives: financial, customer, internal business processes, and learning and growth" (p. 107).
The Balanced Scorecard uses several metrics to gauge an organization's progress with respect to its stated objectives; in addition, other metrics are used to evaluate the organization's progress toward long-term success (McGinn & Kudyba, 2002). In essence, the Balanced Scorecard Model provides a useful framework in which organizations can align their IT assets with their business objectives (McGinn & Kudyba, 2002). According to McGinn and Kudyba (2002), "The Balanced Scorecard approach has been recognized as one of the top management techniques. This strategic technique becomes an even more powerful tool when utilized in conjunction with software technology that supports business intelligence" (p. 107).
Using the Balanced Scorecard Model, the major design factors for aligning IT assets with business objectives include the following:
One of the major benefits of using the Balanced Scorecard Model is its ability to clarify business objectives so that they can be more readily aligned with IT assets (McGinn & Kudyba, 2002). The Balanced Scorecard Model can be used for both long- and short-term business planning, as well as for companies of any size or type (Jalbert & Landry, 2003). According to Fletcher and Smith (2004), "If properly implemented, [the Balanced Scorecard Model] is an excellent management framework to help managers track the many factors that influence performance" (p. 2).
The research showed that companies of all sizes and types can benefit from aligning their IT assets with business objectives, but the process can be daunting and unsuccessful unless certain guidelines are followed. While the guidelines needed by a given company may differ from those for another company, the research also showed that there are a wide range of beneficial outcomes that can be achieved through an alignment of IT assets and business objectives, including improved profitability, reduced losses of time, and the development of a competitive advantage. Unfortunately, many companies have either failed to align their IT resources with their business objectives, or have done so in haphazard ways that fail to fully realize the numerous benefits that can accrue from this process.
For the companies that invest the time and effort needed to develop a thoughtful alignment between IT assets and business objectives, the return on investment should more than justify the resources expended. Because many companies have invested enormous amounts of money in their legacy IT systems, it simply makes good business sense to use these resources to their best effect. In the final analysis, it is reasonable to conclude that companies that align their IT assets with their business objectives will enjoy a competitive advantage over those that fail to do so, or fail to do so in an effective fashion.
Based on the review of the peer-reviewed and scholarly literature concerning the need to align a company's IT assets with its business objectives, the following recommendations are provided:
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Bland, V. (2007, September). Do techies rule? — Aligning business and ICT; development in information and communication technologies creates new business opportunities and customer expectations. New Zealand Management, 55.
Bloomfield, R. C. & Coombs, R. (2008). Information technology and organizations: Strategies, networks, and integration. Oxford: Oxford University Press.
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