Patterns of co-alignment in information-intensive organizations: business performance through integration strategies

Information technology (IT) has transformed business practices in the last several decades: operations, product strategies, distribution, and customer service have become increasingly dependent on IT. Moreover, IT has changed its orientation from that of pure operational utility in the 1960s and 1970s to that of a competitive weapon in the 1990s and today. These phenomena have affected the way modern organizations are managed, as well as the way IT affects the strategic activities of an organization's value-chain. In particular, aligning an organization's business and IT strategies in order to deliver higher business performance presupposes a strategic business opportunity to which information systems technology is integral. In other words, Strategic Alignment between business and IT can have a positive business impact only if we see an organization's IT components as parts of a well-integrated organizational system. If business strategy is viewed separately from IT strategy or IT strategy is viewed only as a "support" tool, then there is little likelihood that the above positive impact of strategic alignment can take place. This research suggests, develops and tests a strategic co-alignment model by examining three types of integration that impact the planning process and the overall performance of information-intensive organizations: technological integration (TI), functional integration and strategic integration (SI). The results of this research yield some useful set of guidelines for theory building for IS, as well as for the business practice aspect of IS: most interesting is the role of consistency (co-alignment) between an organization's business and strategic information systems plans to improve overall firm performance. Other recommendations include having a high degree of involvement of IS executives in corporate planning, the use of outsourcing services to promote organizational systems integration, and the importance of internal coordination mechanisms to facilitate both systems consistency and lower transaction costs. Finally, this study has employed cluster analysis and discriminant analysis to interpret the research findings. (C) 2003 Elsevier Ltd. All rights reserved.